<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 2, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OUTDOOR SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 86-0736400
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
</TABLE>
------------------------
2502 N. BLACK CANYON HIGHWAY
PHOENIX, ARIZONA 85009
(602) 246-9569
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
WILLIAM S. LEVINE
CHAIRMAN OF THE BOARD
2502 N. BLACK CANYON HIGHWAY
PHOENIX, ARIZONA 85009
(602) 246-9569
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
GABRIEL DUMITRESCU, ESQ. R.W. SMITH, JR., ESQ.
WILLIAM B. SHEARER, JR., ESQ. PIPER & MARBURY L.L.P.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP 36 SOUTH CHARLES STREET
191 PEACHTREE STREET, N.E., 16TH FLOOR BALTIMORE, MARYLAND 21201
ATLANTA, GEORGIA 30303 (410) 539-2530
(404) 572-6600
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Section 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE
OF SECURITIES TO BE PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value.......... 14,605,000 $29.75 $434,498,750 $131,666
================================================================================================================
</TABLE>
(1) Includes 1,905,000 shares that the Underwriters have the option to purchase
solely to cover over-allotments, if any.
(2) Pursuant to Rule 457(c), calculated upon the basis of the last reported
sales price of the Common Stock on the Nasdaq National Market on May 1,
1997.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
SUBJECT TO COMPLETION
DATED MAY 2, 1997
12,700,000 SHARES
[OUTDOOR SYSTEMS LOGO]
COMMON STOCK
------------------
Of the shares of Common Stock offered hereby (the "Offering") 12,000,000
shares are being sold by Outdoor Systems, Inc. (the "Company") and 700,000
shares are being sold by the Selling Stockholders named herein under "Principal
and Selling Stockholders." The Company will not receive any of the proceeds from
the sale of Common Stock by the Selling Stockholders.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"OSIA." On May 1, 1997, the last reported sale price for the Common Stock, as
reported on the Nasdaq National Market, was $29.75 per share. See "Price Range
of Common Stock."
Following the Offering, the Company intends to offer $300 million aggregate
principal amount of Senior Subordinated Notes (the "Notes") by a separate
Prospectus (the "Notes Offering" and, together with the Offering, the
"Offerings"). The consummation of the Offering is not contingent upon the
completion of the Notes Offering.
------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 12 HEREOF.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO DISCOUNTS AND TO SELLING
PUBLIC COMMISSIONS COMPANY(1) STOCKHOLDERS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Per Share................................... $ $ $ $
- ------------------------------------------------------------------------------------------------------------
Total(2).................................... $ $ $ $
============================================================================================================
</TABLE>
(1) Before deducting expenses of the offering payable by the Company estimated
at $750,000.
(2) The Company and the Selling Stockholders have granted the Underwriters a
30-day option to purchase up to an additional 1,905,000 shares of Common
Stock solely to cover over-allotments, if any. To the extent that the option
is exercised, the Underwriters will offer the additional shares at the Price
to Public shown above. If the option is exercised in full, the total Price
to Public, Underwriting Discounts and Commissions, Proceeds to Company and
Proceeds to Selling Stockholders will be $ , $ , $ and
$ , respectively. See "Underwriting."
------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about
, 1997.
ALEX. BROWN & SONS
INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CIBC WOOD GUNDY SECURITIES CORP.
PRUDENTIAL SECURITIES INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1997.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE> 3
[INSIDE COVER PAGE CONTAINS PHOTOGRAPHS OF VARIOUS BILLBOARDS ADVERTISING
PRODUCTS FOR MCDONALD'S, CHEVROLET, HUDSON'S FINE JEWELRY AND ALTOIDS'.]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF
THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE
COMMON STOCK OFFERING AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN
THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS PARTICIPATING IN THIS
OFFERING MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
NASDAQ IN ACCORDANCE WITH RULE 103 UNDER REGULATION M. SEE "UNDERWRITING."
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus and in documents incorporated by
reference into this Prospectus. Unless otherwise indicated, all information in
this Prospectus gives effect to two three-for-two Common Stock splits effected
in the form of stock dividends paid on July 22, 1996 and November 22, 1996, and
assumes no exercise of the Underwriters' over-allotment option. The discussion
below includes certain Acquisitions (as defined) that, if not already completed,
are scheduled to occur concurrently with or after consummation of the Offering.
The "Acquisitions" consist of the Completed Acquisitions (as defined), the
pending acquisition (the "3M Media Acquisition") of the outdoor advertising
operations ("3M Media") of Minnesota Mining and Manufacturing Company ("3M"),
and the pending acquisition (the "Van Wagner Acquisition" and, together with the
3M Media Acquisition, the "Pending Acquisitions") of all of the outstanding
common stock of Van Wagner Communications, Inc. ("Van Wagner"). The "Completed
Acquisitions" means, collectively, the Gannett Outdoor Acquisition, the Houston
Acquisition, the Denver Disposition, the CSX Assets Acquisition, the Villepigue
Acquisition, the Scadron Acquisition, the Reynolds Acquisition, the Burlington
Northern and Santa Fe Assets Acquisition and the Other Completed Acquisitions
(each as defined). The "Completed 1997 Acquisitions" means the Completed
Acquisitions consummated following December 31, 1996. As used herein, the
"Company" or "Outdoor Systems" refers to Outdoor Systems, Inc. together with its
consolidated subsidiaries and, where the context requires, includes the
operations to be acquired in the Pending Acquisitions, and "market" in the
United States refers to the geographic area constituting a Designated Market
Area as defined by The A.C. Nielson Company and in Canada refers to Census Metro
Area as defined by Statistics Canada.
THE COMPANY
Outdoor Systems is the largest outdoor advertising company in North America
and upon completion of the Pending Acquisitions will operate approximately
96,500 bulletin, poster, transit and other advertising display faces in 39
states, including 65 metropolitan markets in the United States and seven
metropolitan markets in Canada. The Company also operates approximately 125,000
subway advertising display faces in New York City. Upon completion of the
Pending Acquisitions, the Company will have operations in 20 of the 25 largest
U.S. markets, as well as six of the 10 largest Canadian markets. Giving effect
to the Acquisitions, as if each occurred at the beginning of the period, the
Company had pro forma net revenues of $601.4 million and pro forma EBITDA of
$256.7 million for the year ended December 31, 1996.
Through the Acquisitions, the Company will have significantly increased its
presence in North America and diversified into additional major metropolitan
markets. The Company believes that there are significant opportunities for
revenue enhancement and cost reduction in the integration of its combined
operations. The increased presence in North America resulting from the
Acquisitions should provide the Company with an increased opportunity to
effectively convey advertisers' marketing messages locally, regionally and
nationally. In addition, the Company believes that its operating and sales
strategies will allow it to continue to improve utilization of the acquired
advertising display faces. The following table sets forth certain information
with respect to the Company's outdoor markets as of December 31, 1996 after
giving effect to the Acquisitions.
- ---------------
"3M Media" is a trademark of Minnesota Mining and Manufacturing Company.
3
<PAGE> 5
<TABLE>
<CAPTION>
MALL AND TOTAL
MARKET 30-SHEET 8-SHEET AIRPORT DISPLAY
MARKET RANK BULLETINS POSTERS POSTERS POSTERS TRANSIT FACES
- -------------------------------------------- ------ --------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
UNITED STATES:
New York-New Jersey(1)...................... 1 864 2,979 262 -- 2,710 6,815
Los Angeles................................. 2 1,587 2,961 -- -- 2,912 7,460
Chicago..................................... 3 756 -- 640 -- -- 1,396
Philadelphia................................ 4 23 -- -- -- 498 521
San Francisco............................... 5 213 1,005 563 -- 1,528 3,309
Dallas...................................... 8 849 -- -- -- -- 849
Detroit..................................... 9 1,099 1,342 91 -- 1,000 3,532
Houston..................................... 10 1,316 -- -- -- -- 1,316
Atlanta..................................... 11 1,234 1,679 -- -- 650 3,563
Cleveland................................... 13 70 -- -- -- -- 70
Minneapolis................................. 14 54 -- -- -- -- 54
Miami-Ft. Lauderdale........................ 15 404 -- -- -- -- 404
Tampa-St. Petersburg-Sarasota............... 16 881 -- -- -- -- 881
Phoenix..................................... 17 807 1,516 659 -- 1,490 4,472
Sacramento-Stockton-Modesto................. 18 506 1,271 -- -- -- 1,777
Denver...................................... 19 399 784 -- -- 5,266 6,449
St. Louis................................... 20 466 833 1 -- -- 1,300
San Diego................................... 23 109 541 -- -- 680 1,330
Orlando..................................... 24 466 -- -- -- -- 466
Portland, OR................................ 25 17 -- -- -- -- 17
Indianapolis................................ 26 137 -- -- -- -- 137
Hartford-New Haven.......................... 27 151 831 -- -- -- 982
Cincinnati.................................. 28 104 -- -- -- -- 104
Salt Lake................................... 29 61 -- -- -- -- 61
Charlotte................................... 30 145 -- -- -- -- 145
Raleigh-Durham.............................. 32 33 -- -- -- -- 33
Nashville................................... 33 248 -- -- -- -- 248
Kansas City................................. 34 432 840 -- -- -- 1,272
Columbus, OH................................ 35 104 -- -- -- -- 104
San Antonio................................. 36 85 -- -- -- -- 85
Grand Rapids................................ 38 120 568 -- -- 180 868
New Orleans................................. 40 458 1,042 428 -- 214 2,142
Memphis..................................... 41 77 -- -- -- -- 77
Buffalo..................................... 42 116 -- -- -- -- 116
Albuquerque................................. 43 99 -- -- -- -- 99
Fresno...................................... 46 125 892 -- -- -- 1,017
Louisville.................................. 49 329 1,052 243 -- 224 1,848
Winston-Salem............................... 50 35 -- -- -- -- 35
Birmingham.................................. 51 154 -- -- -- -- 154
West Palm Beach............................. 52 219 -- -- -- -- 219
Dayton...................................... 53 123 -- -- -- -- 123
Jacksonville................................ 55 178 -- -- -- -- 178
Charleston, SC.............................. 57 181 -- -- -- -- 181
Flint....................................... 59 86 423 32 -- -- 541
Knoxville................................... 63 78 -- -- -- -- 78
Roanoke..................................... 70 49 -- -- -- -- 49
Rochester................................... 73 -- -- -- -- 3,715 3,715
Shreveport.................................. 74 41 -- -- -- -- 41
Omaha....................................... 75 52 -- -- -- -- 52
Tucson...................................... 78 170 6 338 -- 10 524
Rio Grande.................................. 82 316 -- -- -- -- 316
Columbia, SC................................ 83 158 -- -- -- -- 158
El Paso..................................... 84 81 -- -- -- -- 81
Chattanooga................................. 85 63 -- -- -- -- 63
Jackson, MS................................. 87 76 -- -- -- -- 76
Ft. Myers................................... 96 108 -- -- -- -- 108
Colorado Springs............................ 99 62 -- -- -- -- 62
Ft. Wayne................................... 106 69 -- -- -- -- 69
Tyler, TX................................... 110 87 -- -- -- -- 87
Eugene...................................... 123 77 382 -- -- -- 459
Bakersfield, CA............................. 124 50 -- -- -- -- 50
Reno........................................ 126 104 -- -- -- -- 104
Columbus, GA................................ 127 190 412 100 -- -- 702
Beaumont.................................... 135 110 -- -- -- -- 110
Midland-Odessa, TX.......................... 144 47 -- -- -- -- 47
Non-Metro Markets........................... N/A 12,439 175 -- -- -- 12,614
Mall Advertising Displays................... N/A -- -- -- 6,700 -- 6,700
------ ------ ----- ----- ------ ------
UNITED STATES TOTAL(1).................... 30,347 21,534 3,357 6,700 21,077 83,015
------ ------ ----- ----- ------ ------
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
MALL AND TOTAL
MARKET 30-SHEET 8-SHEET AIRPORT DISPLAY
MARKET RANK BULLETINS POSTERS POSTERS POSTERS TRANSIT FACES
- -------------------------------------------- ------ ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
CANADA:
Toronto..................................... 1 157 1,491 -- 408 3,202 5,258
Montreal.................................... 2 77 793 -- 297 1,788 2,955
Ottawa...................................... 6 8 188 -- 61 -- 257
Winnipeg.................................... 7 107 247 -- 56 349 759
Quebec City................................. 8 184 333 -- 125 241 883
Hamilton.................................... 9 19 303 -- 80 598 1,000
Halifax..................................... 14 15 173 -- 28 214 430
Other....................................... N/A 145 1,247 -- 278 301 1,971
------ ------ ----- ----- ------ ------
CANADA TOTAL.............................. 712 4,775 0 1,333 6,693 13,513
------ ------ ----- ----- ------ ------
TOTAL(1)(2)............................... 31,059(3) 26,309 3,357 8,033 27,770 96,528
====== ====== ===== ===== ====== ======
</TABLE>
- ---------------
(1) Display faces do not include 125,000 subway advertising display faces in New
York City.
(2) If the Pending Acquisitions are not consummated, the Company will have 7,849
bulletins, 23,846 30-sheet posters, 3,219 8-sheet posters, 1,333 mall and
airport posters, and 27,700 transit display faces, for a total of 63,947
display faces. In addition, the Company may be required to make divestitures
in certain markets in order to receive antitrust clearance for the Pending
Acquisitions. See "Risk Factors -- Possible Non-Consummation of the Pending
Acquisitions."
(3) Includes 141 wall murals and 51 "Spectacular" signs.
RECENT DEVELOPMENTS
Since the Company's initial public offering on April 24, 1996, the Company
has completed 13 acquisitions of outdoor advertising businesses or assets for an
aggregate of more than $860 million, including the Gannett Outdoor Acquisition
for approximately $700 million. In addition, the Company has entered into
binding contracts to purchase two additional outdoor advertising businesses with
operations in 58 metropolitan markets for approximately $1.2 billion. There is
no assurance that the Pending Acquisitions will be consummated or that the
Pending Acquisitions will not be delayed due to required antitrust clearance or
other factors. The Offering is not conditioned on the consummation of the
Pending Acquisitions. See "Risk Factors -- Possible Non-Consummation of the
Pending Acquisitions."
Completed Acquisitions
- - Gannett Outdoor Acquisition. On August 22, 1996, the Company purchased
substantially all of the assets of the outdoor advertising division ("Gannett
Outdoor") of Gannett Co., Inc. ("Gannett"), including the stock of certain
indirect subsidiaries of Gannett, for approximately $700.0 million in cash
(the "Gannett Outdoor Acquisition"). The Company acquired from Gannett a total
of approximately 40,000 advertising display faces consisting of bulletins,
posters and transit advertising display faces in 15 metropolitan markets in
the United States and seven metropolitan markets in Canada and approximately
125,000 subway advertising display faces in New York City.
Upon consummation of the Gannett Outdoor Acquisition, the Company immediately
began implementing its cost savings and integration strategy, which included
the consolidation of certain administrative, sales management and leasing
management functions. This strategy has resulted in the reduction and
consolidation of duplicative functions in: (i) production and sales overhead;
(ii) production and administrative support; (iii) national sales and marketing
support; and (iv) accounting and administrative areas. In addition, the
Company has eliminated certain duplicative operations by closing a billboard
production facility in Canada, consolidating sales offices in Toronto and
closing Gannett Outdoor's corporate office.
The Company had estimated that these measures would result in annual cost
savings of approximately $33.0 million. Based upon the results of the
Company's consolidation and cost savings efforts to date, the Company believes
that annual cost savings will exceed the original estimate. The Company also
believes that it has increased revenues generated by the Gannett
5
<PAGE> 7
Outdoor assets primarily through changing the sales compensation system from
one that was predominantly salary-based to one that is commission-based. The
Company has also increased revenues through streamlining the sales approval
process and improving utilization of the Gannett Outdoor billboard inventory.
The Company believes that opportunities still exist to improve the operations
acquired in the Gannett Outdoor Acquisition.
- - Houston Acquisition and Denver Disposition. In connection with the Gannett
Outdoor Acquisition, on November 14, 1996, the Company acquired Gannett's
outdoor operations in Houston, Texas (the "Houston Acquisition") for $10.0
million in cash plus the net book value of working capital and certain other
specified assets. Also in connection with the Gannett Outdoor Acquisition, on
August 8, 1996, the Company sold substantially all of its then existing
billboard assets in Denver (the "Denver Disposition") to an unrelated party
for $9.2 million consisting of $2.8 million in cash paid at closing and a ten
year 9% promissory note for the balance of the purchase price.
- - CSX Assets Acquisition. On May 22, 1996, the Company acquired permanent
easements for 1,360 plots of land in 17 eastern states for $21.5 million (plus
future consideration estimated to be payable in 2006) from CSX Realty
Development Corporation (the "CSX Assets Acquisition"). Currently, 130
different outdoor advertising companies have licenses to operate approximately
2,240 advertising displays on these plots of land. As a result of this
purchase, the Company has the right to collect the proceeds from these
licenses.
- - Villepigue Acquisition. On January 9, 1997, the Company completed the
acquisition of Villepigue Outdoor Advertising (the "Villepigue Acquisition")
and related entities, consisting of approximately 110 bulletin display faces
in the New York metropolitan area, for a purchase price of approximately $27.0
million in cash, subject to working capital adjustments.
- - Scadron Acquisition. On February 14, 1997, the Company purchased a portion of
the assets of Scadron Enterprises (the "Scadron Acquisition") consisting of
approximately 100 wall and bulletin display faces in the Chicago metropolitan
area, for a purchase price of approximately $24.5 million in cash, subject to
working capital adjustments.
- - Reynolds Acquisition. On February 28, 1997, the Company acquired the assets
of Reynolds Outdoor, L.P. (the "Reynolds Acquisition") and certain related
joint ventures, consisting of approximately 325 bulletin faces in the
Dallas/Ft. Worth metropolitan area, for a purchase price of approximately
$31.6 million in cash, subject to working capital adjustments.
- - Burlington Northern and Santa Fe Assets Acquisition. On March 26, 1997, the
Company purchased from The Burlington Northern and Santa Fe Railway Company
(the "Burlington Northern and Santa Fe Assets Acquisition") permanent
easements for approximately 1,350 plots of land located in 26 western and
midwestern states and the rights to signboard licenses with respect to
advertising displays located on the plots of land covered by the easement. The
purchase price for the assets consists of approximately $17.0 million in cash
which was paid on March 26, 1997 and approximately $12.5 million in cash
payable no later than July 11, 1997 upon delivery by the seller of additional
easements and assignment of license agreements.
- - Other Completed Acquisitions. In addition to these acquisitions, the Company
has acquired certain outdoor advertising assets in Denver, Atlanta,
Louisville, Toronto, Montreal, and Halifax for aggregate consideration of
approximately $18.4 million (the "Other Completed Acquisitions").
Pending Acquisitions
- - 3M Media Acquisition. On April 30, 1997, the Company entered into an
Agreement of Purchase and Sale (the "3M Media Purchase Agreement") to acquire
3M Media, through the purchase of the capital stock of National Advertising
Company, a subsidiary of 3M, for approximately $1.0 billion in cash. In the 3M
Media Acquisition, the Company will acquire from 3M a total of
6
<PAGE> 8
approximately 31,700 advertising display faces consisting of 22,600 bulletins,
2,400 posters and 6,700 mall advertising display faces in 56 metropolitan
markets and non-metropolitan locations in the United States.
The operations of 3M Media will be integrated into the Company principally as
an acquisition of advertising display inventory in locations that can be
administered from existing Company offices. Accordingly, the Company believes
that the consolidation of certain functions will result in certain cost
savings, including the elimination of duplicative administrative, sales and
production overhead positions in the 3M Media corporate headquarters and in
operating locations. The Company believes that the pro forma annualized cost
savings attributable to the elimination of such functions will be
approximately $41.7 million. In addition to these cost savings, the Company
believes that it may be able to achieve additional cost savings arising from
reductions in facility costs through renegotiated rents or reduced space, the
reduction of expenses associated with a reduced work force, and other
reductions in administrative expenses associated with the integration of the
combined businesses.
The Company also believes that there are significant opportunities for revenue
enhancement in 3M Media's operations upon completion of the 3M Media
Acquisition. The Company believes that its local market operating and sales
strategies will allow it to improve utilization of the 3M Media advertising
display faces.
- - Van Wagner Acquisition. On April 11, 1997, the Company entered into a Stock
Purchase Agreement (the "Van Wagner Stock Purchase Agreement") to purchase all
the stock of Van Wagner for approximately $170 million in cash. The Van Wagner
operations include approximately 50 "Spectacular" signs in Times Square, as
well as 105 bulletins and 172 posters and eight wall murals in New York City,
372 bulletins and 16 wall murals in Los Angeles, four bulletins in San
Francisco, and additional transit displays and transit management agreements
in New York, Los Angeles, Northern California and Las Vegas.
The Van Wagner Acquisition will provide the Company with high profile display
faces in Times Square and west Los Angeles which will complement its existing
display inventory. The Company will eliminate certain duplicative
administrative, sales and production functions in connection with the
integration of Van Wagner's operations into the Company's existing operations,
which the Company believes will result in pro forma annualized cost savings of
approximately $8.6 million.
Each Pending Acquisition is subject to various conditions, including
clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). The Company believes that Department of Justice ("DOJ")
clearance of the Pending Acquisitions will be forthcoming, but there can be no
assurance that this will be the case. In order to obtain such clearance, it is
likely that the Company will be required to divest assets in certain markets in
which both the Company and 3M Media currently conduct business. There is no
assurance that the Pending Acquisitions will be consummated or that the Pending
Acquisitions will not be delayed due to required antitrust clearance or other
factors.
The Company will finance the purchase price of the Pending Acquisitions and
the fees and expenses associated with the Pending Acquisitions and the
acquisition financing through (i) the proceeds of the Offering, (ii) borrowings
under its senior credit facility (the "Senior Credit Facility") which is
expected to be amended to provide for a revolving credit facility and term loans
of up to $1.1 billion (the "Bank Financing") and (iii) the net proceeds of the
Notes Offering. If the Company does not complete the Notes Offering, a portion
of the purchase price of the 3M Media Acquisition will be financed through
bridge loans ("Bridge Loans") of up to $300 million under a senior subordinated
credit facility (the "Subordinated Credit Facility") to be entered into
concurrently with the closing of the 3M Media Acquisition.
7
<PAGE> 9
The Company believes that its experienced and sales-oriented management
team is an important asset in the successful implementation of its operating
strategy. William S. Levine, Chairman, Arthur R. Moreno, President and Chief
Executive Officer, Wally C. Kelly, Senior Vice President of Sales, Bill M.
Beverage, Chief Financial Officer, and Robert M. Reade, Vice President, Real
Estate, together possess approximately 110 years of sales and management
experience in the outdoor advertising industry.
The Company was organized in 1980. The Company's executive offices are
located at 2502 N. Black Canyon Highway, Phoenix, Arizona 85009, and its
telephone number is (602) 246-9569.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company................... 12,000,000 shares
Common Stock offered by the Selling Stockholders...... 700,000 shares
Common Stock to be outstanding after the Offering..... 52,155,631 shares(1)
Use of proceeds....................................... To pay a portion of the purchase
price of the Pending Acquisitions.
See "Use of Proceeds."
Nasdaq National Market symbol......................... OSIA
</TABLE>
- ---------------
(1) Excludes 6,436,497 shares of Common Stock issuable upon exercise of options,
of which 4,326,204 are exercisable immediately and 2,110,293 vest ratably
over a four-year period, and 248,392 shares of Common Stock issuable in
settlement of Incentive Units.
THE NOTES OFFERING
Following the Offering, the Company intends to offer $300 million aggregate
principal amount of the Notes, the proceeds of which will be used to fund a
portion of the purchase price of the 3M Media Acquisition or to retire
indebtedness under the Subordinated Credit Facility. The Notes will be offered
by the Company exclusively pursuant to a separate Prospectus. The consummation
of the Offering is not contingent upon the completion of the Notes Offering.
FORWARD-LOOKING STATEMENTS
This Prospectus contains and incorporates by reference certain statements
that are "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Those
statements include, among other things, the discussions of the Company's
business strategy and expectations concerning the Company's market position,
future operations, margins, profitability, liquidity and capital resources, as
well as statements concerning the integration of the Acquisitions and
achievement of cost savings in connection therewith. Investors in the Common
Stock offered hereby are cautioned that reliance on any forward-looking
statement involves risks and uncertainties, and that although the Company
believes that the assumptions on which the forward-looking statements contained
herein are based are reasonable, any of those assumptions could prove to be
inaccurate, and as a result, the forward-looking statements based on those
assumptions also could be incorrect. The uncertainties in this regard include,
but are not limited to, those identified in the risk factors discussed herein.
See "Risk Factors." In light of these and other uncertainties, the inclusion of
a forward-looking statement herein should not be regarded as a representation by
the Company that the Company's plans and objectives will be achieved.
8
<PAGE> 10
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
The following sets forth summary unaudited consolidated pro forma financial
information derived from the Unaudited Consolidated Pro Forma Financial
Information included elsewhere in this Prospectus. The summary unaudited
consolidated pro forma statement of operations combines the historical financial
information of the Company and the businesses acquired and to be acquired in the
Acquisitions for the year ended December 31, 1996, giving effect to (i) the Bank
Financing, (ii) net reductions in operating expenses associated with the
Acquisitions, and (iii) the Offerings (assuming the sale of the shares of Common
Stock offered hereby at a price of $29.75 per share) and the application of the
net proceeds therefrom, as if each had occurred at the beginning of the period.
The summary unaudited consolidated pro forma balance sheet as of December 31,
1996 has been prepared as if the Completed 1997 Acquisitions, the Pending
Acquisitions, the Bank Financing and the Offerings and the application of the
net proceeds therefrom had occurred on December 31, 1996.
The summary unaudited consolidated pro forma financial information does not
purport to present the actual financial position or results of operations of the
Company had the Acquisitions and events assumed therein in fact occurred on the
dates specified, nor are they necessarily indicative of the results of
operations that may be achieved in the future. The summary unaudited
consolidated pro forma financial information is based on certain assumptions and
adjustments described in the notes to the Unaudited Consolidated Pro Forma
Financial Information and should be read in conjunction therewith. See
"Unaudited Consolidated Pro Forma Financial Information" and "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(1).............................................................. $ 601,409
Direct advertising expenses.................................................. 325,911
General and administrative expenses.......................................... 18,754
Depreciation and amortization................................................ 111,353
Gain on Denver Disposition................................................... 7,344
Operating income............................................................. 152,735
Interest expense............................................................. 146,472
Income before extraordinary loss............................................. 3,372
Net loss..................................................................... (14,408)
OTHER DATA:
EBITDA(2).................................................................... $ 256,744
EBITDA margin(3)............................................................. 42.7%
After-tax cash flow(4)....................................................... $ 109,982
Capital expenditures......................................................... $ 39,146
Number of advertising displays(5)............................................ 96,528
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
------------------------
PRO FORMA
AS
ACTUAL ADJUSTED
-------- ----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital....................................................... $ 36,142 $ 68,810
Total assets.......................................................... 933,455 2,307,128
Total debt............................................................ 606,409 1,610,085
Stockholders' equity.................................................. 288,179 623,912
</TABLE>
- ---------------
(1) Net revenues are gross revenues minus agency commissions, plus other income
of $12.8 million.
(2) "EBITDA" is defined as operating income before depreciation and amortization
expense and excludes the gain on the Denver Disposition. While EBITDA should
not be considered in isolation or as a substitute for net income, cash flows
from operating activities and other income or cash flow statement data
prepared in accordance with generally accepted accounting principles, or as
a measure of profitability or liquidity, management understands that it is
widely used by certain investors as one measure to evaluate the financial
performance of companies in the outdoor advertising industry.
(3) "EBITDA margin" is EBITDA stated as a percentage of net revenues.
(4) Defined as income before extraordinary loss plus depreciation and
amortization expense, and deferred tax expense and excludes the gain on the
Denver Disposition. After-tax cash flow is presented here not as a measure
of operating results and does not purport to represent cash provided by
operating activities. After-tax cash flow should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles such as net income
and cash provided by operating activities.
(5) Does not include approximately 125,000 subway advertising display faces in
New York City.
9
<PAGE> 11
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth summary historical financial data for the
Company and 3M Media for the periods indicated. The information presented below
is qualified in its entirety by, and should be read in conjunction with,
"Management's Discussion and Analysis of Results of Operations and Financial
Condition," "Selected Historical Financial and Other Data" and the consolidated
financial statements and notes thereto of the Company and the financial
statements and notes thereto of 3M Media contained herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
OUTDOOR SYSTEMS(1) 1994 1995 1996
- -------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(2)....................................... $ 52,077 $ 64,813 $ 173,116
Operating expenses:
Direct advertising.................................. 24,433 30,462 87,593
General and administrative.......................... 3,357 4,096 13,458
Depreciation and amortization....................... 9,165 9,970 22,384
Gain on 1994 disposal and the Denver Disposition...... 4,325 -- 7,344
Operating income...................................... 19,447 20,285 57,025
Interest expense...................................... 16,393 17,199 32,489
Income before extraordinary loss(3)................... 1,333 2,768 14,336
Net income (loss)(3).................................. 1,333 2,768 (3,444)
Net income (loss) attributable to common
stockholders........................................ (263) 307 (6,905)
Net income (loss) per common share(3)................. $ (0.01) $ 0.01 $ (0.19)
Shares used in computing per share computations(4).... 21,096,379 25,424,078 35,263,336
OTHER DATA:
EBITDA(5)............................................. $ 24,287 $ 30,255 $ 72,065
EBITDA margin(6)...................................... 46.6% 46.7% 41.6%
After-tax cash flow(7)................................ $ 7,497 $ 12,829 $ 39,286
Capital expenditures.................................. $ 4,924 $ 7,070 $ 9,046
Number of advertising displays........................ 11,900 12,700 61,600(8)
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
3M MEDIA 1994 1995 1996
- -------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues(2)....................................... $ 196,948 $ 205,418 $ 211,310
----------- ----------- -----------
Operating expenses:
Direct advertising(9)............................... 131,422 137,131 139,223
General and administrative.......................... 12,024 11,790 12,406
Depreciation and amortization....................... 18,061 17,144 15,382
Loss (gain) on disposal of property and equipment... 343 (806) 21
----------- ----------- -----------
Operating income...................................... $ 35,098 $ 40,159 $ 44,278
========== ========== ==========
</TABLE>
10
<PAGE> 12
NOTES TO SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
(1) During 1996, the Company completed certain acquisitions, including the
Gannett Outdoor Acquisition on August 22, 1996. See "Prospectus
Summary--Recent Developments." In addition, in 1994 the Company completed
certain acquisitions and dispositions. Accordingly, operating results are
not necessarily comparable on a year-to-year basis.
(2) Net revenues are gross revenues minus agency commissions and for the
Company include other income of $1.0 million, $0.4 million and $6.1 million
for the years ended December 31, 1994, 1995 and 1996, respectively.
(3) Deferred financing costs of $17.8 million associated with the early
redemption of borrowings were charged as an extraordinary loss during 1996.
(4) Weighted average share amounts have been adjusted to reflect the
three-for-two Common Stock splits effected in the form of stock dividends
paid on each of July 22, 1996 and November 22, 1996.
(5) "EBITDA" is defined as operating income before depreciation and
amortization expense and, in 1994 and 1996, before the gain on the 1994
disposal and the Denver Disposition, respectively. While EBITDA should not
be considered in isolation or as a substitute for net income, cash flows
from operating activities and other income or cash flow statement data
prepared in accordance with generally accepted accounting principles, or as
a measure of profitability or liquidity, management understands that it is
widely used by certain investors as one measure to evaluate the financial
performance of companies in the outdoor advertising industry.
(6) "EBITDA margin" is EBITDA stated as a percentage of net revenues.
(7) Defined as income before extraordinary loss plus depreciation and
amortization expense, and deferred tax expense and excludes the gain on the
1994 disposal and the Denver Disposition. After-tax cash flow is presented
here not as a measure of operating results and does not purport to
represent cash provided by operating activities. After-tax cash flow should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles such as net income and cash provided by operating activities.
(8) Does not include approximately 125,000 subway advertising display faces in
New York City and does not give effect to the Completed 1997 Acquisitions
and the Pending Acquisitions.
(9) Direct advertising expenses for 3M Media include direct advertising and
selling and marketing expenses.
11
<PAGE> 13
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
Substantial Leverage. Upon completion of the Pending Acquisitions, the
Bank Financing and the Offerings and the application of the net proceeds
therefrom, the Company's total indebtedness will be approximately $1.6 billion,
representing approximately 72% of total capitalization. There can be no
assurance that the Company will have adequate cash available to make required
principal and interest payments. In addition, the terms of the Senior Credit
Facility and of the indenture (the "1996 Notes Indenture") governing the
Company's $250 million 9 3/8% Senior Subordinated Notes due 2006 (the "1996
Notes") include, and the indenture that will govern the Notes (the "Indenture")
will include, significant operating and financial restrictions, such as limits
on the Company's ability to incur indebtedness, create liens, sell assets,
engage in mergers or consolidations, make investments and pay dividends.
The Company's high degree of leverage may have important consequences for
the Company: (i) the ability of the Company to obtain additional financing for
acquisitions, working capital, capital expenditures or other purposes, if
necessary, may be impaired or such financing may not be available on terms
favorable to the Company; (ii) a substantial portion of the Company's cash flow
will be used to pay the Company's interest expense and under certain conditions
to repay indebtedness, which will reduce the funds that would otherwise be
available to the Company for its operations and future business opportunities;
(iii) a substantial decrease in net operating cash flows or an increase in
expenses of the Company could make it difficult for the Company to meet its debt
service requirements and force it to modify its operations; (iv) the Company may
be more highly leveraged than its competitors which may place it at a
competitive disadvantage; and (v) the Company's high degree of leverage may make
it more vulnerable to a downturn in its business or the economy generally. Any
inability of the Company to service its indebtedness or obtain additional
financing, as needed, would have a material adverse effect on the Company.
The Company's ability to pay interest and principal on its debt obligations
will depend upon its future operating performance, which will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond its control. The Company anticipates that its
operating cash flow, together with borrowings under the Senior Credit Facility,
will be sufficient to meet its operating expenses and to service its debt
requirements as they become due. However, if the Company is unable to service
its indebtedness, whether upon acceleration of such indebtedness or in the
ordinary course of business, the Company will be forced to pursue one or more
alternative strategies such as selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all.
See "Management's Discussion and Analysis of Results of Operations and Financial
Condition -- Liquidity and Capital Resources."
Possible Non-Consummation of the Pending Acquisitions. The consummation of
the Pending Acquisitions is subject to various conditions, including clearance
under the HSR Act. There is no assurance that the Pending Acquisitions will be
consummated or that the Pending Acquisitions will not be delayed due to required
antitrust clearance or other factors. The Company believes that DOJ clearance
will be forthcoming, but there can be no assurance that this will be the case.
In order to obtain such clearance, it is likely that the Company will be
required to divest assets in certain markets in which both the Company and 3M
Media currently conduct business. There can be no assurance that the purchase
price payable in respect of any such divestiture will be comparable to the
purchase price paid for such assets in the 3M Media Acquisition. Furthermore,
any such divestitures, as well as other conditions which may be imposed in
connection with the antitrust clearance, may adversely affect the operations of
the Company and may reduce the expected return from the 3M Media Acquisition.
12
<PAGE> 14
Challenges of Business Integration. The Company faces significant
challenges in integrating the operations of the Acquisitions with those of the
Company. The continued integration of Gannett Outdoor and the integration of 3M
Media will require substantial attention from the Company's management team.
Diversion of management attention from the Company's existing business could
have an adverse impact on the revenues and operating results of the Company.
There can be no assurance that the Company will be able to successfully
integrate the operations of the Acquisitions with those of the Company. In
addition, 3M Media and Van Wagner have historically operated with higher cost
structures than that of the Company and the pro forma financial statements
assume that the Company will be able to achieve significant cost reductions
following the closing of the Pending Acquisitions, including cost reductions
associated with employee reductions. The Company could face regulatory,
contractual and other restrictions on its ability to implement the cost
reductions. There can be no assurance that the Company will be successful in
reducing the overhead and other costs associated with 3M Media and Van Wagner or
other Acquisitions, or that realization of such cost reductions will not be
delayed. In addition, to the extent that the Company is successful in achieving
part or all of such cost reductions, there can be no assurance that the
reductions will not have a material adverse effect on the business of the
Company.
Restrictions on Tobacco Advertising. Tobacco revenues have historically
accounted for a significant portion of outdoor advertising revenues. Beginning
in 1992, the leading tobacco companies substantially reduced their domestic
advertising expenditures in response to a declining population of smokers in the
United States, societal pressures to reduce advertising, consolidation in the
tobacco industry and increasing price competition from generic products. Tobacco
advertising accounted for 8.2% of the net revenues for the Company and 5.9% of
the net revenues for the Pending Acquisitions for fiscal 1996. In addition, the
Food and Drug Administration recently promulgated rules which, among other
things, would limit certain types of outdoor advertising by tobacco companies.
While certain of these regulations have been declared invalid by a lower court
ruling, appeals are likely and there can be no assurance that further
developments resulting in a validation or implementation of these or similar
regulations will not occur. Further, at least one local municipality in which
the Company does not conduct business has banned tobacco and liquor advertising
on billboards (subject to limited exceptions), which ban has been upheld in
court rulings to date and may be implemented in other jurisdictions. It also
recently has been reported that certain cigarette manufacturers who are
defendants in numerous class action suits throughout the United States have
proposed an out of court settlement with respect to such suits that could
potentially include restrictions on billboard advertising by these and other
cigarette manufacturers. There can be no assurance as to the effect of these
regulations, potential legislation or settlement discussions on the Company's
business and on its net revenues and financial position. A reduction in
billboard advertising by the tobacco industry would cause an immediate reduction
in the Company's direct revenue from such advertisers and would simultaneously
increase the available space on the existing inventory of billboards in the
outdoor advertising industry. This could in turn result in a lowering of outdoor
advertising rates in each of the Company's outdoor advertising markets or limit
the ability of industry participants to increase rates for some period of time.
Any such consequence could have a material adverse effect on the Company.
Economic Conditions; Advertising Trends. The Company relies on sales of
advertising space for its revenues and its operating results therefore are
affected by general economic conditions, as well as trends in the advertising
industry. A reduction in advertising expenditures available for the Company's
displays could result from a general decline in economic conditions, a decline
in economic conditions in particular markets where the Company conducts business
or a reallocation of advertising expenditures to other available media by
significant users of the Company's displays. The Company has benefitted from
special events in the past, such as the 1996 Olympic Games in Atlanta. However,
there can be no assurance that the Company will continue to benefit to the same
degree in the future from special events, and results in a particular market,
year or period could be adversely affected by the lack of such special events.
13
<PAGE> 15
Reliance on Key Executives. The Company's success depends to a significant
extent upon the continued services of its executive officers and other key
management and sales personnel, in particular its President and Chief Executive
Officer, Arthur R. Moreno, and its Senior Vice President of Sales, Wally C.
Kelly. Although the Company has designed its incentive and compensation programs
to retain key employees, including options to purchase shares of Common Stock
(certain of which are subject to forfeiture in the event the recipients violate
non-competition clauses included therein), the Company has no employment
contracts with any of its employees, and none of its employees are bound by
non-competition agreements. The unavailability of the continuing services of its
executive officers and other key management and sales personnel could have a
material adverse effect on the Company's business.
Increase in Interest Rates. All of the indebtedness under the Senior
Credit Facility, as expected to be amended, bears interest at variable rates.
While the Company is required by the Senior Credit Facility, as expected to be
amended, to enter into interest rate cap agreements to reduce its exposure to
increases in such interest rates with respect to a minimum of approximately $570
million of indebtedness, such agreements will not apply to the Company's entire
variable rate debt and, therefore, will not entirely eliminate the Company's
exposure to variable rates. Any increase in the interest rates on the Company's
indebtedness will reduce funds available to the Company for its operations and
future business opportunities and will exacerbate the consequences of the
Company's leveraged capital structure. See "Description of Indebtedness and
Other Commitments -- Senior Credit Facility."
Acquisition Strategy. The Company's growth has been facilitated by
strategic acquisitions that have substantially increased the Company's inventory
of advertising display faces, and the Company intends to continue to pursue such
acquisitions. While the Company believes that the outdoor advertising industry
is highly fragmented and that significant acquisition opportunities are
available, there can be no assurance that suitable acquisition candidates can be
found, and the Company is likely to face competition from other outdoor
advertising companies or other parties for acquisition opportunities that are
available. In addition, if the prices sought by sellers of outdoor advertising
displays and companies continue to rise, as management believes may happen, the
Company may find fewer acceptable acquisition opportunities. The Company's
indebtedness will increase as a result of the Pending Acquisitions and debt
covenants may constrain the Company's ability to complete significant
acquisitions in the future. There can be no assurance that the Company will have
sufficient capital resources to complete acquisitions, that acquisitions can be
completed on terms acceptable to the Company, or that any acquisitions that are
completed can be successfully integrated into the Company. The process of
integrating such acquired businesses may involve unforeseen difficulties and may
utilize a significant portion of the Company's financial, managerial and other
resources.
Competition. The Company faces competition for advertising revenues from
other outdoor advertising companies, as well as from other media such as radio,
television, print media and direct mail marketing. The Company also competes
with a wide variety of other "out-of-home" advertising media, the range and
diversity of which has increased substantially over the past several years to
include advertising displays in shopping centers and malls, airports, stadiums,
movie theaters and supermarkets, and on taxis, trains, buses and subways. Some
of the Company's competitors, principally in other media such as radio and
television, are substantially larger, better capitalized and have access to
greater resources than the Company. There can be no assurance that outdoor
advertising media will be able to compete with other types of media, or that the
Company will be able to compete successfully either within the outdoor
advertising industry or with other media.
Regulation of Outdoor Advertising. Outdoor advertising displays are
subject to governmental regulation at the federal, state, provincial and local
levels. These regulations, in some cases, limit the height, size, location and
operation of billboards and, in limited circumstances, regulate the content of
the advertising copy displayed on the billboards. Some governmental regulations
prohibit the construction of new billboards or the replacement, relocation,
enlargement or upgrading of
14
<PAGE> 16
existing structures. Some cities, including Houston, Jacksonville, Kansas City
and St. Louis, have adopted amortization ordinances or regulations under which,
after the expiration of a specified period of time, billboards must be removed
at the owner's expense and without the payment of compensation. Ordinances
requiring the removal of a billboard without compensation, whether through
amortization or otherwise, are being challenged in various state and federal
courts with conflicting results. To date, regulations in the Company's markets
have not materially adversely affected its operations. However, no assurance can
be given as to the effect on the Company of existing laws and regulations or of
new laws and regulations that may be adopted in the future.
In recent years, there have been efforts to restrict billboard advertising
of certain products, including tobacco and alcohol. Congress has passed no
legislation at the federal level except legislation requiring health hazard
warnings similar to those on cigarette packages and print advertisements.
Certain states in which the Company operates have historically prohibited the
outdoor advertising of distilled spirits. In California, transit shelter
advertising posters are maintained on public rights of way, and most of the
contracts prohibit tobacco and/or alcohol advertising. San Francisco has adopted
an ordinance banning all tobacco and alcohol advertising on public property, but
has "grandfathered" Gannett Outdoor's existing contract through 2002. For each
of the past three years, the California legislature has considered proposed
legislation which would ban, or substantially limit, all outdoor advertising of
tobacco. While that legislation has not been passed, the proponents have
publicly stated they will continue to attempt to have such proposals enacted. It
is uncertain whether additional legislation of this type will be enacted at the
national level or in any of the markets in which the Company operates. A
reduction in billboard advertising by the tobacco and alcohol industries would
cause a reduction in the Company's direct revenue from such advertisers. Such a
reduction would increase the available space on the existing inventory of
billboards in the outdoor advertising industry and could result in a lowering of
outdoor advertising rates in markets affected by this type of legislation.
Transit Business. A portion of the business acquired from Gannett Outdoor
(pro forma net revenues of approximately $31.4 million in 1996) consists of
revenues under contracts for the operation of display faces on bus shelters and
in subway stations and subways in the City of New York. Most of these contracts
are subject to termination upon short notice by the applicable governmental
authority, include letter of credit and other requirements obligating the
Company to fund and meet certain minimum payment requirements to the
governmental authority and erect and maintain shelters in the applicable
jurisdiction, and contain other performance obligations which are imposed on the
Company. In addition, upon scheduled termination of such contract, the Company
must meet competitive bidding and other requirements for renewal. There can be
no assurance that these various obligations and conditions will not adversely
affect the Company or that the Company will be awarded renewals in the future.
The subway business in New York historically has generated relatively low
operating margins and there can be no assurance that the Company will be able to
improve the performance of this business.
Environmental Matters. As the owner, lessee or operator of various real
properties and facilities, the Company is subject to various federal, state and
local environmental laws and regulations. To date, compliance with such laws and
regulations has not had a material adverse effect on the historical business of
the Company. However, a number of the properties acquired in the Completed
Acquisitions or to be acquired in the Pending Acquisitions have existing
environmental conditions relating primarily to underground storage tanks for
which the Company has assumed responsibility. In addition, certain sites are
adjacent to Superfund sites and other properties are in the vicinity of other
industrial properties with known contamination. Of the properties adjacent to
Superfund sites, at least one is believed to be contaminated by such site. There
can be no assurance that environmental conditions will not create greater costs
than currently expected or that compliance with existing or new environmental
laws or regulations will not require the Company to make significant
expenditures in the future, all of which could adversely affect the Company.
15
<PAGE> 17
Seasonality. The Company's revenues and operating results have exhibited
some degree of seasonality in past periods. Typically, the Company experiences
its strongest financial performance in the fourth quarter and its lowest
revenues in the first quarter. The Company expects this trend to continue in the
future. Because a significant portion of the Company's expenses are fixed, a
reduction in revenues in any quarter is likely to result in a period-to-period
decline in operating performance and net income.
Control by Executive Officers and Directors. Upon consummation of the
Offering, the Company's executive officers, directors and their respective
affiliates will beneficially own (including for this purpose options exercisable
within 60 days after the date of this Prospectus and shares over which such
persons have voting control) approximately 37.6% of the outstanding shares of
Common Stock. Such persons, if acting together, would have sufficient voting
power to control the outcome of corporate actions submitted to the stockholders
for approval and to control the management and affairs of the Company, including
the election of the Board of Directors of the Company. As a result of such
control, certain transactions may not be possible without the approval of such
stockholders, including proxy contests, mergers involving the Company and tender
offers or other purchases of Common Stock that could give stockholders of the
Company the opportunity to realize a premium over the then-prevailing market
price for their shares of Common Stock. See "Principal and Selling
Stockholders."
Nature of Acquisition Agreements; Limited Recourse to Sellers. The
representations and warranties made by 3M in connection with the 3M Media
Acquisition relating to the assets to be acquired and the associated indemnities
are limited and qualified. The Company's recourse to 3M is extremely limited.
Agreements related to other acquisitions, including the Gannett Outdoor
Acquisition, have been, and agreements for future acquisitions may be, similar
to the 3M Media and Gannett Outdoor acquisition agreements with respect to
representations, warranties and indemnification provisions. Accordingly,
unanticipated events or liabilities related to the Gannett Outdoor and 3M Media
businesses or other businesses acquired or that may be acquired in the future
could materially and adversely affect the Company.
16
<PAGE> 18
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 12,000,000 shares of
Common Stock offered by it hereby are estimated to be approximately $343 million
(or approximately $370 million if the Underwriters' over-allotment option is
exercised in full), after deducting estimated underwriting discounts and
commissions and offering expenses and assuming an offering price of $29.75 per
share (the last reported sale price of the Common Stock on the Nasdaq National
Market on May 1, 1997).
The Company intends to use such proceeds to pay a portion of the purchase
price of the Pending Acquisitions. Until completion of the Pending Acquisitions,
the Company will use such net proceeds to reduce indebtedness outstanding under
the Company's Senior Credit Facility or will invest such proceeds in short-term
interest bearing securities. To the extent the Pending Acquisitions are not
consummated, the Company will use the net proceeds of the Offering for general
corporate purposes which may include repayment of existing indebtedness or other
acquisitions.
If the Notes Offering is consummated, the net proceeds therefrom will be
used to pay a portion of the purchase price of the 3M Media Acquisition or to
repay amounts outstanding under the Subordinated Credit Facility.
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders.
PRICE RANGE OF COMMON STOCK
The Common Stock is quoted on the Nasdaq National Market under the symbol
"OSIA." The following table sets forth, for the periods indicated, the high and
low sales prices for the Common Stock as reported by the Nasdaq National Market.
Prior to April 24, 1996, the day on which the Common Stock was first publicly
traded, there was no public market for the Common Stock.
<TABLE>
<CAPTION>
1996 HIGH LOW
------ ------
<S> <C> <C>
Second Quarter (beginning April 24, 1996)........................ $16.78 $ 9.33
Third Quarter.................................................... $31.50 $15.25
Fourth Quarter................................................... $33.00 $23.00
</TABLE>
<TABLE>
<CAPTION>
1997 HIGH LOW
------ ------
<S> <C> <C>
First Quarter.................................................... $33.88 $21.75
Second Quarter (through May 1, 1997)............................. $33.25 $24.13
</TABLE>
On May 1, 1997, the last reported sale price per share for the Common Stock
on the Nasdaq National Market was $29.75 per share.
DIVIDEND POLICY
The Company has not declared or paid dividends on the Common Stock and does
not anticipate paying dividends in the foreseeable future. The Company intends
to retain any future earnings to repay senior indebtedness or reinvest in the
Company. In addition, the Company's debt instruments place limitations on the
Company's ability to pay dividends or make any other distributions on the Common
Stock. See "Description of Indebtedness and Other Commitments." Any future
determination as to the payment of dividends will be subject to such
prohibitions and limitations, will be at the discretion of the Company's Board
of Directors and will depend on the Company's results of operations, financial
condition, capital requirements and other factors deemed relevant by the Board
of Directors.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company (i) as of December 31, 1996 and (ii) pro forma giving effect as of
December 31, 1996 to the Completed 1997 Acquisitions, the Pending Acquisitions,
the Bank Financing and the Offerings and the application of the estimated net
proceeds therefrom. See "Use of Proceeds" and "Unaudited Consolidated Pro Forma
Financial Information."
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1996
----------------------
ACTUAL PRO FORMA
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt................................. $ 28,000 $ 28,000
-------- --------
Long-term debt:
Senior Credit Facility............................................. 328,348 1,032,024
1996 Notes......................................................... 250,000 250,000
Notes(1)........................................................... -- 300,000
Other.............................................................. 61 61
-------- --------
Total long-term debt............................................ 578,409 1,582,085
-------- --------
Common stockholders' equity:
Common Stock, $0.01 par value...................................... 402 522
Additional paid in capital......................................... 316,988 659,374
Accumulated deficit................................................ (25,275) (32,048)
Treasury stock (at cost) 11,475,554 shares......................... (4,053) (4,053)
Foreign currency translation adjustment............................ 117 117
-------- --------
Total common stockholders' equity(2)............................ 288,179 623,912
-------- --------
Total capitalization....................................... $894,588 $ 2,233,997
======== ========
</TABLE>
- ---------------
(1) Assumes the issuance of $300 million aggregate principal amount of Notes
pursuant to the Notes Offering. If the Notes Offering is not consummated,
$300 million of indebtedness will be incurred under the Subordinated Credit
Facility. See "Description of Indebtedness and Other Commitments -- The
Subordinated Credit Facility."
(2) Excludes 6,391,497 shares of Common Stock issuable upon exercise of options
outstanding at December 31, 1996, of which 4,326,204 were exercisable and
2,065,293 vest ratably over a four-year period, and 248,392 shares of Common
Stock issuable in settlement of Incentive Units outstanding at December 31,
1996.
18
<PAGE> 20
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following unaudited consolidated pro forma statement of operations
combines the historical financial information of the Company and the businesses
acquired and to be acquired in the Acquisitions for the year ended December 31,
1996 giving effect to (i) the Bank Financing, (ii) the net reduction in
operating expenses associated with the Acquisitions and (iii) the Offerings and
the application of the net proceeds therefrom, as if such events had occurred at
the beginning of the period. The unaudited pro forma consolidated balance sheet
as of December 31, 1996 has been prepared as if the Completed 1997 Acquisitions,
the Pending Acquisitions, the Bank Financing and the Offerings and the
application of the net proceeds therefrom had occurred on December 31, 1996.
The detailed assumptions used to prepare the unaudited consolidated pro
forma financial information are contained in the notes to unaudited consolidated
pro forma financial information. The unaudited consolidated pro forma financial
information reflects the use of the purchase method of accounting for the
Acquisitions.
Pro forma adjustments for the Acquisitions are based upon preliminary
estimates, available information and certain assumptions that the management of
the Company deems appropriate. Final adjustments may differ from the pro forma
adjustments presented herein. The unaudited consolidated pro forma financial
information does not purport to represent the results of operations or the
financial position of the Company that actually would have resulted had the
Acquisitions occurred as of the dates indicated, nor should it be taken as
indicative of the future results of the operations or future financial position
of the Company. The unaudited consolidated pro forma financial information
should be read in conjunction with the notes to unaudited consolidated pro forma
financial information and the separate historical financial statements and notes
thereto of the Company and 3M Media which are contained elsewhere herein.
19
<PAGE> 21
OUTDOOR SYSTEMS, INC.
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------ PRO FORMA
PENDING ------------------------------------------------
------------------------- COMPLETED PENDING
3M MEDIA VAN WAGNER 1997 ACQUISITIONS TOTAL
COMPANY ACQUISITION ACQUISITION ACQUISITIONS ADJUSTMENTS PRO FORMA
-------- ------------ ---------- ----------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS.......................... $ 97,174 $ 48,245 $ 9,133 $ (15,439)(1) $ 19,291(2) $ 158,404
PROPERTY AND EQUIPMENT -- Net........... 742,144 127,362 8,028 127,815(1) 676,529(2) 1,681,878
INTANGIBLE ASSETS -- Net................ 59,831 -- 12,852 1,300(1) 320,000(2) 393,983
DEFERRED FINANCING COSTS................ 24,151 -- -- -- 30,138(2) 43,001
(11,288)(3)
OTHER ASSETS............................ 10,155 2,085 14,189 -- (1,082)(2) 29,862
4,515(3)
-------- -------- ------- ---------- ---------- --------
TOTAL................................... $933,455 $177,692 $ 44,202 $ 113,676 $1,038,103 $2,307,128
======== ======== ======= ========== ========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES..................... $ 61,032 $ 22,201 $ 10,745 $ -- $ (4,182)(2) $ 95,296
5,500(2)
-------- -------- ------- ---------- ---------- --------
LONG-TERM DEBT:
Senior Credit Facility................ 328,348 -- -- 113,676(1) 590,000(2) 1,032,024
1996 Notes............................ 250,000 -- -- -- 250,000
Notes................................. -- -- -- -- 300,000(2) 300,000
Other................................. 61 -- 41,565 -- (41,565)(2) 61
-------- -------- ------- ---------- ---------- --------
Total long-term debt................ 578,409 -- 41,565 113,676 848,435 1,582,085
-------- -------- ------- ---------- ---------- --------
OTHER LONG-TERM LIABILITIES............. 3,552 -- 1,717 -- (1,717)(2) 3,552
-------- -------- ------- ---------- ---------- --------
DEFERRED INCOME TAXES................... 2,283 9,763 110 -- (9,873)(2) 2,283
-------- -------- ------- ---------- ---------- --------
Total liabilities................... 645,276 31,964 54,137 113,676 838,163 1,683,216
-------- -------- ------- ---------- ---------- --------
NET ASSETS (LIABILITIES) TO BE
ACQUIRED.............................. -- 145,728 (9,935) -- (135,793)(2) --
-------- -------- ------- ---------- ---------- --------
COMMON STOCKHOLDERS' EQUITY:
Common stock.......................... 402 -- -- -- 120(2) 522
Additional paid-in capital............ 316,988 -- -- -- 342,386(2) 659,374
Accumulated deficit................... (25,275) -- -- -- (6,773)(3) (32,048)
Treasury stock at cost................ (4,053) -- -- -- (4,053)
Foreign currency translation
adjustment.......................... 117 -- -- -- 117
-------- -------- ------- ---------- ---------- --------
Total common stockholders' equity... 288,179 -- -- -- 335,733 623,912
-------- -------- ------- ---------- ---------- --------
TOTAL................................... $933,455 $177,692 $ 44,202 $ 113,676 $1,038,103 $2,307,128
======== ======== ======= ========== ========== ========
</TABLE>
20
<PAGE> 22
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma financial position of
the Company after giving effect to the Completed 1997 Acquisitions, the Pending
Acquisitions, the Bank Financing and the Offerings.
<TABLE>
<CAPTION>
DEBIT
(CREDIT)
---------
<S> <C> <C>
1. Entry records the increase in assets and debt for the Completed 1997
Acquisitions:
Current assets............................................................... $ (15,439)
Property and equipment....................................................... 127,815
Intangible assets............................................................ 1,300
Senior Credit Facility....................................................... (113,676)
$ 0
2. Entry records the Pending Acquisitions, Bank Financing and the Offerings:
Sale of 12,000,000 shares of Common Stock at $29.75 per share:
Common Stock................................................................. $ (120)
Additional paid in capital................................................... (342,386)
Increase debt as follows:
Senior Credit Facility....................................................... (590,000)
Notes........................................................................ (300,000)
Elimination of historical net assets (liabilities) of Pending Acquisitions... 135,793
Change in assets and liabilities resulting from allocation of purchase price:
Intangibles.................................................................. 320,000
Property and equipment....................................................... 676,529
Increase in deferred financing costs......................................... 30,138
Increase in current assets................................................... 19,291
Accrual for estimated severance costs related to the Pending Acquisitions.... (5,500)
Deferred income taxes........................................................ 9,873
Assumption of long-term debt by Van Wagner selling shareholders.............. 41,565
Assumption of current portion of long-term debt by Van Wagner selling
shareholders............................................................... 4,182
Assumption of liabilities by Van Wagner selling shareholders................. 1,717
Joint venture assets retained by Van Wagner selling shareholders............. (1,082)
$ 0
3. Entry records the write-off of bridge commitment fees and related tax effect:
Write-off of deferred financing fees........................................... $(11,288)
Tax effect at a blended rate of 40%............................................ 4,515
Increase in accumulated deficit................................................ 6,773
$ 0
</TABLE>
21
<PAGE> 23
OUTDOOR SYSTEMS, INC.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPLETED ACQUISITIONS
--------------------------------- PENDING ACQUISITIONS
GANNETT -------------------------
OUTDOOR OTHER 3M MEDIA VAN WAGNER
COMPANY ACQUISITION(1) TRANSACTIONS(2) ACQUISITION ACQUISITION
----------- -------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Outdoor advertising -- net............. $ 167,047 $156,896 $23,447 $ 211,310 $29,894
Other income........................... 6,069 201 5,893 -- 652
----------- -------- ------- -------- -------
Net revenues..................... 173,116 157,097 29,340 211,310 30,546
----------- -------- ------- -------- -------
OPERATING EXPENSES:
Direct advertising..................... 87,593 106,205 12,174 139,223 18,012
General and administrative............. 13,458 22,126 6,942 12,427 4,502
Depreciation and amortization.......... 22,384 11,369 814 15,382 2,541
----------- -------- ------- -------- -------
Total operating expenses......... 123,435 139,700 19,930 167,032 25,055
----------- -------- ------- -------- -------
GAIN ON DENVER DISPOSITION.............. 7,344 -- -- -- --
----------- -------- ------- -------- -------
OPERATING INCOME........................ 57,025 17,397 9,410 44,278 5,491
INTEREST EXPENSE (INCOME)............... 32,489 -- 363 (2,059) 2,792
----------- -------- ------- -------- -------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS..................... 24,536 17,397 9,047 46,337 2,699
INCOME TAXES (BENEFIT).................. 10,200 -- -- -- --
----------- -------- ------- -------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY
LOSS................................... 14,336 17,397 9,047 46,337 2,699
EXTRAORDINARY LOSS...................... (17,780) -- -- -- --
----------- -------- ------- -------- -------
NET (LOSS) INCOME....................... (3,444) 17,397 9,047 46,337 2,699
LESS STOCK DIVIDENDS, ACCRETIONS AND
DISCOUNT ON REDEMPTIONS................ 3,461 -- -- -- --
----------- -------- ------- -------- -------
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS........................... $ (6,905) $ 17,397 $ 9,047 $ 46,337 $ 2,699
=========== ======== ======= ======== =======
NET (LOSS) INCOME PER COMMON AND
EQUIVALENT SHARE:
Income (loss) before extraordinary
loss................................. $ 0.31
Extraordinary loss..................... (0.50)
-----------
NET (LOSS) INCOME PER COMMON SHARE...... $ (0.19)
===========
WEIGHTED AVERAGE NUMBER OF SHARES....... 35,263,336
===========
<CAPTION>
SUPPLEMENTAL ADJUSTMENTS
PURCHASE ----------------------------
ACCOUNTING COMPLETED PENDING PRO
ADJUSTMENTS TOTAL ACQUISITIONS ACQUISITIONS FORMA
----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Outdoor advertising -- net............. $ 588,594 $ 588,594
Other income........................... 12,815 12,815
----------- -----------
Net revenues..................... 601,409 601,409
----------- -----------
OPERATING EXPENSES:
Direct advertising..................... 363,207 $(14,114)(6) $(23,182)(6) 325,911
General and administrative............. 59,455 (13,608)(6) (27,093)(6) 18,754
Depreciation and amortization.......... $ 58,863(3) 111,353 111,353
---------- ----------- --------- --------- -----------
Total operating expenses......... 58,863 534,015 (27,722) (50,275) 456,018
---------- ----------- --------- --------- -----------
GAIN ON DENVER DISPOSITION.............. 7,344 7,344
---------- ----------- --------- --------- -----------
OPERATING INCOME........................ (58,863) 74,738 27,722 50,275 152,735
INTEREST EXPENSE (INCOME)............... 112,887(4) 146,472 146,472
---------- ----------- --------- --------- -----------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS..................... (171,750) (71,734) 27,722 50,275 6,263
INCOME TAXES (BENEFIT).................. (38,508)(5) (28,308) 11,089(7) 20,110(7) 2,891
---------- ----------- --------- --------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY
LOSS................................... (133,242) (43,426) 16,633 30,165 3,372
EXTRAORDINARY LOSS...................... (17,780) (17,780)
---------- ----------- --------- --------- -----------
NET (LOSS) INCOME....................... (133,242) (61,206) 16,633 30,165 (14,408)
LESS STOCK DIVIDENDS, ACCRETIONS AND
DISCOUNT ON REDEMPTIONS................ 3,461 3,461
---------- ----------- --------- --------- -----------
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS........................... $(133,242) $ (64,667) $ 16,633 $ 30,165 $ (17,869)
========== =========== ========= ========= ===========
NET (LOSS) INCOME PER COMMON AND
EQUIVALENT SHARE:
Income (loss) before extraordinary
loss................................. $ (0.99) $ --
Extraordinary loss..................... (0.38) (0.38)
----------- -----------
NET (LOSS) INCOME PER COMMON SHARE...... $ (1.37) $ (0.38)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES....... 47,332,302 47,332,302
=========== ===========
</TABLE>
22
<PAGE> 24
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma results of operations
of the Company for the year ended December 31, 1996.
<TABLE>
<S> <C> <C>
(1) Represents the operations of Gannett Outdoor excluding the
Houston Acquisition, for the period from January 1, 1996
through August 23, 1996.
(2) Represents 1996 revenues and expenses associated with the
CSX Assets Acquisition and the Houston Acquisition prior
to the respective dates of their acquisition and the 1996
historical results of the Completed 1997 Acquisitions less
revenues and expenses associated with assets sold in the
Denver Disposition.
(3) Entry records the increase in depreciation and
amortization expense arising from purchase accounting
adjustments as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITIONS
AMORTIZATION -------------------
ASSETS PERIOD COMPLETED PENDING TOTAL
-------------------------------------------- ------------ --------- ------- -------
<S> <C> <C> <C> <C> <C>
Advertising structures...................... 20 years $31,796 $45,194 $76,990
Goodwill.................................... 30 years 1,312 10,667 11,979
------- ------- -------
Total..................................................... 33,108 55,861 88,969
Amount recorded in financial statements................... 12,183 17,923 30,106
------- ------- -------
Pro forma adjustment...................................... $20,925 $37,938 $58,863
======= ======= =======
(4) Entry records interest expense and amortization of
deferred financing fees on the debt issued in connection
with the Acquisitions less interest on the debt redeemed
in 1996, as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITIONS
-------------------
COMPLETED PENDING TOTAL
--------- ------- --------
<S> <C> <C> <C> <C>
Interest expense:
$ 27,723 $48,970 $ 76,693
Senior Credit Facility..................................
14,063 -- 14,063
1996 Notes..............................................
-- 28,500 28,500
Notes...................................................
(7,823) -- (7,823)
Less interest on the debt redeemed in 1996.........
-- (1,250) (1,250)
Interest income on excess cash.....................
-- (2,792) (2,792)
Less interest on Van Wagner debt assumed by selling
shareholders.....................................
2,817 2,679 5,496
Amortization of deferred financing costs...........
--------- ------- --------
$ 36,780 $76,107 $112,887
Total interest expense..................................
========= ======== =========
</TABLE>
23
<PAGE> 25
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA
STATEMENTS OF OPERATIONS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACQUISITIONS
--------------------
COMPLETED PENDING TOTAL
--------- -------- --------
<S> <C> <C> <C> <C>
(5) Entry records the income tax effect on the income of
the Acquisitions and purchase adjustments at a blended
rate
of 40%................................................. $(12,504) $(26,004) $(38,508)
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
ACQUISITIONS
-------------------
COMPLETED PENDING
--------- -------
<S> <C> <C> <C> <C>
(6) Entry records a) a decrease in payroll and payroll
related costs in direct advertising and general and
administrative expense categories due to termination of
employees in the following functions; and b) the
elimination of general corporate alloca-tions not
considered attributable to operations sold, as follows:
Direct Advertising:
Elimination of production and sales
overhead functions................................. $13,073 $19,182
Consolidation of Canadian production facility......... 1,041
Elimination of general corporate overhead
allocation......................................... -- 4,000
--------- -------
Total direct advertising........................... 14,114 23,182
--------- -------
General and Administrative:
Elimination of administrative support................. 6,377 7,245
Elimination of national office function, accounting
and administrative personnel....................... 7,231 16,748
Elimination of corporate facility rent allocations.... -- 3,100
--------- -------
Total general and administrative................... 13,608 27,093
--------- -------
Total......................................... $27,722 $50,275
========= ========
(7) Entry records the income tax effect of pro forma
adjustments at a blended rate of 40%.................... $11,089 $20,110
========= ========
</TABLE>
24
<PAGE> 26
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial data presented below were derived from
the audited consolidated financial statements of the Company for the five years
ended December 31, 1996. The financial statements of the Company for the three
years in the period ended December 31, 1996 and as of December 31, 1995 and 1996
were audited by Deloitte & Touche LLP, independent auditors, as indicated in
their report included elsewhere in this Prospectus. The data set forth below
should be read in
conjunction with "Management's Discussion and Analysis of Results of Operations
and Financial Condition" and the consolidated financial statements, including
the Notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Net revenues(2)....................... $ 44,886 $ 49,151 $ 52,077 $ 64,813 $173,116
Operating expenses:
Direct advertising.................. 21,781 23,721 24,433 30,462 87,593
General and administrative.......... 2,238 2,777 3,357 4,096 13,458
Depreciation and amortization....... 12,350 10,421 9,165 9,970 22,384
Gain on 1994 disposal and the Denver
Disposition......................... -- -- 4,325 -- 7,344
Operating income...................... 8,517 12,232 19,447 20,285 57,025
Interest expense...................... 9,526 11,894 16,393 17,199 32,489
Income (loss) before extraordinary
loss and change in accounting
principle(3)........................ (955) 111 1,333 2,768 14,336
Net income (loss)(3).................. 5,775 (3,176) 1,333 2,768 (3,444)
Net income (loss) attributable to
common stockholders................. 1,937 (5,748) (263) 307 (6,905)
Net income (loss) per common
share(3)............................ $ 0.07 $ (0.26) $ (0.01) $ 0.01 $ (0.19)
Shares used in computing per share
computations(4)..................... 28,267,380 22,228,834 21,096,379 25,424,078 35,263,336
OTHER DATA:
EBITDA(5)............................. $ 20,867 $ 22,653 $ 24,287 $ 30,255 $ 72,065
EBITDA margin(6)...................... 46.5% 46.1% 46.6% 46.7% 41.6%
After-tax cash flow(7)................ $ 11,041 $ 10,532 $ 7,497 $ 12,829 $ 39,286
Capital expenditures.................. $ 5,382 $ 4,387 $ 4,924 $ 7,070 $ 9,046
Number of advertising displays........ 10,700 10,800 11,900 12,700 61,600(8)
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....................... $ 5,218 $ 13,967 $ 15,022 $ 8,221 $ 36,142
Total assets.......................... 129,651 129,433 151,260 138,213 933,455
Total debt............................ 109,283 129,812 155,204 142,269 606,409
Common stockholders' equity
(deficiency)........................ (23,769) (28,811) (29,074) (28,767) 288,179
</TABLE>
25
<PAGE> 27
NOTES TO SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(1) During 1996, the Company completed certain acquisitions, including the
Gannett Outdoor Acquisition on August 22, 1996. See "Prospectus
Summary --Recent Developments." In addition, in 1993 and 1994 the Company
completed certain acquisitions and dispositions. Accordingly, operating
results are not necessarily comparable on a year-to-year basis.
(2) Net revenues are gross revenues minus agency commissions, plus other income
of $1.0 million, $0.4 million and $6.1 million for the years ended December
31, 1994, 1995 and 1996, respectively.
(3) Deferred financing costs of $3.3 million and $17.8 million associated with
borrowings which were retired or redeemed were charged as an extraordinary
loss during 1993 and 1996, respectively. As of January 1, 1992, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 109
Accounting for Income Taxes. SFAS No. 109 allows the income tax consequences
resulting from the utilization of net operating loss carry forwards to be
recorded as a deferred asset. The cumulative effect of this change in
accounting principle was a one-time credit to income of $6.7 million in the
first quarter of 1992.
(4) Weighted average share amounts have been adjusted to reflect the
three-for-two Common Stock splits effected in the form of stock dividends
paid on each of July 22, 1996 and November 22, 1996.
(5) "EBITDA" is defined as operating income before depreciation and amortization
expense and, in 1994 and 1996, before the gain on the 1994 disposal and the
Denver Disposition, respectively. While EBITDA should not be considered in
isolation or as a substitute for net income, cash flows from operating
activities and other income or cash flow statement data prepared in
accordance with generally accepted accounting principles, or as a measure of
profitability or liquidity, management understands that it is customarily
used by certain investors as one measure to evaluate the financial
performance of companies in the outdoor advertising industry.
(6) "EBITDA margin" is EBITDA stated as a percentage of net revenues.
(7) Defined as income (loss) before extraordinary loss and change in accounting
principle plus depreciation and amortization expense, and deferred tax
expense and excludes the gain on the 1994 disposal and the Denver
Disposition. After-tax cash flow is presented here not as a measure of
operating results and does not purport to represent cash provided by
operating activities. After-tax cash flow should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles such as net income
and cash provided by operating activities.
(8) Does not include approximately 125,000 subway advertising display faces in
New York City and does not give effect to the Completed 1997 Acquisitions
and the Pending Acquisitions.
26
<PAGE> 28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
CERTAIN EFFECTS OF THE GANNETT OUTDOOR ACQUISITION
On August 22, 1996, the Company purchased substantially all of the assets
of Gannett Outdoor, including the stock of certain indirect subsidiaries of
Gannett, for approximately $700.0 million in cash. The Company acquired from
Gannett a total of approximately 40,000 advertising display faces consisting of
bulletins, posters and transit advertising display faces in 15 metropolitan
markets in the United States and seven metropolitan markets in Canada and
approximately 125,000 subway advertising display faces in New York City.
Upon consummation of the Gannett Outdoor Acquisition, the Company
immediately began implementing its cost savings and integration strategy, which
included the consolidation of certain administrative, sales management and
leasing management functions. This strategy has resulted in the reduction and
consolidation of duplicative functions in: (i) production and sales overhead;
(ii) production and administrative support; (iii) national sales and marketing
support; and (iv) accounting and administrative areas. In addition, the Company
has eliminated certain duplicative operations by closing a billboard production
facility in Canada, consolidating sales offices in Toronto and closing Gannett
Outdoor's corporate office.
The Company had estimated that these measures would result in annual cost
savings of approximately $33.0 million. Based upon the results of the Company's
consolidation and cost savings efforts to date, the Company believes that annual
cost savings will exceed the original estimate. The Company also believes that
it has increased revenues generated by the Gannett Outdoor assets primarily
through changing the sales compensation system from one that was predominantly
salary-based to one that is commission-based. The Company has also increased
revenues through streamlining the sales approval process and improving
utilization of the Gannett Outdoor billboard inventory. The Company believes
that opportunities still exist to improve the operations of Gannett Outdoor.
While management believes that additional cost savings and revenue
increases are achievable, the Company's ability to achieve such cost savings and
revenue increases is uncertain and subject to numerous factors, many of which
are beyond the Company's control. There can be no assurance that the Company
will realize such additional cost savings and revenue increases or that the
realization of such cost savings and revenue increases will not be delayed over
an extended period of time. See "Risk Factors -- Acquisition Strategy".
CERTAIN EFFECTS OF THE PENDING ACQUISITIONS
3M Media Acquisition. On April 30, 1997, the Company entered into the 3M
Media Purchase Agreement pursuant to which it agreed to purchase 3M Media for
approximately $1.0 billion in cash. In the 3M Media Acquisition, the Company
will acquire from 3M a total of approximately 31,700 advertising display faces
consisting of 22,600 bulletins, 2,400 posters and 6,700 mall advertising display
faces in 56 metropolitan markets and non-metropolitan locations in the United
States.
The operations of 3M Media will be integrated into the Company principally
as an acquisition of advertising display inventory in locations that can be
administered from existing Company offices. Accordingly, the Company believes
that the consolidation of certain functions will result in certain cost savings,
including the elimination of duplicative administrative, sales and production
overhead positions in the 3M Media corporate headquarters and in operating
locations. In addition to these cost savings, the Company believes that it may
be able to achieve additional cost savings arising from reductions in facility
costs through renegotiated rents or reduced space, the reduction of expenses
associated with a reduced work force, and other reductions in administrative
expenses associated with the integration of the combined businesses.
27
<PAGE> 29
Van Wagner Acquisition. On April 11, 1997, the Company entered into the Van
Wagner Stock Purchase Agreement pursuant to which it will purchase all of the
capital stock of Van Wagner for approximately $170 million in cash. The Van
Wagner operations include approximately 50 "Spectacular" signs in Times Square,
105 bulletins and 172 posters and eight wall murals in New York City, 372
bulletins and 16 wall murals in Los Angeles, four bulletins in San Francisco,
and additional transit displays and transit management agreements in New York,
Los Angeles, Northern California and Las Vegas. The Van Wagner operations will
be integrated as an acquisition of advertising display inventory. The Company
will eliminate certain duplicative administrative, sales and production
functions in connection with the integration of the Van Wagner operations with
those of the Company.
Certain Cost Savings. The Company believes that had the cost savings
associated with the 3M Media and Van Wagner Acquisitions been implemented as of
January 1, 1996 such annual savings would have been approximately $50.3 million
in aggregate as detailed below.
<TABLE>
<CAPTION>
VAN
3M MEDIA WAGNER TOTAL
-------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Elimination of production and sales overhead functions........... $14,460 $4,722 $19,182
Elimination of general corporate overhead allocation............. 4,000 -- 4,000
Elimination of administrative support............................ 3,377 3,868 7,245
Elimination of national office function, accounting and
administrative personnel....................................... 16,748 -- 16,748
Elimination of corporate facility rent allocations............... 3,100 -- 3,100
-------- -------- --------
$41,685 $8,590 $50,275
======== ======== ========
</TABLE>
Certain Costs Associated with the Pending Acquisitions. The Company will
incur significant additional costs as a result of the Pending Acquisitions. The
financing of the Pending Acquisitions will significantly increase the Company's
interest expense, adding approximately $890 million to the Company's total
indebtedness assuming completion of the Offerings. Depreciation and amortization
expense will also increase significantly. The Company will record goodwill and
other intangible assets of approximately $320 million in connection with the
Pending Acquisitions, which will be amortized over a period of 30 years. In
addition, the cost basis of advertising display inventory to be acquired by the
Company in the Pending Acquisitions will increase by approximately $667 million
which will be amortized over 20 years.
28
<PAGE> 30
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $8.2 million at December 31, 1995 and
$36.1 million at December 31, 1996. The increase in working capital resulted
primarily from working capital acquired in the Gannett Outdoor Acquisition,
offset by an increase in accrued interest and current maturities relating to new
debt associated with the Gannett Outdoor Acquisition.
Net cash provided by operating activities increased by $29.6 million from
$18.6 million during 1995 to $48.2 million during 1996, primarily due to
increased net revenues resulting from the Gannett Outdoor Acquisition. Net cash
used in investing activities increased from $6.3 million in 1995 to $754.1
million in 1996, primarily due to the Gannett Outdoor Acquisition, partially
offset by proceeds from the Denver Disposition in 1996. Net cash used in
financing activities was $14.2 million in 1995 compared to net cash provided by
financing activities of $716.0 million in 1996, primarily due to borrowings
under the Senior Credit Facility used to finance the Gannett Outdoor
Acquisition, and net proceeds from the initial public offering ("IPO") of Common
Stock in April 1996, an offering of Common Stock in August 1996 (the "1996
Common Stock Offering") and the offering of the 1996 Notes in October 1996 (the
"1996 Notes Offering").
The Company made approximately $9.0 million of capital expenditures during
1996, an increase from approximately $7.1 million during 1995. Currently, the
Company has no material commitments for capital expenditures, although it
anticipates ongoing capital expenditures in the ordinary course of business,
other than for acquisitions, will be approximately $26.0 million to $30.0
million in each of the next two years.
The Company completed the IPO on April 24, 1996, resulting in net proceeds
to the Company of $36.6 million. The Company completed the 1996 Common Stock
Offering on August 22, 1996, resulting in net proceeds to the Company of $283.2
million. In addition, on August 22, 1996, the Company increased the revolving
credit facility and term loans under its Senior Credit Facility up to $530.0
million and incurred bridge loans of $180.0 million under a subordinated credit
facility. The proceeds from these financing activities were used to purchase
substantially all the assets of Gannett Outdoor, to pay the related fees and
expenses and to redeem the $115.0 million 1993 Notes.
In October 1996, the Company completed the 1996 Notes Offering. The net
proceeds from the 1996 Notes Offering of approximately $241.8 million were used
to repay the bridge loan under the subordinated credit facility and to repay a
portion of the term loans under the Senior Credit Facility.
The Company has received a written commitment from Canadian Imperial Bank
of Commerce ("CIBC") to increase the amounts that may be borrowed under the US
portion of its Senior Credit Facility to up to $325 million of revolving credit
loans and up to $715 million in term loans. See "Description of Indebtedness and
Other Commitments -- Senior Credit Facility" and " -- Amendment to the Senior
Credit Facility." The Company believes that the net proceeds of the Offerings,
available borrowings under the Senior Credit Facility as expected to be amended
and internally generated funds will be sufficient to fund the purchase price of
the Pending Acquisitions, allow the Company to make required interest and
principal payments under the Senior Credit Facility, as expected to be amended,
and interest payments on the Notes and the 1996 Notes and to satisfy its
operating cash requirements for at least the next twelve to twenty-four months.
The Company may, however, require additional capital to consummate significant
acquisitions in the future and there can be no assurance that such capital will
be available. After giving effect to the Offerings and the application of the
net proceeds therefrom and the consummation of the Pending Acquisitions, the
Company will have approximately $755.0 million and cdn$48.0 of term loans
outstanding under the Senior Credit Facility, as expected to be amended. The
term loans will require mandatory amortization payments of $60.4 million and
cdn$4.8 million in 1998 and $70.4 million and cdn$7.2 million in 1999. In
addition, the Company will have $258.8 million and cdn$28.3 million of
borrowings outstanding under the revolving credit portion of the Senior Credit
Facility. The revolving credit portion of the Senior Credit Facility, as
expected to be amended, will permit the Company to borrow
29
<PAGE> 31
up to $325.0 million and cdn$35.0 million (approximately $25.0 million based on
current exchange rates).
The Company has also obtained a written commitment from CIBC, Inc. for up
to $300 million principal amount of Bridge Loans. In the event that the Notes
Offering is not consummated prior to or concurrently with the closing of the 3M
Media Acquisition, the Company will fund a portion of the purchase price of the
3M Media Acquisition with Bridge Loans under the Subordinated Credit Facility.
See "Description of Indebtedness and Other Commitments -- The Subordinated
Credit Facility.
30
<PAGE> 32
PRINCIPAL AND SELLING STOCKHOLDERS
The table below sets forth the number and percentage of outstanding shares
of Common Stock beneficially owned by (i) each person known by the Company to
own beneficially more than 5% of the outstanding shares of Common Stock, (ii)
each of the Selling Stockholders, (iii) each director of the Company, (iv) each
executive officer of the Company, and (v) all directors and executive officers
of the Company as a group. The Company believes that each individual or entity
named has sole investment and voting power with respect to shares of Common
Stock indicated as beneficially owned by such stockholder, except as otherwise
noted.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF COMMON STOCK OF COMMON STOCK
PRIOR TO THE OFFERING AFTER THE OFFERING++
------------------------ ------------------------
NUMBER PERCENT SHARES NUMBER OF PERCENT
NAME OF BENEFICIAL OWNER OF SHARES OF CLASS BEING OFFERED SHARES OF CLASS
- ---------------------------- ---------- --------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
William S. Levine........... 14,814,240(1) 36.9% 300,000 14,414,240 27.6%
1702 E. Highland, Suite
310
Phoenix, Arizona 85016
Arthur R. Moreno............ 12,131,487(2) 27.4 300,000 11,731,487 20.8
2502 N. Black Canyon
Highway
Phoenix, Arizona 85009
Stephen J. Haberkorn........ 5,511,615(3) 13.7 100,000 5,411,615 10.4
1702 E. Highland, Suite
310
Phoenix, Arizona 85016
Putnam Investments, Inc..... 4,007,831(4) 10.0 4,007,831 7.7
One Post Office Square
Boston, Massachusetts
02109
Wally C. Kelly.............. 462,012(5) 1.2 462,012 *
Bill M. Beverage............ 42,188(6) * 42,188 *
Robert M. Reade............. 28,125(7) * 28,125 *
Stephen F. Butterfield...... 49,500(8) * 49,500 *
Brian J. O'Connor........... 15,750(9) * 15,750 *
All directors and executive
officers as a group (7
persons).................. 22,031,687(10) 49.2% 21,331,687 37.6%
</TABLE>
- ---------------
++ Assumes no exercise of the Underwriters' over-allotment option.
* Represents less than 1% of the number of outstanding shares of Common Stock.
(1) Includes 5,511,615 (5,411,615 shares after the Offering) shares of Common
Stock owned by M-K Link Investments Limited Partnership ("M-K Link") over
which Mr. Levine shares voting control with Mr. Moreno and over which
Messrs. Levine and Moreno have certain rights of first refusal with respect
to certain private sales. Of those 5,511,615 (5,411,615 shares after the
Offering) shares, 301,507 shares are subject to an option granted to Mr.
Levine (now held by Levine Investments Limited Partnership, Mr. Levine's
family partnership) and 1,993,418 shares are subject to an option granted to
Mr. Moreno (see Note 2 below). Mr. Levine disclaims beneficial ownership of
the shares owned by M-K Link except to the extent of the 301,507 shares
subject to the option granted to Mr. Levine. The option for the 301,507
shares of Common Stock of M-K Link and the remaining 9,302,625 (9,002,625
shares after the Offering) shares of Common Stock attributed to Mr. Levine
are owned by Levine Investments Limited Partnership, 1702 E. Highland, Suite
310, Phoenix, Arizona 85016. Mr. Levine is the sole general partner of
Levine Investments Limited Partnership; Mr. Levine, his wife and children
are the limited partners. Mr. Levine disclaims beneficial ownership of such
shares and option except in his capacity as general partner and to the
extent of his partnership interest therein.
31
<PAGE> 33
(2) Includes 5,511,615 (5,411,615 shares after this Offering) shares of Common
Stock owned by M-K Link over which Mr. Moreno shares voting control with Mr.
Levine and over which Messrs. Levine and Moreno have certain rights of first
refusal with respect to certain private sales. Of those 5,511,615 (5,411,615
shares after the Offering) shares, 1,993,418 shares are subject to an option
granted to Mr. Moreno and 301,507 shares are subject to an option granted to
Mr. Levine now held by Mr. Levine's family partnership (see Note 1 above).
Mr. Moreno disclaims beneficial ownership of the shares owned by M-K Link
except to the extent of the 1,993,418 shares subject to the option granted
to Mr. Moreno. Also includes (i) 4,120,139 shares of Common Stock that may
be purchased by Mr. Moreno pursuant to options granted by the Company that
are currently exercisable to Prospectus; (ii) 1,278,617 (978,617 shares
after the Offering) shares of Common Stock held by Mr. Moreno and his wife,
as joint tenants; and (iii) 1,221,116 shares held by BRN Properties Limited
Partnership, an Arizona limited partnership of which Mr. Moreno is the sole
general partner.
(3) Represents shares of Common Stock held by M-K Link, 1702 E. Highland, Suite
310, Phoenix, Arizona 85016, an Arizona limited partnership of which Mr.
Haberkorn is the sole general partner. Of the shares indicated, 2,294,925
are subject to options held by Levine Investments Limited Partnership and
Mr. Moreno. Mr. Haberkorn disclaims beneficial ownership of shares owned by
M-K Link, except in his capacity as general partner and to the extent of his
partnership interest therein, and both he and M-K Link disclaim beneficial
ownership of shares subject to options in favor of Levine Investments
Limited Partnership and Mr. Moreno. Messrs. Levine and Moreno hold certain
voting and rights of refusal power as to shares owned by M-K Link. See Notes
1 and 2 above.
(4) Based on Schedule 13G, as amended, filed by the indicated person with the
Securities and Exchange Commission reporting beneficial ownership as of
December 31, 1996. Each of Putnam Investment Management, Inc. and the Putnam
Advisory Company, Inc., wholly-owned registered investment advisors of
Putnam Investments, Inc. having the same address, also filed a Schedule 13G
with the Commission which, as amended, reports beneficial ownership of
3,757,910 shares and 249,921 shares, respectively, as of December 31, 1996.
(5) Represents options to purchase shares of Common Stock from the Company that
are currently exercisable. Does not include any shares of Common Stock that
Mr. Kelly may receive in settlement of Incentive Units.
(6) Represents shares of Common Stock subject to options that are currently
exercisable. Does not include any shares of Common Stock that Mr. Beverage
may receive in settlement of Incentive Units.
(7) Represents shares of Common Stock subject to options that are currently
exercisable. Does not include any shares of Common Stock that Mr. Reade may
receive in settlement of Incentive Units.
(8) Includes (i) 2,250 shares of Common Stock owned by Mr. Butterfield's
children, and (ii) 2,250 shares of Common Stock subject to options that are
currently exercisable.
(9) Includes 4,500 shares of Common Stock subject to options that are currently
exercisable.
(10) Includes (i) 301,507 and 1,993,418 shares of Common Stock that may be
acquired by Levine Investments Limited Partnership and Mr. Moreno,
respectively, upon the exercise of options held by them to purchase shares
held by them to purchase shares held by M-K Link (see Notes 1 and 2 above),
and (ii) 4,659,214 shares of Common Stock that may be acquired upon the
exercise of options granted by the Company which are currently exercisable.
Does not include shares of Common Stock that may be issued in settlement of
Incentive Units.
32
<PAGE> 34
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the Company's authorized capital stock
consists of 60,000,000 shares of Common Stock, $.01 par value per share, and
12,000,000 shares of preferred stock, $1.00 par value each ("Preferred Stock"),
the terms and provisions of which may be designated by the Board of Directors in
the future. The following summary of the Company's capital stock is qualified in
its entirety by reference to the Company's Third Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") and Amended
and Restated Bylaws (the "By-laws"), each of which was filed as an exhibit to
the registration statement of which this Prospectus is a part.
COMMON STOCK
The Company is authorized to issue 60,000,000 shares of Common Stock, $0.01
par value per share. Following the Offering, 52,155,631 shares of Common Stock
will be issued and outstanding (assuming no exercise of the Underwriters'
over-allotment option). See "Capitalization." Holders of Common Stock are
entitled to one vote per share on all matters on which the holders of Common
Stock are entitled to vote. Because holders of Common Stock do not have
cumulative voting rights and the Company has a classified Board of Directors,
the holders of a majority of the shares of Common Stock voting for the election
of directors can elect all of the members of the Board of Directors standing for
election at any particular meeting. The Common Stock is not redeemable and has
no conversion or preemptive rights. All of the outstanding shares of Common
Stock are, and all of the shares of Common Stock sold in the Offering will be,
when issued and paid for, fully paid and nonassessable. In the event of the
liquidation or dissolution of the Company, subject to the rights of the holders
of any outstanding shares of Preferred Stock, the holders of Common Stock are
entitled to share pro rata in any balance of the corporate assets available for
distribution to them. The Company may pay dividends if, when and as declared by
the Board of Directors from funds legally available therefor, subject to the
dividend provisions of any outstanding shares of Preferred Stock and
restrictions set forth in the Company's debt instruments. See "Dividend Policy."
PREFERRED STOCK
Holders of shares of Preferred Stock have no preemptive rights or
cumulative voting rights. In addition to specific prohibitions set forth in the
Certificate of Incorporation, under Delaware law holders of preferred stock are
entitled to vote as a class upon any proposed amendment, whether or not entitled
to vote thereon by the Certificate of Incorporation, if such amendment would
increase or decrease the par value of the shares of such class, or alter or
change the powers, preferences, or special rights of the shares of such class so
as to affect them adversely.
DESCRIPTION OF INDEBTEDNESS AND OTHER COMMITMENTS
The following is a description of the principal agreements that will govern
the indebtedness of the Company following the consummation of the Acquisitions.
The following summaries of certain provisions of the Senior Credit Facility and
the 1996 Notes Indenture are qualified in their entirety by reference to such
documents, a copy of each of which is filed or incorporated by reference as an
exhibit to the registration statement of which this Prospectus is a part. See
"Available Information." Capitalized terms used below and not defined have the
meanings set forth in the respective documents.
THE NOTES
The Notes intended to be offered in the Notes Offering are to be issued
under an indenture (the "Indenture") among the Company, the Subsidiary
Guarantors (as defined) and a trustee to be selected by the Company. The
Indenture will provide for the issuance of up to $300 million aggregate
principal amount of the Notes, which will be general unsecured obligations of
the Company subordinate in right of payment to all existing and future senior
indebtedness of the
33
<PAGE> 35
Company. The Notes will be unconditionally guaranteed, on an unsecured senior
subordinated basis, as to payment of principal, premium, if any, and interest,
jointly and severally, by all of the Subsidiary Guarantors. The Notes will be
pari passu with the 1996 Notes.
The Notes will be redeemable at the option of the Company, in whole or in
part, at any time on or after the fifth anniversary of the date of original
issuance thereof, at the redemption prices set forth in the Indenture plus
accrued and unpaid interest, if any, to but excluding the date of redemption.
Also, on or prior to the third anniversary of the date of original issuance
thereof, the Company may redeem up to 35% of principal amount of the Notes with
the net proceeds of one or more future public equity offerings, in cash, at 110%
of the principal amount thereof, together with accrued and unpaid interest, if
any, to the date of redemption; provided that Notes having an aggregate
principal amount of at least $195 million remain outstanding immediately after
any such redemption.
The Indenture will contain covenants, events of default and other
provisions that will be substantially the same as those contained in the 1996
Notes Indenture. See "-- The 1996 Notes" below.
THE 1996 NOTES
The 1996 Notes were issued under the 1996 Notes Indenture among the
Company, the Subsidiary Guarantors (as defined therein) and The Bank of New
York, as trustee. The 1996 Notes are general unsecured obligations of the
Company subordinate in right of payment to all existing and future senior
indebtedness of the Company. The 1996 Notes are unconditionally guaranteed, on
an unsecured senior subordinated basis, as to payment of principal, premium, if
any, and interest, jointly and severally, by all of the Subsidiary Guarantors.
The 1996 Notes mature on October 15, 2006.
The 1996 Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after October 15, 2001, at the redemption prices set
forth in the 1996 Notes Indenture plus accrued and unpaid interest, if any, to
but excluding the date of redemption. Also, on or prior to October 15, 1999, the
Company may redeem up to 35% of principal amount of the 1996 Notes with the net
proceeds of one or more future public equity offerings, in cash, at 110% of the
principal amount thereof, together with accrued and unpaid interest, if any, to
the date of redemption; provided that 1996 Notes having an aggregate principal
amount of at least $162.5 million remain outstanding immediately after any such
redemption. Upon the occurrence of a Change of Control (as defined), the Company
will be required to make an offer to purchase all 1996 Notes then outstanding at
a purchase price, in cash, equal to 101% of the principal amount thereof,
together with accrued and unpaid interest, if any, to the date of purchase.
The 1996 Notes Indenture contains certain restrictive covenants, including
limitations on (i) the incurrence of indebtedness; (ii) the payment of dividends
and the making of restricted payments; (iii) transactions with affiliates; (iv)
the existence of liens; (v) the disposition of proceeds of asset sales; (vi)
entering into sale and lease-back transactions; (vii) the making of guarantees
by the Company and its subsidiaries; (viii) transfers and issuances of stock of
its subsidiaries; (ix) the imposition of restrictions on certain payments by the
Company or its subsidiaries; (x) the making of certain investments by the
Company or its subsidiaries; and (xi) certain mergers and consolidations.
The 1996 Notes Indenture contains customary events of default, including,
without limitation, the following: (i) the failure to pay principal or interest
when due; (ii) certain defaults under agreements relating to other indebtedness;
(iii) the material breach of any covenant; (iv) the levy of certain judgments;
and (v) certain bankruptcy, reorganization and insolvency events. The occurrence
of an event of default will permit the holders of the 1996 Notes to accelerate
the 1996 Notes and to pursue other remedies.
34
<PAGE> 36
SENIOR CREDIT FACILITY
The Senior Credit Facility provides for revolving credit loans, letters of
credit and term loans to the Company (the "US Facility") and for revolving
credit loans, letters of credit, bankers' acceptances and term loans to the
Canadian Subsidiary (the "Canadian Facility").
US Facility
The US Facility provides for: (i) revolving credit loans of up to $225
million subject to automatic reduction each year commencing in 1998 and
continuing through 2002; (ii) term loans in the aggregate amount of $350
million, payable in quarterly installments with a final installment due in 2003;
and (iii) letter of credit commitments of $35 million (but only to the extent
there is available US revolving credit commitment which is not being utilized).
The US revolving credit loans and US term loans may be, at the option of
the Company, Eurodollar Loans, ABR Loans, or a combination thereof. Eurodollar
Loans bear interest at a rate per annum equal to the Eurodollar rate (as
hereinafter described) plus an applicable margin. The "Eurodollar rate" is a
rate per annum determined by CIBC, as administrative agent, based upon the rates
at which US dollar deposits with a term comparable to the interest period
applicable to the Eurodollar Loan being made are offered by leading banks in the
London interbank deposit market (adjusted for maximum reserves). ABR Loans bear
interest at a rate per annum equal to the ABR (as defined below) plus an
applicable margin. "ABR" means, on a particular date, a rate per annum equal to
the highest of (a) the rate of interest most recently announced by CIBC as its
Base Rate, (b) the rate of interest for such date offered in the interbank
market to CIBC, as administrative agent, at the overnight Federal Funds Rate,
plus 1%, and (c) the rate determined by CIBC, as administrative agent, based on
the latest 3-week moving average of daily secondary market morning offering
rates in the United States for 3-month certificates of deposit of major United
States money market lenders as published by the Federal Reserve Bank of New York
(as adjusted for reserves and assessments), plus 1%.
The obligations of the Company under the Senior Credit Facility are secured
by a security interest in substantially all of the Company's assets, including,
with certain exceptions, both real and personal property.
Canadian Facility
The Canadian Facility provides for: (i) revolving credit loans to Mediacom
Inc., a wholly-owned subsidiary (the "Canadian Subsidiary"), of up to cdn$35
million (the equivalent of approximately $25 million at current exchange rates),
subject to automatic reduction each year from 1999 to 2002; (ii) term loans to
the Canadian Subsidiary (A) payable in Canadian dollars ("cdn$") in the
aggregate amount of cdn$48 million (the equivalent of approximately $35 million
at current exchange rates) payable in quarterly installments with the final
installment due in 2002 and (B) payable in US dollars ("US$") in the aggregate
amount of $40 million payable in quarterly installments with the final
installment due in 2003; (iii) revolving credit loan borrowings and certain term
loan borrowings through the issuance of bankers' acceptances in a minimum
aggregate face amount of cdn$4 million and for a term of 30, 60, 90 or 180 days;
and (iv) letter of credit commitments of cdn$7 million (but only to the extent
there is available Canadian revolving credit commitment which is not being
utilized).
The Canadian revolving credit loans and the cdn$ term loans may be, at the
option of the Canadian Subsidiary, cdn$ Prime Loans, bankers' acceptances or a
combination thereof. Cdn$ Prime Loans bear interest at a rate per annum equal to
the cdn$ Prime Rate (as hereinafter described) plus an applicable margin. The
cdn$ Prime Rate is a rate per annum equal to the greater of (i) the CIBC
reference rate and (ii) the sum of 0.50% plus the per annum rate of interest
appearing on "Reuters Screen CDOR Page" applicable to 30 day cdn$ bankers'
acceptances of certain Canadian banks. The
35
<PAGE> 37
US$ term loans may be, at the option of the Canadian Subsidiary, Eurodollar
Loans, ABR Loans or a combination thereof. See "-- US Facility" above.
The obligations of the Canadian Subsidiary under the Senior Credit Facility
are secured by a security interest in substantially all of the assets of the
Canadian Subsidiary, including, with certain exceptions, both real and personal
property.
General Terms
The Senior Credit Facility contains various covenants that limit the
ability of the Company to, among other things, incur indebtedness, dispose of
assets, pay dividends or purchase or redeem any shares of capital stock, make
capital expenditures and make loans or investments.
The Senior Credit Facility also requires the Company and its subsidiaries
to maintain a total leverage ratio and a senior leverage ratio at certain levels
and to maintain certain interest expense coverage and fixed charges coverage.
The Senior Credit Facility contains various affirmative covenants including,
without limitation, a covenant to enter into hedging arrangements to provide
interest rate protection in respect of a portion of the Company's indebtedness.
The Senior Credit Facility contains customary events of default, including,
without limitation, the Company's failure to pay principal or interest when due,
the Company's material breach of any covenant, representation or warranty or the
Company's bankruptcy. In addition, under the Senior Credit Facility, events of
default will occur if the Company's revenues from tobacco advertisements exceeds
15% of revenues for four consecutive quarters, and upon a change of control of
the Company.
AMENDMENT TO THE SENIOR CREDIT FACILITY
The Company has received a written commitment from CIBC to increase the
amounts that may be borrowed under the US Facility to (i) up to $325 million of
revolving credit loans and (ii) up to $715 million of term loans. The Senior
Credit Facility is expected to be amended effective upon the consummation of the
3M Media Acquisition to reflect such increase, to extend the maturity of the
loans by one year and to make certain other related changes. The Company intends
to use additional borrowings under the Senior Credit Facility, as expected to be
amended, to finance a portion of the purchase price of the 3M Media Acquisition.
There can be no assurance, however, that the expected amendment will be entered
into as currently contemplated.
THE SUBORDINATED CREDIT FACILITY
The Company has received a commitment from CIBC, Inc. for a Subordinated
Credit Facility under which it may obtain up to $300 million of Bridge Loans in
the event the Notes Offering is not consummated. The Bridge Loans, if made, will
constitute unsecured, senior subordinated indebtedness of the Company. The
following is a summary of the principal terms of the Subordinated Credit
Facility as currently proposed by the Company and CIBC, Inc. There is no
assurance, however, that the terms of the Subordinated Credit Facility that will
be entered into if the Notes Offering is not consummated will not contain terms
and conditions that are substantially different than the proposed terms
summarized below.
Conversion to Term Loans. Subject to the absence of any existing default
or event of default and certain other conditions, the Bridge Loans will be
converted on the first anniversary of the closing of the Bridge Loans (the
"Conversion Date") into term loans (the "Term Loans"), which will mature on the
10th anniversary of the closing date (the "Maturity Date").
Interest. Interest on the Bridge Loans and any Term Loans will be a
variable rate which will fluctuate monthly in relation to the three-month LIBOR,
plus the Applicable Spread. The "Applicable Spread" will be an increasing
percentage per annum which will rise prior to the Conversion Date from the
initial Applicable Spread of 6% to 7.5%. On the Conversion Date, the Applicable
36
<PAGE> 38
Spread will increase by 0.5% over the then current Applicable Spread, and will
continue to increase by the same increment after each three-month period
following the Conversion Date, subject to a maximum interest rate of 20% per
annum. The Company will have the option to pay any portion of the interest on
the Bridge Loans and the Term Loans in excess of 15% per annum by issuing
additional Bridge Loan Promissory Notes or additional Term Loan Promissory
Notes, as applicable.
Voluntary Prepayments. The Company may prepay the Bridge Loans without
penalty or premium, in whole or in part. The Term Loans may be prepaid in whole
or in part at a prepayment price initially at 101% of the principal amount
thereof on the first anniversary of the closing date, increasing annually
thereafter to 104% of the principal amount thereof on the fourth and fifth
anniversaries and then declining annually to 100% of the principal amount
thereof on the ninth anniversary of the closing date, plus accrued interest to
the prepayment date.
Mandatory Prepayments. The Company will be required to apply net cash
proceeds from certain asset sales in excess of $5 million to prepay a portion of
the Bridge Loans or Term Loans (collectively, "Loans"), as the case may be, to
the extent that such net cash proceeds are not used to prepay term loans and
revolving credit loans under the Senior Credit Facility, to repurchase 1996
Notes or to make an investment in a related business. The Company will also be
required, subject to compliance with the terms of the Senior Credit Facility, to
apply net proceeds received from the issuance of securities to the prepayment of
the Loans.
Change of Control. Upon a change of control of the Company, each holder of
Bridge Loans may require the Company to purchase all or a portion of such
holder's Bridge Loans at a purchase price equal to 101% of the outstanding
principal amount thereof, plus accrued interest thereon to the date of purchase.
Prior to any purchase of the Bridge Loans, the Company will be required to
either repay its obligations under the Senior Credit Facility or to obtain the
consent of the lenders thereunder.
Covenants. The Subordinated Credit Facility will restrict the ability of
the Company and its subsidiaries to, among other things: (i) incur indebtedness;
(ii) incur liens; (iii) declare dividends, repurchase its capital stock or
prepay, repurchase or make sinking fund payments in respect of any subordinated
indebtedness; (iv) make certain investments; (v) guarantee indebtedness; (vi)
incur indebtedness unless subordinated to the Bridge Loans; (vii) enter into
mergers or consolidations or sell all or substantially all of its business,
property or assets, except for the Pending Acquisitions and in certain other
circumstances; (viii) enter into agreements prohibiting or limiting the ability
of subsidiaries of the Company to pay dividends, transfer property or assets to
the Company or any other subsidiary of the Company; (ix) enter into transactions
with affiliates; (x) sell capital stock of any of the Company's subsidiaries;
(xi) enter into amendments or waivers with respect to the Senior Credit Facility
materially adversely affecting the issuance of the Demand Take Out Notes (as
defined below); (xii) amend its charter documents; (xiii) refinance the Bridge
Loans in part other than through the Demand Take Out Notes (as defined below) or
the Exchange Notes (as defined below), except under certain circumstances; (xiv)
enter into asset sales; (xv) transfer assets to a subsidiary of the Company
other than for payment of fair market value except under certain circumstances;
and (xvi) permit its subsidiaries to guarantee certain indebtedness.
Subordination of Loans and Guarantees of Subsidiaries. The obligations of
the Company and of the Subsidiary Guarantors under the Subordinated Credit
Facility will be subordinated to the rights of holders of senior indebtedness of
the Company and the Subsidiary Guarantors, as the case may be.
Events of Default. The Subordinated Credit Facility will contain customary
events of default, including, without limitation, the following: (i) the failure
to pay principal or interest when due; (ii) certain defaults under agreements
relating to other indebtedness; (iii) the material breach of any covenant,
representation or warranty; (iv) the levy of certain judgments; (v) default
under a guarantee of a Subsidiary Guarantor relating to the Company's
obligations under certain agreements'; (vi) the commencement of a proceeding in
foreclosure with respect to collateral securing
37
<PAGE> 39
the Senior Credit Facility; and (vii) certain bankruptcy, reorganization and
insolvency events. The occurrence of an event of default permits the Bridge
Lenders to accelerate the indebtedness under the Subordinated Credit Facility
and to pursue other remedies.
Demand Take Out Notes. The Company will be required to take all reasonable
actions necessary to the extent within its power, upon request by one or more
investment banks (the "Take Out Banks") prior to the Conversion Date, to enable
the Take Out Banks to publicly sell or privately place senior subordinated notes
(the "Demand Take Out Notes"), the proceeds of which are to be used to repay the
Bridge Loans in whole or in part and which will be guaranteed by each subsidiary
of the Company that guarantees the Bridge Loans.
Exchange Notes. At the written request of the holder of any Term Loan, the
Company and each Subsidiary Guarantor will be required to enter into a trust
indenture in substantially the form to be attached as an exhibit to the
Subordinated Credit Facility and to issue notes (the "Exchange Notes")
thereunder in exchange for the same principal amount of Term Loans or portion
thereof being exchanged.
38
<PAGE> 40
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters") have severally agreed to purchase
from the Company and the Selling Stockholders, the following respective numbers
of shares of Common Stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of the Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- -------------------------------------------------------------------------------- ----------
<S> <C>
Alex. Brown & Sons Incorporated.................................................
Donaldson, Lufkin & Jenrette Securities Corporation.............................
CIBC Wood Gundy Securities Corp. ...............................................
Prudential Securities Incorporated..............................................
----------
Total................................................................. 12,700,000
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of the Common Stock offered hereby if any
of such shares are purchased.
The Company and the Selling Stockholders have been advised by the
Underwriters that the Underwriters propose to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After the
public offering, the offering price and other selling terms may be changed by
the Underwriters.
The Company and the Selling Stockholders have granted to the Underwriters
an option, exercisable not later than 30 days after the date of this Prospectus,
to purchase up to 1,905,000 additional shares of Common Stock at the public
offering price less the underwriting discounts and commissions set forth on the
cover page of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will have a firm commitment to purchase
approximately the same percentage thereof that the number of shares of Common
Stock to be purchased by it shown in the above table bears to 12,700,000, and
the Company will be obligated, pursuant to the option, to sell such shares to
the Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of Common Stock offered hereby.
If purchased, the Underwriters will offer such additional shares on the same
terms as those in which the 12,700,000 shares are being offered.
In connection with the Offering, certain Underwriters may engage in passive
market making transactions in the Common Stock on the Nasdaq National Market
immediately prior to the commencement of sales in the Offering in accordance
with Rule 103 of Regulation M. Passive market making consists of displaying bids
on the Nasdaq National Market limited by the bid prices of independent market
makers and making purchases limited by such prices and effected in response to
order flow. Net purchases by a passive market maker on each day are limited to a
specified percentage of the passive market maker's average daily trading volume
in the Common Stock during a specified period and must be discontinued when such
limit is reached. Passive market making may stabilize the market price of the
Common Stock at a level above that which might otherwise prevail and, if
commenced, may be discontinued at any time.
Subject to applicable limitations, the Underwriters, in connection with the
Offering, may place bids for or make purchases of the Common Stock in the open
market or otherwise, for long or short account, or cover short positions
incurred, to stabilize, maintain or otherwise affect the price of the Common
Stock, which may be higher than the price that might otherwise prevail in the
open market. There can be no assurance that the price of the Common Stock will
be stabilized, or that stabilizing, if commenced, will not be discontinued at
any time. Subject to applicable limitations, the Underwriters may also place
bids or make purchases on behalf of the underwriting syndicate to
39
<PAGE> 41
reduce a short position created in connection with the Offering. The
Underwriters are not required to engage in these activities and may end these
activities at any time.
The Company and the Selling Stockholders have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act.
The Selling Stockholders and certain other stockholders of the Company, who
will hold in the aggregate 21,331,687 shares of Common Stock after the Offering
(including currently exercisable options to purchase 4,659,214 shares of Common
Stock) have agreed not to offer, sell or otherwise dispose of any of such Common
Stock for a period of 180 days after the date of this Prospectus without the
prior consent of the Underwriters.
CIBC Wood Gundy Securities Corp. ("CIBC Wood Gundy") is an affiliate of
CIBC, which is the administrative agent and a lender under the Senior Credit
Facility. Affiliates of CIBC Wood Gundy have committed to provide any necessary
bridge financing in connection with the Pending Acquisitions for which they have
received customary fees. CIBC Wood Gundy has also provided the Company with
financial advisory services in connection with the Pending Acquisitions for
which it will receive customary fees.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Powell, Goldstein, Frazer & Murphy LLP,
Atlanta, Georgia. Certain legal matters will be passed upon for the Underwriters
by Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The Consolidated Financial Statements of the Company as of December 31,
1996 and 1995 and for each of the three years in the period ended December 31,
1996 included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein and is included
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The Gannett Outdoor Combined Statement of Net Assets to be Acquired by
Outdoor Systems, Inc. as of December 31, 1994 and 1995 and the Gannett Outdoor
Combined Statements of Revenues and Direct Expenses of Net Assets to be Acquired
by Outdoor Systems, Inc. for the years ended December 31, 1993, 1994 and 1995
incorporated in this Prospectus by reference from the Company's Prospectus
included in the Registration Statement on Form S-3 (File No. 333-9713) have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The financial statements of National Advertising Company as of December 31,
1996 and 1995 and for each of the three years in the period ended December 31,
1996, included in this Prospectus have been included herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
40
<PAGE> 42
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports and other information with the
Commission. Reports and other information filed with the Commission pursuant to
the Exchange Act may be inspected and copied, at the offices of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional offices at
Seven World Trade Center, New York, New York 10048, and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained
from the public reference section of the Commission at its Washington address
upon payment of the prescribed fee. The Commission also maintains an Internet
Web Site at http://www.sec.gov. that contains reports and other information
about the Company.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or information filed by the Company with the
Commission are incorporated in this Prospectus by reference and made a part
hereof: (i) Annual Report on Form 10-K for the fiscal year ended December 31,
1996 (File No. 0-28256); (ii) the Proxy Statement for the 1997 Annual Meeting of
Shareholders (File No. 0-28256); (iii) the Gannett Outdoor Combined Statements
of Net Assets to be Acquired as of December 31 1994 and 1995 and the Gannett
Outdoor Combined Statements of Revenues and Direct Expenses of Net Assets to be
Acquired for the years ended December 31, 1993, 1994 and 1995, together with
notes thereto and Independent Auditors' Report thereon, contained in the
Company's Prospectus dated October 9, 1996 included in its Registration
Statement on Form S-3 (File No. 333-9713); and (iv) the description of the
Common Stock contained in Registration Statement on Form 8-A filed on April 19,
1996 (File No. 0-28256).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the Offering shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the respective dates of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document incorporated or
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Prospectus.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon written or oral request, a copy
of any or all information incorporated by reference in this Prospectus (not
including exhibits to such information, unless such exhibits are specifically
incorporated by reference into such information). Such requests should be
directed to Outdoor Systems, Inc., Attention: Bill M. Beverage, Chief Financial
Officer, Treasurer and Secretary, at 2502 North Black Canyon Highway, Phoenix,
Arizona 85009, telephone number (602) 246-9569.
41
<PAGE> 43
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE COMPANY:
Independent Auditors' Report.......................................... F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996.......... F-3
Consolidated Statements of Operations for the Years Ended December 31,
1994, 1995 and 1996................................................. F-4
Consolidated Statements of Common Stockholders' Equity (Deficiency)
for the Years Ended December 31, 1994, 1995 and 1996................ F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1994, 1995 and 1996................................................. F-6
Notes to Consolidated Financial Statements............................ F-7
NATIONAL ADVERTISING COMPANY:
Report of Independent Accountants..................................... F-21
Balance Sheets as of December 31, 1996 and 1995....................... F-22
Statements of Income for the Years Ended December 31, 1996, 1995 and
1994................................................................ F-23
Statements of Cash Flows for the Years Ended December 31, 1996, 1995
and 1994............................................................ F-24
Notes to Financial Statements......................................... F-25
</TABLE>
F-1
<PAGE> 44
INDEPENDENT AUDITORS' REPORT
Board of Directors
Outdoor Systems, Inc.
Phoenix, Arizona
We have audited the accompanying consolidated balance sheets of Outdoor
Systems, Inc. and subsidiaries (the "Company") as of December 31, 1995 and 1996,
and the related consolidated statements of operations, common stockholders'
equity (deficiency) and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Outdoor Systems, Inc. and
subsidiaries at December 31, 1995 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1996 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
February 14, 1997, except for Note 16 as
to which the date is March 26, 1997
F-2
<PAGE> 45
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................................... $ 1,739 $ 11,887
Accounts receivable -- less allowance for doubtful accounts of
$1,010 and $5,398............................................... 10,971 56,975
Prepaid land leases................................................ 1,691 10,938
Other current assets, including amounts due from related parties of
$62 and $385 (Notes 2 and 14)................................... 613 15,737
Deferred income taxes (Note 11).................................... 415 1,637
-------- --------
Total current assets....................................... 15,429 97,174
PROPERTY AND EQUIPMENT -- Net (Notes 2, 3 and 5)..................... 111,729 742,144
OTHER ASSETS (Note 2)................................................ 981 10,155
DEFERRED FINANCING COSTS -- Net (Notes 5 and 6)...................... 4,275 24,151
DEFERRED INCOME TAXES (Note 11)...................................... 5,255 --
GOODWILL -- Net (Note 2)............................................. 544 59,831
-------- --------
TOTAL................................................................ $138,213 $933,455
======== ========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable................................................... $ 642 $ 8,323
Accrued interest................................................... 4,843 7,056
Accrued expenses and other liabilities (Notes 4 and 12)............ 1,173 17,653
Current maturities of long-term debt (Notes 3 and 5)............... 550 28,000
-------- --------
Total current liabilities.................................. 7,208 61,032
LONG-TERM DEBT (Notes 3 and 5)....................................... 141,719 578,409
OTHER LONG-TERM OBLIGATIONS (Note 2)................................. 984 3,552
DEFERRED INCOME TAXES (Note 11)...................................... -- 2,283
-------- --------
Total liabilities.......................................... 149,911 645,276
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 2, 9, 10, 12 and 16)
COMMON STOCK -- Subject to put option (Note 8)....................... 3,420 --
-------- --------
REDEEMABLE PREFERRED STOCK (Note 8).................................. 13,649 --
-------- --------
COMMON STOCKHOLDERS' EQUITY (DEFICIENCY) (Notes 2 and 9):
Common stock, $.01 par value -- authorized, 60,000,000 shares;
issued and outstanding, 21,096,379 and 40,155,631 shares........ 4 402
Additional paid-in capital......................................... -- 316,988
Accumulated deficit................................................ (24,718) (25,275)
Treasury stock at cost -- 11,475,554 shares........................ (4,053) (4,053)
Foreign currency translation adjustment............................ -- 117
-------- --------
Total common stockholders' equity (deficiency)............. (28,767) 288,179
-------- --------
TOTAL................................................................ $138,213 $933,455
======== ========
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE> 46
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES:
Outdoor advertising (Note 13)........................ $ 59,150 $ 74,690 $ 194,183
Less agency commissions.............................. 8,073 10,294 27,136
---------- ---------- ----------
Total........................................ 51,077 64,396 167,047
Lease, printing and other revenues................... 1,000 417 6,069
---------- ---------- ----------
Net revenues................................. 52,077 64,813 173,116
---------- ---------- ----------
OPERATING EXPENSES:
Direct advertising -- including $139, $139 and $139
to related parties (Note 14)...................... 24,433 30,462 87,593
General and administrative -- including $354, $385
and $450 to related parties (Note 14)............. 3,357 4,096 13,458
Depreciation and amortization........................ 9,165 9,970 22,384
---------- ---------- ----------
Total operating expenses..................... 36,955 44,528 123,435
---------- ---------- ----------
GAIN ON ATLANTA AND DENVER DISPOSITIONS (Note 2)....... 4,325 -- 7,344
---------- ---------- ----------
OPERATING INCOME (Note 13)............................. 19,447 20,285 57,025
INTEREST EXPENSE (Note 5).............................. 16,393 17,199 32,489
---------- ---------- ----------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY LOSS...... 3,054 3,086 24,536
INCOME TAXES (Note 11)................................. 1,721 318 10,200
---------- ---------- ----------
INCOME BEFORE EXTRAORDINARY LOSS....................... 1,333 2,768 14,336
EXTRAORDINARY LOSS (Note 6)............................ -- -- (17,780)
---------- ---------- ----------
NET (LOSS) INCOME...................................... 1,333 2,768 (3,444)
LESS STOCK DIVIDENDS, ACCRETIONS AND DISCOUNT ON
REDEMPTIONS (Note 8)................................. 1,596 2,461 3,461
---------- ---------- ----------
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS......................................... $ (263) $ 307 $ (6,905)
---------- ---------- ----------
NET (LOSS) INCOME PER COMMON AND EQUIVALENT SHARE (Note
1):
Income (loss) before extraordinary loss.............. $ (.01) $ .01 $ .31
Extraordinary loss................................... -- -- (.50)
---------- ---------- ----------
NET (LOSS) INCOME PER COMMON SHARE..................... $ (.01) $ .01 $ (.19)
---------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF SHARES...................... 21,096,379 25,424,078 35,263,336
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 47
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY (DEFICIENCY)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1994 1995 1996
----------- ----------- ----------
<S> <C> <C> <C>
COMMON STOCK OUTSTANDING: Shares:
Balance, beginning of year............................... 397,119 21,096,379 21,096,379
Stock splits............................................. 20,699,260 -- 7,691,862
Initial public offering (Note 2)......................... -- -- 2,677,390
Secondary offering....................................... -- -- 8,690,000
------- ------- ----------
Balance, end of year..................................... 21,096,379 21,096,379 40,155,631
------- ------- ----------
COMMON STOCK OUTSTANDING: Amount:
Balance, beginning of year............................... $ 4 $ 4 $ 4
Stock splits............................................. -- -- 284
Initial public offering (Note 2)......................... -- -- 27
Secondary offering (Note 2).............................. -- -- 87
------- ------- ----------
Balance, end of year..................................... $ 4 $ 4 $ 402
------- ------- ----------
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of year............................... $ -- $ -- $ --
Stock splits............................................. -- -- (284)
Initial public offering (Note 2)......................... -- -- 36,617
Secondary offering (Note 2).............................. -- -- 283,135
Common/preferred stock accretion......................... -- -- (2,480)
------- ------- ----------
Balance, end of year..................................... $ -- $ -- $ 316,988
------- ------- ----------
ACCUMULATED DEFICIT:
Balance, beginning of year............................... $ (24,762) $ (25,025) $ (24,718)
Common/preferred stock accretion......................... (714) (1,507) (688)
Dividend on exchangeable preferred stock................. (82) (82) (293)
Cash dividends........................................... (800) (872) --
Cancellation of put option on common stock............... -- -- 3,868
Net income (loss)........................................ 1,333 2,768 (3,444)
------- ------- ----------
Balance, end of year..................................... $ (25,025) $ (24,718) $ (25,275)
------- ------- ----------
COMMON STOCK IN TREASURY: Amount:
Balance.................................................. $ (4,053) $ (4,053) $ (4,053)
------- ------- ----------
FOREIGN CURRENCY TRANSLATION ADJUSTMENT.................... $ -- $ -- $ 117
------- ------- ----------
TOTAL COMMON STOCKHOLDERS' EQUITY (DEFICIENCY)............. $ (29,074) $ (28,767) $ 288,179
======= ======= ==========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 48
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1995 1996
-------- -------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income....................................................................... $ 1,333 $ 2,768 $ (3,444)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Extraordinary loss.................................................................... -- -- 27,615
Gain on sale of land.................................................................. -- (417) --
Gain on disposals..................................................................... (4,325) (7,344)
Deferred taxes........................................................................ 1,324 90 (1,714)
Depreciation and amortization......................................................... 9,165 9,970 22,384
Allowance for doubtful accounts....................................................... 792 761 2,492
Other................................................................................. 383 363 3,664
Changes in net assets and liabilities -- net of effects from acquisitions and disposals
(Note 2):
Accounts receivable................................................................... 1,092 4,539 (767)
Other current assets.................................................................. 704 2,486 74
Accrued interest...................................................................... 187 (84) 2,216
Accounts payable and other liabilities................................................ 850 (1,924) 3,023
--------- -------- --------
Net cash provided by operating activities......................................... 11,505 18,552 48,199
--------- -------- --------
INVESTING ACTIVITIES:
Acquisition of Gannett Outdoor, net of cash overdraft acquired.......................... -- -- (712,545)
Acquisition of Gannett Houston.......................................................... -- -- (12,174)
Capital expenditures.................................................................... (4,924) (7,070) (9,046)
Proceeds from sale of land.............................................................. 769
Other acquisitions...................................................................... (44,347) -- (1,817)
Net proceeds from disposals............................................................. 21,715 -- 3,049
Acquisition of perpetual easements...................................................... -- -- (21,525)
--------- -------- --------
Net cash used in investing activities............................................. (27,556) (6,301) (754,058)
--------- -------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt................................................ 39,252 10,679 846,853
Tender for 10.75% notes................................................................. -- -- (128,205)
Principal payments on debt and capital leases........................................... (20,726) (23,977) (269,893)
Increase in deferred financing fees..................................................... -- -- (35,952)
Cash dividends paid on preferred stock.................................................. (800) (872) (293)
Redemption of preferred and exchangeable preferred stock................................ -- -- (16,369)
Issuance of common stock................................................................ -- -- 319,866
--------- -------- --------
Net cash provided by (used in) financing activities............................... 17,726 (14,170) 716,007
--------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...................................... 1,675 (1,919) 10,148
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................................ 1,983 3,658 1,739
--------- -------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................................................. $ 3,658 $ 1,739 $ 11,887
========= ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest.............................................................................. $ 14,095 $ 16,162 $ 27,519
========= ======== ========
Income taxes.......................................................................... $ 343 $ 227 $ 275
========= ======== ========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
In conjunction with acquisitions described in Note 2, liabilities were assumed as
follows:
Fair value of assets acquired......................................................... $ 45,696 $ -- $ 728,848
Cash paid............................................................................. (42,636) -- 707,980
--------- -------- --------
Liabilities assumed and incurred and issuance of notes payable.......................... $ 3,060 $ -- $ 20,868
========= ======== ========
Accretion of common and preferred stock................................................. $ 714 $ 1,507 $ --
========= ======== ========
Accrued dividends on exchangeable preferred stock....................................... $ 82 $ 82 $ --
========= ======== ========
Additional obligation on CSX transaction (Note 2)....................................... $ -- $ -- $ 2,198
========= ======== ========
Write-off of deferred financing costs (Note 6).......................................... $ -- $ -- $ 14,073
========= ======== ========
Note receivable on Denver Disposition................................................... $ -- $ -- $ 6,440
========= ======== ========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 49
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization -- Outdoor Systems, Inc. was incorporated on February 22,
1980, and is engaged principally in the rental of advertising space on outdoor
advertising structures in 22 metropolitan markets in the United States and seven
metropolitan markets in Canada.
Principles of consolidation -- The consolidated financial statements
include the accounts of Outdoor Systems, Inc. and its subsidiaries
(collectively, the "Company"), including its Canadian subsidiary Mediacom, Inc.
("Mediacom"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Significant accounting policies are as follows:
a. Cash and cash equivalents -- The Company considers all highly liquid
investments with an initial maturity of three months or less to be cash
equivalents.
b. Property and equipment are recorded at cost. Normal maintenance and
repair costs are expensed. Improvements which extend the life or usefulness of
an asset are capitalized. Depreciation is computed principally on a
straight-line method based upon the following useful lives:
<TABLE>
<S> <C>
Buildings...................................................... 25-32 years
Advertising structures......................................... 5-20 years
Vehicles....................................................... 3-5 years
Furniture and fixtures......................................... 5 years
Perpetual easements............................................ 40 years
</TABLE>
c. Deferred financing costs are amortized using the effective interest
method over the terms of the related loans.
d. Intangibles include the excess purchase price over net assets acquired
and are amortized over 15 to 30 year periods. Amortization expense was $47,000,
$47,000 and $713,000 in 1994, 1995 and 1996, respectively.
e. Revenue recognition -- The Company recognizes revenue from advertising
contracts when billed, which is on a straight-line pro rata monthly basis in
accordance with contract terms. Costs associated with providing service for
specific contracts are expensed as incurred, although such contracts generally
extend beyond one month. Other revenue represents license fees from perpetual
easements and revenues from a printing operation.
f. Net income (loss) per share -- Primary income (loss) per common and
common equivalent share is computed based on the weighted average number of
common and common equivalent shares outstanding during each year and includes
shares issuable upon exercise of stock options. Such amounts have been adjusted
to reflect the 36.4535 for 1, 3 for 2 and 3 for 2 stock splits on April 17,
1996, July 22, 1996 and November 22, 1996, respectively.
g. Impairment of long-lived assets -- On January 1, 1996, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting
for the Impairment of Long-Lived Assets and of Long-Lived Assets to Be Disposed
Of. In accordance with the provisions of SFAS No. 121, the Company reviews the
carrying values of its long-lived assets and identifiable intangibles for
possible impairment whenever events or changes in circumstances indicate that
the carrying amount of assets to be held and used may not be recoverable. The
adoption of SFAS No. 121 had no effect on the December 31, 1996 consolidated
financial statements.
F-7
<PAGE> 50
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
h. Use of estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles necessarily requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from these
estimates.
i. Stock-based compensation -- In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, Accounting for Stock-Based Compensation. As
permitted by SFAS No. 123, the Company uses the intrinsic value based method
prescribed by the Accounting Principles Board ("APB") Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
plans. Accordingly, no compensation expense has been recognized for its stock-
based compensation plans. A summary of the pro forma effects on reported income
from continuing operations and earnings per share for 1996, as if the fair value
based method of accounting defined in SFAS No. 123 had been applied is included
in Note 9 to these consolidated financial statements. Such information is not
presented for 1995 and 1994 because no options were issued in such years.
j. Environmental remediation costs -- The Company accrues for losses
associated with environmental remediation obligations when such losses are
probable and reasonably estimable. Accruals for estimated losses from
environmental remediation obligations generally are recognized no later than
completion of the remedial feasibility study. Such accruals are adjusted as
further information develops or circumstances change. Costs of future
expenditures for environmental remediation obligations are not discounted to
their present value.
k. New accounting pronouncement -- Beginning in 1997, the Company will be
required to implement SFAS No. 128 "Earnings Per Share" which requires, among
other matters, presentation of basic earnings per share, which is calculated
utilizing only weighted average common shares outstanding. Basic earnings (loss)
per share would have been $0.01 and $(0.26) and fully diluted earnings (loss)
per share would have been $0.01 and $(0.19), respectively for the years ended
December 31, 1995 and 1996 under SFAS 128.
l. Reclassifications -- Certain reclassifications were made to the 1994 and
1995 financial statements to conform with the 1996 presentation.
2. OFFERINGS AND ACQUISITIONS
COMPLETION OF INITIAL PUBLIC OFFERING
On April 24, 1996, the Company completed its Initial Public Offering
("IPO") by selling 6,024,132 shares of its common stock. The Company received
proceeds of approximately $36,644,000 net of underwriting discounts and
commissions and offering expenses of approximately $3,517,000.
GANNETT OUTDOOR ACQUISITION
On August 22, 1996, the Company purchased substantially all of the
billboard and transit advertising operations of the Outdoor Advertising Division
("Gannett Outdoor" or the "Gannett Outdoor Acquisition") of Gannett Co., Inc.,
for approximately $712,545,000 ($707,980,000 before cash overdraft acquired of
$4,565,000). The Company also acquired an option to acquire the Gannett Outdoor
operations in Houston ("Gannett Houston"), which option was exercised on
November 14, 1996 for $12,174,000. The principal assets of Gannett Outdoor and
Gannett Houston were approximately 40,000 advertising display faces consisting
of bulletins, posters and transit advertising displays (the Company also
acquired approximately 125,000 subway advertising display faces in New York
City) in and around New York, Los Angeles, Chicago, Philadelphia, San Francisco,
F-8
<PAGE> 51
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Detroit, Sacramento, St. Louis, Denver, San Diego, New Haven, Houston, Kansas
City, Grand Rapids, Flint and Rochester and in various locations in New Jersey
and Canada.
The Company financed the acquisition through a Senior Credit Facility, a
Subordinated Credit Facility ("Bridge Loan") and the sale on August 22, 1996 of
12,885,000 shares of common stock for which it received proceeds of
approximately $283,222,000 net of underwriting discounts and commissions and
offering expenses of approximately $13,133,000. In October 1996, the Company
sold $250,000,000 of 9 3/8% Senior Subordinated Notes due 2006 (the "1996
Notes"). The proceeds from this offering were used to repay all borrowings under
the Bridge Loan and to partially repay amounts outstanding under the Senior
Credit Facility (Note 5).
The acquisition was accounted for using the purchase method of accounting
and the results of operations have been included in the consolidated financial
statements subsequent to the date of acquisition. The acquisition resulted in
goodwill of $60,000,000 which represents the excess of the purchase price over
the fair value of the assets which amount will be amortized on a straight-line
basis over 30 years. The Company is continuing its evaluation of the fair value
of the Gannett Outdoor Acquisition and further adjustments to the purchase price
may be made.
DENVER DISPOSITION
In connection with the Gannett Outdoor Acquisition, on August 8, 1996, the
Company sold substantially all of its existing billboard assets in Denver
("Denver Disposition") to an unrelated party for $2,760,000 in cash and a
$6,440,000 9% promissory note due November 8, 2006, which is included in other
assets. The Denver Disposition resulted in a gain of $7,344,000.
OTHER 1996 ACQUISITIONS
On May 22, 1996, the Company completed the acquisition of perpetual
easements located on real property and leased to independent outdoor advertising
companies from CSX Realty Development Corporation ("CSX") for $21,525,000 in
cash and certain future payments in an aggregate amount not to exceed
$10,000,000 payable over a period of ten years beginning no later than the year
2006. The exact amount and timing of such payments is to be determined based
upon the results of the Company's operation of the easements. The cost of the
perpetual easements is included in property and equipment and will be amortized
on a straight-line basis over 40 years.
In April 1996, the Company acquired all of the stock of Decade
Communications Group, Inc. (the "Bench Ad Acquisition"), which owned
approximately 5,300 bus benches in the Denver metropolitan area for a purchase
price of approximately $1,817,000. The acquisition was accounted for as a
purchase and the results of operations of the Bench Ad Acquisition are included
in these financial statements from the date of acquisition.
ATLANTA ACQUISITION AND DISPOSITION
On December 19, 1994, the Company acquired the assets of Capitol Outdoor
Advertising, Inc. (the "1994 Acquisition") located in Atlanta, Georgia for cash
of $44,347,000. This acquisition has been accounted for using the purchase
method of accounting, and the results of operation have been included in the
consolidated financial statements subsequent to the acquisition. As a condition
of allowing the 1994 Acquisition, the United States Justice Department required
the Company to sell substantially all the operating assets of its business then
operating in Atlanta (the "Atlanta Disposition"). This disposal was effective
December 19, 1994 and the resulting gain on sale of $4,325,000 is included in
income for 1994.
F-9
<PAGE> 52
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UNAUDITED PRO FORMA INFORMATION
The following table summarizes unaudited pro forma operating results for
the Company for the two years in the two-year period ended December 31, 1996,
assuming that the Gannett Outdoor Acquisition and other 1996 acquisitions and
the Denver Disposition had occurred at the beginning of the applicable year and
after giving effect to financing costs and purchase accounting adjustments.
<TABLE>
<CAPTION>
1995 1996
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Consolidated net revenues.................................... $ 314,386 $ 335,826
======== ========
Income before extraordinary loss............................. $ 5,005 $ 14,173
======== ========
Net income................................................... $ 5,005 $ 13,329
======== ========
Income attributable to common stockholders................... $ 2,544 $ 9,868
======== ========
Net income per common share.................................. $ .07 $ .23
======== ========
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1996
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Advertising structures and display leases.................... $153,080 $736,731
Perpetual land easements..................................... -- 24,428
Vehicles..................................................... 1,832 5,796
Furniture and fixtures....................................... 2,654 8,859
Buildings.................................................... 4,747 15,934
Land......................................................... 6,628 15,881
Other........................................................ 481 8,963
-------- --------
Total........................................................ 169,422 816,592
Less accumulated depreciation................................ 57,693 74,448
-------- --------
Property and equipment -- net................................ $111,729 $742,144
======== ========
</TABLE>
Advertising structures include $163,704 allocated to display leases related
to such advertising structures.
The Company has granted a security interest in substantially all of its
assets to lenders in connection with the Senior Credit Facility.
F-10
<PAGE> 53
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities is comprised of the following at
December 31:
<TABLE>
<CAPTION>
1995 1996
------ -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Accrued payroll, payroll taxes and severance.................. $ 922 $ 7,118
Percentage lease payments..................................... -- 2,206
Other liabilities assumed in Gannett acquisition.............. -- 3,272
Customer deposits............................................. -- 909
Unearned revenue.............................................. -- 796
Taxes......................................................... 90 422
Other......................................................... 161 2,930
------ -------
$1,173 $17,653
====== =======
</TABLE>
5. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1996
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Senior Credit Facility....................................... $ 21,000 $356,348
9 3/8% Senior Subordinated Notes............................. -- 250,000
10.75% Senior Notes.......................................... 114,670 15
Other........................................................ 6,599 46
-------- --------
Total........................................................ 142,269 606,409
Less current maturities...................................... 550 28,000
-------- --------
Long-term debt -- net........................................ $141,719 $578,409
======== ========
</TABLE>
At December 31, 1996, the Company was in compliance with the covenants of
its debt agreements.
SENIOR CREDIT FACILITY
The Senior Credit Facility, dated October 22, 1996, consists of 1) a U.S.
Dollar senior revolving line of credit facility of up to $125,000,000 including
a $35,000,000 letter of credit subfacility ("United States Revolver"), and a
Canadian Dollar ("C$") senior revolving line of credit facility ("Canadian
Revolver") of up to C$35,000,000 including a C$7,000,000 letter of credit
sub-facility; 2) a $240,000,000 and $10,000,000 Senior Secured U.S. Dollar Term
Loans A and B, respectively; and, 3) C$48,000,000 and $40,000,000 Senior Secured
Canadian Term Loans A and B, respectively. The Company has issued letters of
credit totaling $28,876,000 at December 31, 1996. Availability under the Senior
Credit Facility totaled approximately $90,000,000 at December 31, 1996.
The commitment of the lenders under the United States Revolver will be
reduced annually on December 31st of each year by $20,000,000 during 1998 and
1999, $25,000,000 during 2000 and $30,000,000 during 2001 and 2002. The
commitment under the Canadian Revolver will be reduced annually on December 31st
of each year by C$5,000,000 during 1999-2001 and C$20,000,000 during 2002. The
United States Term Loan A commitment will reduce in equal quarterly installments
commencing on March 31, 1997, with annual amortization of $24,000,000 during
1997, $36,000,000 during 1998, $45,000,000 during 1999, $55,000,000 during 2000,
$50,000,000 during 2001, and
F-11
<PAGE> 54
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$30,000,000 during 2002. The Canadian Term Loan A commitment will reduce in
equal quarterly installments commencing on March 31, 1997, with annual
amortization of C$4,800,000 during 1997, C$7,200,000 during 1998, C$9,000,000
during 1999, C$11,000,000 during 2000, C$10,000,000 during 2001 and C$6,000,000
during 2002. The United States Term Loan B commitment will reduce in equal
quarterly installments commencing on March 31, 1997, with annual amortization of
$100,000 during 1997-2000, $1,000,000 during 2001, $3,100,000 during 2002, and
$5,500,000 during 2003. The Canadian Term Loan B commitment will reduce in equal
quarterly installments commencing on March 31, 1997, with annual amortization of
$400,000 during 1997-2000, $4,400,000 during 2001, $12,000,000 during 2002, and
$22,000,000 during 2003.
The United States and Canadian Revolvers and United States and Canadian
Term Loans A bear interest at the bank's base rate (8.25% at December 31, 1996)
plus 0.125% to 1.75% or LIBOR (5.53% at December 31, 1996) plus 1.125% to 2.75%,
based on the Company's total leverage ratio. The United States and Canadian Term
Loans B bear interest at the base rate plus 1.75% to 2% or LIBOR plus 2.75% to
3%, based on the Company's total leverage ratio.
The Company's obligations under the Senior Credit Facility are secured by a
first perfected lien on substantially all of the present and future assets of
the Company and a pledge of the Company's equity interest in its subsidiaries
provided that the United States facilities will only be secured by two thirds of
the stock of Mediacom. The Canadian facilities will be guaranteed by Mediacom's
subsidiaries, the Company and each of the Company's subsidiaries.
Under the Senior Credit Facility, among other things, conditions of default
arise if tobacco advertisement revenues exceed 15% of consolidated gross
revenues for any four consecutive quarters. The credit facility also places
limitations on the Company's acquisitions, dispositions, asset swaps, stock
repurchases, and capital expenditures, and requires the Company to comply with
financial covenants concerning leverage, interest coverage, fixed charges and
minimum cash flows.
9 3/8% SENIOR SUBORDINATED NOTES
In October 1996, the Company completed the sale of $250,000,000 of 9 3/8%
Senior Subordinated Notes due 2006 (the "1996 Notes"). The net proceeds of the
1996 Notes were used to repay the Bridge Loan and to reduce amounts borrowed
under the Senior Credit Facility and to pay related fees and expenses. The 1996
Notes represent general unsecured obligations of the Company and are
subordinated to all existing and future senior indebtedness of the Company and
are senior to all subordinated indebtedness of the Company.
Under the 1996 Notes, among other things, the Company is restricted in its
ability to incur additional indebtedness, make certain investments, create
liens, enter into transactions with affiliates, issue stock of a restricted
subsidiary, enter into sale and leaseback transactions, merge or consolidate the
Company, and transfer or sell assets. The Company is prohibited from paying cash
dividends and distributions.
F-12
<PAGE> 55
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MATURITIES
The annual maturities of long-term debt at December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
1997..................................................... $ 28,000
1998..................................................... 61,785
1999..................................................... 59,679
2000..................................................... 67,133
2001..................................................... 58,939
Thereafter............................................... 330,873
--------
Total.......................................... $606,409
========
</TABLE>
6. EXTRAORDINARY LOSS ARISING FROM EARLY EXTINGUISHMENT OF DEBT
The extraordinary loss arising from the early extinguishment of debt
consisted of the following:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Redemption of subordinated debt subsequent to IPO........ $ 1,415
Redemption of 10.75% Senior Notes:
Tender offer........................................... 13,542
Deferred debt costs.................................... 3,802
Bridge Redeemable Preferred Stock and Bridge Loan
financing costs........................................ 8,856
-------
Total.................................................... 27,615
Less related tax benefit................................. (9,835)
-------
Total extraordinary loss....................... $ 17,780
=======
</TABLE>
In connection with the IPO, the Company redeemed $6,583,000 principal
amount of subordinated debt that had a carrying value of $6,099,000 for
$7,514,000 in cash, resulting in an extraordinary loss of $1,415,000.
In order to facilitate the financing of the Gannett Outdoor Acquisition,
the Company purchased, pursuant to a tender offer (the "Debt Tender Offer"), all
but $15,000 aggregate principal amount of its outstanding 10.75% Senior Notes
due 2003 (the "Senior Notes"). The aggregate consideration paid by the Company
in the Debt Tender Offer of $1,116.25 per $1,000 principal amount of Senior
Notes, plus expenses associated therewith, resulted in an extraordinary loss
from debt extinguishment of $13,542,000.
In connection with the Gannett Outdoor Acquisition, the Company entered
into long-term bridge financing commitments for the Bridge Loan and redeemable
preferred stock. Such commitment fees and bridge loan issuance costs aggregated
$8,949,000. The commitment on the redeemable preferred stock was canceled at the
date of the Gannett Outdoor Acquisition and the Bridge Loan was repaid with the
net proceeds of the offering of the 1996 Notes resulting in an extraordinary
loss of $8,856,000.
7. FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosures About Fair Value of Financial
F-13
<PAGE> 56
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Instruments. The carrying amounts and estimated fair values of the Company's
financial instruments are as follows:
The carrying values of cash and cash equivalents, receivables,
accounts payable and accrued expenses approximate fair values due to the
short-term maturities of these instruments. The carrying amount of variable
rate long-term debt instruments is estimated to approximate fair values as
the underlying agreements have been recently negotiated and rates are tied
to short-term indices.
The 1996 Notes are estimated to approximate market value as the trade
price of those notes approximates par value at December 31, 1996. Other
fixed rate long-term debt instruments are estimated to approximate fair
values as actual rates are consistent with rates estimated to be currently
available for debt of similar terms and remaining maturities.
8. OTHER EQUITY MATTERS
Redeemable preferred stock at December 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Exchangeable Preferred Stock, 10% cumulative dividend, $1
par value -- authorized, issued and outstanding, 24,235
shares................................................. $ 3,504
Class A Preferred Stock, $1 par value -- authorized,
issued and outstanding, 40,000 shares.................. 5,526
Class B Preferred Stock, 9% cumulative, $1 par value --
authorized, 5,000 shares; issued and outstanding, 4,619
shares................................................. 4,619
-------
Total redeemable preferred stock............... $ 13,649
=======
</TABLE>
In connection with the IPO, the Company redeemed all of its outstanding
preferred stock for approximately $16,369,000.
In 1990, the Company issued common stock in connection with the financing
of an acquisition under which the Company was required to redeem the common
stock at a redemption price based upon the appraised value of the common stock
as of the redemption date. Because this common stock was subject to redemption
at the option of the holder, the Company accreted the stock to its estimated
appraised value over the redemption period based upon annual estimates of value
determined as a multiple of cash flow. Accretion was calculated on a
straight-line basis and was charged directly to stockholders' deficit. At the
date of the IPO, the common stock was sold by the holders and the related put
options were terminated. Accordingly, amounts aggregating $3,868,000 were
credited to paid-in capital.
9. STOCK OPTIONS
The Company applies APB No. 25 and related interpretations in accounting
for its stock option plan. Accordingly, no compensation expense has been
recognized for its stock-based compensation plan. Had compensation cost for the
Company's stock option plan been determined based upon the fair value at the
grant date for awards under this plan consistent with the methodology prescribed
in SFAS No. 123, the Company's net income and earnings per share for the year
ended December 31, 1996 would have been reduced by approximately $1,366,200, or
$0.04 per share. The fair value of the options granted during 1996 is estimated
as $2,277,000 on the date of grant using an option-pricing model with the
following assumptions: dividend yield 0%, volatility of 62.0%, an average
risk-free interest rate of 6.0%, assumed forfeiture rate of 0%, and an average
expected life of three years.
F-14
<PAGE> 57
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a summary of changes in outstanding options:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE
SHARES PRICE
--------- ----------------
<S> <C> <C>
Outstanding at December 31, 1994...................... 4,476,204 $0.05 to $0.83
Granted............................................... -- --
Cancelled or expired.................................. -- --
Exercised............................................. -- --
----------
Outstanding at December 31, 1995...................... 4,476,204 $0.05 to $0.83
Granted............................................... 2,065,293 $6.67 to $23.00
Cancelled or expired.................................. -- --
Exercised............................................. (150,000) $0.83
----------
Outstanding at December 31, 1996...................... 6,391,497 $0.05 to $23.00
----------
Exercisable at December 31, 1996...................... 4,326,204 $0.05 to $0.83
----------
</TABLE>
The following table summarizes information concerning currently outstanding
and exercisable options:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED AVERAGE --------------------------------
NUMBER REMAINING WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- --------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.05 3,464,706 N/A $ 0.05 3,464,706 $ 0.05
$ 0.83 861,498 N/A $ 0.83 861,498 $ 0.83
$ 6.67 2,052,113 9.3 years $ 6.67 -- --
$ 23.00 13,180 9.7 years $23.00 -- --
---------- ----------
6,391,497 4,326,204
========== ==========
</TABLE>
The options issued prior to January 1, 1996 are fully exercisable and have
no expiration date. Options issued during 1996 vest ratably over a four year
period and expire in 2006.
10. BENEFIT PLANS
The Company had established an Incentive Plan (the "Plan") covering certain
managers and key employees. Incentive Awards ("Awards") were made under the Plan
in the form of shares of phantom stock based on the individual's performance.
Awards were valued each year based upon the estimated value of the Company. The
awards are vested at the date of grant and any increases in value vested over a
four year period. For the years ended December 31, 1994, 1995 and 1996, the
Company charged earnings for compensation expense of $218,000, $304,000 and
$159,000, respectively. In connection with the IPO, effective January 1, 1996,
the Company ceased allocating amounts to the accounts maintained under the
Incentive Plan. The Company offered to each current employee who is a
participant in the Incentive Plan the alternative of having their account
settled in cash, in shares of the common stock of the Company, or both, with
actual distributions of cash or common stock subject to both vesting
requirements and terms and conditions similar to those under which distributions
would have been made under the Incentive Plan. To the extent participants
elected to settle their accounts in common stock, the Company issued (subject to
the vesting requirements and distribution terms and conditions) to such
participants options to purchase common stock at the initial public offering
price.
The Company has a 401(k) savings plan under which it has the discretion of
making contributions as a percentage of employee contributions. For the years
ended December 31, 1994,
F-15
<PAGE> 58
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1995 and 1996, the Company's contributions to the 401(k) plan were $49,000,
$56,000 and $63,000, respectively.
11. INCOME TAXES
The provision (benefit) for income taxes is comprised of the following for
the years ended December 31,
<TABLE>
<CAPTION>
1994 1995 1996
------- ---- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.............................................. $ 179 $ 50 $ 108
State -- including franchise taxes................... 218 177 182
------- ---- ------
Total current.......................................... 397 227 290
Deferred............................................... 1,324 91 9,910
------- ---- ------
Total income tax provisions............................ $ 1,721 $318 $10,200
======= ==== ======
</TABLE>
The Company has federal net operating loss carryforwards of approximately
$34,693,000 as of December 31, 1996. These net operating loss carryforwards
expire as follows: $1,189,000 (2003), $3,494,000 (2004), $4,308,000 (2005),
$4,104,000 (2006), $1,193,000 (2007), $3,243,000 (2008), $68,000 (2009) and
$17,094,000 (2011).
Although realization is not assured, the Company believes, based on
operating results in 1996, and its expectations for the future, that taxable
income of the Company will more likely than not be sufficient to utilize all of
the $34,693,000 net operating loss carryforwards prior to their ultimate
expiration in the year 2011. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced.
Significant components of the Company's net deferred tax asset (liability)
as of December 31 are as follows:
<TABLE>
<CAPTION>
1995 1996
------------------- --------------------
NON- NON-
CURRENT CURRENT CURRENT CURRENT
------ -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Deferred taxes:
Financial statement expenses not
currently deductible for income tax
purposes........................... $ 415 $ 393 $1,637 $ 435
Tax loss and other credit
carryforwards...................... -- 6,854 -- 13,059
Deferred tax liability -- Excess of tax
over book depreciation................ -- (1,992) -- (15,777)
------ ------- ---- ------
Total asset (liability)....... $ 415 $ 5,255 $1,637 $ (2,283)
====== ======= ==== ======
</TABLE>
F-16
<PAGE> 59
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a reconciliation of the income taxes to the statutory
rates:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory rate.................................................. 34% 34% 35%
Impact of adjustment to valuation allowance..................... -- (34) --
State income taxes, franchise tax............................... 20 7 4
Other........................................................... 2 3 3
-- --
---
Reported rate................................................... 56% 10% 42%
== === ==
</TABLE>
12. COMMITMENTS AND OTHER
LEASES
The Company leases land and equipment under operating leases with various
terms expiring at various dates. Certain of the land leases provide for periodic
rental increases. At December 31, 1996, minimum annual rentals under all
operating leases for the next five years are as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
1997..................................................... $ 33,391
1998..................................................... 17,116
1999..................................................... 12,034
2000..................................................... 7,946
2001..................................................... 6,212
Thereafter............................................... 11,970
-------
Total.......................................... $ 88,669
=======
</TABLE>
Operating lease expense was $9,969,000, $13,533,000 and $29,790,000 for
1994, 1995 and 1996, respectively.
TRANSIT AGREEMENTS
The Company has signed agreements which provide an exclusive right to sell
advertising space in various airports, transit shelters and transit systems.
Under the various agreements, the Company must make minimum guarantee payments
as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
1997..................................................... $9,393
1998..................................................... 2,810
1999..................................................... 1,397
2000..................................................... 1,397
2001..................................................... 1,397
</TABLE>
LITIGATION
The Company is party either as plaintiff or defendant to various actions,
proceedings and pending claims, in the ordinary course of business. Litigation
is subject to many uncertainties and it is possible that some of the legal
actions, proceedings or claims referred to above could be decided against the
Company. Although the ultimate amount for which the Company or its subsidiaries
may be held liable with respect to matters where the Company is defendant is not
ascertainable, the
F-17
<PAGE> 60
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company believes that any resulting liability should not materially affect the
Company's financial position or results of operations.
In connection with the due diligence procedures performed by the Company
for the Gannett Outdoor acquisition, it was discovered that certain sites had
been contaminated as a result of removing various underground storage tanks. The
Company has estimated the costs to remediate the contamination and such amount
has been accrued in the financial statements at December 31, 1996 and is
included in accrued expenses and other.
13. FOREIGN OPERATIONS
The assets and operations of Mediacom are included in these financial
statements subsequent to August 22, 1996 and are as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Net revenues:
United States.......................................... $150,970
Canadian............................................... 22,146
--------
Total net revenues....................................... $173,116
========
Income from operations:
United States.......................................... $ 52,150
Canadian............................................... 4,875
--------
Total income from operations............................. $ 57,025
========
Assets:
United States.......................................... $800,184
Canadian............................................... 133,271
--------
Total assets............................................. $933,455
========
</TABLE>
14. TRANSACTIONS WITH RELATED PARTIES
During 1994, 1995 and 1996, the Company entered into a number of
transactions with officers and/or stockholders of the Company, affiliated
companies and affiliated partnerships.
The following summarizes those transactions as of and for the years ended
December 31:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Due from employees and related parties, included in other
current assets............................................ $ 59 $ 62 $385
==== ==== ====
Rental income from affiliated company....................... $ 45 $ 24 $ 6
==== ==== ====
Land rent paid to affiliated company and related parties.... $139 $139 $139
==== ==== ====
Administrative services agreement........................... $104 $ 35 $ --
==== ==== ====
Services agreement.......................................... $250 $350 $450
==== ==== ====
</TABLE>
F-18
<PAGE> 61
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER
----------------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATA)
<S> <C> <C> <C> <C>
1995:
Net revenues................................ $13,758 $15,979 $16,886 $18,910
Operating income............................ 3,048 5,128 5,586 6,523
Net (loss) income........................... (1,265) 425 1,400 2,208
Net (loss) income per common share.......... (.07) (.01) .03 .06
1996:
Net revenues................................ $16,945 $19,582 $41,769 $94,820
Operating income............................ 5,447 7,457 18,153 25,968
Net income (loss)........................... 777 1,364 (7,220) 1,637
Net (loss) income per common share.......... (.01) (.02) (.20) .04
</TABLE>
The fourth quarter of 1995 includes other income of $1,000,000 relating to
cash payments received from the early termination of agreements made in
connection with an acquisition in 1992.
The third and fourth quarters of 1996 include the operating results from
the acquisition of Gannett Outdoor and an extraordinary loss from the early
extinguishment of debt of approximately $12.4 million and $4.5 million,
respectively, net of tax.
16. SUBSEQUENT EVENTS
Subsequent to December 31, 1996, the Company has acquired outdoor
advertising assets in the following locations and for the following purchase
prices:
<TABLE>
<CAPTION>
DESCRIPTION
--------------------------------------------------------- PURCHASE PRICE
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Villepigue Outdoor -- New York City...................... $ 27,000
=======
Atlanta Bus Shelters -- Atlanta.......................... $ 6,000
=======
Philbin & Coine, Inc. -- Louisville...................... $ 830
=======
Scadron Enterprises -- Chicago........................... $ 24,500
=======
Murad Communications -- Toronto.......................... $ 5,489
=======
Reynolds Outdoor, L.P. -- Dallas......................... $ 31,600
=======
Ad Outdoor -- Halifax.................................... $ 879
=======
Burlington Northern/Santa Fe -- Western and Midwestern
States................................................. $ 29,500
=======
</TABLE>
Each of these acquisitions will be accounted for using the purchase method
of accounting. The purchase prices above do not include any working capital
adjustments. These acquisitions were financed, primarily, utilizing cash flows
and amounts available under the Senior Credit Facility.
F-19
<PAGE> 62
OUTDOOR SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
17. SUMMARY FINANCIAL INFORMATION OF GUARANTORS
The 9 3/8% Senior Subordinated Notes are guaranteed on a senior
subordinated basis by all of the domestic subsidiaries of the Company (the
"Guarantors"). The guarantees are subordinate to the Senior Credit Facility.
Condensed balance sheet and statement of operation data for the guarantor and
non-guarantor subsidiaries are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------------------------------
ELIMINATION
GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
---------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Summary Balance Sheet Data:
Current assets.................... $ 72,654 $ 23,157 $ 1,363 $ 97,174
Noncurrent assets................. 726,248 110,114 (81) 836,281
Current liabilities............... 55,062 5,916 54 61,032
Noncurrent liabilities............ 495,561 89,175 (492) 584,244
Stockholders' equity.............. 284,557 38,180 (34,558) 288,179
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------------
ELIMINATION
GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
---------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Summary Income Statement Data:
Net revenues...................... $150,970 $ 22,996 $ (850) $173,116
Operating income.................. 52,150 4,875 -- 57,025
Income before income taxes and
extraordinary loss............. 20,908 3,628 -- 24,536
Net (loss) income................. (6,950) 1,792 1,714 (3,444)
Net (loss) income attributable to
common stockholders............ (10,411) 1,792 1,714 (6,905)
</TABLE>
* * * * * * *
F-20
<PAGE> 63
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Minnesota Mining and Manufacturing Company
We have audited the accompanying balance sheets of National Advertising
Company (the Company) as of December 31, 1996 and 1995, and the related
statements of income and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements have been prepared on the
basis described in Note 1 and are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of National Advertising Company
as of December, 31, 1996 and 1995 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 21, 1997, except for Note 10,
as to which the date is May 1, 1997
F-21
<PAGE> 64
NATIONAL ADVERTISING COMPANY
BALANCE SHEETS AS OF DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Trade receivables, net allowances of $1,767 and $1,500............. $ 21,896 $ 24,512
Inventories........................................................ 4,047 3,508
Prepaid land rents, current portion................................ 15,189 13,994
Deferred income taxes.............................................. 5,702 5,492
Other current assets............................................... 1,411 1,237
-------- --------
Total current assets....................................... 48,245 48,743
Property, plant and equipment, net of accumulated depreciation and
amortization....................................................... 127,362 128,436
Prepaid land rents, non-current portion.............................. 1,885 907
Other assets......................................................... 200 324
-------- --------
Total assets............................................... $177,692 $178,410
======== ========
LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable................................................... $ 1,684 $ 2,856
Accrued payroll and related expenses............................... 6,149 6,191
Deferred revenue................................................... 1,053 736
Accrued legal...................................................... 3,331 2,756
Accrued workers compensation....................................... 2,540 2,970
Accrued property taxes............................................. 966 1,817
Other current liabilities.......................................... 6,478 6,163
-------- --------
Total current liabilities.................................. 22,201 23,489
Deferred income taxes................................................ 9,763 6,931
-------- --------
Total liabilities.......................................... 31,964 30,420
Net assets........................................................... 145,728 147,990
-------- --------
Total liabilities and net assets........................... $177,692 $178,410
======== ========
</TABLE>
The accompanying notes are integral part of these financial statements.
F-22
<PAGE> 65
NATIONAL ADVERTISING COMPANY
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Revenues............................................. $ 239,469 $ 232,162 $ 221,540
Agency commissions................................. (28,159) (26,744) (24,592)
--------- --------- ---------
Net revenues......................................... 211,310 205,418 196,948
Operating expenses:
Direct advertising................................. (104,510) (102,485) (97,673)
Selling and marketing.............................. (34,713) (34,646) (33,749)
General and administrative......................... (12,406) (11,790) (12,024)
Depreciation and amortization...................... (15,382) (17,144) (18,061)
(Loss) gain on disposal of property and
equipment....................................... (21) 806 (343)
--------- --------- ---------
Operating income..................................... 44,278 40,159 35,098
Interest income, net................................. 2,059 1,924 1,147
--------- --------- ---------
Income before income taxes................. 46,337 42,083 36,245
Provision for income taxes........................... (19,122) (17,510) (14,967)
--------- --------- ---------
Net income........................................... $ 27,215 $ 24,573 $ 21,278
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE> 66
NATIONAL ADVERTISING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 27,215 $ 24,573 $ 21,278
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 15,382 17,144 18,061
Loss (gain) on disposal of property and equipment...... 21 (806) 343
Deferred income tax provision.......................... 2,622 562 2,121
Provision for doubtful accounts........................ 694 840 628
Changes in operating assets and liabilities:
Decrease (increase) in trade receivables............... 1,922 (2,566) (3,685)
(Increase) decrease in inventories..................... (539) 5,125 1,274
Increase in other assets............................... (2,347) (1,612) (394)
(Decrease) increase in accounts payable................ (1,172) 665 (190)
(Decrease) increase in accrued payroll and related
expenses............................................. (42) 2,271 255
Decrease in other liabilities.......................... (74) (983) (2,277)
-------- -------- --------
Net cash provided by operating activities......... 43,682 45,213 37,414
-------- -------- --------
Cash flows from investing activities:
Purchases of property and equipment....................... (17,497) (24,963) (26,142)
Proceeds from sales of property and equipment............. 3,292 3,608 1,956
Payment for non-compete agreement......................... -- (312) --
-------- -------- --------
Net cash used in investing activities............. (14,205) (21,667) (24,186)
-------- -------- --------
Cash flows from financing activities:
Payments of dividends..................................... (20,000) (18,000) (13,000)
Net change in net assets.................................. (9,477) (5,546) (228)
-------- -------- --------
Net cash used in financing activities............. (29,477) (23,546) (13,228)
-------- -------- --------
Net change in cash.......................................... $ -- $ -- $ --
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE> 67
NATIONAL ADVERTISING COMPANY
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying financial statements include certain accounts of National
Advertising ("NADCO" or "the Company"), that are primarily dedicated to the
outdoor media and mall advertising businesses in the United States. The Company
is a wholly-owned subsidiary of Minnesota Mining and Manufacturing Company
("3M"). The accounts of the Company have been adjusted to exclude the effects
and results of the following: (1) the Travel Center Advertising business and (2)
the In-Store Media program utilizing 3M Floorminder's Graphics.
The financial statements present the historical financial position, results
of operations and cash flows of the Company, on the basis described above. Other
than amounts related to the customary time lag in paying monthly charges, the
Company has excluded from the balance sheets assets and liabilities related to
its employees' participation in the 3M pension and other postretirement benefit
plans. Current federal and state income taxes payable have been recorded as a
component of net assets.
NADCO owns and operates advertising display faces in outdoor and other
out-of-home media, selling the advertising space to national, regional and local
advertisers throughout the United States.
The statement of income reflects an allocation of certain costs and
expenses from 3M based on services provided by 3M (see Notes 2, 6 and 8). The
accompanying financial statements may not necessarily be indicative of the
financial position, results of operations or cash flows of the Company in the
future or what the financial position, results of operations or cash flows would
have been had the Company been a separate, independent company during the
periods presented.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
NADCO's revenues are generated from contracts with advertisers generally
covering periods ranging from one to thirty-six months. NADCO recognizes
revenues ratably over the contract term and defers customer prepayments of
rental fees. Costs incurred for the production of outdoor advertising displays
are recognized in the initial month of the contract or as incurred during the
contract period.
PREPAID LAND RENT
Most of NADCO's advertising structures are located on leased land. Land
rents are generally paid in advance for periods ranging from one to twelve
months. Prepaid rents are expensed ratably over the related rental term.
INVENTORIES
Inventories consist principally of parts and materials for the construction
and replacement of outdoor and mall advertising signage. Inventories are stated
at the lower of cost of market, cost being determined using the first-in,
first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation is recorded
using the straight-line method over estimated useful lives of the assets.
F-25
<PAGE> 68
NATIONAL ADVERTISING COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Repairs and maintenance are charged to expense when incurred. Expenditures
for significant improvements are capitalized. Upon sale or retirement of
property, plant and equipment, the cost and accumulated depreciation are
eliminated from the accounts, and the related gain or loss is included in the
statement of income.
IMPAIRMENT OF LONG-LIVED ASSETS
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. The Company assesses the impairment
of its long-lived assets, including intangibles and property and equipment,
whenever economic events or changes in circumstances indicate that the carrying
amounts of the assets may not be recoverable. Long-lived assets are considered
to be impaired when the sum of the expected future operating cash flows,
undiscounted and without interest charges, is less than the carrying amounts of
the related assets. No adjustment was necessary as a result of the above
adoption.
PENSION AND POSTRETIREMENT PLANS
NADCO employees participate in 3M pension and postretirement plans. The
Company has accounted for its participation in the 3M plans as a participation
in multi-employer plans. Accordingly, the statement of income includes an
allocation from 3M for the costs associated with the NADCO employees who
participate in these plans that is comparable to the Company's required
contribution to the plans for the periods presented. Additionally, no assets and
liabilities have been reflected in the balance sheets related to the overall 3M
pension and other postretirement benefit plans since it is not practicable to
segregate the amounts applicable to the Company.
INCOME TAXES
The Company is included in the consolidated income tax returns of 3M. The
Company has no tax-sharing agreement, formal or informal, with 3M. For purposes
of the accompanying financial statements, income taxes are determined on the
"separate return" method. The financial statements reflect the application of
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, for all periods presented. Current federal and state income taxes payable
for the Company's operations are included in Net Assets as 3M pays all income
taxes and receives all income tax refunds on the Company's behalf.
Deferred income taxes are recognized for the future tax consequences of
differences between the bases of assets and liabilities and their
financial-reporting amounts at each year-end based on enacted laws and statutory
tax rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amounts expected to be realized. Income tax
expense is the payable for the period and the change during the period in
deferred tax assets and liabilities.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
F-26
<PAGE> 69
NATIONAL ADVERTISING COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1996 and 1995 consists of the
following:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Signs, principally outdoor advertising structures.......... $272,219 $262,766
Land....................................................... 3,578 3,624
Buildings and leasehold improvements....................... 6,261 6,289
Machinery and equipment.................................... 1,138 1,261
Mobile equipment........................................... 5,457 5,951
Furniture and fixtures..................................... 9,762 8,711
Construction in progress................................... 2,313 4,954
--------- ---------
300,728 293,556
Accumulated depreciation and amortization.................. (173,366) (165,120)
--------- ---------
Property, plant and equipment, net......................... $127,362 $128,436
========== ==========
</TABLE>
4. NET ASSETS
Net assets is comprised of the following components at December 31, 1996
and 1995:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Capital........................................................ $ 4,000 $ 4,000
Retained earnings.............................................. 170,886 163,671
Intercompany accounts with affiliates.......................... (29,158) (19,681)
-------- --------
$145,728 $147,990
========= =========
</TABLE>
The authorized capital stock of the Company consists of 50,000 shares of no
par common stock, of which 40,000 shares are issued and outstanding.
As discussed in Notes 1 and 2, the intercompany accounts with affiliates
include net charges from 3M and other affiliates for various services and cost
allocations. In addition, the intercompany accounts with affiliates include
liabilities relating to current federal and state income taxes, and state sales
and use taxes.
5. OPERATING LEASES
Rental expense for operating leases totaled $38,754, $36,775, and $35,441
including contingent rental payments of $3,251, $2,802, and $2,136 for the years
ended December 31, 1996, 1995 and 1994, respectively. Contingent payments are
primarily based on related signage revenues. Land leases are generally entered
into for terms of 10 years or less.
F-27
<PAGE> 70
NATIONAL ADVERTISING COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Minimum future lease commitments at December 31, 1996 for the next five
years are as follows:
<TABLE>
<CAPTION>
OTHER LAND
LEASES LEASES TOTAL
------ -------- ---------
<S> <C> <C> <C>
1997.................................................... $ 95 $ 33,680 $33,775
1998.................................................... 29 33,733 33,762
1999.................................................... 19 33,819 33,838
2000.................................................... 5 33,846 33,851
2001.................................................... 33,860 33,860
------ -------- ---------
Total minimum lease payments............................ $148 $168,938 $169,086
</TABLE>
The total minimum lease payments for land leases assumes that the company
will continue to renew, at current lease rates, its existing leases which may
expire during the five years presented.
6. EMPLOYEE BENEFITS
PENSION PLANS
Substantially all of the Company's employees participate in defined benefit
pension plans sponsored by 3M. 3M's pension benefits are based principally on an
employee's years of service and compensation near retirement. 3M has allocated
pension expense to the Company of approximately $1,861, $1,711 and $1,793 in
1996, 1995 and 1994, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Under various 3M plans, the Company provides health care and life insurance
benefits to substantially all employees who reach retirement age while employed
by 3M, their covered dependents and beneficiaries. 3M has allocated to the
Company postretirement benefit expense of approximately $949, $768, and $711 for
the years ended December 31, 1996, 1995 and 1994, respectively.
DEFINED CONTRIBUTION PLANS
Employees of the Company also participate in a 3M sponsored Employee
Savings Plan under section 401(k) of the Internal Revenue Code. Under this plan,
3M matches employee contributions of up to 6 percent of compensation at rates
ranging from 10 to 85 percent depending upon 3M financial performance. 3M's
matching contributions to the employee savings plan are funded through an
employee stock ownership plan. The Company's allocation of the expense related
to the Employee Savings Plan was $478, $430, and $425 in 1996, 1995, and 1994,
respectively.
F-28
<PAGE> 71
NATIONAL ADVERTISING COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES
The provision for income taxes for the years ended December 31, 1996, 1995
and 1994 is comprised of the following amounts:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Provision for income taxes:
Federal:
Current........................................ $13,225 $13,582 $10,294
Deferred....................................... 2,100 450 1,699
------- ------- -------
15,325 14,032 11,993
State and local:
Current........................................ 3,275 3,366 2,552
Deferred....................................... 522 112 422
------- ------- -------
3,797 3,478 2,974
------- ------- -------
Total provision for income taxes.................... $19,122 $17,510 $14,967
======= ======= =======
</TABLE>
The effective tax rate differs from the U.S. federal statutory rate
principally due to state income taxes and certain non-deductible expenses.
The tax effects of temporary differences which gave rise to deferred income
tax assets and liabilities consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Deferred income tax assets:
Accrued vacation.................................... $ 1,017 $ 1,017 $ 945
Lease acquisition costs............................. 1,153 868 677
Allowance for doubtful accounts..................... 711 603 570
Accrued legal....................................... 1,339 1,108 1,108
Accrued workers compensation........................ 1,021 1,194 1,194
Other accrued liabilities........................... 1,614 1,570 1,510
------- ------ ------
Total deferred income tax assets............ 6,855 6,360 6,004
------- ------ ------
Deferred income tax liabilities:
Property, plant & equipment......................... 10,773 7,656 6,734
Other............................................... 143 143 147
------- ------ ------
Total deferred income tax liabilities....... 10,916 7,799 6,881
------- ------ ------
Net deferred income tax liabilities................... $ 4,061 $ 1,439 $ 877
======= ====== ======
</TABLE>
The deferred income tax assets and liabilities have been classified in the
balance sheet as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Net deferred income tax assets -- current............. $ 5,702 $ 5,492 $ 5,327
Net deferred income tax liabilities -- non-current.... 9,763 6,931 6,204
------ ------ ------
Net deferred income tax liabilities................... $ 4,061 $ 1,439 $ 877
====== ====== ======
</TABLE>
F-29
<PAGE> 72
NATIONAL ADVERTISING COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. TRANSACTIONS WITH RELATED PARTIES
3M provides the Company with various services, including certain corporate
accounting, finance and administration, facility management, human resource and
legal. The cost allocations to the Company for such services were approximately
$9,183, $9,058, and $9,305 for the years ended December 31, 1996, 1995 and 1994,
respectively. The amounts allocated are based on historical or actual usage of
services relative to the usage of the other participating affiliated businesses.
Additionally, 3M allocates charges to the Company for its share of the
annual self-insurance expense, consisting of workers' compensation, auto and
general liability claims. This expense allocation is based upon the ratio of
NADCO claims and loss development to the total amount of 3M claims and loss
development. The self-insurance expense allocated to the Company was $6,432,
$6,240, and $5,284 for the years ended December 31, 1996, 1995 and 1994,
respectively.
The Company also rents its corporate headquarters and is charged for the
use of other 3M facilities. The expense allocated to the Company was $5,227,
$4,281 and $4,537 for the years ended December 31, 1996, 1995 and 1994,
respectively.
Personnel of the Company use certain automobiles owned by 3M. The Company
recognized $993, $930 and $956 in rental expense for 1996, 1995 and 1994,
respectively, related to the use of these assets.
The Company invests its excess cash with 3M in a participation investment
account. Interest income earned was $2,073, $1,962 and $1,249 for the years
ended December 31, 1996, 1995 and 1994.
9. LITIGATION AND CLAIMS
The Company is a defendant in a 1995 Florida federal court suit, filed by
two former NADCO sales representatives who formed a company to compete with
NADCO. This suit seeks approximately $36 million in damages for lost profits and
punitive damages, allegedly arising out of violations of antitrust laws,
intentional tortious interference with business opportunities and defamation of
business reputation. Trial of this matter is scheduled to begin in April 1997.
The plaintiffs have made settlement demands for amounts significantly less than
the amount sought in the suit. Management believes it has adequate defenses,
however, if liability is found, management is not able, at this time, to
estimate the amount or range of potential loss.
In addition to the above matter, various legal actions and claims are
pending or may be instituted or asserted against the Company in the future,
including those arising out of alleged personal injury, discrimination and
antitrust violations, condemnation matters, permit appeals, property owner
disputes, amortization issues, permit violation questions, lease disputes,
foreclosures and property tax issues. Liabilities have been recorded for these
matters to the extent that it is probable that the Company will be found liable
and the minimum amount of liability is determinable.
Management believes that the ultimate outcome of all pending litigation,
after considering recorded liabilities, would not have a material adverse effect
on the Company's financial position or results of operations.
10. PENDING SALE OF THE COMPANY
On April 30, 1997, 3M agreed to sell all of the outstanding common stock of
the Company to Outdoor Systems, Inc. for approximately $1.0 billion cash.
F-30
<PAGE> 73
======================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR
ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 12
Use of Proceeds....................... 17
Price Range of Common Stock........... 17
Dividend Policy....................... 17
Capitalization........................ 18
Unaudited Consolidated Pro Forma
Financial Information............... 19
Selected Consolidated Financial and
Other Data.......................... 25
Management's Discussion and Analysis
of Results of Operations and
Financial Condition................. 27
Principal and Selling Stockholders.... 31
Description of Capital Stock.......... 33
Description of Indebtedness and Other
Commitments......................... 33
Underwriting.......................... 39
Legal Matters......................... 40
Experts............................... 40
Available Information................. 41
Incorporation of Certain Documents by
Reference........................... 41
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
======================================================
======================================================
12,700,000 SHARES
[OUTDOOR SYSTEMS LOGO]
COMMON STOCK
-------------------
PROSPECTUS
-------------------
ALEX. BROWN & SONS
INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CIBC WOOD GUNDY SECURITIES CORP.
PRUDENTIAL SECURITIES INCORPORATED
, 1997
======================================================
<PAGE> 74
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of estimated expenses incurred in connection
with the shares of Common Stock being registered hereby, other than underwriting
discounts and commissions:
<TABLE>
<S> <C>
SEC Registration Fee................................................... $131,666
NASD Filing Fee........................................................ 30,500
Nasdaq Stock Market Additional Listing Fee............................. 17,500
Printing and Engraving Expenses........................................ 100,000
Legal Fees and Expenses................................................ 175,000
Accounting Fees and Expenses........................................... 175,000
Transfer Agent and Registrar Fees and Expenses......................... 15,000
Blue Sky Fees and Expenses (including legal fees)...................... 5,000
Miscellaneous.......................................................... 100,334
--------
Total........................................................ $750,000
========
</TABLE>
The foregoing items, except for the SEC Registration Fee, NASD Filing Fee,
and the Nasdaq Stock Market Additional Listing Fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "Delaware Law"),
Article VII of the Registrant's Third Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation"), and Article VI of the
Company's Amended and Restated Bylaws (the "Bylaws") provide for indemnification
of the Registrant's directors and officers to the maximum extent provided by
Delaware law, which may include liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
The Underwriting Agreement provides for indemnification by the Underwriters
of directors, officers and controlling persons of the Company against certain
liabilities, including liabilities under the Securities Act, under certain
circumstances.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to its Certificate of Incorporation, Bylaws, the Underwriting Agreement
or otherwise, the Company has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
As permitted by Section 102(b) of the Delaware Law, the Certificate of
Incorporation provides that directors of the Company shall have no personal
liability to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of a director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violations of law,
(iii) under Section 174 of the
II-1
<PAGE> 75
Delaware Law, or (iv) for any transaction from which a director derived an
improper personal benefit.
The Company does not maintain directors' and officers' liability insurance.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement (to be filed by amendment).
4.1 -- Specimen Common Stock Certificate of the Registrant (filed as Exhibit 4.1 to the
Registrant's Amendment No. 2 to Form S-1 Registration Statement No. 333-1582 and
incorporated herein by reference).
5.1 -- Opinion of Powell, Goldstein, Frazer & Murphy LLP (to be filed by amendment).
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Powell, Goldstein, Frazer & Murphy LLP (to be included in Exhibit 5.1)
24.1 -- Powers of Attorney (included on Signature Page)
27 -- Financial Data Schedule
99.1 -- Agreement of Purchase and Sale dated April 30, 1997 by and between the Registrant
and Minnesota Mining and Manufacturing Company. The Exhibit contains a list
briefly identifying the contents of Schedules and Exhibits, some of which have
been omitted. The Registrant agrees to furnish supplementally a copy of any
omitted Schedule or Exhibit to the Commission upon request.
99.2 -- Stock Purchase Agreement dated April 11, 1997 by and among the Registrant, Van
Wagner Communications, Inc., Richard M. Schaps and Jason Perline. The Exhibit
contains a list briefly identifying the contents of Schedules and Exhibits, some
of which have been omitted. The Registrant agrees to furnish supplementally a
copy of any omitted Schedule or Exhibit to the Commission upon request.
99.3 -- Signboard Easements Sale Agreement dated March 21, 1997 between the Registrant
and The Burlington Northern and Santa Fe Railway Company. The Exhibit contains a
list briefly identifying the contents of Schedules and Exhibits, some of which
have been omitted. The Registrant agrees to furnish supplementally a copy of any
omitted Schedule or Exhibit to the Commission upon request.
99.4 -- Asset Purchase Agreement dated as of February 24, 1997 by and between the
Registrant and GRTP, Ltd. The Exhibit contains a list briefly identifying the
contents of Schedules and Exhibits, some of which have been omitted. The
Registrant agrees to furnish supplementally a copy of any omitted Schedule or
Exhibit to the Commission upon request.
99.5 -- Joint Venture Asset Purchase Agreement dated as of February 28, 1997 by and
between the Registrant and Reynolds/Tower Outdoor Sign Joint Venture. The Exhibit
contains a list briefly identifying the contents of Schedules and Exhibits, some
of which have been omitted. The Registrant agrees to furnish supplementally a
copy of any omitted Schedule or Exhibit to the Commission upon request.
99.6 -- Joint Venture Asset Purchase Agreement dated as of February 28, 1997 by and
between the Registrant and Reynolds/McCrary Joint Venture. The Exhibit contains a
list briefly identifying the contents of Schedules and Exhibits, some of which
have been omitted. The Registrant agrees to furnish supplementally a copy of any
omitted Schedule or Exhibit to the Commission upon request.
</TABLE>
II-2
<PAGE> 76
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------
<S> <C> <C>
99.7 -- Joint Venture Asset Purchase Agreement dated as of February 28, 1997 by and
between the Registrant and RV Outdoor Sign Joint Venture. The Exhibit contains a
list briefly identifying the contents of Schedules and Exhibits, some of which
have been omitted. The Registrant agrees to furnish supplementally a copy of any
omitted Schedule or Exhibit to the Commission upon request.
99.8 -- Asset Purchase Agreement dated as of January 21, 1997 by and among the Registrant
and Scadron Enterprises, Robert B. Scadron, Jeffrey Scadron and Barry Scadron.
The Exhibit contains a list briefly identifying the contents of Schedules and
Exhibits, some of which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the Commission upon
request.
99.9 -- Asset Purchase Agreement dated as of December 27, 1996 by and among the
Registrant, Villepigue Outdoor Advertising Corporation, Villepigue International
Advertising, Inc., S.B. Properties, Inc., Third & Eighth Realty Corp. and Mobile
Outdoor Media, Inc. The Exhibit contains a list briefly identifying the contents
of Schedules and Exhibits, some of which have been omitted. The Registrant agrees
to furnish supplementally a copy of any omitted Schedule or Exhibit to the
Commission upon request.
99.10 -- Amendment dated as of March 12, 1997 to the Fourth Amended and Restated Credit
Agreement dated as of October 22, 1996 among the Registrant, Mediacom Inc., the
several banks and other financial institutions parties thereto and Canadian
Imperial Bank of Commerce as administrative agent.
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as the indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 77
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 78
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe it meets all the
requirements for filing on Form S-3 and has duly caused the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on the 2nd day of May,
1997.
OUTDOOR SYSTEMS, INC.
By: /s/ WILLIAM S. LEVINE
------------------------------------
William S. Levine
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints WILLIAM S. LEVINE and BILL M. BEVERAGE, and each
of them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, to sign any related registrations
statements pursuant to Rule 462(b) of the Securities Act of 1933, and to file
the same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, for their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of the
Registrants and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------- ---------------------------------------- -------------
<S> <C> <C>
/s/ ARTHUR R. MORENO President (Principal Executive Officer) May 2, 1997
- ----------------------------------- and Director
Arthur R. Moreno
/s/ WILLIAM S. LEVINE Chairman of the Board and Director May 2, 1997
- -----------------------------------
William S. Levine
/s/ BILL M. BEVERAGE Secretary, Treasurer and Chief Financial May 2, 1997
- ----------------------------------- Officer (Principal Accounting and
Bill M. Beverage Financial Officer)
/s/ BRIAN J. O'CONNOR Director May 2, 1997
- -----------------------------------
Brian J. O'Connor
/s/ STEPHEN F. BUTTERFIELD Director May 2, 1997
- -----------------------------------
Stephen F. Butterfield
</TABLE>
II-5
<PAGE> 79
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------
<S> <C> <C> <C>
1.1 -- Form of Underwriting Agreement (to be filed by amendment).
4.1 -- Specimen Common Stock Certificate of the Registrant (filed as Exhibit 4.1
to the Registrant's Amendment No. 2 to Form S-1 Registration Statement No.
333-1582 and incorporated herein by reference).
5.1 -- Opinion of Powell, Goldstein, Frazer & Murphy LLP (to be filed by
amendment).
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Powell, Goldstein, Frazer & Murphy LLP (to be included in
Exhibit 5.1)
24.1 -- Powers of Attorney (included on Signature Page)
27 -- Financial Data Schedule
99.1 -- Agreement of Purchase and Sale dated April 30, 1997 by and between the
Registrant and Minnesota Mining and Manufacturing Company. The Exhibit
contains a list briefly identifying the contents of Schedules and Exhibits,
some of which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the Commission
upon request.
99.2 -- Stock Purchase Agreement dated April 11, 1997 by and among the Registrant,
Van Wagner Communications, Inc., Richard M. Schaps and Jason Perline. The
Exhibit contains a list briefly identifying the contents of Schedules and
Exhibits, some of which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the Commission
upon request.
99.3 -- Signboard Easements Sale Agreement dated March 21, 1997 between the
Registrant and The Burlington Northern and Santa Fe Railway Company. The
Exhibit contains a list briefly identifying the contents of Schedules and
Exhibits, some of which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the Commission
upon request.
99.4 -- Asset Purchase Agreement dated as of February 24, 1997 by and between the
Registrant and GRTP, Ltd. The Exhibit contains a list briefly identifying
the contents of Schedules and Exhibits, some of which have been omitted.
The Registrant agrees to furnish supplementally a copy of any omitted
Schedule or Exhibit to the Commission upon request.
99.5 -- Joint Venture Asset Purchase Agreement dated as of February 28, 1997 by and
between the Registrant and Reynolds/Tower Outdoor Sign Joint Venture. The
Exhibit contains a list briefly identifying the contents of Schedules and
Exhibits, some of which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the Commission
upon request.
99.6 -- Joint Venture Asset Purchase Agreement dated as of February 28, 1997 by and
between the Registrant and Reynolds/McCrary Joint Venture. The Exhibit
contains a list briefly identifying the contents of Schedules and Exhibits,
some of which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the Commission
upon request.
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------
<S> <C> <C> <C>
99.7 -- Joint Venture Asset Purchase Agreement dated as of February 28, 1997 by and
between the Registrant and RV Outdoor Sign Joint Venture. The Exhibit
contains a list briefly identifying the contents of Schedules and Exhibits,
some of which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the Commission
upon request.
99.8 -- Asset Purchase Agreement dated as of January 21, 1997 by and among the
Registrant and Scadron Enterprises, Robert B. Scadron, Jeffrey Scadron and
Barry Scadron. The Exhibit contains a list briefly identifying the contents
of Schedules and Exhibits, some of which have been omitted. The Registrant
agrees to furnish supplementally a copy of any omitted Schedule or Exhibit
to the Commission upon request.
99.9 -- Asset Purchase Agreement dated as of December 27, 1996 by and among the
Registrant, Villepigue Outdoor Advertising Corporation, Villepigue
International Advertising, Inc., S.B. Properties, Inc., Third & Eighth
Realty Corp. and Mobile Outdoor Media, Inc. The Exhibit contains a list
briefly identifying the contents of Schedules and Exhibits, some of which
have been omitted. The Registrant agrees to furnish supplementally a copy
of any omitted Schedule or Exhibit to the Commission upon request.
99.10 -- Amendment dated as of March 12, 1997 to the Fourth Amended and Restated
Credit Agreement dated as of October 22, 1996, among the Registrant,
Mediacom Inc., the several banks and other financial institutions parties
thereto and Canadian Imperial Bank of Commerce as administrative agent.
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Outdoor Systems,
Inc. on Form S-3 of our report dated February 14, 1997, except as to Note 16 as
to which the date is March 26, 1997, appearing in the Prospectus, which is part
of this Registration Statement and to the reference to us under the headings
"Selected Consolidated Financial and Other Data" and "Experts" in such
Prospectus.
We also consent to the incorporation by reference in this Registration
Statement of Outdoor Systems, Inc. on Form S-3 of our report dated July 25, 1996
relating to the financial statements of Gannet Outdoor appearing in the
Prospectus included in the Registration Statement on Form S-3 (File No.
333-9713).
DELOITTE & TOUCHE LLP
Phoenix, Arizona
May 2, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3 of
Outdoor Systems, Inc. of our report dated March 21, 1997, on our audits of the
financial statements of National Advertising Company as of December 31, 1996 and
1995 and for each of the three years in the period ended December 31, 1996
appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to our firm under the caption "Experts" in
such Prospectus.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
May 2, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 11,887
<SECURITIES> 0
<RECEIVABLES> 56,975
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 97,174
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 933,455
<CURRENT-LIABILITIES> 61,032
<BONDS> 0
0
0
<COMMON> 402
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 933,455
<SALES> 0
<TOTAL-REVENUES> 173,116
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 24,536
<INCOME-TAX> 10,200
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (17,780)
<CHANGES> 0
<NET-INCOME> (3,444)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
CONFORMED COPY
AGREEMENT OF PURCHASE AND SALE
Dated as of April 30, 1997
by and between
MINNESOTA MINING AND MANUFACTURING COMPANY,
as Seller
and
OUTDOOR SYSTEMS, INC.,
as Buyer
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I TERMS OF PURCHASE AND SALE...............................1
1.01. Purchase and Sale........................................1
1.02. The Closing; Closing Deliveries..........................1
1.03. Purchase Price and Payment...............................2
1.04. Purchase Price Adjustment................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.................5
2.01. Capitalization...........................................5
2.02. Organization.............................................5
2.03. Financial Statements.....................................5
2.04. Absence of Certain Changes or Events.....................6
2.05. Title to Assets..........................................6
2.06. Litigation; Compliance with Laws.........................6
2.07. Permits..................................................7
2.08. Environmental............................................7
2.09. Commitments..............................................8
2.10. Corporate Power and Authority; Effect of Agreement.......8
2.11. Employee Benefit Plans...................................8
2.12. Consents.................................................9
2.13. Taxes....................................................9
2.14. Fees.....................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER..................10
3.01. Corporate Power and Authority; Effect of Agreement.......10
3.02. Consents.................................................11
3.03. Availability of Funds....................................11
3.04. Litigation...............................................12
3.05. Purchase for Investment..................................12
ARTICLE IV COVENANTS OF SELLER......................................12
4.01. Conduct of Business......................................12
4.02. Access...................................................12
4.03. No Solicitation..........................................13
(i)
<PAGE> 3
4.04. Further Assurances.......................................13
4.05. Interim Statements.......................................13
ARTICLE V COVENANTS OF BUYER.............................................13
5.01. Books and Records; Personnel.............................13
5.02. Buyer's Knowledge of Business; Representations of
Seller Modified by Buyer's Knowledge...................14
5.03. Liabilities..............................................15
5.04. Performance Bonds........................................16
5.05. Imprints.................................................16
5.06. Consummation of Agreement................................16
5.07. Further Assurances.......................................17
ARTICLE VI ADDITIONAL COVENANTS...........................................17
6.01. Taxes....................................................17
6.02. Corporate Name...........................................21
6.03. Cash Management..........................................21
6.04. Filings; Other Action....................................22
6.05. Buyer Investigation; No Representations or Warranties;
Exclusivity of Remedies................................24
6.06. Excluded Assets; Included Businesses.....................26
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER.............................27
7.01. Representations, Warranties, Covenants of Seller.........27
7.02. No Prohibition...........................................28
7.03. Governmental Consents....................................28
7.04. Non-Foreign Status Statements............................28
7.05. Resignations.............................................28
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER............................29
8.01. Representations, Warranties, Covenants of Buyer..........29
8.02. No Prohibition...........................................29
8.03. Insurance................................................29
8.04. Performance Bonds........................................29
8.05. Governmental Consents....................................29
(ii)
<PAGE> 4
ARTICLE IX EMPLOYMENT AND EMPLOYEE BENEFITS ARRANGEMENTS...........30
9.01. Definitions.............................................30
9.02. Employment..............................................30
9.03. Seller's Benefits.......................................31
9.04. Buyer's Benefits........................................33
9.05. Severance...............................................33
9.06. Indemnity...............................................34
9.07. W-2 Matters.............................................34
9.08. Continuing Assistance...................................35
9.09. Union Employees.........................................35
ARTICLE X TERMINATION PRIOR TO CLOSING............................35
10.01. Termination.............................................35
10.02. Effect on Obligations...................................36
10.03. Termination Fee.........................................36
ARTICLE XI DISPUTE RESOLUTION......................................37
11.01. Unaided Negotiations....................................37
11.02. Mediation...............................................37
11.03. Litigation..............................................38
11.04. Governing Law; Personal Jurisdiction; Waiver of Jury....38
ARTICLE XII MISCELLANEOUS...........................................38
12.01. Survival................................................38
12.02. Indemnification.........................................39
12.03. Interpretive Provisions.................................43
12.04. Entire Agreement........................................43
12.05. Successors and Assigns..................................43
12.06. Headings................................................44
12.07. Modification and Waiver.................................44
12.08. Broker's Fees...........................................44
12.09. Expenses................................................44
12.10. Notices.................................................44
12.11. Public Announcements....................................45
12.12. Nonassignable Assets....................................46
12.13. Severability............................................46
12.14. Counterparts............................................46
12.15. Third Party Rights......................................46
(iii)
<PAGE> 5
AGREEMENT OF PURCHASE AND SALE
This Agreement, made and entered into this 30th day of April,
1997, by and between Minnesota Mining and Manufacturing Company, a Delaware
corporation ("Seller"), on the one hand, and Outdoor Systems, Inc., a Delaware
corporation ("Buyer"), on the other;
W I T N E S S E T H:
WHEREAS, Seller is the owner of all of the issued and
outstanding common stock, no par value (the "Stock"), of National Advertising
Company, a Delaware corporation (the "Company");
WHEREAS, the Company is in the business of owning,
constructing, posting and maintaining off-premises advertising displays,
consisting principally of painted bulletins, poster panels and mall advertising
displays of various sizes in the United States (such U.S. business, the "Outdoor
Advertising Business" or the "Business");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires
to purchase from Seller, all of the Stock;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements, and upon the terms and
subject to the conditions hereinafter set forth, the parties do hereby agree as
follows:
ARTICLE I
TERMS OF PURCHASE AND SALE
1.01. Purchase and Sale. On the Closing Date (as defined in Section
1.02), on the terms and subject to the conditions set forth in this Agreement,
Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Stock.
1.02. The Closing; Closing Deliveries. (a) The closing of the
transactions contemplated hereby (the "Closing") shall take place at Seller's
offices at 3M Center, St. Paul, Minnesota, commencing at 9 a.m., Central time,
on the fifth business day after termination or expiration of the applicable
waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), or at such other time and/or place and/or on such other date as
the parties may mutually agree (the "Closing Date"). Notwithstanding the above,
under no circumstances shall the Closing Date occur later
<PAGE> 6
than the Termination Date (as defined in Section 6.04(b)). Time is of the
essence in this transaction. Notwithstanding failure to meet the conditions set
forth in Section 7.02 (with respect to antitrust matters only) or Section 7.03,
Buyer's failure to close on or prior to the Termination Date shall constitute a
breach of this Agreement; provided, however, that Seller's failure to perform or
observe in any material respect any of its covenants or agreements contained in
this Agreement shall not have been the cause of, or result in, Buyer's failure
to close on or before such date.
(b) (i) In addition to and without limiting any other
provision of this Agreement, the Seller shall deliver to Buyer at the Closing
the following:
(A) the stock certificates evidencing the Stock,
together with such endorsements or duly executed assignments separate from
certificate as may be required to vest all right, title and interest in and to
the Stock in Buyer;
(B) the stock books, stock transfer ledgers, minute
books and corporate seals of the Company;
(C) the various certificates, instruments and
documents referred to in Article VII; and
(D) such other instruments as Buyer or its counsel
may reasonably request.
(ii) In addition to and without limiting any other
provision of this Agreement, Buyer shall pay or deliver, as the case may be, to
Seller as the Closing the following:
(A) the Purchase Price (as defined in Section 1.03)
and payable as set forth in Section 1.03;
(B) the payment described in Section 9.02(a);
(C) the various certificates, instruments and
documents referred to in Article VIII; and
(D) such other instruments as Seller or counsel for
Seller may reasonably request.
1.03. Purchase Price and Payment. (a) The aggregate purchase price
to be paid by Buyer for the Stock shall be $1,000,000,000 (one billion dollars),
as adjusted pursuant to Section 1.04 below (the "Purchase Price"). Payment of
the Deposit (as defined in Section 1.03(b)) shall be made pursuant to Section
1.03(b). Payment of the balance of the Purchase Price due on the Closing Date
shall be in U.S. dollars and shall be
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<PAGE> 7
made no later than 11 a. m., Central time, on the Closing Date by wire transfer
of immediately available funds to the account of Seller at a bank specified by
Seller. If payment of the Purchase Price is made after 11 a. m., Central time,
on the Closing Date, Buyer shall pay to Seller, in the manner set forth above,
interest on the Purchase Price at an annual rate equal to the prime rate as
reported in The Wall Street Journal on the Closing Date (the "Interest Rate")
plus 2%, from and including the Closing Date to but not including the next
business day following the Closing Date.
(b) Upon the execution of this Agreement, Buyer shall deposit
the amount of $20,000,000 (twenty million dollars) in U.S. dollars (the
"Deposit") with Seller, by wire transfer of immediately available funds to a
separate, interest-bearing account of Seller at a bank designated by Seller at
an interest rate of 5.25%. In the event Closing occurs, the Deposit (plus
interest at such rate) shall be applied to the Purchase Price. In the event
Closing does not occur, the Deposit (plus interest at such rate) shall be paid
pursuant to Section 10.03.
1.04. Purchase Price Adjustment. (a) Seller and Buyer agree that the
Purchase Price will be adjusted up or down by the amount by which the Company's
Working Capital (as hereinafter defined) on the Closing Date exceeds or is less
than the Company's Working Capital as of December 31, 1996 based on the Balance
Sheet (as defined in Section 2.03); provided, however, that Seller and Buyer
agree that the Purchase Price will be adjusted (and the Purchase Price
adjustment will be paid) only in the event that the amount that would be
refunded or paid under this Section 1.04 is greater than $20,000,000 (twenty
million dollars) (two percent of the Purchase Price without regard to any
adjustment under this Section 1.04). Working Capital shall mean current assets
less current liabilities as determined in accordance with the historical
accounting practices applied in the preparation of the Balance Sheet (as defined
in Section 2.03); provided, however, that Working Capital shall exclude (i) the
current portion of (A) deferred tax liabilities and (B) income tax liabilities
and (ii) cash on hand and in bonds and other cash items of the Company other
than amounts of Pre-Closing Cash (as defined in Section 6.03(a)) left by Seller
in Bank Accounts (as defined in Section 6.03(a)) or other locations as
contemplated by the proviso in Section 6.03(a). Buyer and Seller hereby confirm
and agree that, based upon the definition of Working Capital as set forth in
this Section 1.04(a) and as described in the Disclosure Schedule, Working
Capital at December 31, 1996 is $26,044,000 (twenty-six million, forty-four
thousand dollars).
(b) Within ninety (90) days after the Closing Date, Seller
will prepare and provide to Buyer a balance sheet of the Company as of the close
of business on the Closing Date (the "Closing Balance Sheet") and a calculation
of the working capital adjustment to the Purchase Price based on the Closing
Balance Sheet. The Closing Balance Sheet shall be prepared in accordance with
the historical accounting practices applied in the preparation of the Balance
Sheet with consistent classification,
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<PAGE> 8
judgments, and estimation methodology as used in the preparation of the Balance
Sheet. In preparing the Closing Balance Sheet, the amounts included for
litigation reserves and for any other reserves that were valued for the Balance
Sheet by subjective estimates shall be equal to the amounts (including zero)
included in respect of such items on the December 31, 1996 Balance Sheet except
to reflect changes that have actually occurred or events actually occurring
between December 31, 1996 and the date of the Closing Balance Sheet (in which
event the immediately preceding sentence shall govern the determination of any
changes in the reserve). The Closing Balance Sheet shall not take into account
any changes in circumstances or events occurring after the close of business on
the day immediately preceding the Closing Date.
(c) Buyer agrees that the Closing Balance Sheet delivered by
Seller to Buyer and the computation of the Purchase Price adjustment annexed
thereto shall be conclusive and binding upon the parties unless Buyer, within 10
days after the delivery to Buyer of the Closing Balance Sheet, notifies Seller
in writing that Buyer disputes any of the amounts set forth therein, specifying
the nature of the dispute and the basis therefor, and any refund or amount due
shall nonetheless be promptly made to the extent such amount is not in dispute.
The parties shall in good faith attempt to resolve any dispute, in which event
the Closing Balance Sheet and the computation of the Purchase Price adjustment,
as amended to the extent necessary to reflect the resolution of the dispute,
shall be conclusive and binding upon the parties. If any such dispute cannot be
resolved by the parties within 10 days after the date of the notice of the
dispute, it shall be referred to a mutually satisfactory independent public
accounting firm of national stature that has not been employed by either party
for the two years preceding the Closing Date. The determination of such firm
shall be conclusive and binding on each party. The fees of such firm shall be
borne equally by Buyer and Seller.
(d) (1) Buyer hereby acknowledges and agrees that access to
employees of the Company and representatives of Buyer may be required in order
that Seller may prepare the Closing Balance Sheet. Buyer shall make such persons
available to Seller and its representatives and shall give Seller and its
representatives all necessary access to the Books and Records (as defined in
Section 5.01(a)), without charge to Seller, as may reasonably be requested by
Seller, in order to assist in the preparation of the Closing Balance Sheet.
(2) Seller hereby agrees to furnish Buyer with any
documents or records in Seller's possession or control as may reasonably be
requested by Buyer in order to confirm the adjustments in this Section 1.04.
(e) On or before the one hundred and twentieth (120th) day
after the Closing Date, all required refunds or payments under this Section 1.04
shall be made on the basis of the Closing Balance Sheet.
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<PAGE> 9
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
2.01. Capitalization. The authorized capital stock of the Company
consists of 50,000 shares of Stock, of which 40,000 shares are outstanding; all
of such 40,000 shares of Stock are owned of record and beneficially by Seller.
All of the shares comprising the Stock are validly issued, fully paid and
non-assessable. There are outstanding no securities convertible into,
exchangeable for, or carrying the right to acquire, equity securities of the
Company, or subscriptions, warrants, options, rights or other arrangements or
commitments obligating the Company to issue or dispose of any of its equity
securities or any ownership interest therein. The sale and delivery of the Stock
to Buyer pursuant to Article I hereof will vest in Buyer legal and valid title
to the Stock, free and clear of all liens, security interests, pledges, adverse
claims and other encumbrances ("Encumbrances") (other than Encumbrances created
or suffered by Buyer).
2.02. Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing as a foreign corporation in all jurisdictions where the nature of the
property owned or leased by it, or the nature of the business conducted by it,
makes such qualification necessary and the absence of such qualification would
not have a material adverse effect on the business, assets, financial condition
or results of operations of the Company (a "Material Adverse Effect"). True and
complete copies of the certificate of incorporation and by-laws of the Company
have previously been delivered to Buyer. The Company does not have any
subsidiaries. Except as set forth on the Disclosure Schedule, the Company does
not engage in, and has not during the preceding 5 years engaged in, any business
except the Outdoor Advertising Business.
2.03. Financial Statements. Seller has delivered to Buyer audited
balance sheets of the Company as of December 31, 1996 and 1995 (the "Balance
Sheet") and audited statements of income and cash flows for each of the three
years in the period ended December 31, 1996, including footnotes thereto
(collectively, the "Financial Statements"), included in the Disclosure Schedule.
The Financial Statements fairly present in all material respects the financial
position of the Company as of December 31, 1996 and 1995 and the results of
operations and cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles
consistently applied except as disclosed in the notes thereto.
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<PAGE> 10
2.04. Absence of Certain Changes or Events. Except as otherwise set
forth in the Disclosure Schedule or as otherwise contemplated by this Agreement,
since December 31, 1996, the Company has not (i) suffered any damage,
destruction or casualty loss to its physical properties which has a Material
Adverse Effect; (ii) incurred or discharged any obligation or liability or
entered into any other transaction except in the ordinary course of business and
except for obligations, liabilities and transactions that do not individually or
in the aggregate have a Material Adverse Effect; (iii) suffered any material
adverse change in its assets, business or financial condition; or (iv) increased
the rate or terms of compensation payable or to become payable by the Company to
its key employees or increased the rate or terms of any bonus, pension or other
employee benefit plan covering any of its key employees, except in each case
increases occurring in the ordinary course of business in accordance with its
customary practices (including normal periodic performance reviews and related
compensation and benefit increases) or as required by any pre-existing
Commitment (as defined in Section 2.09).
2.05. Title to Assets. (a) Other than as set forth in Section
6.06(a), the Company has or will have prior to Closing good and marketable title
to all of the assets which it purports to own (including those assets reflected
on the December 31, 1996 Balance Sheet, except for assets and properties sold,
consumed or otherwise disposed of in the ordinary course of business since the
date of the Balance Sheet) ("Assets"), free and clear of all Encumbrances, other
than (i) as set forth in the Disclosure Schedule, (ii) for liens for taxes not
yet due and payable or due but not delinquent or being contested in good faith
by appropriate proceedings and (iii) Encumbrances which individually or in the
aggregate do not have a Material Adverse Effect; provided, however, that Seller
does not represent or warrant hereby that the lessors of any lease, license,
easement or other agreement (for real property or otherwise) (collectively, the
"Leases") to which the Company is a party have good and marketable title to the
property leased thereunder. To Seller's knowledge, (i) there are no mortgages or
deeds of trust on any real property owned or leased by the Company with respect
to which the Company is the mortgagor or the obligor and (ii) there are no liens
or security interests on the Assets securing obligations of the Company, or
guaranties by the Company of obligations, for borrowed money or evidenced by
notes, debentures or other similar instruments.
(b) For purposes of this Agreement, transfers under
condemnation and conveyances under threat of condemnation shall be considered in
the ordinary course of business.
2.06. Litigation; Compliance with Laws. To the knowledge of Seller,
except for matters (i) that have occurred in the ordinary course of the Outdoor
Advertising Business (including, but not limited to, local permitting issues),
(ii) that do not have a Material Adverse Effect, (iii) that are listed in the
Disclosure Schedule or (iv) that are described in Section 2.08:
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<PAGE> 11
(a) the Outdoor Advertising Business is not operating under or
subject to, or in default with respect to, any order, writ, injunction, judgment
or decree of any court or federal, state or local government;
(b) the Company has not received written notification of any
action or proceeding in any court or before any governmental authority
("Litigation") pending or threatened by or against the Company; and
(c) (i) other than with respect to the Company's off-premises
advertising displays, the Company is in compliance with applicable laws,
by-laws, regulations, orders or decrees, and the present uses by the Company of
the assets conveyed hereby do not violate or fail to comply with any such laws,
regulations, orders or decrees in any material respect and (ii) with respect to
the Company's off-premises advertising displays, the Company has not received
written notification from any federal, state, local or other governmental
authority that (x) the Company is not in compliance with applicable laws,
regulations, orders or decrees, or (y) the present uses by the Company of such
off-premises advertising displays violate or fail to comply with any such laws,
regulations, orders or decrees in any material respect.
2.07. Permits. To the knowledge of Seller, the Disclosure Schedule
lists all material licenses and permits paid by the Company as of the date set
forth on such listing in connection with the Outdoor Advertising Business and
issued to the Company by any federal or state governmental authority.
2.08. Environmental. (a) To the knowledge of Seller, no hazardous
substance (as defined under applicable federal, state, local or foreign law) has
been treated, stored, disposed of or discharged into the environment on or from
the premises of any real property owned by the Company or subject to any Lease
which is required by law, rule or regulation currently in effect to be
remediated by or at the expense of Seller or the Company, other than (i) as
listed in the Disclosure Schedule or (ii) where the cost of such remediation
individually or in the aggregate would not have a Material Adverse Effect.
(b) Buyer and Seller agree that the only representations and
warranties of Seller in this Agreement as to any Environmental Matters are those
contained in Section 2.06 and this Section 2.08, and that such representations
and warranties relate only to the present use of the property owned by the
Company or subject to any Lease. As used herein, the term "Environmental
Matters" means any matter arising out of or relating to environment, safety,
health or sanitation or the production, storage, handling, use, emission,
release, discharge or disposal of any substance, product or waste which is
hazardous or toxic or which is regulated by municipal, state, federal, foreign
or other law.
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<PAGE> 12
2.09. Commitments. The Disclosure Schedule lists each written
contract or agreement and, to the knowledge of Seller, each oral agreement, to
which the Company is a party or by which the Company is bound and which is
material to the business or financial condition of the Company (collectively,
the "Commitments"). Except as set forth in the Disclosure Schedule, to Seller's
knowledge, the Company is not in default under any of the Commitments, which
default has a Material Adverse Effect.
2.10. Corporate Power and Authority; Effect of Agreement. (a) Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to execute, deliver and perform this Agreement and the Ancillary
Documents (as defined in Section 12.01) and to consummate the transactions
contemplated hereby and thereby.
(b) The execution, delivery and performance by Seller of this
Agreement and the Ancillary Documents and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Seller.
(c) This Agreement has been, and the Ancillary Documents when
executed and delivered will be, duly and validly executed and delivered by
Seller; and this Agreement constitutes, and the Ancillary Documents when
executed and delivered will constitute, valid and binding obligations of Seller
enforceable against Seller in accordance with their respective terms, except to
the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally, and (ii) is subject to general principles of
equity.
(d) The execution, delivery and performance by Seller of this
Agreement and the Ancillary Documents and the consummation by Seller of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time, or both, (i) violate any provision of
law, rule or regulation to which Seller or the Company is subject, (ii) violate
any order, judgment or decree applicable to Seller or the Company, or (iii)
violate any provision of the certificate of incorporation or the by-laws of
Seller or the Company; except, in each case, for violations which individually
or in the aggregate would not materially hinder or impair the consummation of
the transactions contemplated hereby and thereby and would not have a Material
Adverse Effect.
2.11. Employee Benefit Plans. (a) The Disclosure Schedule lists all
material Company Benefit Plans and material Benefit Arrangements (as defined in
Section 9.01). True and complete copies thereof, where in writing, have
previously been delivered or made available to Buyer.
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<PAGE> 13
(b) With respect to each of the Company Benefit Plans intended
to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), except as set forth in the Disclosure Schedule, (i) a favorable
determination letter has been issued by the Internal Revenue Service (the "IRS")
that considers all amendments to such Company Benefit Plans required by the Tax
Reform Act of 1986, and (ii) there have been no prohibited transactions (within
the meaning of Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Code) for which no exemption
exists under Section 408 of ERISA or Section 4975 of the Code and for which
there is any liability or civil penalty assessed pursuant to Section 502(i) of
ERISA or taxes imposed by Section 4975 of the Code which would individually or
in the aggregate have a Material Adverse Effect.
(c) Except as set forth in the Disclosure Schedule, the
Company Benefit Plans and the Benefit Arrangements have been maintained in
accordance with their terms and all provisions of applicable law, except where
the failure to do so does not have a Material Adverse Effect.
(d) Except as set forth in the Disclosure Schedule, the
Company does not have any obligation to contribute to a "multiemployer plan" as
defined in Section 3(37) of ERISA or a Benefit Plan subject to Title IV of ERISA
with respect to any Employees or any Union Employees (as defined in Section
9.01(c)).
2.12. Consents. To the knowledge of Seller, no consent, approval or
authorization of, or exemption by, or filing with, any governmental authority is
required to be obtained or made by Seller in connection with the execution,
delivery and performance by Seller of this Agreement and the Ancillary Documents
or the taking by Seller of any other action contemplated hereby or thereby,
other than (i) pursuant to the HSR Act, (ii) as listed in the Disclosure
Schedule or (iii) such consents, approvals, authorizations or exemptions which
individually or in the aggregate, if not made, obtained or granted, would not
have a Material Adverse Effect and would not materially affect the ability of
Seller to execute, deliver and perform this Agreement and the Ancillary
Documents or the transactions contemplated hereby or thereby.
2.13. Taxes. (a) Except as set forth in the Disclosure Schedule, all
federal, state, local and foreign tax returns and reports required to be filed
with respect to the Company have been filed in a timely manner (taking into
account all extensions of due dates) and all taxes shown as due thereon have
been paid, except where the failure to so file or pay, individually or in the
aggregate, does not have a Material Adverse Effect. Except as set forth in the
Disclosure Schedule, no deficiencies for any taxes in respect of the Company
have been asserted in writing against the Company which remain unpaid and which
individually or in the aggregate have a Material Adverse Effect.
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<PAGE> 14
(b) Neither Seller nor the Company is a "foreign person"
within the meaning of Section 1445(b)(2) of the Code.
2.14. Fees. Except for the fees payable to Goldman, Sachs & Co.,
neither Seller nor the Company has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.01. Corporate Power and Authority; Effect of Agreement. (a) Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to execute, deliver and perform this Agreement and the
Ancillary Documents and to consummate the transactions contemplated hereby and
thereby.
(b) The execution, delivery and performance by Buyer of this
Agreement and the Ancillary Documents and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Buyer.
(c) This Agreement has been, and the Ancillary Documents when
executed and delivered will be, duly and validly executed and delivered by
Buyer; and this Agreement constitutes, and the Ancillary Documents when executed
and delivered will constitute, valid and binding obligations of Buyer
enforceable against Buyer in accordance with their respective terms, except to
the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally, and (ii) is subject to general principles of
equity.
(d) The execution, delivery and performance by Buyer of this
Agreement and the Ancillary Documents and the consummation by Buyer of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time, or both, (i) violate any provision of
law, rule or regulation to which Buyer is subject, (ii) violate any order,
judgment or decree applicable to Buyer, or (iii) violate any provision of the
Certificate of Incorporation or the By-laws of Buyer; except, in each case, for
violations which individually or in the aggregate would not
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<PAGE> 15
materially hinder or impair the consummation of the transactions contemplated
hereby and thereby.
3.02. Consents. Except pursuant to the HSR Act and except for
filings pursuant to applicable federal securities laws and regulations, no
consent, approval or authorization of, or exemption by, or filing with, any
governmental authority is required to be obtained or made by Buyer in connection
with the execution, delivery and performance by Buyer of this Agreement, or the
taking by Buyer of any other action contemplated hereby.
3.03. Availability of Funds. (a) Buyer will have available on the
Closing Date sufficient funds to enable it to consummate the transactions
contemplated by this Agreement.
(b) Canadian Imperial Bank of Commerce ("CIBC") and CIBC Wood
Gundy Securities Corp. ("CIBCWG") have issued to Buyer, and Buyer has received
and accepted from CIBC and CIBCWG, a commitment letter dated as of the date
hereof (the "Senior Credit Facilities Commitment Letter"), whereby CIBC has
committed to provide to Buyer a credit facility consisting of a term loan
facility and a revolving credit facility, subject to the terms and conditions of
the Senior Credit Facilities Commitment Letter. CIBC, Inc. and CIBC WG Argosy
Merchant Fund 2, L.L.C. ("CIBC Argosy") have issued to Buyer, and Buyer has
accepted from CIBC, Inc. and CIBC Argosy, a commitment letter dated as of the
date hereof (the "Bridge Loan Commitment Letter" and, collectively with the
Senior Credit Facilities Commitment Letter, the "Commitment Letters"), whereby
CIBC, Inc. has committed to provide a senior subordinated bridge loan and CIBC
Argosy has committed to purchase Buyer's Senior Increasing Rate Redeemable
Preferred Stock, subject to the terms and conditions of the Bridge Commitment
Letter. Buyer has delivered true and complete copies of the Commitment Letters
to Seller. The aggregate amount of financing pursuant to the Commitment Letters
will be sufficient to enable Buyer to consummate the transactions contemplated
by this Agreement and to refinance, to the extent necessary, Buyer's existing
debt. The Commitment Letters are in full force and effect without amendment or
modification, except for any amendments or modifications made after the date of
this Agreement without otherwise causing the terms of this Section 3.03 to
become untrue and without otherwise having a material adverse effect upon
Buyer's right to funding of the credit and equity facilities under the
Commitment Letters.
(c) Consummation of the transactions contemplated hereby and
by the Commitment Letters will not cause or result in any breach or default
(including any event which, with notice or lapse of time or both would be a
breach or a default) or trigger any repurchase requirements under any of the
terms or provisions of any
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<PAGE> 16
indebtedness of Buyer or its subsidiaries that will be outstanding after
consummation of the transactions contemplated hereby.
3.04. Litigation. There is no Litigation pending or, to Buyer's
knowledge, threatened (i) against Buyer or any of its affiliates with respect to
which there is a reasonable likelihood of a determination which would materially
affect the ability of Buyer to perform its obligations under this Agreement, or
(ii) which seeks to enjoin or obtain damages in respect of the consummation of
the transactions contemplated hereby. Neither Buyer nor any of its affiliates is
subject to any outstanding orders, rulings, judgments or decrees which would
materially affect the ability of Buyer to perform its obligations under this
Agreement.
3.05. Purchase for Investment. Buyer is purchasing the Stock for
investment and not with a view to any public resale or other distribution
thereof, except in compliance with applicable securities laws. Buyer
acknowledges that it has received, or has had access to, all information which
it considers necessary or advisable to enable it to make a decision concerning
its purchase of the Stock.
ARTICLE IV
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
4.01. Conduct of Business. Except as may be otherwise contemplated
by this Agreement or required by any of the documents listed in the Disclosure
Schedule or except as Buyer may otherwise consent to in writing (which consent
shall not be unreasonably withheld), from the date hereof and prior to the
Closing Date, Seller will (i) cause the Company to (x) in all material respects
operate the Outdoor Advertising Business only in the ordinary course, (y) use
its reasonable efforts to keep available until the Closing Date the services of
its present employees and agents (as a group) involved in the Outdoor
Advertising Business, and (z) use its reasonable efforts to preserve its
relationship with its material lenders, suppliers, contractors, customers,
lessors, advertisers, licensors and licensees and others having material
business dealings with the Outdoor Advertising Business such that the Outdoor
Advertising Business will not be materially impaired and (ii) use its reasonable
efforts to maintain in full force and effect Seller's self-insurance plan which
insures, among other affiliates of Seller, the Company.
4.02. Access. From the date hereof and prior to the Closing Date,
Seller shall provide Buyer with such information as Buyer may from time to time
reasonably request with respect to the Company and the transactions contemplated
by this Agreement and the Ancillary Documents, and shall provide Buyer and its
accountants, counsel,
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consultants and other representatives reasonable access, during regular business
hours and upon reasonable notice, to the personnel, properties, books and
records of the Company as Buyer may from time to time reasonably request;
provided, however, that Seller shall not be obligated to provide Buyer with any
information which, in the sole discretion of Seller, relates to trade secrets or
the disclosure of which would violate any law, rule or regulation or term of any
Commitment, or if the provision thereof would, in the sole discretion of Seller,
adversely affect the ability of Seller, the Company or any of their affiliates
to assert attorney-client, attorney work product or other similar privilege, and
provided, further, that any information provided under this Section 4.02 shall
be limited to information available at Seller's headquarters or such other
location as designated by Seller until such time as Seller has made a public
announcement or issued a press release concerning the transactions contemplated
herein, whichever is earlier. Any disclosure whatsoever during such
investigation by Buyer shall not constitute an enlargement of or additional
representations or warranties of Seller beyond those specifically set forth in
this Agreement. All such information and access shall be subject to the terms
and conditions of the letter agreement dated February 19, 1997 (the
"Confidentiality Agreement").
4.03. No Solicitation. From the date hereof and prior to the Closing
Date, Seller shall not, nor permit any of its affiliates to, solicit or
encourage any inquiries or proposals for, or enter into any discussions with
respect to, the acquisition or disposition of the Company.
4.04. Further Assurances. At any time or from time to time after the
Closing, Seller shall, at the request of Buyer and at Buyer's expense, execute
and deliver any further instruments or documents and take all such further
action as Buyer may reasonably request in order to evidence the consummation of
and give effect to the transactions contemplated hereby and by the Ancillary
Documents.
4.05. Interim Statements. Prior to Closing, and in addition to the
information to be provided pursuant to Section 1.04 above, Seller agrees to
promptly provide to Buyer unaudited monthly net sales results of the Company
with respect to all periods after December 31, 1996.
ARTICLE V
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
5.01. Books and Records; Personnel. For a period of seven years from
the Closing Date:
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(a) Buyer shall not dispose of or destroy any books and
records relating to the Company for periods prior to the Closing ("Books and
Records") without first offering to turn over possession thereof to Seller by
written notice to Seller at least 30 days prior to the proposed date of such
disposition or destruction;
(b) Buyer shall, upon prior written notice, allow Seller and
its agents access to all Books and Records during normal working hours at
Buyer's principal place of business or at any location where any Books and
Records are stored, and Seller shall have the right, at its own expense, to make
copies of any Books and Records; provided, however, that any such access or
copying shall be had or done in such a manner so as not to interfere with the
normal conduct of Buyer's business;
(c) Buyer shall make available to Seller upon written request
(i) copies of any Books and Records, (ii) Buyer's personnel to assist Seller in
locating and obtaining any Books and Records, and (iii) any of Buyer's personnel
whose assistance or participation is reasonably required by Seller or any of its
affiliates in anticipation of, or preparation for, existing or future
Litigation, tax returns or other matters in which Seller or any of its
affiliates is involved. Seller shall reimburse Buyer for the reasonable
out-of-pocket expenses incurred by Buyer in performing the covenants contained
in this Section 5.01(c); provided, however, that any such access or copying
shall be had or done in such manner so as not to interfere with the normal
conduct of Buyer's business.
(d) The foregoing provisions of this Section 5.01 shall be in
addition to the obligations of Buyer under Sections 6.01(g) and 12.02(c)(ii).
5.02. Buyer's Knowledge of Business; Representations of Seller
Modified by Buyer's Knowledge. To the knowledge of Buyer, the representations
and warranties of Seller made in this Agreement or in any Ancillary Document
entered into on or prior to the date hereof are true and correct. Buyer hereby
agrees that to the extent any representation or warranty of Seller made herein
or in any Ancillary Document is, to the knowledge of Buyer acquired prior to the
date hereof, untrue or incorrect, (i) Buyer shall have no rights hereunder or
thereunder by reason of such untruth or inaccuracy, and (ii) any such
representation or warranty by Seller shall be deemed to be amended to the extent
necessary to render it consistent with such knowledge of Buyer. In addition,
between the date hereof and the Closing, Buyer may acquire additional knowledge
concerning the matters covered by the representations and warranties of Seller.
Accordingly, Buyer agrees (without prejudice to any rights which Buyer may have
under Sections 7.01, 10.01 and 10.02) that, if the Closing occurs, then to the
extent any representation or warranty of Seller made herein or in any Ancillary
Document entered into at or prior to the Closing, to the knowledge of Buyer
acquired from and after the date hereof and prior to the Closing, is untrue or
incorrect, (x) Buyer shall have no rights hereunder or thereunder by reason of
such untruth or inaccuracy, and (y) any such
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<PAGE> 19
representation or warranty by Seller shall be deemed to be amended to the extent
necessary to render it consistent with such knowledge of Buyer.
5.03. Liabilities. (a) Buyer understands and agrees that, from and
after the Closing, except as specifically provided in Section 6.01 to the
contrary, and except for any obligations expressly incurred by Seller in its
capacity as seller under this Agreement (including, without limitation, under
Sections 9.02, 9.03, 9.07, 12.02, 12.08, 12.09 and 12.12) (collectively, "Seller
Obligations"), neither Seller nor any its affiliates shall have any liability or
responsibility for any liability or obligation of, or arising out of, or
relating to, the Outdoor Advertising Business or the operation of the Outdoor
Advertising Business in the United States by the Company (including, but not
limited to, any liability or obligation of Seller arising out of, or relating
to, the ownership by Seller of the Business) (including, in each case, as to
tradeouts and barter (as such terms are used in the industry), Environmental
Matters, Litigations and Nonassignable Assets (as defined in Section 12.12)), of
whatever kind or nature, whether contingent or absolute, whether arising prior
to or on or after, and whether determined or indeterminable on, the Closing
Date, and whether or not specifically referred to in this Agreement (such
liabilities and obligations, except as specifically provided in Section 6.01 to
the contrary, except for the Seller Obligations and except for such liabilities
arising from Seller's fraud, willful misconduct or bad faith, being collectively
referred to as the "Liabilities"). Accordingly, Buyer agrees that, effective
upon the Closing, Buyer shall assume and be responsible for and indemnify Seller
and its affiliates and hold each of them harmless against, and shall not bring
any claim or action against Seller or its affiliates with respect to, any
liability, loss, damage, claim (including third-party claims, whether or not
meritorious), cost or expense (including, without limitation, reasonable
attorneys' fees and disbursements) (collectively, "Losses") incurred or suffered
by any of them arising out of any of the Liabilities.
(b) Buyer shall pay each Liability (or reimburse Seller
therefor) on the later of the date on which such Liability is due or within five
days after Seller advises Buyer of the amount thereof; provided, however, that
Buyer may dispute any such Liability with the third party to whom such Liability
is owed, in good faith, by appropriate proceedings after written notice to
Seller of its intent to do so and receipt of Seller's written consent thereto
(which consent shall not be unreasonably withheld and shall be deemed given if
Seller does not object thereto in writing within ten days after receipt of
Buyer's written notice). The grant to Buyer of such right to dispute shall not
in any way affect the obligation of Buyer, pursuant to Section 12.02(b) or
otherwise, to indemnify Seller and its affiliates against Losses sustained or
incurred by any of them arising out of or relating to such Liability, including
by reason of Buyer's disputing such Liability.
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<PAGE> 20
(c) Buyer shall procure insurance, reasonably acceptable to
Seller and the Company's insurers (the "Company's Insurers"), insuring,
effective from and after the Closing, any product liability, general liability,
automobile liability and other claims relating to the Company in respect of
periods prior to the Closing ("Claims"), for which Seller or any of its
affiliates is responsible vis-a-vis the Company's Insurers and for which Buyer
has assumed responsibility pursuant to Section 5.03(a) so that (i) from and
after the Closing, the Company's Insurers will no longer look to Seller or any
of its affiliates for reimbursement of any payment made by the Company's
Insurers in respect of any Claim, and (ii) at the Closing, the Company's
Insurers will release any letters of credit of Seller or any of its affiliates
held by the Company's Insurers to secure the obligations of Seller or any of its
affiliates with respect to Claims.
5.04 Performance Bonds. At the Closing, Buyer shall deliver to
Seller replacement (or, if the beneficiary thereof will not permit replacement,
back-up) performance bonds, payment bonds, bid bonds, letters of credit,
guarantees and similar instruments, in an aggregate principal amount and with
terms and from banks or other financial institutions or surety companies in each
case reasonably satisfactory to Seller, to replace (or, to the extent required
as described above, to collateralize) any performance bonds, payment bonds, bid
bonds, letters of credit, guarantees and similar instruments of Seller or of any
of its affiliates related to the Company of which Seller advises Buyer or of
which Buyer otherwise has knowledge prior to the Closing (in each case, or
portions thereof) remaining outstanding on the Closing Date with respect to
which Seller or any of its affiliates will have any liability after the Closing.
5.05. Imprints. (a) No later than 180 days after the Closing Date,
Buyer, at its sole expense, shall remove from all advertising displays and
vehicles transferred hereby all imprints containing the Names (as defined in
Section 6.02) or Logos (as defined in Section 6.02); provided, however, that (i)
Buyer shall remove all such imprints within 120 days after the Closing Date with
respect to any such advertising displays containing tobacco advertising, and
(ii) Buyer shall not place any new tobacco advertising on any such advertising
displays without removing all such imprints from such displays.
(b) Buyer shall indemnify Seller and its affiliates and hold
them harmless from and against any and all Losses incurred or suffered by any of
them arising out of or resulting from the use of the Names or any similar name
or any Logos incorporating such Names or any similar Names by Buyer after the
Closing, whether or not such use is contemplated under this Section 5.05.
5.06. Consummation of Agreement. Buyer will take all corporate and
other action required of it to carry out the transactions contemplated by this
Agreement and the Commitment Letters, and will not take any action that would
have the effect of impeding or preventing the consummation of the transactions
contemplated by this
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<PAGE> 21
Agreement, to the end that the transactions contemplated by this Agreement
shall be fully carried out.
5.07. Further Assurances. At any time or from time to time after the
Closing, Buyer shall, at the request of Seller and at the expense of Seller,
execute, acknowledge and deliver any further assumption agreements, instruments
or documents and take all such further action as Seller may reasonably request
in order to evidence the consummation of and give effect to the transactions
contemplated hereby and by the Ancillary Documents, and the assumption by Buyer
of the Liabilities.
ARTICLE VI
ADDITIONAL COVENANTS
6.01. Taxes.
(a) Returns. (i) Consolidated Returns. Buyer shall cause the
Company to consent to join, for all taxable periods of the Company ending on or
before the Closing Date for which the Company is eligible to do so, in any
consolidated, combined or unitary Income Tax (as defined in Section 6.01(j)(i))
returns which Seller shall request the Company to join. Seller shall cause to be
prepared and filed all such consolidated, combined or unitary Income Tax
returns. Buyer agrees to cooperate with Seller and its affiliates in the
preparation of the portions of such Income Tax returns pertaining to the
Company, and hereby agrees to take no position inconsistent with the Company
being a member of such group. Seller shall cause to be timely paid all Income
Taxes to which such Income Tax returns relate for all periods covered by such
returns.
(ii) Other Pre-Closing Returns. Seller shall cause to
be prepared, and Buyer shall cause to be timely filed, all required Income Tax
returns of the Company (other than those to be filed by Seller pursuant to
Section 6.01(a)(i)) for any period which ends on or before or includes the
Closing Date, for which Income Tax returns have not been filed as of such date.
Buyer and its affiliates, including the Company after the Closing Date, shall
cooperate with Seller and its affiliates in the preparation of such Income Tax
returns. Seller shall provide such Income Tax returns to Buyer not less than
five business days before the due date (including extensions) for filing such
returns.
(b) Payments. Buyer shall timely cause to be paid all Income
Taxes with respect to the Income Tax returns to be caused to be filed by Buyer
pursuant to Section 6.01(a)(ii). Such Income Taxes to be caused to be paid by
Buyer, to the extent attributable to any period or portion of a period ending on
or before the Closing Date, shall be referred to herein as "Pre-Closing Taxes".
Seller shall pay to Buyer an amount
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equal to the Pre-Closing Taxes due with respect to any such Income Tax returns
caused to be filed by Buyer (after taking into account any estimated Income
Taxes previously paid and net of any tax benefits to Buyer or any of its
affiliates, including the Company). Where the Pre-Closing Taxes involve a period
which begins before and ends after the Closing Date (a "Straddle Period"), such
Pre-Closing Taxes shall be calculated on the basis of taxable income of the
Company determined pursuant to the principles of Treasury Regulations Section
1.1502-76(b)(i) as though the taxable year of the Company terminated at the
Closing. Any amounts owed by Seller to Buyer pursuant to this Section 6.01(b)
shall be paid by Seller within ten days of Buyer's request therefor.
(c) Refunds. Any refunds or credits of Income Taxes (including
any interest thereon) received by or credited to the Company attributable to
periods ending on or prior to the Closing Date or to Straddle Periods (in the
case of Straddle Periods, which were not borne by Buyer) (collectively,
"Seller's Refunds"), shall be for the benefit of Seller, and Buyer shall use its
best efforts to obtain any Seller's Refunds and shall cause the Company to pay
over to Seller any Seller's Refunds immediately upon receipt thereof. In
addition, if the Pre-Closing Taxes with respect to a Straddle Period of the
Company are less than the sum of the Income Tax payments made by or credited to
the Company on or before the closing Date and payments made to Buyer pursuant to
Section 6.01(b), in each case with respect to such Straddle Period, Buyer shall
cause the Company to pay to Seller the excess of such sum over such Pre-Closing
Taxes immediately upon the Company receiving the benefit of such excess through
a reduction in any Income Tax payment required to be made by the Company after
the Closing.
(d) Buyer's Indemnification. If the Closing shall occur, and
subject to Buyer fulfilling its obligations under Section 6.01(f), Seller shall
indemnify and hold harmless Buyer against any and all liability (including,
without limitation, interest, additions to tax and penalties, but net of any tax
benefits to Buyer or any of its affiliates, including the Company) for (i)
Income Taxes due with respect to or assessed against the Company for any taxable
period of the Company ending on or prior to the Closing Date, other than any
Buyer's Taxes (as defined in Section 6.01(e)), (ii) Pre-Closing Taxes that
relate to a Straddle Period, and (iii) Income Taxes of any member (other than
the Company) of any affiliated group of which Seller is a member assessed
against the Company for any taxable period ending prior to or including the
Closing Date by reason of the Company being severally liable for the entire tax
of such affiliated group pursuant to Treasury Regulations Section 1.1502-6 or
any analogous state or local tax provision.
(e) Seller's Indemnification. It is understood by the parties
hereto that Seller shall not indemnify Buyer or any of its affiliates and
instead that Buyer shall, if the Closing shall occur, pay, or cause to be paid,
and Buyer and the Company shall jointly and severally indemnify Seller and its
affiliates against and hold them harmless from any liability for taxes,
additions to tax, interest, penalties or other tax detriment (which, shall
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include, but not be limited to, the utilization of any net operating loss or
capital loss or the utilization of any tax credits or other tax attributes by
the Company) arising from any action or failure to act by Buyer or any affiliate
of Buyer (including the Company) from and after the Closing, including, without
limitation, any sale or other disposition of assets by the Company from and
after the Closing or the operation or ownership of the business of the Company
from and after the Closing ("Buyer's Taxes").
(f) Audits. Buyer shall promptly notify Seller in writing upon
receipt by Buyer or any affiliate of Buyer (including the Company after the
Closing Date) of notice of any pending or threatened federal, state, local or
foreign tax audits or assessments which may affect the Income Tax liabilities of
the Company and for which Seller would be liable under Section 6.01(d). Seller
shall have the sole right to represent the interests of the Company in any
federal, state, local or foreign Income Tax matter, including any audit or
administrative or judicial proceeding or the filing of any amended return, which
involves a refund to which Seller would be entitled under Section 6.01(c) or an
Income Tax liability or potential Income Tax liability for which Seller would be
liable under Section 6.01(d) (a "Tax Matter"), and to employ counsel of its
choice at its expense. Buyer agrees that it will cooperate fully with Seller and
its counsel in the defense or compromise of any Tax Matter. In no case shall
Buyer (including the Company after the Closing Date) settle or otherwise
compromise any Tax Matter without the prior written consent of Seller.
(g) Cooperation. After the Closing Date, Buyer and Seller
shall make available to the other, as reasonably requested, all information,
records or documents relating to tax liabilities or potential tax liabilities of
the Company for all periods prior to or including the Closing Date and shall
preserve all such information, records and documents until the expiration of any
applicable statute of limitations or extensions thereof. Buyer shall prepare and
provide to Seller such federal, state, local and foreign tax information
packages as Seller shall request for the use of Seller in preparing any tax
return that relates to the Company. Such tax information packages shall be
completed by Buyer and provided to Seller within 30 days after request therefor.
Notwithstanding any other provisions hereof, each party shall bear its own
expenses in complying with the foregoing provisions.
(h) Section 338 Elections and Forms. (i) Buyer and Seller
hereby covenant and agree with each other that they will join in making an
election under section 338(h)(10) of the Code, and the regulations promulgated
thereunder, and any applicable analogous provision of state or local law, with
respect to the sale and acquisition of the Stock hereunder (the "Section
338(h)(10) Elections").
(ii) In the case of any Section 338(h)(10) Elections
that are made in accordance with Section 6.01(h)(i) hereof,
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(A) Buyer shall be responsible for the preparation
and timely filing of all returns (other than Income Tax returns the
responsibility for the preparation and filing of which is governed by Section
6.01(a)), documents, statements and other forms required to be filed with any
federal, state or local taxing authority in connection with the Section
338(h)(10) Elections (the "Section 338 Forms"); provided, however, that Seller
shall be solely responsible for calculating the gain or loss resulting from
making the Section 338(h)(10) Elections;
(B) Seller shall cooperate with Buyer to enable Buyer
to prepare and file all Section 338 Forms and shall execute and deliver to Buyer
such documents or forms as are required by the Code or the regulations
promulgated thereunder (and any applicable analogous provision of state or local
law) to properly complete the Section 338 Forms and to complete the Section 338
Elections, provided that such material is completed and delivered by Buyer to
Seller for execution at least 60 days prior to the date Buyer wishes to file
such material;
(C) The Purchase Price, liabilities of the Company,
and other relevant items, shall be allocated in accordance with the rules of
section 338 of the Code and the regulations promulgated thereunder. Such
allocation shall be set forth on a schedule which shall be prepared jointly by
Buyer and Seller within 90 days following the Closing Date. All allocations
contained in such schedule shall be used by each party and its affiliates in
preparing the Section 338 Forms and all relevant Income Tax returns, subject to
adjustment to reflect (i) Seller's selling expenses as a reduction of sales
proceeds, and (ii) Buyer's acquisition expenses as an addition to Purchase
Price;
(D) Buyer hereby indemnifies and holds Seller, the
Company and any affiliated person or entity affected thereby harmless from and
against any and all claims, demands, liabilities, obligations, taxes, actions,
suits, proceedings, losses, damages, costs, expenses, assessments, judgments,
recoveries and deficiencies, including interest, penalties and reasonable
attorneys' fees, of every kind and description, contingent or otherwise, arising
out of or resulting from any adverse tax consequences ("Tax Damages") that may
result (a) if Buyer makes an election under section 338(g) of the Code and Buyer
and Seller do not make Section 338(h)(10) Elections, or (b) if any income or
gain is otherwise recognized by the Company after Buyer acquires control of the
Company; and
(E) Provided that Buyer shall have fulfilled all of
its obligations under this Section 6.01(h) and as required by the Code or any
regulations promulgated thereunder and any analogous provisions of state or
local law with respect to the Section 338(h)(10) Election, Seller shall
indemnify Buyer, the Company and any affiliated person or entity affected
thereby harmless from and against any and all Tax
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Damages that may result if Seller does not make a Section 338(h)(10) Election as
provided above.
(i) Tax Sharing. Other than pursuant to this Agreement, as of
the Closing Date, the Company shall not have any further rights or obligations
under any tax-sharing agreement with or among the Seller and/or any of its
affiliates.
(j) Miscellaneous. (i) For purposes of this Agreement, "Income
Tax" means any federal, state, local or foreign tax (including interest,
penalties or additions to such tax) based upon, measured by, or calculated with
respect to, net income.
(ii) Buyer shall bear the cost of any documentary
stamp, sales, excise, transfer, stock transfer, real property transfer taxes or
real property gains taxes (provided that such real property gains taxes are not
an Income Tax) and similar taxes payable in respect of the sale of the Stock
hereunder.
(iii) Except as otherwise required by law, including any
contrary determination (within the meaning of section 1313 of the Code), Buyer
and Seller agree to treat all payments made under this Section 6.01 or Article
XII as adjustments to Purchase Price for tax purposes.
6.02. Corporate Name. Buyer acknowledges that, as between Buyer and
Seller, Seller has the absolute and exclusive proprietary right to all names,
marks, trade names, trademarks, service names and service marks (collectively,
"Names") incorporating "Minnesota Mining and Manufacturing", "3M", "3M Media"
and "3M National" and to all corporate symbols or logos (collectively, "Logos")
incorporating "Minnesota Mining and Manufacturing", "3M", "3M Media" or "3M
National", all right to which and the goodwill represented thereby and
pertaining thereto are being retained by Seller. Buyer agrees that it will not
use the Names "Minnesota Mining and Manufacturing", "3M", "3M Media" or "3M
National" or any Logo incorporating such Names in connection with the sale of
any products or services or otherwise in the conduct of its business, except as
expressly permitted by Seller in writing.
6.03. Cash Management. (a) Seller shall be entitled, prior to the
Closing, to collect and retain the proceeds of all items received in any bank
account of the Company (collectively, the "Bank Accounts") or otherwise in
respect of the Company (including the amount of any checks received by the
Company), and all other cash on hand, through the close of business on the day
immediately preceding the Closing Date (the "Pre-Closing Cash"); provided,
however, that Seller may in its sole discretion not collect but leave in any of
the Bank Accounts or other locations of the Company all or any portion of the
Pre-Closing Cash, and the aggregate amount of such uncollected Pre-Closing Cash,
calculated, in the case of foreign cash, at the exchange rate at the close of
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business on the day immediately preceding the Closing Date as reported in The
Wall Street Journal, shall be reflected in the Working Capital adjustment to the
Purchase Price.
(b) As part of Seller's cash management program, Seller and
the Company maintain the bank account(s) set forth opposite their names in the
Disclosure Schedule from which transfers to Seller and its applicable affiliates
may be made, and into which certain payments from Seller and its applicable
affiliates may be deposited (such accounts being referred to collectively as the
"Seller Accounts"). At the Closing, Seller shall retain all of the Seller
Accounts (including any positive cash balance contained therein) (which shall
not be reflected in the Working Capital adjustment to the Purchase Price), it
being the intention of Buyer to open new accounts to serve the purposes
theretofore served by the Seller Accounts.
6.04. Filings; Other Action. (a) Subject to the terms and conditions
herein provided, each party shall:
(i) Promptly make their respective filings and thereafter
make any other required submissions under the HSR Act with respect to the
transactions contemplated hereby;
(ii) Use their best efforts to cooperate with one another
in (x) determining which filings are required to be made prior to the
consummation of the transactions contemplated hereby, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
consummation of the transactions contemplated hereby from governmental or
regulatory authorities of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and (y) timely
making all such filings and timely seeking all such consents, approvals, permits
or authorizations;
(iii) Without limiting Buyer's obligations under Section
1.02 or Section 6.04(d) of this Agreement, use their best efforts to take, or
cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper and appropriate to consummate and effectuate the
Closing Date for the transaction contemplated hereby on or prior to the
Termination Date (as hereinafter defined), including, without limitation,
promptly responding to any request for additional information pursuant to
Section (e)(1) of the HSR Act ("Second Request"), and the resolution of
objections, if any, as may be asserted by any governmental authority with
respect to the transactions contemplated hereby under any antitrust or trade or
regulatory laws or regulations of any governmental authority (it being
understood and agreed that Buyer shall use all measures available to it to
consummate the transactions contemplated hereby including, if necessary to
resolve such objections, by way of selling, licensing or
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<PAGE> 27
otherwise disposing of, or holding separate or otherwise divesting itself of,
all or any portion of its businesses or assets or any portion of the business or
assets of any of its subsidiaries or any portion of the business or assets of
the Company); provided, however, that, without limiting Buyer's obligations
under this paragraph or under Section 1.02 or Section 6.04(d) of this Agreement,
Buyer shall have the right, given the option by a governmental agency, to
determine (x) which businesses or assets, or portions thereof, shall be, if
necessary to satisfy such objections, sold, licensed, disposed of, held separate
or divested, and (y) on what terms and conditions such actions shall be taken;
(iv) Use their best efforts to lift or rescind or appeal
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby and
use their best efforts to defend any litigation seeking to enjoin, prevent or
delay the consummation of the transactions contemplated hereby or seeking
material damages; and
(v) Furnish to the other party, upon request, copies of
all correspondence, filings or communications between that party, or any of its
representatives, on the one hand, and any governmental agency or authority, on
the other hand, with respect to pre-notification obligations under any antitrust
law with respect to this Agreement; provided, however, that with respect to any
documents that one party reasonably believes should not be disclosed to the
other party, such party shall instead furnish those documents to counsel for the
other party pursuant to a mutually satisfactory confidentiality agreement.
(b) "Termination Date" shall mean that date one hundred twenty
(120) days after the initial filing by Seller under the HSR act of its
Notification and Report Form for Certain Mergers and Acquisitions with respect
to the transaction contemplated hereby and which initial filing is not rejected
for any deficiency; provided, however, that such one hundred twenty day period
shall be tolled for, and to the extent of, any of the following:
(i) in the event that Buyer has substantially complied
with any Second Request but Seller has not substantially complied, each day
after the date of Buyer's substantial compliance until and including the date of
Seller's substantial compliance with the Second Request; and
(ii) in the event that Buyer has entered into an
agreement with the Department of Justice or the Federal Trade Commission with
respect to the transaction contemplated hereby ("Agreement"), each day after the
date of submission of the Agreement to the appropriate federal court or the
Federal Trade Commission for which Buyer is enjoined from closing, by either the
appropriate federal court or the Federal Trade Commission or pursuant to the
specific request of the Department of
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Justice or the Federal Trade Commission which request is embodied in the
Agreement with the relevant agency.
(c) In the event that Seller has substantially complied with
any Second Request but Buyer has not substantially complied, Buyer agrees to pay
Seller an amount of $10,000 per day for each day after the date of Seller's
substantial compliance until and including the date of Buyer's substantial
compliance with the Second Request.
(d) Buyer agrees to use its best efforts to obtain all
necessary regulatory or judicial approvals, and to take such other actions as
are necessary, to consummate the transaction contemplated herein prior to the
expiration of any public notice and comment period that may be required in
connection with the approval of the Agreement.
6.05. Buyer Investigation; No Representations or Warranties;
Exclusivity of Remedies. (a) BUYER HEREBY ACKNOWLEDGES THAT IT HAS INDEPENDENTLY
EVALUATED AND CONDUCTED DUE DILIGENCE SATISFACTORY TO BUYER WITH RESPECT TO THE
ASSETS OF THE COMPANY AND THE OUTDOOR ADVERTISING BUSINESS (INCLUDING, BUT NOT
LIMITED TO, THE OPERATIONS, FACILITIES, CONTRACTS, CUSTOMER FILES, INTELLECTUAL
PROPERTY, FINANCIAL INFORMATION AND PROSPECTS OF THE BUSINESS), AND HAS BEEN
REPRESENTED BY, AND HAD THE ASSISTANCE OF, COUNSEL IN THE CONDUCT OF SUCH DUE
DILIGENCE, THE PREPARATION AND NEGOTIATION OF THIS AGREEMENT AND THE ANCILLARY
DOCUMENTS, AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.
(b) SELLER HAS MADE AVAILABLE TO BUYER AND ITS REPRESENTATIVES
CERTAIN INFORMATION AND RECORDS RELATING TO THE ASSETS OF THE COMPANY AND THE
OUTDOOR ADVERTISING BUSINESS. IT IS UNDERSTOOD AND AGREED BY THE PARTIES THAT NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN MADE BY SELLER OR ITS
AGENTS REGARDING THE ACCURACY OR COMPLETENESS OF ANY SUCH INFORMATION OR
RECORDS, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY OF THE ANCILLARY
DOCUMENTS, AND THAT SELLER WILL NOT HAVE OR BE SUBJECT TO ANY LIABILITY TO BUYER
OR ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO BUYER, OR BUYER'S USE, OF
ANY SUCH INFORMATION OR RECORDS, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT
OR EXCEPT AS A RESULT OF FRAUD. FURTHERMORE, BUYER AGREES THAT IT IS ACCEPTING
POSSESSION OF THE ASSETS OF THE COMPANY AND THE OUTDOOR ADVERTISING BUSINESS
BEING TRANSFERRED TO BUYER UPON
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ACQUISITION BY BUYER OF THE STOCK AT THE CLOSING "AS IS, WHERE IS, WITH ALL
FAULTS", WITH NO RESULTING RIGHT OF SET-OFF OR REDUCTION IN THE TOTAL PURCHASE
PRICE, AND THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY OF THE
ANCILLARY DOCUMENTS, SUCH TRANSFER IS BEING MADE WITHOUT REPRESENTATION OR
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF INCOME
POTENTIAL, OPERATION EXPENSE, USE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR QUALITY, WITH RESPECT TO ANY OF THE ASSETS OR THE OUTDOOR
ADVERTISING BUSINESS BEING SO TRANSFERRED, OR AS TO THE CONDITION OR WORKMANSHIP
THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, ALL OF
WHICH REPRESENTATIONS AND WARRANTIES ARE HEREBY DISCLAIMED AND RENOUNCED BY
SELLER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY
SET FORTH IN SECTION 2.08 OF THIS AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES WHATSOEVER TO THE BUYER REGARDING THE PRESENCE OR ABSENCE OF ANY
HAZARDOUS SUBSTANCES, ASBESTOS CONTAINING MATERIALS, UNDERGROUND STORAGE TANKS
OR PCBS IN, AT OR UNDER ANY OF THE ASSETS OF THE COMPANY OR THE ACCURACY OR
COMPLETENESS OF ANY STATEMENTS, DOCUMENTS OR REPORTS REGARDING ENVIRONMENTAL
MATTERS RECEIVED FROM SELLER, AND BUYER ACKNOWLEDGES THAT IT HAS CONDUCTED SUCH
INVESTIGATIONS AS IT HAS DEEMED APPROPRIATE TO EVALUATE TO ITS SATISFACTION ITS
RISKS FROM AN ENVIRONMENTAL STANDPOINT.
(c) BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT, ITS SOLE AND EXCLUSIVE REMEDY WITH RESPECT
TO ANY AND ALL CLAIMS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT
(INCLUDING CLAIMS FOR BREACHES OF REPRESENTATIONS, WARRANTIES AND COVENANTS
CONTAINED IN THIS AGREEMENT) SHALL BE PURSUANT TO THE INDEMNIFICATION PROVISIONS
SET FORTH IN SECTION 12.02. IN FURTHERANCE OF THE FOREGOING BUYER HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, ANY AND ALL RIGHTS, CLAIMS
AND CAUSES FOR ACTION NOT PROVIDED FOR IN SECTION 12.02 THAT BUYER MAY HAVE
AGAINST SELLER OR ANY OF ITS AFFILIATES UNDER OR BASED UPON ANY PRINCIPLE OF
EQUITY OR ANY FEDERAL, STATE, LOCAL OR FOREIGN STATUTE, LAW, ORDINANCE, RULE OR
REGULATION (INCLUDING THOSE RELATING TO HAZARDOUS SUBSTANCES, ASBESTOS
CONTAINING MATERIALS, UNDERGROUND
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STORAGE TANKS AND PCBS, AND INCLUDING SPECIFICALLY ALL RIGHTS, IF ANY, THAT
BUYER MAY HAVE TO CONTRIBUTION FROM SELLER UNDER THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION AND LIABILITY OF ACT OF 1980, AS AMENDED), EXCEPT FOR
SUCH CLAIMS ARISING OUT OF SELLER'S FRAUD, WILLFUL MISCONDUCT OR BAD FAITH.
(d) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO
CLAIMS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT MAY BE BROUGHT BY BUYER
AGAINST ANY DIRECTOR, OFFICER OR EMPLOYEE OF SELLER OR THE COMPANY IN HIS OR HER
INDIVIDUAL CAPACITY.
6.06. Excluded Assets; Included Businesses. (a) (i) Seller and Buyer
confirm and agree that the following assets, which are used by or in connection
with the Outdoor Advertising Business but are not included in the Financial
Statements, will not be transferred to Buyer upon Buyer's acquisition of the
Stock: (i) the In-Store media program utilizing 3M(TM) FloorMinders(TM)
Graphics; (ii) the Travel Center Advertising business; (iii) all vehicles listed
in the Disclosure Schedule; (iv) all cellular telephones used in the Business;
(v) all Seller company credit cards used in the Business; (vi) the Westminster,
Maryland plant, property and equipment; (vii) the corporate facilities located
at Bedford Park, Illinois, Westminster, Maryland and New York, New York; (viii)
the software and hardware listed in the Disclosure Schedule, including, without
limitation, the telecommunications system (including the Wide Area Network);
(ix) all cash of the Company; and (x) all attorneys' fees, costs, proceeds and
other funds awarded or paid to the Company or Seller in connection with Impact
Communications of Central Florida, Inc. and Frances Sirianni v. National
Advertising Company and POA Acquisition Corp., Case No. 95-142-Civ-Orl-18,
excluding any such attorneys' fees and costs that are attributable to
prosecution of any appeal of such action subsequent to the Closing Date. Seller
shall assign its entire right, title and interest in United States Patent Number
5,613,314, dated March 25, 1997, entitled COLLAPSIBLE BILLBOARD SIGN, to the
Company and the Company, immediately prior to Closing, shall grant to Seller a
perpetual, non-exclusive, royalty free license for the benefit of Seller and its
affiliates and their customers under said patent and any reexamination or
reissue thereof on terms reasonably satisfactory to Buyer. The foregoing license
shall not be transferable by Seller or its affiliates to any third party
unrelated to Seller or any of its affiliates except in connection with the use
of such licensed rights by Seller or any of its affiliates such as in connection
with the sale or use of products under such license, but shall be transferable
as part of the sale of the entire business to which the license pertains. Seller
and Buyer also confirm that it is not the intention of Seller to transfer to
Buyer, or Buyer's intention to acquire from Seller, any ownership interest in
any Subsidiary of Seller other than the Company. Following the Closing and in
furtherance of Section 5.06, Buyer shall take such action as Seller may
reasonably request to transfer to Seller any of such excluded
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assets and will indemnify and hold Seller harmless from any and all losses
incurred by Seller in connection with the use following the Closing of any such
excluded assets not so transferred, including, but not limited to, the use of
cellular telephones and Seller company credit cards.
(ii) Buyer and Seller confirm and agree that certain
services provided by Seller and its affiliates to the Company as of the date
hereof, including, but not limited to, certain services relating to human
resources/payroll, tax, travel reimbursement, insurance coverage, insurance
claims administration, legal, financial reporting, environmental, engineering
services, property accounting, information technologies (including computer
services and data processing) and employee information systems, shall be
terminated as of the Closing Date, subject to any transition agreement with
respect to one or more of such services as may be agreed between Buyer and
Seller prior to Closing.
(b) Seller and Buyer confirm and agree that the Tradewinds
barter business, the Healthport business and the wireless communications
business (relating to use of the Company's outdoor advertising displays for
transmission purposes), which are included in the Financial Statements, will be
transferred to Buyer upon Buyer's acquisition of the Stock and are included in
the terms "Outdoor Advertising Business" and the "Business" for all purposes of
this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Stock shall be subject
to the satisfaction (or waiver) on or prior to the Closing Date of all of the
following conditions:
7.01. Representations, Warranties, Covenants of Seller. (a) Seller
shall have complied in all material respects with its agreements and covenants
contained herein to be performed on or prior to the Closing Date, and the
representations and warranties of Seller contained herein shall be true in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date (taking into account all modifications to the
Disclosure Schedule as reflected in the revised disclosure schedule to be
delivered by Seller to Buyer at the Closing, which shall include any material
changes to information set forth in the Disclosure Schedule (the "Revised
Disclosure Schedule")), except (i) as otherwise contemplated hereby, and (ii) to
the extent that any such representations and warranties were made as of a
specified date and as to such representations and warranties the same shall
continue on the Closing Date to have been true in all material respects as of
the specified date.
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(b) At the Closing Date, there shall have been no changes in
the Outdoor Advertising Business, other than changes that do not individually or
in the aggregate have a Material Adverse Effect, excluding, without limitation,
changes that are otherwise contemplated hereby (including, without limitation,
changes under Section 4.01).
(c) At the Closing Date, Buyer shall have received a
certificate of Seller, dated as of the Closing Date and signed by an officer of
Seller, certifying as to the fulfillment of the conditions set forth in this
Section 7.01 (the "Certificate of Seller").
7.02. No Prohibition. No statute, rule or regulation or order of any
court or administrative agency shall be in effect which prohibits Buyer from
consummating the transactions contemplated hereby.
7.03. Governmental Consents. The applicable waiting period under the
HSR Act shall have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from governmental agencies that shall be
required in order to enable Buyer to consummate the transactions contemplated
hereby and by the Ancillary Documents shall have been obtained (except for such
consents, approvals, authorizations, exemptions and waivers, the absence of
which would not prohibit consummation of such transactions or render such
consummation illegal).
7.04. Non-Foreign Status Statements. Seller shall have delivered
statements, as contemplated under Section 1.1445-2(b)(2) of the Treasury
Regulations, to the effect that neither Seller nor the Company is a foreign
person within the meaning of the Code and applicable Treasury Regulations.
7.05. Resignations. Seller shall have received the resignations,
effective as of the Closing, of each director and officer of the Company other
than those whom Buyer shall have specified in writing at least ten days prior to
the Closing Date (it being understood that each such resigning director and
officer who is an Employee on the Closing Date shall remain an Employee (as
defined in Section 9.01(c)), and no such resignation shall constitute a
resignation from, or a termination of employment with, the Company).
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ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligation of Seller to sell the Stock shall be subject to the
satisfaction (or waiver) on or prior to the Closing Date of all of the following
conditions:
8.01. Representations, Warranties, Covenants of Buyer. Buyer shall
have complied in all material respects with its agreements and covenants
contained herein to be performed on or prior to the Closing Date, and the
representations and warranties of Buyer contained herein shall be true in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date, except (i) as otherwise contemplated hereby,
and (ii) to the extent that any such representations and warranties were made as
of a specified date and as to such representations and warranties the same shall
continue on the Closing Date to have been true in all material respects as of
the specified date. Seller shall have received a certificate of Buyer, dated as
of the Closing Date and signed by an officer of Buyer, certifying as to the
fulfillment of the condition set forth in this Section 8.0l (the "Certificate of
Buyer").
8.02. No Prohibition. No statute, rule or regulation or order of any
court or administrative agency shall be in effect which prohibits Seller from
consummating the transactions contemplated hereby.
8.03. Insurance. Buyer shall have procured the insurance referred to
in Section 5.03(c).
8.04. Performance Bonds. Buyer shall have delivered to Seller the
performance bonds, payment bonds, bid bonds, letters of credit, guarantees
and/or other instruments referred to in Section 5.04.
8.05. Governmental Consents. The applicable waiting period under the
HSR Act shall have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from governmental agencies that shall be
required in order to enable Seller to consummate the transactions contemplated
hereby and by the Ancillary Documents shall have been obtained (except for such
consents, approvals, authorizations, exemptions and waivers, the absence of
which would not prohibit consummation of such transactions or render such
consummation illegal).
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ARTICLE IX
EMPLOYMENT AND EMPLOYEE BENEFITS ARRANGEMENTS
9.01. Definitions. (a) The term "Benefit Plans" shall mean each and
all "employee benefit plans", as defined in Section 3(3) of ERISA, including (i)
any such plans that are "employee welfare benefit plans" as defined in Section
3(1) of ERISA and (ii) any such plans that are "employee pension benefit plans"
as defined in Section 3(2) of ERISA.
(b) The term "Benefit Arrangements" shall mean each and all
pension, supplemental pension, accidental death and dismemberment, life and
health insurance and benefits (including medical, dental, vision and
hospitalization), workers compensation, short- and long-term disability,
savings, bonus, deferred compensation, incentive compensation, holiday,
vacation, severance pay, salary continuation, sick pay, sick leave, tuition
refund, service award, company car, scholarship, relocation, patent award,
fringe benefit and other employee benefit arrangements, plans, contracts
(including individual employment, consulting or severance contracts), policies
or practices providing employee or executive compensation or benefits, other
than the Benefit Plans.
(c) As used in this Agreement the following terms shall have
the meanings set forth in this clause (c).
(i) "Employee" shall mean all salaried and hourly
employees of the Company not represented by a union or subject to a collective
bargaining agreement and other than an "Extra Employee."
(ii) "Extra Employee" shall have the meaning set forth in
Section 9.02(a).
(iii) "Union Employee" shall mean employees of the
Company represented by a union or subject to a collective bargaining agreement.
9.02. Employment. (a) Buyer will identify, as soon as possible but
in no event later than 45 days from the date hereof, those employees of the
Company other than Union Employees which it does not intend to retain following
the Closing Date (the "Extra Employees"). As of the day before the Closing Date,
the Extra Employees shall cease to be employees of the Company and their future
employment status and any compensation (other than accrued salary which shall be
the responsibility of the Company and shall be paid as provided in this clause
(a)), severance pay or other benefits due such employee shall be the
responsibility of Seller. On the Closing Date, Buyer will pay to Seller in cash
an amount equal to the sum of (i) Twenty-Five Hundred Dollars ($2,500)
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per Extra Employee, and (ii) one and one-half weeks of pay of each Extra
Employee (at such employee's Pay Level (as defined in clause (b) hereof)
immediately prior to the Closing Date) for each year of such Extra Employee's
employment with Seller, the Company or any of their affiliates and respective
predecessors. Seller and Buyer agree that the accrued salary of the Extra
Employees as of the Closing Date shall, at Seller's option, either be paid by
Seller and promptly reimbursed to Seller by the Company or be paid by the
Company. Buyer further agrees that, after the Closing, Buyer shall cause the
Company to take these and all other actions contemplated by this Agreement to be
taken by the Company.
(b) Except with respect to directors and officers who are not
also Employees of the Company, all Employees immediately prior to the Closing
Date (including those on lay off, disability or other leaves of absence, whether
paid or unpaid) shall remain employed by the Company immediately after the
Closing Date at substantially the same compensation levels (including bonus,
commission and sales incentive programs) ("Pay Level") and on substantially the
same terms and conditions and in comparable positions (including level of
responsibilities and authority, and location) as those in effect immediately
prior to the Closing Date. By purchasing the Stock of the Company, Buyer shall
assume all obligations of Seller, the Company and their affiliates under all
individual agreements which relate to employment, compensation or benefits
(including, but not limited to, employment and consulting and severance
agreements) with any Employee who remains employed by the Company immediately
after the Closing Date. Nothing in this Agreement shall limit Buyer's right to
terminate the employment of any Employee following the Closing, provided that
the termination is in accordance with any applicable individual agreement and
the provisions of Section 9.05.
9.03. Seller's Benefits. (a) As of the Closing Date, the Company
will cease to be a participating employer in, and the Employees and Union
Employees will cease to be covered by, the Seller's Benefit Plans and Benefit
Arrangements. Except as provided in paragraphs (b) and (c) of this Section 9.03,
Seller and its Benefit Plans will remain responsible to the Employees and Union
Employees for all benefits accrued or payable under such Plans and the Seller's
Benefit Arrangements with respect to periods prior to the Closing Date
(including but not limited to retiree health and life benefits attributable to
participation in Seller's Benefit Plans and Benefit Arrangements). Except as
provided in paragraphs (b), (c) and (d) of this Section 9.03, Buyer assumes no
liability or obligation with respect to Seller's Benefit Plans or Benefit
Arrangements.
(b) (i) As soon as practicable after Seller receives the
opinion letter or the determination letter referred to in subparagraph (ii)
below, Seller shall cause the trustees of the 3M Voluntary Investment Plan and
Employee Stock Ownership Plan and, subject to obtaining any required consent of
the respective unions representing the Union Employees, the 3M Savings Plan
("Seller's 401(k) Plans") to transfer to the trust forming
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a part of the Buyer's defined contribution plan described in Section 9.04(a)
cash and outstanding participant loans in an amount equal to the account
balances of the Employees and Union Employees under Seller's 401(k) Plans as of
the transfer date (the "Account Balances"). For the period between the Closing
Date and the date of the transfer of the Account Balances, Seller shall treat
the Employees and Union Employees as inactive participants in Seller's 401(k)
Plans in accordance with the terms of such plans and applicable law.
(ii) Within 30 days after the Closing Date, Buyer shall either
(A) provide Seller with an opinion letter of counsel reasonably acceptable to
Seller that the Buyer's defined contribution plan and related trust satisfy in
form the requirements for qualification under Sections 401(a) and 401(k) of the
Code as of the later of its effective date or the Closing Date or (B) deliver to
Seller a favorable determination letter issued by the IRS with respect to the
Buyer's defined contribution plan and related trust that addresses all
provisions that are required to be incorporated in such plan and trust under
Sections 401(a) and 401(k) of the Code as of the Closing Date. No transfer shall
be made unless Buyer provides Seller with the opinion letter or determination
letter referred to in this subparagraph (ii).
(iii) In consideration for the transfer by the Seller's 401(k)
Plans of the Account Balances to the trust forming a part of the Buyer's defined
contribution plan, Buyer shall, effective as of the date of transfer, assume all
of the liabilities and obligations of Seller and its affiliates in respect of
the Employees and Union Employees and their beneficiaries under the Seller's
401(k) Plans, and Seller and its affiliates and the Seller's 401(k) Plans shall
be relieved of all liabilities and obligations to the Employees and Union
Employees and their beneficiaries arising out of the Seller's 401(k) Plans.
(c) Buyer shall assume effective as of the Closing Date all of
the liability and obligations of Seller in respect of Employees for the amount
of their accrued and unused vacation benefits under Seller's vacation plan
through the Closing Date. Within thirty (30) days after the Closing Date, Seller
will provide Buyer with a list of the Employees and the days of unused vacation
benefits as of the Closing Date. During the remainder of 1997, Buyer will cause
its vacation plan to permit the Employees to receive paid vacation benefits
equal in time to the number of days of unused vacation benefits as of the
Closing Date. Immediately after the end of 1997 or, if sooner, upon the
termination of their employment with the Company and the Buyer, the Buyer shall
pay in cash to the Employees of the Company any remaining amount of such unused
vacation benefits.
(d) Within thirty (30) days after receiving each invoice from
Seller or its agent, Buyer or the Company will reimburse Seller for all workers
compensation benefits and related expenses paid by Seller or its insurers after
the Closing Date with
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respect to Employees or Union Employees of the Company as a result of injuries
or illnesses occurring or arising on or prior to the Closing Date. At least ten
(10) days prior to entering into any binding agreement, Seller will inform or
cause its agent to inform Buyer of any proposed settlement involving the payment
of workers compensation benefits totaling more than $25,000 to any Employee or
Union Employee of the Company for injuries or illnesses occurring or arising on
or prior to the Closing Date. Upon Buyer's request, Seller shall consult with
Buyer and seek Buyer's consent prior to entering into a binding settlement of
such a claim. If Buyer withholds its consent to such settlement, Buyer shall
reimburse Seller for all amounts that Seller or Seller's insurers ultimately pay
in connection with such claim (including, but not limited to, workers
compensation benefits, related expenses and attorneys' fees).
9.04. Buyer's Benefits. (a) From and after the Closing Date, Buyer
will provide coverage and benefits to the Employees under the same Benefit Plans
and Benefit Arrangements that cover its current employees and Seller will have
no responsibility therefor on and after such date. Buyer shall cause each of its
Benefit Plans to recognize all service that Employees completed with Seller and
its affiliates and respective predecessors prior to the Closing Date for all
purposes for which such service was recognized by Seller's Benefit Plans.
(b) Buyer shall cause its Benefit Plans which provide medical
or dental welfare benefits to (i) waive any pre-existing conditions and
actively-at-work exclusions affecting Employees and their eligible family
members, and (ii) recognize any out-of-pocket medical and dental expenses
incurred by Employees and their eligible family members during 1997 under the
Seller's Benefit Plans and Benefit Arrangements on or before the Closing Date
for purposes of satisfying applicable annual deductible, coinsurance and maximum
out-of-pocket provisions.
(c) Buyer's vacation plan will recognize all of the service
that Employees completed with Seller and its affiliates and respective
predecessors prior to the Closing Date for the purpose of determining their
vacation benefits after the Closing Date.
(d) Buyer represents and warrants to Seller that its defined
contribution pension plan and trust have been maintained in accordance with
their terms and all provisions of applicable law, except where the failure to do
so would not have a material adverse effect on the business, assets, financial
condition or results of operations of Buyer.
9.05. Severance. Buyer agrees to cause the Company to provide the
following severance benefits to any Employee whose employment is either (i)
terminated (other than for cause) by the Company or Buyer or (ii) terminated in
connection with a
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sale or disposition of all or part of the Business regardless of whether such
Employee accepts employment with the entity that acquires the Business or such
part thereof, in the case of either (i) or (ii), within two years after the
Closing Date: (a) severance pay in accordance with the severance policy of Buyer
in effect at the time of termination, but not less than one and one-half weeks
of pay (at the Employee's Pay Level at the time of such termination) for each
year of employment with the Company, Seller or any of their affiliates and
respective predecessors (including periods prior to the Closing Date); and (b)
six months of continued health benefits coverage for such Employee and his or
her eligible family members at no cost.
9.06. Indemnity. Buyer shall indemnify Seller and its affiliates and
hold each of them harmless from and against any Losses which may be incurred or
suffered by any of them (i) under the Worker Adjustment and Retraining
Notification Act arising out of, or relating to, any actions taken by Buyer or
the Company on or after the Closing Date; (ii) in connection with any claim made
by any Employee or any Union Employee for any severance pay or other damages
(including, but not limited to, compensation and benefits) by reason of Buyer's
or the Company's failure to offer such Employee or Union Employee employment in
accordance with Section 9.02 or Section 9.09, as applicable, or to employ or
continue to employ such Employee or such Union Employee on or after the Closing
Date at substantially the same compensation levels (including bonus, commission
and sales incentive programs) and on substantially the same terms and conditions
and in a comparable position (including level of responsibilities and authority,
and location) as those in effect immediately prior to the Closing Date;
provided, however, that Buyer shall not indemnify Seller and its affiliates or
hold any of them harmless with respect to any claim for severance pay or other
damages by reason of Buyer's or the Company's failure to offer an Extra Employee
employment in accordance with Section 9.02 or to employ or continue to employ an
Extra Employee on or after the Closing Date as set forth above, or if such claim
is made by an Employee to whom Buyer offers employment in accordance with
Section 9.02 but who rejects Buyer's offer of employment; (iii) in connection
with any claim made by any Employee or any Union Employee for any severance pay
or other damages (including, but not limited to, compensation and benefits) by
reason of such Employee's or such Union Employee's termination of employment by
Buyer or the Company after the Closing Date; or (iv) by reason of Buyer's
failure to comply with the provisions of this Article IX.
9.07. W-2 Matters. Pursuant to IRS Revenue Procedure 84-77, Buyer
shall assume the obligations of Seller to furnish Forms W-2 to Employees and
Union Employees for the calendar year in which the Closing occurs. Seller will
provide Buyer with any information available to it and not available to Buyer
relating to periods ending on the Closing Date necessary for Buyer to prepare
and distribute such Forms W-2, which Forms W-2 will include all remuneration
earned by Employees and Union Employees
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from Seller and Buyer during such calendar year, and Buyer will prepare and
distribute such forms.
9.08. Continuing Assistance. Subsequent to the Closing Date and for
a period of six months thereafter, other than with respect to the Seller's
401(k) Plans, which shall be the later of such six-month period or the
completion of the transfer of the Account Balances as provided in Section
9.03(b)(i), Seller and Buyer shall, at their own cost (but at the other's
expense for out-of-pocket costs), provide such assistance to each other
(including making records and personnel reasonably available) as may be
reasonably requested to enable Seller and Buyer to administer their Benefit
Plans and Benefit Arrangements with respect to the Employees and Union Employees
and the spouses and covered dependents of such Employees and Union Employees.
9.09. Union Employees. (a) All Union Employees shall remain employed
by the Company immediately after the Closing Date. Buyer recognizes the unions
representing Union Employees and accepts the terms and conditions of existing
collective bargaining agreements until expiration or amended through the
collective bargaining process. In the event the employment of a Union Employee
is terminated within the time and for the reasons set forth in Section 9.05,
Buyer agrees that in the negotiations with the union representing such employee,
the Company's initial offer shall include (and, in any case, Buyer will cause
the Company to pay, subject to the consent of the relevant union and
notwithstanding any contrary provision in any agreement resulting from such
negotiation) minimum severance benefits payable to such employee of not less
than one and one-half weeks of pay (at such employee's Pay Level at the time of
such termination) for each year of employment with the Company, Seller or any of
their affiliates and respective predecessors (including periods prior to the
Closing Date); and shall also provide six months of continued health benefits
coverage for such employee and his or her eligible family members at no cost.
(b) All obligations of Seller under the collective bargaining
agreements shall terminate on the Closing Date.
ARTICLE X
TERMINATION PRIOR TO CLOSING
10.01. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of Buyer and Seller; or
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(b) in writing by Seller, if the Closing shall not have
occurred on or before the Termination Date, provided, however, that the right to
terminate this Agreement pursuant to this Section 10.01(b) shall not be
available to Seller if Seller's failure to perform or observe in any material
respect any of its covenants or agreements contained in this Agreement shall
have been the cause of, or resulted in, the failure of the consummation of the
transactions contemplated hereby to occur on or before such date; or
(c) in writing by either Buyer or Seller, if there shall have
been a material breach by the other party of any of its representations,
warranties, covenants or agreements contained herein and such breach results in
a failure to satisfy a condition to the terminating party's obligation to
consummate the transactions provided herein which cannot be cured or is not
cured prior to the Closing Date; or
(d) in writing by Buyer, if the Closing shall not have
occurred on or before 60 days after the Termination Date by reason of a failure
to satisfy the conditions set forth in Section 7.01(b) or Section 7.02 (other
than matters relating to antitrust law), provided, however, that the right to
terminate this Agreement pursuant to this Section 10.01(d) shall not be
available to Buyer if Buyer's failure to perform or observe in any material
respect any of its covenants or agreements contained in this Agreement shall
have been the cause of, or resulted in, the failure of the consummation of the
transactions contemplated hereby to occur on or before such date.
10.02. Effect on Obligations. Termination of this Agreement pursuant
to this Article X shall terminate all obligations of the parties hereunder,
except for the obligations under Article XI and Sections 12.08, 12.09, and
12.11; provided, however, that termination by Seller pursuant to clause (b) or
by Buyer or Seller pursuant to clause (c) of Section 10.01 shall not relieve the
defaulting or breaching party from any liability to the other party hereto.
10.03. Termination Fee. In the event that Closing does not occur on
or before Termination Date and Seller has the unilateral right to terminate this
Agreement pursuant to Section 10.01(b), then Buyer agrees to pay Seller,
immediately upon Seller's demand, the sum of $20,000,000 (twenty million
dollars) as a termination fee and not as liquidated damages, in which case Buyer
and Seller agree that payment of such fee shall not relieve Buyer from liability
for its breach hereunder or be construed as limiting Seller's rights in any
manner, including, without limitation, the right to sell the Stock or the assets
of the Company (or any portion of them) to one or more buyers and/or the right
to seek further damages against Buyer in equity or at law. Buyer and Seller
confirm and agree that payment of the termination fee is in consideration, among
other things, of the benefit to Buyer of Seller's selection of Buyer as the
acquiror of the Company. The Deposit shall be applied against any amounts
payable to Seller under this Section 10.03.
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In addition, if the Deposit is paid to Seller under this Section 10.03, any
interest earned on the Deposit (as contemplated by the terms of Section 1.03(b))
shall also be paid to Seller.
ARTICLE XI
DISPUTE RESOLUTION
11.01. Unaided Negotiations. To resolve any disputes among the
parties, Buyer or Seller must first provide written notice to the other,
specifying in as much detail as possible the source or reason for the dispute,
the amount of claimed damages, if any, and the resolution proposed by the
notifying party. The receiving party shall respond in writing to any such notice
within seven business days after receipt. The responding party may include in
its reply a detailed description of any disputes it would like to resolve and
the proposed resolutions. The first notifying party shall respond within seven
business days. If the dispute is not then resolved, there shall follow within
seven business days of the last written response a meeting between at least one
representative of each party. Each party agrees to have present such person or
persons who are authorized to fully and finally resolve the dispute. The purpose
of this meeting shall be to discuss and negotiate in good faith the complete
resolution of any outstanding dispute. The date and time shall be mutually
agreed (within the stated period), and the location of the meeting shall be
chosen by the party responding to the first notice. Each party shall bear its
own costs (including travel expenses) incident to this negotiation and meeting.
11.02. Mediation. Should the procedure outlined in Section 11.01 not
bring about a resolution of the dispute, then within 30 days following the
meeting of principals, the party first sending the notice shall initiate a
voluntary, nonbinding mediation conducted by a mutually-agreed mediator. Should
the parties for any reason be unable or unwilling to agree upon a mediator, they
shall request J-A-M-S/Endispute in New York, NY, to appoint a capable mediator
for them in accordance with the commercial mediation rules of such organization.
The parties shall bear equally all costs and expenses (including any attorneys'
fees) of this mediation and endeavor in good faith to resolve their differences.
While this mediation shall be nonbinding in all respects (i.e., any agreement
must be accepted by each party), each party agrees that:
(a) It shall appear when directed by the mediator, be fully
prepared to work towards a resolution of the dispute, and participate in good
faith in the mediation towards a resolution of all disputed issues or concerns;
(b) The duty to mediate in good faith under this Agreement
shall be specifically enforceable by the courts of Minnesota; and
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(c) Should a court in litigation stemming from the same
general dispute or disagreement among the parties determine that either did not
participate in good faith in the mediation process hereunder, then such party
shall be liable for the other party's attorneys' fees in the resulting
litigation, up to $100,000.
11.03. Litigation. In the event that the parties are unable to
resolve any outstanding disagreement or dispute as provided above, then, as a
last resort, either party may commence Litigation; provided, however, that it
must do so in the courts (state or federal, provided the court selected has
subject matter jurisdiction) of the State of Minnesota, County of Ramsey.
11.04. Governing Law; Personal Jurisdiction; Waiver of Jury. Any
questions, claims, disputes, remedies, or Litigation arising from or related to
this Agreement, and any relief or remedies sought by any parties hereunder,
shall be governed exclusively by the laws of the State of Minnesota, without
giving effect to the conflicts of laws principles thereof. The parties agree
that the State of Minnesota and the County of Ramsey each have a substantial
relationship to this transaction, and each party consents to personal
jurisdiction in the courts thereof, consistent with Section 11.03. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY AND ALL STATUTORY OR CONSTITUTIONAL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS
OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
ARTICLE XII
MISCELLANEOUS
12.01. Survival. The representations and warranties made in this
Agreement or in any agreement, certificate (including the Certificate of Seller
and the Certificate of Buyer) or other document executed at or prior to the
Closing in connection herewith (an "Ancillary Document") shall survive the
Closing Date until the first anniversary thereof and shall thereupon expire
together with any right to indemnification for breach thereof (except to the
extent a written notice asserting a claim for breach of any such representation
or warranty, describing the nature of the breach in reasonable detail, shall
have been given prior to such date to the party which made such representation
or warranty, in which case such representation and warranty shall survive, to
the extent of such claim only, until such claim is resolved, whether or not the
amount of the damages or expenses resulting from such breach has been finally
determined at the time the notice is given, if, but only if, (i) in the case of
any claim made by Buyer by reason of a third-party claim, the written notice is
accompanied by a copy of the written notice of the third-party claimant or (ii)
in the case of any claim made by Buyer other than by reason of a
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third-party claim, some damages or expense shall have been incurred in good
faith at or prior to the date of such notice; and provided that any notice
asserting a claim for breach of any of the representations and warranties
contained in Sections 2.06 and 2.08 (or in the Certificate of Seller insofar as
it pertains to Sections 2.06 and 2.08) as to Environmental Matters (an
"Environmental Breach") shall not be effective notice unless accompanied by (x)
written notice from the applicable regulatory authority, or, if there has been a
claim made against Buyer by a third party, the written notice of the third-party
claimant, alleging the existence of the conditions as to which an Environmental
Breach is claimed or (y) a written report from an environmental consulting firm
reasonably acceptable to Seller, the fees and expenses of which firm shall be
borne solely by Buyer, confirming, in reasonable detail, the existence of the
conditions as to which an Environmental Breach is claimed). The covenants and
agreements contained herein to be performed or complied with prior to the
Closing (and the provisions of the Certificate of Seller and the Certificate of
Buyer pertaining thereto) shall expire at the Closing. The covenants and
agreements contained herein to be performed or complied with at or after the
Closing (other than the covenant and agreement to indemnify against breaches of
representations and warranties, which shall expire as set forth in the first
sentence of this Section 12.01, but including the indemnification obligations
contained in Sections 5.03, 5.05, 6.01, 6.06 and 9.06) shall survive the Closing
until the expiration of the applicable statute of limitations. Accordingly,
Buyer agrees (without prejudice to any rights which Buyer may have under
Sections 7.01, 10.01 and 10.02) that, if the Closing occurs, then to the extent
any representation or warranty of Seller made herein or in any Ancillary
Document entered into at or prior to the Closing, to the knowledge of Buyer
acquired from and after the date hereof and prior to the Closing, is untrue or
incorrect, (x) Buyer shall have no rights hereunder by reason of such untruth or
inaccuracy, and (y) any such representation or warranty by Seller shall be
deemed to be amended to the extent necessary to render it consistent with such
knowledge of Buyer.
12.02. Indemnification. (a) If the Closing shall occur, Seller
(except with respect to indemnification claims relating to or arising from
Section 6.01, which claims shall be governed by Section 6.01(d)) shall indemnify
Buyer and its affiliates and hold each of them harmless from and against all
Losses which are incurred or suffered by any of them (i) by reason of the breach
of any of the representations or warranties made by Seller herein or in any
Ancillary Document or (ii) by reason of the failure by Seller to perform or
comply with any of the covenants or agreements contained herein or in any
Ancillary Document to be performed or complied with by Seller at or after the
Closing. Any recovery by Buyer and its affiliates for indemnification shall be
limited as follows: (l) Buyer and its affiliates shall not be entitled to any
recovery unless a claim for indemnification is made in accordance with Section
12.01 and paragraph (c)(i) of this Section 12.02 and within the time period of
survival set forth in Section 12.01; (2) Buyer and its affiliates shall not be
entitled to recover any amount for indemnification claims
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under clause (i) of this Section 12.02(a) unless and until the amount which
Buyer and its affiliates are entitled to recover in respect of such claims
exceeds, in the aggregate, $10,000,000 (ten million dollars) (the "Deductible"),
in which event (subject to clause (3) below) the entire amount which Buyer and
its affiliates are entitled to recover in respect of such claims less the
Deductible shall be payable; and (3) the maximum amount recoverable by Buyer and
its affiliates for indemnification claims under clause (i) of this Section
12.02(a) (other than claims relating to a breach of Seller's representations and
warranties set forth in Section 2.01) shall in the aggregate be equal to
$50,000,000 (fifty million dollars).
(b) If the Closing shall occur, Buyer shall indemnify Seller
and its affiliates and hold each of them harmless from and against all Losses
which are incurred or suffered by any of them (i) by reason of the breach by
Buyer of any of the representations or warranties made by Buyer herein or in any
Ancillary Document, (ii) by reason of the failure by Buyer to perform or comply
with any of the covenants or agreements contained herein or in any Ancillary
Document to be performed or complied with by Buyer at or after the Closing or
(iii) by reason of the ownership by Buyer or any of its affiliates of the Assets
or the conduct by Buyer or any of its affiliates of its business after the
Closing; provided, however, that Seller and its affiliates shall not be entitled
to any recovery unless a claim for indemnification is made in accordance with
paragraph (c)(i) of this Section 12.02 and within the time period set forth in
Section 12.01.
(c) (i) In the event that any party shall incur or suffer any
Losses in respect of which indemnification may be sought by such party pursuant
to the provisions of this Section 12.02, the party seeking to be indemnified
hereunder (the "Indemnitee") shall assert a claim for indemnification by written
notice (a "Notice") to the party from whom indemnification is sought (the
"Indemnitor") stating the nature and basis of such claim, and if such claim is
with respect to a third-party claim or a claim relating to an Environmental
Matter, accompanied by the documentation set forth in Section 12.01. In the case
of Losses arising by reason of any third-party claim, the Notice shall be given
within 30 days of the filing or other written assertion of any such claim
against the Indemnitee, but the failure of the Indemnitee to give the Notice
within such time period shall not relieve the Indemnitor of any liability that
the Indemnitor may have to the Indemnitee except to the extent that the
Indemnitor is prejudiced thereby.
(ii) The Indemnitee shall provide to the Indemnitor on request
all information and documentation reasonably necessary to support and verify any
Losses which the Indemnitee believes give rise to a claim for indemnification
hereunder and shall give the Indemnitor reasonable access to all books, records
and personnel in the possession or under the control of the Indemnitee which
would have bearing on such claim.
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(iii) In the case of third-party claims for which
indemnification is sought, the Indemnitor shall have the option, and with
respect to such claims that represent or are in respect of any of the
Liabilities ("Liabilities Claims") shall have the obligation, (x) to conduct any
proceedings or negotiations in connection therewith, (y) to take all other steps
to settle or defend any such claim (provided that the Indemnitor shall not
settle any such claim without the consent of the Indemnitee (which consent shall
not be unreasonably withheld)) and (z) to employ counsel to contest any such
claim or liability in the name of the Indemnitee or otherwise. In any event, the
Indemnitee shall be entitled to participate at its own expense and by its own
counsel in any proceedings relating to any third-party claim. The Indemnitor
shall, within 45 days of receipt of the Notice, notify the Indemnitee of (or, in
the case of a Liabilities Claim, confirm to the Indemnitee) its intention to
assume the defense of such claim. Until the Indemnitee has received notice of
the Indemnitor's election whether to (or, in the case of a Liabilities Claim,
the Indemnitor's confirmation of its intention to) defend any claim, the
Indemnitee shall take reasonable steps to defend (but may not settle) such
claim. Except for Liabilities Claims, as to which this sentence shall not be
applicable, if the Indemnitor shall decline to assume the defense of such claim,
or shall fail to notify the Indemnitee within 45 days after receipt of the
Notice of the Indemnitor's election to defend such claim, the Indemnitee shall
defend against such claim (provided that the Indemnitee shall not settle such
claim without the consent of the Indemnitor, which consent shall not be
unreasonably withheld). The expenses of all proceedings, contests or lawsuits in
respect of any such claims (other than those incurred by the Indemnitee which
are referred to in the second sentence of this subparagraph (iii)) shall be
borne by the Indemnitor but only if the Indemnitor is responsible pursuant
hereto to indemnify the Indemnitee in respect of the third-party claim and, if
applicable, only to the extent required by the second sentence of Section
12.02(a). Regardless of which party shall assume the defense of the claim, the
parties agree to cooperate fully with one another in connection therewith. In
the case of a claim for indemnification made under Sections 12.02(a)(i) or
12.02(b)(i), (a) if (and to the extent) the Indemnitor is responsible pursuant
hereto for indemnifying the Indemnitee in respect of the third-party claim, then
within ten days after the occurrence of a final non-appealable determination
with respect to such third-party claim, the Indemnitor shall pay the Indemnitee,
in immediately available funds, the amount of any Losses (or such portion
thereof as the Indemnitor shall be responsible for pursuant to the provisions
hereof, including, without limitation, the second sentence of Section 12.02(a)),
and (b) in the event that any Losses incurred by the Indemnitee do not involve
payment by the Indemnitee of a third-party claim, then, if (and to the extent)
the Indemnitor is responsible pursuant hereto for indemnifying the Indemnitee
against such Losses, the Indemnitor shall within ten days after agreement on the
amount of Losses or the occurrence of a final non-appealable determination of
such amount pay to the Indemnitee, in immediately available funds, the amount of
such Losses (or such portion thereof as the Indemnitor
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shall be responsible for pursuant to the provisions hereof, including, without
limitation, the second sentence of Section 12.02(a)).
(d) The provisions of paragraph (c) of this Section 12.02
shall apply to all claims for indemnification hereunder, except indemnification
claims relating to or arising from Section 6.01, which claims shall be governed
by Section 6.01.
(e) The indemnification provided in this Section 12.02 shall
be the sole and exclusive remedy for any inaccuracy or breach of any
representation or warranty made by Seller in this Agreement or in any Ancillary
Document. All amounts payable by one party in indemnification of the other shall
be considered an adjustment to the Purchase Price.
(f) IN NO EVENT SHALL SELLER BE LIABLE FOR LOSS OF PROFITS OR
CONSEQUENTIAL DAMAGES BY REASON OF A BREACH OF ANY REPRESENTATION OR WARRANTY,
WHETHER ORAL OR WRITTEN, MADE BY SELLER IN THIS AGREEMENT, IN ANY ANCILLARY
DOCUMENT OR OTHERWISE.
(g) Notwithstanding anything in this Agreement to the
contrary, neither Seller nor any of its affiliates shall be responsible for any
liability or obligation as a result of Buyer's failure to comply with applicable
law after the Closing even if the Outdoor Advertising Business acquired hereby
is operated after the Closing in the manner operated prior to Closing.
(h) Upon making any payment to an Indemnitee for any
indemnification claim pursuant to this Section 12.02, the Indemnitor shall be
subrogated, to the extent of such payment, to any rights which the Indemnitee
may have against any other parties with respect to the subject matter underlying
such indemnification claim.
(i) Buyer understands and agrees that the rights accorded it
by clause (a) of this Section 12.02 are its sole and exclusive remedy against
Seller or any of its affiliates with respect to any Environmental Matters
whatsoever. Buyer (on its own behalf and on behalf of its affiliates and the
successors and assigns of any of the foregoing) hereby waives any right to seek
contribution or other recovery from Seller or any of its affiliates that any of
them may now or in the future ever have under 42 U.S.C. Sections 9607 and
9613(f) of the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. Section 601 et seq.), as amended ("CERCLA"), the Hazardous
Material Transportation Act (49 U.S.C. Section 1801 et seq.), the Clean Water
Act (33 U.S.C. Section 1251 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C.
Sections 11001 et seq.), the Safe
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Drinking Water Act (42 U.S.C. Sections 300f et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. Section 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) or any other
federal, state, local or foreign law relating to Environmental Matters, the
rules and regulations promulgated under any thereof, and any provisions of
common law providing for any remedy or right of recovery with respect to
Environmental Matters, as these laws, rules, regulations and provisions were in
the past or are currently in effect, or may in the future be enacted or be in
effect (collectively, "Environmental Laws"), with respect to the Liabilities.
Buyer (on its own behalf and on behalf of its affiliates and the successors and
assigns of any of the foregoing) hereby further unconditionally releases Seller
and its affiliates from any and all claims, demands, and causes of action that
any of them may now or in the future ever have against Seller or any of its
affiliates for recovery under CERCLA or under any other Environmental Laws with
respect to the Liabilities.
12.03. Interpretive Provisions. (a) Whenever used in this Agreement
the term "knowledge" shall mean actual knowledge without the need for
independent investigation and "knowledge" with respect to Seller shall mean
actual knowledge of those individuals listed in the Disclosure Schedule. The
burden of proving that a party or person had knowledge shall be on the party
asserting such knowledge.
(b) The inclusion of any item in this Agreement, the
Disclosure Schedule or the Revised Disclosure Schedule shall not be deemed an
acknowledgment that such item is material or would result in a Material Adverse
Effect.
(c) Buyer and Seller confirm and agree that any judgment,
order, settlement, legislation or regulation which has the effect of restricting
tobacco advertising, in whole or in part, shall not be a "Material Adverse
Effect" for purposes of this Agreement.
12.04. Entire Agreement. This Agreement, the Disclosure Schedule,
the Revised Disclosure Schedule and the Confidentiality Agreement constitute the
sole understanding of the parties with respect to the subject matter hereof.
Matters disclosed by Seller to Buyer pursuant to any Section of this Agreement
shall be deemed to be disclosed with respect to all Sections of this Agreement.
12.05. Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto; provided, however, that this
Agreement may not be assigned by Buyer without the prior written consent of
Seller, except that Buyer may, at its election, assign this Agreement to any
direct or indirect wholly owned subsidiary so long as (i) the representations
and warranties of Buyer made herein are equally true of such assignee, (ii) such
assignment does not have any adverse consequences to Seller or any of
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its affiliates (including, without limitation, any adverse tax consequences or
any adverse effect on the ability of Buyer to consummate (or timely consummate)
the transactions contemplated hereby), and (iii) such assignee shall execute a
counterpart of this Agreement agreeing to be bound by the provisions hereof as
"Buyer", and agreeing to be jointly and severally liable with the assignor and
any other assignee for all of the obligations of the assignor hereunder, but no
such assignment of this Agreement or any of the rights or obligations hereunder
shall relieve Buyer of its obligations under this Agreement; and provided,
further, that Buyer may assign its rights but not its obligations under this
Agreement as collateral security under financing arrangements entered into by
Buyer for the purpose of obtaining the funds required for the Purchase Price.
12.06. Headings. The headings of the Articles, Sections and
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
hereof.
12.07. Modification and Waiver. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the parties hereto, except
that any of the terms or provisions of this Agreement may be waived in writing
at any time by the party which is entitled to the benefits of such waived terms
or provisions. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar). No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof.
12.08. Broker's Fees. Each of the parties hereto (i) represents and
warrants that it has not taken and will not take any action that would cause the
other party hereto to have any obligation or liability to any person for a
finder's or broker's fee, and (ii) agrees to indemnify the other party hereto
for breach of the foregoing representation and warranty, whether or not the
Closing occurs.
12.09. Expenses. Except as otherwise provided herein, Seller and
Buyer shall each pay all costs and expenses incurred by it or on its behalf in
connection with this Agreement and the transactions contemplated hereby,
including, without limiting the generality of the foregoing, fees and expenses
of its own financial consultants, accountants and counsel.
12.10. Notices. Any notice, request, instruction or other document
to be given hereunder by any party hereto to any other party shall be in writing
and shall be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by electronic facsimile transmission, cable, telegram, telex
or other standard forms of written telecommunications, by overnight courier or
by registered or certified mail, postage prepaid,
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if to Seller to:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55144-1000
Attention: Senior Vice President - Legal Affairs
Telecopy: (612) 736-7859
with a copy to:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55144-1000
Attention: Office of General Counsel
Gregg Larson, Esq.
Assistant General Counsel
Telecopy: (612) 736-9469
if to Buyer to:
Outdoor Systems, Inc.
2502 North Black Canyon Highway
Phoenix, AZ 85009
Attention: William S. Levine
Telecopy: (602) 433-2482 and
(602) 248-0884
with a copy to:
Powell, Goldstein, Frazier & Murphy LLP
16th Floor
191 Peachtree Street
Atlanta, GA 30303
Attention: William B. Shearer, Esq.
Telecopy: (404) 572-5958
or at such other address for a party as shall be specified by like notice.
12.11. Public Announcements. Neither Seller nor Buyer shall make any
public statements, including, without limitation, any press releases, with
respect to this
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Agreement and the transactions contemplated hereby without the prior written
consent of the other party (which consent shall not be unreasonably withheld or
delayed) except as may be required by law. If a public statement is required to
be made by law, the parties shall consult with each other in advance as to the
contents and timing thereof.
12.12. Nonassignable Assets. "Nonassignable Asset" shall mean any
asset used in the Outdoor Advertising Business whose sale, conveyance, transfer,
assignment or delivery is not permitted, or is not permitted without the consent
of any other person or party (including any governmental, regulatory or
administrative authority) other than consents, approvals, permits or
authorizations contemplated by Section 6.04. The Purchase Price shall not be
subject to adjustment or revision, and Buyer shall not be entitled to any
repayment, refund or other compensation, with respect to such Nonassignable
Asset. The Seller shall, to the maximum extent permitted by law or any terms or
limitations pertaining to such Nonassignable Asset, use its reasonable efforts
to obtain for the Buyer the benefits thereunder, and shall cooperate with Buyer
in any reasonable arrangement designed to provide such benefits to Buyer,
including any sublease or subcontract or similar arrangement; provided, however,
that Seller shall not be required to make any payments or incur any obligations
in connection with such arrangements.
12.13. Severability. If any provision of this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality or enforceability
of the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
12.14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
12.15. Third Party Rights. Nothing in this Agreement shall be deemed
to create any right on the part of any person or entity not a party to this
Agreement other than (i) any permitted assignees and (ii) with respect to
Article IX, any Employee or Union Employee of the Company.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
MINNESOTA MINING AND MANUFACTURING COMPANY
By: /s/ MINNESOTA MINING AND MANUFACTURING COMPANY
----------------------------------------------
Name:
Title:
OUTDOOR SYSTEMS, INC.
By: /s/ OUTDOOR SYSTEMS, INC.
-------------------------
Name:
Title:
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EXHIBIT 99.2
EXECUTION COPY
================================================================================
STOCK PURCHASE AGREEMENT
dated April 11, 1997
by and among
OUTDOOR SYSTEMS, INC.,
VAN WAGNER COMMUNICATIONS, INC.,
RICHARD M. SCHAPS
and
JASON PERLINE
================================================================================
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TABLE OF CONTENTS
Page
----
1. DEFINITIONS.......................................................... 1
2. PURCHASE AND SALE.................................................... 10
2.1 Agreement to Purchase and Sell............................. 10
2.2 Closing.................................................... 10
2.3 Purchase Price............................................. 10
2.4 Adjustments to Purchase Price.............................. 10
2.5 Transactions at the Closing................................ 11
3. REPRESENTATIONS AND WARRANTIES OF SELLER............................. 12
3.1 Organization and Good Standing............................. 12
3.2 Authority; No Conflict..................................... 13
3.3 Capitalization............................................. 14
3.4 Financial Statements....................................... 14
3.5 Absence of Changes......................................... 15
3.6 Permits.................................................... 15
3.7 The Structures and Site Leases............................. 15
3.8 Advertising Contracts...................................... 16
3.9 Absence of Undisclosed Liabilities......................... 16
3.10 Owned Real Property........................................ 17
3.11 Title, Encumbrances........................................ 17
3.12 Taxes...................................................... 17
3.13 Compliance with Legal Requirements......................... 18
3.14 Legal Proceedings; Orders.................................. 18
3.15 Other Contracts............................................ 18
3.16 Insurance.................................................. 19
3.17 Environmental Matters...................................... 19
3.18 Intangible Property........................................ 20
3.19 Relationships with Affiliates.............................. 20
3.20 Brokers or Finders......................................... 20
3.21 Labor Matters.............................................. 20
3.22 Employee Benefit Matters................................... 20
3.23 Books and Records.......................................... 22
3.24 Assets Necessary for Conduct of Business................... 22
3.25 Bank Accounts.............................................. 22
3.26 Payments to Employees...................................... 22
3A. REPRESENTATIONS AND WARRANTIES OF EACH SELLER........................ 22
3A.1 Authority of Seller; No Conflict........................... 22
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3A.2 Title to Shares............................................ 23
3A.3 Brokers or Finders......................................... 23
4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................. 24
4.1 Organization and Good Standing............................. 24
4.2 Authority; No Conflict..................................... 24
4.3 Certain Proceedings........................................ 25
4.4 Brokers or Finders......................................... 25
4.5 Investment................................................. 25
5. COVENANTS............................................................ 25
5.1 Access and Investigation................................... 25
5.2 Operation of the Company................................... 25
5.3 Negative Covenant.......................................... 26
5.4 Required Approvals......................................... 27
5.5 Best Efforts............................................... 28
5.6 Notification............................................... 28
5.7 Encumbrances and Security Interests........................ 28
5.8 Non-Transferred Employees.................................. 28
5.9 Financial Transactions at the Closing...................... 28
5.10 Non-Competition; Release................................... 29
5.11 Section 338(h)(10) Election................................ 29
5.12 Delivery of Financial Statements........................... 31
5.13 Transfer of Retained Business.............................. 31
5.14 Intercompany Indebtedness.................................. 31
5.15 Transfer and Use of Name................................... 32
5.16 Termination/Assignment of Contracts........................ 32
5.17 Tax Returns................................................ 32
5.18 Profit Sharing Plan........................................ 32
6. COVENANTS OF THE PARTIES RELATING TO ANTITRUST MATTERS............... 33
6.1 Antitrust Filings............................................... 33
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.................. 34
7.1 Accuracy of Representations................................ 34
7.2 Sellers' Performance....................................... 35
7.3 Additional Documents....................................... 35
7.4 No Proceedings............................................. 35
7.5 Change in EBITDA........................................... 35
7.6 Absence of Material Adverse Change......................... 35
7.7 Termination/Assignment of Agreements and Plans............. 35
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS TO CLOSE................ 36
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8.1 Accuracy of Representations................................ 36
8.2 Buyer's Performance........................................ 36
8.3 Payment of Purchase Price.................................. 36
8.4 Additional Documents....................................... 36
8.5 No Proceedings............................................. 36
8.6 No Prohibition............................................. 37
9. TERMINATION.......................................................... 37
9.1 Termination Events......................................... 37
9.2 Effect of Termination...................................... 37
10. INDEMNIFICATION; REMEDIES............................................ 38
10.1 Indemnification and Payment of Damages by Sellers.......... 38
10.2 Indemnification and Payment of Damages by Buyer............ 38
10.3 Procedure for Indemnification -- Third Party Claims........ 39
10.4 Procedure for Indemnification -- Other Claims.............. 40
10.5 Survival/Limitations....................................... 40
10.6 Exclusive Remedy........................................... 41
10.7 General.................................................... 41
11. GENERAL PROVISIONS................................................... 41
11.1 Expenses................................................... 41
11.2 Public Announcements....................................... 42
11.3 Notices.................................................... 42
11.4 Further Assurances......................................... 44
11.5 Waiver..................................................... 44
11.6 Entire Agreement and Modification.......................... 44
11.7 Assignments, Successors, and No Third-Party Rights......... 44
11.8 Severability............................................... 44
11.9 Post-Closing Access........................................ 44
11.10 Headings; Construction..................................... 45
11.11 Applicable Law............................................. 45
11.12 Incorporation of Exhibits and Schedules.................... 45
11.13 Counterparts............................................... 45
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EXHIBITS
Exhibit A - Form of Non-Solicitation Agreement
Exhibit B - Form of Opinion of Sellers' Counsel
Exhibit C - Form of Opinion of Buyer's Counsel
DISCLOSURE SCHEDULE
Part 2.3(a)
Part 3.1(a)
Part 3.1(b)
Part 3.2
Part 3.3
Part 3.4
Part 3.5
Part 3.6
Part 3.7(a)
Part 3.7(b)
Part 3.8(a)
Part 3.8(b)
Part 3.9
Part 3.10
Part 3.11
Part 3.12
Part 3.13
Part 3.14
Part 3.15(a)
Part 3.15(b)
Part 3.16
Part 3.17
Part 3.18
Part 3.19
Part 3.21(a)
Part 3.21(b)
Part 3.22(a)
Part 3.22(a)(i)
Part 3.22(c)
Part 3.25
Part 3.A.2
Part 5.2
Part 5.3(c)
Part 5.3(f)
Part 5.3(g)
Part 5.13
Part 5.14
Part 5.16
Part 5.18
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is dated April 11, 1997 by
and among RICHARD M. SCHAPS, a resident of the state of New York ("Schaps"), and
JASON PERLINE, a resident of the state of New York ("Perline," and together with
Schaps, "Sellers"), VAN WAGNER COMMUNICATIONS, INC., a New York corporation
("Company"), and OUTDOOR SYSTEMS, INC., a Delaware corporation ("Buyer"). (Buyer
and Sellers are sometimes herein referred to individually as a "Party" and
collectively as the "Parties.")
RECITALS
The Company is engaged in the Business (as defined herein). Sellers own
all of the outstanding capital stock of the Company. Sellers desire to sell, and
Buyer desires to purchase, all of the issued and outstanding capital stock of
the Company, pursuant to the terms and conditions and subject to the limitations
and exclusions contained in this Agreement.
AGREEMENT
The Parties, for and in consideration of the covenants and agreements
herein set forth and intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the following
meanings.
"ACCREDITED INVESTOR" -- as defined in Regulation D promulgated under
the Securities Act.
"ADVERTISING CONTRACTS" -- all rights under existing and pending sales
and advertising contracts associated with the Structures and the Business, and
all rights to the advertising copy displayed on the Structures.
"ADTIME" -- shall mean Adtime Acquisition Holding Co., Inc., a Delaware
corporation.
"AFFILIATES" -- when used with reference to a specified Person, means
any other Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
specified Person. For purposes of this definition of Affiliate, "control" means
the possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies of the Person in question, whether through
the ownership of voting securities or by contract or otherwise.
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"ANTITRUST LAW" -- the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other Legal Requirements, decrees, administrative and judicial doctrines that
are designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization, restraint of trade or lessening of
competition through merger or acquisition.
"ANTITRUST DIVISION" -- Antitrust Division of the United States
Department of Justice.
"AUDITED 1996 FINANCIAL STATEMENTS" -- the audited balance sheets and
statement of income of the Company, including all notes thereto, as of and for
the fiscal year ended December 31, 1996.
"BANK" shall mean The First National Bank of Chicago.
"BANK PAYMENT" -- the aggregate amount of principal and interest owed
by the Company to the lenders under the Credit Agreement.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances; provided, that, as used
in Article 6 hereof, Best Efforts shall have the meaning ascribed to such term
under the laws of the State of New York, including all applicable case-law.
"BOOKS AND RECORDS" -- All of Company's books and records, other than
those relating to the Retained Business.
"BONUS PAYMENTS" the sum of the amounts to be paid by the Company to
various officers, employees and consultants of the Company prior to the Closing
pursuant to the Bonus Plan, which amounts shall be determined by the Sellers.
"BONUS PLAN" -- the bonus plan to be adopted by the Company prior to
the Closing Date for the benefit of certain officers, employees and consultants
of the Company who remain employed by the Company for a specified transition
period prior to the Closing Date.
"BUSINESS" -- shall mean the business of managing, owning and/or
operating out of home advertising, including without limitation, outdoor signs
and billboards and managing the Carey Shuttle Bus advertising in New York, and
in each case as currently operated by the Company, and shall specifically
exclude the Retained Business.
"BUYER" -- as defined in the first paragraph of this Agreement.
"BUYER'S BANK" -- Canadian Imperial Bank of Commerce.
"CLOSING" -- as defined in Section 2.2.
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"CLOSING DATE" -- the date and time as of which the Closing actually
takes place.
"CLOSING DATE BALANCE SHEET" -- the Company's unaudited Balance Sheet
as of the Closing Date, excluding the Retained Business, prepared according to
GAAP.
"CLOSING DATE NET WORKING CAPITAL" -- the net working capital of the
Company without any assets or liabilities associated with the Retained Business
as of the Closing, computed in accordance with GAAP after giving effect to the
Proration, and subject to the following:
(a) Net working capital shall be calculated without regard to, and
shall not include (i) the Indebtedness for Borrowed Money; (ii) the Bonus
Payments; (iii) the expenses referred to in Section 5.2(f); (iv) the loan
referred to in Section 2.5(a); (v) any current asset or current liability with
respect to a Retained Business; or (vi) any other cost or obligation which
Sellers are required to pay for at or before Closing as a condition to Buyer's
obligation to close hereunder; and
(b) for purposes of this Agreement, current assets will include (if the
acquisition thereof has been approved by the Buyer in writing) capital assets
purchased between the date hereof and the Closing Date, at the cost thereof less
the excess of fair market value over the sales price for any capital asset
disposed of by the Company during the same period; if any current or long-term
liability is owed in connection with such capital asset, then any such liability
will be deemed a current liability for purposes of calculating Closing Date Net
Working Capital.
"CLOSING DOCUMENTS" -- any documents to be executed at Closing pursuant
to this Agreement.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including: (a) the purchase of the Shares by Buyer from Sellers,
and (b) the performance by Buyer and Sellers of their respective covenants and
obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"CREDIT AGREEMENT" that certain Amended and Restated Credit Agreement
dated January 4, 1996, as amended, by and among the Company and the Bank, as
agent for the lenders thereunder.
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"DAMAGES" -- any loss, liability, claim, damage, expense, including
Expenses (including reasonable costs of investigation and defense and reasonable
attorneys' fees, expenses and charges, and specifically excluding any
consequential damages or loss of profits), whether or not involving a
third-party claim; provided, that, in the event that a Closing hereunder does
not occur through a breach by the Buyer, and Sellers subsequently sell all of
the stock or substantially all of the assets of the Company, consequential
damages shall not be deemed to include, and therefore Damages shall include, but
not be limited to (i) the difference between $170 million and the lesser amount
received by the Sellers in respect of such sale, and (ii) all fees, costs and
expenses incurred by Sellers in connection with any such sale, which sale shall
not be required to prove damages; provided, however, that any such sale must be
at arm's-length with a bona fide purchaser.
"DISCLOSURE SCHEDULE" -- the disclosure schedule, delivered by Sellers
to Buyer concurrently with the execution and delivery of this Agreement.
"EBITDA" -- income from operations before interest, taxes, depreciation
and amortization.
"EMPLOYEE BENEFIT PLAN" -- any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" -- has the meaning set forth in ERISA
Section3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" -- has the meaning set forth in ERISA
Section3(1).
"ENCUMBRANCE" -- any charge, claim, equitable interest, lien, option,
pledge, security interest, mortgage, right of first refusal, or restriction of
any kind, including any restriction on use, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW" -- any Legal Requirement pertaining to
environmental discharges, Release, emissions or spills or the manufacture, sale,
processing, handling, transportation, storage or disposal of any Hazardous
Materials, or relating to any environmental processes or condition, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act ("RCRA"), the Endangered Species Act, the
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Federal Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Surface Mining Control and Reclamation Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Coastal Zone Management Act, the National
Environmental Policy Act, the Noise Control Act. As used in this Agreement,
Environmental Laws shall mean any of such laws or regulations as the same exist
now or at the Closing Date.
"ERISA" -- the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"EXECUTIVES" -- Richard M. Schaps, Dirk S. Gould, Robert Fauser,
William Beattie, Bill Crabtree and Jason Perline.
"FINANCIAL STATEMENTS" -- as defined in Section 3.4.
"FINANCING ARRANGEMENTS" -- Buyer's financing arrangements with Buyer's
Bank in connection with the Contemplated Transactions.
"FTC" -- the United States Federal Trade Commission.
"GAAP" -- United States generally accepted accounting principles as in
effect from time to time.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"HSR ACT" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and any regulations and rules promulgated thereunder.
"INDEBTEDNESS FOR BORROWED MONEY" -- the Bank Payment and the Perline
Loan.
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"INDEMNIFIED PERSON" -- any of the Seller Indemnified Persons or the
Buyer Indemnified Persons, as the context requires.
"INDEMNIFYING PARTY" -- Buyer or any or both of Sellers, as the context
requires.
"INTANGIBLE PROPERTY" -- All right, title and interest in and to the
goodwill and other intangible property (except for the Company's corporate or
trade names and trade logos) used in connection with the Business, all licenses,
permits and authorizations pertaining to the Business or the right to own and
operate the Business and all right, title and interest in and to (i) any
intellectual property used in connection with the Business, and (ii) all records
and data relating specifically to the Business.
"IRC" -- the Internal Revenue Code of 1986, as amended from time to
time, or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"JOINT VENTURES" -- the entity formed by the Company and: (i) Transit
Graphics Ltd., known as Van Wagner Transit Graphics, pursuant to the Joint
Venture Agreement dated March 20, 1991 (New York); (ii) Zapco 1500 Investment
L.P., a Delaware limited partnership known as 1500 Signs Company, pursuant to
the Joint Venture Agreement dated June 1, 1996, as amended (New York); (iii)
Bertelsman Property, Inc., as successor to Broadway State Partners, a New York
limited partnership, known as Broadway Signs Company, pursuant to the Agreement
dated February 20, 1990 (New York); (iv) Metro Display Advertising, Inc., known
as VW Metro Company pursuant to the Joint Venture Agreement dated as of November
18, 1994 (California); and (v) Tall Wall Media, Inc., known as Van Wagner Tall
Wall Media, LLC, a California limited liability company, pursuant to the
Operating Agreement dated as of December 20, 1996.
"KNOWLEDGE" -- a Person will be deemed to have "Knowledge" of a
particular fact or other matter only if such Person is actually aware of such
fact or other matter without making any independent inquiry or investigation.
Knowledge of the Company shall mean the Knowledge of the Executives. Knowledge
of the Company and the Sellers shall mean the Knowledge of any one of them.
Knowledge of the Buyer shall mean Knowledge of any of William Levine, Bill
Beverage, Robert M. Reade, John R. Clements or Arthur Marino.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, regulation, statute, or treaty.
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"LOAN AMOUNT" -- the aggregate amount of principal and interest owed by
Adtime to the Company pursuant to that certain Promissory Note from Adtime to
the Company dated December 12, 1996 in the original principal amount of $11
million.
"MATERIAL ADVERSE CHANGE" -- a change that is reasonably likely to
cause a Material Adverse Effect; without in any way limiting the foregoing, the
following shall not be considered a Material Adverse Change: (i) the termination
of any Contract listed on the Disclosure Schedule in accordance with its terms,
(ii) the failure to obtain any of the Consents of the other parties to the
Contracts listed on Part 3.2 of the Disclosure Schedule, or (iii) any change
resulting substantially and proximately from the public announcement or pendency
of this Agreement or the Contemplated Transactions.
"MATERIAL ADVERSE EFFECT" -- a material adverse effect on the Company
or its operations or financial condition taken as a whole.
"MOST RECENT FINANCIAL STATEMENTS" -- as defined in Section 3.4.
"MULTIEMPLOYER PLAN" -- as defined in ERISA Section3(37).
"NON-SOLICITATION AGREEMENT" -- as defined in Section 5.10.
"NON-TRANSFERRED EMPLOYEES" -- as defined in Section 5.8.
"ORDER" -- any award, decision, decree, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" if such action is
consistent with the past custom and practices of such Person and is taken in the
ordinary course of the normal operations of such Person (including with respect
to quantity and frequency).
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"OTHER CONTRACT" -- any Contract (other than a Site Lease, Advertising
Contract or Permit) relating to or affecting the Company (i) under which the
Company has or may acquire any rights, (ii) under which the Company has or may
become subject to any obligation or liability, or (iii) by which the Company or
the Business is or may become bound.
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"OWNED REAL PROPERTY" -- all of the real property owned in fee by
Seller and any rights therein, and all buildings, facilities, structures,
fixtures, leasehold and other improvements located thereon.
"PARTY" -- as defined in the first paragraph of this Agreement.
"PARTIES" -- as defined in the first paragraph of this Agreement.
"PERLINE LOAN" -- the aggregate amount of principal and interest owed
by the Company to Jason Perline pursuant to the terms of that certain Senior
Subordinated Note of the Company dated January 4, 1996, as amended, in the
original principal amount of $5 million.
"PERMITS" -- all state and local licenses or permits/tags and other
Governmental Authorizations of the Company that are required for the operation
of the Business, including the Structures.
"PERMITTED LIENS" -- Encumbrances for taxes not yet delinquent or, if
delinquent, being contested in good faith, and with respect to real property,
installments of special assessments not yet delinquent or, if delinquent, being
contested in good faith, recorded easements, covenants and other restrictions,
and utility easements, building restrictions, zoning restrictions and other
easements and restrictions which do not impair the current use of the parcel of
real property, interests of lessors and Encumbrances set forth in the Title
Policy and Encumbrances which are within the definition of current liabilities
as contemplated under the definition of Closing Date Net Working Capital.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PHANTOM STOCK PLAN" -- the Phantom Unit Appreciation Rights Plan of
the Company dated January 1, 1996.
"PLEDGE" -- the security interest in the Shares in favor of the Bank.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PRO-RATA PERCENTAGE" -- with respect to Richard M. Schaps, 95%, and
with respect to Jason Perline, 5%, of any amounts required to be paid by Sellers
under Article 10 hereof.
"PRORATION" -- the proration of all of the Company's revenues and expenses
without the Retained Business as of the Closing Date. Revenues and expenses will
be recognized according
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to GAAP and on the number of days of postings before and after the Closing Date.
For purposes of this definition, one month shall be deemed to have thirty (30)
days and one year shall be deemed to have three hundred and sixty (360) days.
"PURCHASE PRICE" -- as defined in Section 2.3.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"RETAINED BUSINESS" -- as defined in Section 5.13.
"SECTION 338(H)(10) ELECTION" -- as defined in Section 5.11
"SECURITIES ACT" -- the Securities Act of 1933, as amended and the rules
and regulations promulgated thereunder.
"SELLERS" -- as defined in the first paragraph of this Agreement.
"SHARES" -- as described in Section 3.3.
"SHAREHOLDERS' AGREEMENT" -- the Shareholders' Agreement between the
Sellers and the Company dated as of January 4, 1996, as amended.
"SITE LEASES" -- all leases, subleases and all other grants of the right
to place, construct, own, operate or maintain a Structure on land, buildings
and/or other real property owned by third parties.
"STRUCTURES" -- all of the billboard displays, and other out-of-home
advertising structures, together with all components, fixtures, parts,
appurtenances, and equipment attached to or made a part thereof that are
existing, under construction or for which the Company has any rights.
"TAX" -- shall mean all tax (including income tax, capital gains tax,
value added tax, sales tax, property tax, transfer tax or intangibles tax), levy
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including fine, penalty and interest) imposed, assessed or collected by
or under the authority of any Governmental Body.
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"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREATENED" -- a claim or Proceeding will be deemed to have been
"THREATENED" if any written demand or statement has been delivered to the
Company or any written notice has been delivered to the Company that would lead
a prudent Person to conclude that such a claim or Proceeding is likely to be
asserted, commenced or taken in the future.
"TITLE POLICY" -- as defined in Section 3.10.
2. PURCHASE AND SALE
2.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions of
this Agreement, each Seller hereby agrees to grant, sell, assign, transfer,
convey and deliver to Buyer all right, title and interest in and to the Shares
owned by him, free and clear of any Encumbrances, other than Encumbrances that
may be created by, or as a result of actions of, Buyer, and Buyer hereby agrees
to buy and acquire the Shares from Sellers.
2.2 CLOSING. The purchase and sale of the Shares (the "Closing") provided
for in this Agreement will take place, subject to the satisfaction of the
conditions in Sections 7 and 8 hereof, at the offices of Baer Marks & Upham LLP,
805 Third Avenue, New York, New York 10022, commencing at 10:00 a.m. local time
on the date which is the later of (i) ten days after the delivery by Sellers to
Buyer of the Audited 1996 Financial Statements, and (ii) four (4) business days
after the expiration or termination of the applicable waiting period under the
HSR Act, or such other time and place as the Parties may agree in writing. The
effective time of the Closing shall be 11:59 p.m., Eastern Standard Time, on the
Closing Date.
2.3 PURCHASE PRICE. The aggregate purchase price for the Shares shall be
One Hundred Seventy Million Dollars ($170,000,000), as adjusted in accordance
with Section 2.4 hereof (the "Purchase Price"). The Purchase Price shall be paid
by wire transfer of immediately available funds, to the accounts designated by
Sellers in writing delivered to Buyer at least two (2) business days prior to
the Closing Date, and shall be allocated between Schaps and Perline in the
percentages provided in Part 2.3(a) of the Disclosure Schedule.
2.4 ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be subject
to adjustment as follows;
(a) The Purchase Price shall be decreased by:
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(i) the Bonus Payments paid or owed by the
Company at or prior to Closing; and
(ii) the Indebtedness for Borrowed Money; and
(iii) to the extent not paid prior to the Closing,
all liabilities of the Company not included
in the calculation of Closing Date Net
Working Capital except for those which do
not have a monetary effect on the Company.
(b) The Purchase Price shall be increased or decreased as
follows:
(i) to the extent that the Closing Date Net
Working Capital is a positive amount, the
Purchase Price shall be increased by a
dollar amount equal to the positive balance;
and
(ii) to the extent that the Closing Date Net
Working Capital is a negative amount, the
Purchase Price shall be reduced by a dollar
amount equal to the negative balance.
(c) The Purchase Price shall be further adjusted as provided in
Section 5.11.
(d) The Purchase Price adjustments in (a) and (b) above shall be
made at Closing based on an estimate of all items (except the adjustment
provided for in Section 5.11 hereof) from an estimated Closing Date Balance
Sheet and income statement prepared by the Company's outside certified public
accountants pursuant to the terms of this Agreement and reviewed by Buyer's
outside certified public accountants. Within ninety (90) days after the Closing,
the Buyer will prepare and provide to Sellers calculations of adjustments to the
Purchase Price under this Section 2.4. Within ninety (90) days after receipt
thereof, Sellers shall provide Buyer with any objections to such calculations.
The Parties and their respective representatives shall thereafter work in good
faith to resolve any discrepancies. If the Parties and their Representatives are
unable to resolve such discrepancies within thirty (30) days, the matter shall
be submitted to an accounting firm or other third party mutually acceptable to
the Parties, whose determination shall be final and binding on the Parties, and
fifty (50%) of the fees and expenses of such third party shall be borne by each
of Buyer, on the one hand and Sellers (in accordance with their respective
Pro-Rata Percentage), on the other hand. Any required refund or payment with
respect to the Purchase Price shall be made promptly after a final determination
of such calculations is made.
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2.5 TRANSACTIONS AT THE CLOSING. The following transactions shall
take place at the Closing in the order listed whereby no more than the Purchase
Price amount will be loaned by Buyer to the Company at Sellers' request at the
Closing.
(a) Buyer will loan the Company, at Closing, the amount
requested by Sellers at least two (2) business days prior to the Closing to
allow the Company to meet its and the Sellers' obligations under this Agreement,
including, without limitation the Bonus Payments, the Indebtedness for Borrowed
Money, and all of the professional fees and brokerage fees incurred by the
Company in regard to preparing the Company for sale and selling it to the Buyer.
(b) Sellers shall deliver to Buyer (i) the original stock
certificates representing the Shares, endorsed in blank or accompanied by duly
executed assignment documents, (ii) the Noncompetition Agreements, (iii) duly
executed resignations of each of the officers, (other than Non-Transferred
Employees), Executives and directors of the Company and each of the trustees and
fiduciaries of each pension and other plan of the Company, (iv) duly executed
releases of each of the Executives, (v) all minute books and corporate and stock
records of the Company other than those which relate to the Retained Business,
and (vi) all other instruments of transfer and all other related documents, if
any, as may be reasonably necessary to evidence or perfect the sale, assignment,
transfer, and conveyance to Buyer of good title to the Shares in accordance with
this Agreement.
(c) The Company shall deliver to Buyer any documents or
records, including payoff letters reasonably requested by Buyer, including,
without limitation, releases of Encumbrances on the Shares and releases of all
other obligations of the Company and Encumbrances securing the same, which the
Sellers have agreed hereunder to discharge on or prior to the Closing Date.
(d) Sellers shall cause Adtime to repay the Loan Amount to the
Company.
(e) The Parties shall deliver to each other such other
agreements, instruments, opinions, certificates, and other documents referred to
in or contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Company and Sellers, jointly and severally, represent and warrant
to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. (a) The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, with full power and authority to
conduct the Business as it is now being conducted, to own or use its assets, and
to perform all its obligations. Sellers have delivered or made available to
Buyer true and complete copies of the Company's Organizational Documents,
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as currently in effect. The Company is duly qualified and in good standing to do
business in New York and California and each other jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the lack of such
qualification would not have a Material Adverse Effect. Except as set forth on
Part 3.1(a) of the Disclosure Schedule, and except with respect to the Retained
Business, the Company does not directly or indirectly own any interest in any
corporation, joint venture or other entity.
(b) Each Joint Venture that is a legal entity has been duly
organized, is validly existing and is in good standing under the laws of the
jurisdiction of its formation, with full power and authority to conduct its
business as now being conducted and to own or use its assets and to perform all
of its obligations. Sellers have delivered or made available to Buyer true and
complete copies of the Organizational Documents of each Joint Venture, as
currently in effect. Each Joint Venture is duly qualified and in good standing
to do business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualifications necessary, except where the lack of such qualification would not
have a Material Adverse Effect. Except as set forth on Part 3.1(b) of the
Disclosure Schedule, the Joint Ventures do not directly or indirectly own any
interest in any corporation, joint venture or other entity.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement has been duly executed and delivered by the
Company and, assuming the valid execution and delivery by the other parties
hereto, constitutes the legal, valid, and binding obligation of the Company,
enforceable against the Company in accordance with its terms except as may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies, including specific performance, is
subject to the equitable principles and the discretion of the court before which
any proceeding therefor may be brought (whether at law or in equity). Upon the
execution and delivery by the Company of any other agreements to be executed at
Closing pursuant to this Agreement, such agreements shall, assuming the valid
execution and delivery by the other parties thereto, constitute the legal,
valid, and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the equitable principles and the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity). The Company
has the absolute and unrestricted right, power and authority to execute and
deliver this Agreement and such other agreements to which it is a Party and to
perform its obligations thereunder. The execution, delivery and performance of
this Agreement has been specifically authorized by the shareholders and
directors of the Company.
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<PAGE> 19
(b) Except as set forth in Part 3.2 of the Disclosure
Schedule, neither the execution and delivery by the Company or Sellers of this
Agreement nor the consummation or performance by the Company or Sellers of any
of the Contemplated Transactions will:
(i) conflict with, violate or result in a breach
of (A) any provision of the Organizational Documents of the Company or
the Joint Ventures; or (B) any Legal Requirement or any Order to which
the Company or the Joint Ventures or any of their respective assets may
be subject; or
(ii) (A) contravene, conflict with, or result in
a violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
material Contract to which the Company or any of the Joint Ventures is
a Party; or (B) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets of the Company or the Joint
Ventures.
(c) Except for (i) filings under the HSR Act, (ii)
Consents that may be required under any Site Leases, and (iii) as set forth in
Part 3.2 of the Disclosure Schedule, the Company and each of the Joint Ventures
is not and will not be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION. The Company has authorized capital stock
consisting of: Three Hundred (300) shares of common stock, no par value, of
which 105.263157895 shares are issued and outstanding. All of the issued and
outstanding shares of the Company ("Shares") have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held beneficially and of
record by Sellers as set forth in Part 3.3 of the Disclosure Schedule. Except as
set forth in Part 3.3 of the Disclosure Schedule or any other part of the
Disclosure Schedule, (i) there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Company to
issue, sell, or otherwise cause to become outstanding any of its capital stock;
(ii) there are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the Company; and (iii)
there is no liability or other indebtedness for dividends or other distributions
declared or accumulated and unpaid with respect to the capital stock of the
Company.
3.4 FINANCIAL STATEMENTS.
(a) Attached hereto as Part 3.4 of the Disclosure
Schedule are the following financial statements of the Company (collectively,
the "Financial Statements"): (i) audited balance sheet and statement of income
as of and for the fiscal year ended December 31, 1995, and (ii) the unaudited
balance sheet and statement of income as of and for the fiscal year ended
December 31, 1996 (the "Most Recent Financial Statements"). The Financial
Statements
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(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis through the periods covered thereby and present fairly the
financial condition of the Company as of such dates and the results of
operations of the Company for such periods; provided, however, that the Most
Recent Financial Statements lack footnotes and other presentation items.
(b) The Company has previously furnished to Buyer an
unaudited balance sheet and statement of operations as of December 31, 1996
relating to the Retained Businesses (the "Retained Business Financial
Statements"). The Retained Business Financial Statements have been prepared in
accordance with the policies stated therein.
3.5 ABSENCE OF CHANGES. Since December 31, 1996 and except as set
forth on Part 3.5 of the Disclosure Schedule, there has not been:
(i) Any change in the shares of capital stock of the
Company that are authorized or in those that are issued and
outstanding, or any grant of options, warrants, or other rights or
convertible or exchangeable securities calling for the issuance
thereof;
(ii) Any declaration of any dividend in respect of the
Shares which has not been paid;
(iii) Any change in the method of accounting or accounting
practices of Company; or
(iv) Any transaction by the Company outside the Ordinary
Course of Business.
3.6 PERMITS. Part 3.6 of the Disclosure Schedule lists
substantially all of the Permits held by the Company. Except as indicated on
Part 3.6 of the Disclosure Schedule, the Company has not received written notice
that any Governmental Body issuing any Permit intends to cancel, terminate,
modify or amend any Permit listed on Part 3.6 of the Disclosure Schedule.
Notwithstanding anything otherwise contained in this Agreement, including but
not limited to Section 3.13 hereof, this Section 3.6 shall be the only Section
in this Agreement which is applicable to, and under which the Sellers make any
representation with respect to, the Permits.
3.7 THE STRUCTURES AND SITE LEASES. (a) Part 3.7(a) of the
Disclosure Schedule lists all Site Leases of the Company. Sellers have delivered
or made available to Buyer true and complete copies of the Site Leases. On the
date hereof, the Site Leases are in full force and effect, and with respect to
those Site Leases to which the Company or a Joint Venture is a party, are
binding upon the Company or the Joint Ventures, respectively, and, to the
Company's Knowledge, on the other parties thereto, in accordance with their
terms, except as to those Site Leases the terms of which have expired, which
are, consequently, agreements "at will" or "month to month", as applicable.
Except as set forth on Part 3.7(a) of the Disclosure Schedule, each of
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the Structures located at any Site Lease or otherwise owned, leased or subleased
by the Company or the Joint Ventures are in condition to accept faces and in
adequate condition and repair for its current use, except for Structures as to
which the failure to meet any such requirement would not have a Material Adverse
Effect.
(b) Except as set forth in Part 3.7(b) of the Disclosure
Schedule (i) to the Company's Knowledge, no default by Company or any other
party has occurred under the Site Leases, (ii) to the Company's Knowledge, no
event, occurrence or condition exists which (with or without notice or lapse of
time or the happening of any further event or condition) would become a material
default by the Company or any Joint Venture thereunder or would entitle any
other party to terminate a Site Lease, to make a claim or set-off against
Company or otherwise to amend such Site Lease or prevent such Site Lease from
being renewed (if renewable) in accordance with its terms, except for any of the
foregoing which would not have a Material Adverse Effect, and (iii) the Company
and the Joint Ventures have not received any written notice of default,
termination or non-renewal under any Site Lease.
3.8 ADVERTISING CONTRACTS.
(a) Part 3.8(a) of the Disclosure Schedule contains a list of
all material Advertising Contracts as of the date hereof. Sellers have made
available or delivered to Buyer true and complete copies of all of the
Advertising Contracts set forth in Part 3.8(a) of the Disclosure Schedule.
(b) Except as set forth in Part 3.8(b) of the Disclosure
Schedule, all sales made to advertisers have been made pursuant to Advertising
Contracts. The Advertising Contracts set forth in Part 3.8(a) of the Disclosure
Schedule are in full force and effect, and with respect to those Advertising
Contracts to which the Company or a Joint Venture is a party, are binding upon
the Company or the Joint Venture and, to the Company's Knowledge, upon the other
parties thereto in accordance with their terms. Except as set forth in Part
3.8(b) of the Disclosure Schedule, or as would not have a Material Adverse
Effect, (i) no default by Company or, to the Company's Knowledge, by any other
party, has occurred under the Advertising Contracts set forth in Part 3.8(a) of
the Disclosure Schedule, and (ii) no event, occurrence or condition exists which
(with or without notice or lapse of time or the happening of any further event
or condition) would become a default by Company thereunder or would entitle any
other party to terminate an Advertising Contract set forth in Part 3.8(a) of the
Disclosure Schedule, to make a claim or set-off against Company or otherwise to
amend such Advertising Contract or prevent such Advertising Contract from being
renewed (if renewable) in accordance with its terms.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except for and to the
extent monetary liabilities and obligations are (a) provided for in the balance
sheet included in the Most Recent Financial Statements, (b) disclosed in Part
3.9 of the Disclosure Schedule or on any other Part of the Disclosure Schedule,
(c) incurred since the date of the Most Recent Financial Statements in
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the Ordinary Course of Business, or (d) any liability or obligation that may
result from any Section 338(h)(10) Election, the Company has no monetary
liabilities or obligations (whether direct, indirect, accrued or contingent) in
excess of $25,000 and there is no existing condition or situation which could
reasonably be expected to result in any such monetary liabilities or
obligations.
3.10 OWNED REAL PROPERTY. Part 3.10 of the Disclosure Schedule
contains a list of all Owned Real Property. The Company has good and marketable
record title to the Owned Real Property, to the extent set forth in the Pioneer
National Title Insurance Co. and the Title Guarantee Company Policy No.
T41-88-01644 (together, the "Title Policy"), such title being a fee interest in
the Owned Real Property. The Company has not received any notice of pending or
Threatened claims, Proceedings, planned public improvements, annexations,
special assessments, rezonings or other adverse claims affecting the Owned Real
Property. To the Knowledge of the Company and the Sellers, all improvements on
the Owned Real Property are in compliance with all applicable Legal
Requirements, except for those that if not in compliance would not have a
Material Adverse Effect.
3.11 TITLE, ENCUMBRANCES. Except as set forth on Part 3.11 of the
Disclosure Schedule, (i) the Company owns or has good title to all of its
assets, and (ii) all of such assets are owned by Company free and clear of all
Encumbrances except for Permitted Liens.
3.12 TAXES.
(a) Except as set forth on Part 3.12 of the Disclosure
Schedule, and except for Taxes that might arise as a result of the signing of
this Agreement or the consummation of the Contemplated Transactions, the Section
338(h)(10) Election, the Company has (i) correctly prepared and timely filed all
Tax Returns required to be filed by it in respect of any Taxes, (ii) timely and
properly paid all Taxes that are due and payable, (iii) established on its books
and records reserves that are adequate for the payment of all Taxes not yet due
and payable, and (iv) complied in all respect with all applicable laws, rules
and regulations relating to the payment and withholding of Taxes and has timely
and properly withheld from employee wages and paid over to the proper
governmental authorities all amounts required to be so withheld and paid over
under all applicable Legal Requirements.
(b) Except as set forth Part 3.12 of the Disclosure Schedule,
no deficiency for any Taxes has been proposed, asserted or assessed against the
Company which has not been resolved and paid in full. The Company has not waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(c) Except as set forth on Part 3.12 of the Disclosure
Schedule, no Tax Returns with respect to the Company for taxable periods ended
on or after December 31, 1990 have been audited, and no Tax Returns of the
Company are currently the subject of audit. The
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Company has delivered or made available to the Buyer correct and complete copies
of all Tax Returns filed by the Company since December 31, 1990.
(d) The Company is not a party to any Tax allocation or
sharing agreement and is not liable for the Taxes of any other Person.
(e) The Company has not been a member of an affiliated group
within the meaning of IRC Section1504 which filed or was required to file a
consolidated Tax Return.
(f) The Company is an "S corporation" having elected that
status pursuant to IRC Section 1362 effective March 1, 1989.
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company has complied
in all respects with (i) all Legal Requirements applicable to the Company with
respect to Site Leases, Structures and Advertising Contracts, except in each
case for any such noncompliance which would not have a Material Adverse Effect,
and (ii) all other Legal Requirements of the Company; provided, however, that
this Section 3.13 shall not be applicable to, or be deemed to include any
representation or warranty with respect to, any Permit or any Legal Requirement
relating to any Permit. Except as disclosed in Part 3.13 of the Disclosure
Schedule, the Company has not been Threatened to be charged with or given
written notice of any violation of (which has not been cured), nor to the
Company's and Sellers' Knowledge, is the Company under investigation with
respect to any violation of, any Legal Requirements applicable to the Company.
3.14 LEGAL PROCEEDINGS; ORDERS. Except as set forth in Part 3.14 of
the Disclosure Schedule, there is no Proceeding pending or, to the Knowledge of
the Company and Sellers, Threatened against the Company or that challenges, or
may have the effect of preventing or otherwise interfering with any of the
Contemplated Transactions, and there is no Order to which the Company is
subject.
3.15 OTHER CONTRACTS.
(a) Except as disclosed in Part 3.15(a) of the Disclosure
Schedule the Company and each Joint Venture is not a Party to or bound by (i)
any agreement evidencing indebtedness for money borrowed by the Company or for
loans made by the Company in excess of $25,000; (ii) any joint venture,
partnership or Other Contract involving a sharing of profits, losses, costs or
liabilities by the Company with any other person; (iii) any non-competition or
non-solicitation agreement containing covenants that in any way purport to
restrict the business activity of the Company with respect to the Business; (iv)
any power of attorney of the Company that is currently effective and
outstanding; (v) any written guaranty, performance bond or letter of credit of
the Company; (vi) any written indemnity of the Company provided in connection
with the acquisition or disposition of a business by the Company since January
1, 1992; (vii) any collective bargaining agreement, employment agreement or
confidentiality agreement; (viii) any
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sales agency agreements or other agreement of the Company providing for sales
commissions; (ix) any management contracts; and (x) any Other Contract
obligating the Company for payments in excess of Twenty-Five Thousand Dollars
($25,000) per year which is not cancelable by the Company or a Joint Venture,
without penalty within a thirty (30) day period. The Company has delivered or
made available to Buyer true and complete copies of all such Contracts. The
Other Contracts listed on Part 3.15(a) of the Disclosure Schedule are
collectively referred to as the "Material Other Contracts".
(b) The Material Other Contracts are in full force and effect,
and are binding upon the Company or the Joint Ventures, as applicable, and, to
the Company's Knowledge, upon the other parties thereto. Except as set forth in
Part 3.15(b) of the Disclosure Schedule, (i) no default by the Company or, to
the Company's Knowledge, any other party, has occurred under the Material Other
Contracts, and (ii) no event, occurrence or condition exists which (with or
without notice or lapse of time or the happening of any further event or
condition) would become a default by Company or a Joint Venture, as applicable,
thereunder or would entitle any other party to terminate a Material Other
Contract, to make a claim or set-off against Company or otherwise to amend such
Material Other Contract or prevent such Material Other Contract from being
renewed (if renewable) in accordance with its terms.
3.16 INSURANCE. The Company maintains in full force and effect
policies of fire and other casualty, liability, title and other forms of
insurance covering its assets and the Business, and the operation thereof, of
the types and with the amounts of coverage as are consistent with industry
standards for outdoor advertising businesses comparable to the Business. All
such policies are in full force and effect, all premiums with respect thereto
have been paid, and no notice of cancellation or termination has been received
by the Company, or to the Knowledge of the Company and the Sellers, Threatened
to be given, with respect to any such policy. Part 3.16 of the Disclosure
Schedule lists all claims pending or for which coverage is disputed under any
such insurance policy.
3.17 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.17 of the
Disclosure Schedule:
(a) The Company is, and at all times has been, in material
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law, except for those violations and liabilities that would
not have Material Adverse Effect. There are no pending or, to the Knowledge of
the Company and Sellers, Threatened Encumbrances resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law.
(b) Neither the Company nor the Sellers has Knowledge of, nor
has the Company received, any written citation, directive, inquiry, notice,
Order, summons, warning, or other communication that relates to any alleged
actual or potential liability with respect to Hazardous Materials.
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(c) The Company and Sellers have not initiated and do not
possess any reports, studies, analyses, tests, or monitoring pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the properties
owned or leased by the Company or the Joint Ventures.
3.18 INTANGIBLE PROPERTY. Except as set forth in Part 3.18 of the
Disclosure Schedule, the Company uses no Intangible Property in connection with
the operation of the Business except for the Permits, the Books and Records, the
trade name "Van Wagner" and licenses for commonly available software programs
under which Company is the licensee.
3.19 RELATIONSHIPS WITH AFFILIATES. Except as set forth on Part
3.19 of the Disclosure Schedule, (a) the Company is not a party to any contract
with any of the Sellers or other Affiliates of the Company or immediate family
members of Sellers or such Affiliates, and (b) neither of the Sellers nor any of
their Affiliates or any of their respective immediate family members, or any
other Affiliate of Company, is the owner (of record or as a beneficial owner) of
an equity interest or any other financial or profit interest in, a Person that
has business dealings or a material financial interest in any transaction with
Company.
3.20 BROKERS OR FINDERS. The Company has not incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement that will not be paid by Sellers at or prior to the Closing.
3.21 LABOR MATTERS. (a) Except as set forth in Part 3.21(a) of the
Disclosure Schedule, (i) the Company is not a party to or bound by, and its
employees are not covered by, any labor or collective bargaining agreement; (ii)
there are no pending or, to the Company's and Sellers' Knowledge, Threatened
strikes, work stoppages, slowdowns, lockouts, unfair labor practice charges or
complaints, grievances or arbitrations arising out of a collective bargaining
agreement, or other labor disputes against the Company and during the past three
(3) years there has not been any such action or proceeding; (iii) there are no
pending or, to the Company and Sellers' Knowledge, Threatened complaints,
charges or claims against the Company with any Governmental Authority regarding
the employment or termination of employment by the Company of any individual;
(iv) except as previously provided or made available to the Buyer, the Company
has no written personnel policies applicable to employees; and (v) no union
organization campaign is presently in progress.
(b) Part 3.21(b) of the Disclosure Schedule lists the names of
all present employees of the Company, the total compensation payable to each,
and accrued sick, personal and vacation days for each (or pay in lieu thereof),
except for the Executives. The Joint Ventures do not have any employees.
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3.22 EMPLOYEE BENEFIT MATTERS.
(a) Part 3.22(a) of the Disclosure Schedule lists each
Employee Benefit Plan that the Company maintains or to which the Company
contributes.
(i) Except as set forth on Part 3.22(a)(i) of
the Disclosure Schedule, each such Employee Benefit Plan that is not a
Multiemployer Plan (and each related trust, insurance contract, or
fund) complies in form and in operation in all material respects with
the applicable requirements of ERISA and the IRC.
(ii) With respect to each Employee Pension
Benefit Plan that is not a Multiemployer Plan maintained by the Company
that is intended to qualify under Code Section401(a) (A) the Company
has made available to Buyer the most recent opinion letter issued by
the IRS, and (B) to the Company's Knowledge, there have been no
prohibited transactions (within the meaning of Section 406 of ERISA or
IRC Section4975) for which no exemption exists under Section 408 of
ERISA or IRC Section4975 and for which there is any material liability
or civil penalty assessed pursuant to Section 502 of ERISA or material
taxes imposed by IRC Section4975.
(iii) The Company has delivered or made available
to the Buyer correct and complete copies of the plan documents and
summary plan descriptions, the most recent opinion letter received from
the IRS, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements with
respect to each of the Company's Employee Benefit Plans that is not a
Multiemployer Plan.
(b) With respect to each Employee Benefit Plan that is
not a Multiemployer Plan that the Company maintains or to which it contributes,
or is required to contribute:
(i) No such Employee Benefit Plan is or has been
subject to Title IV of ERISA.
(ii) No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of
the assets of any such Employee Benefit Plan (other than routine claims
for benefits) is pending, or to the Knowledge of Sellers and the
Company, Threatened.
(c) Except as set forth on Part 3.22(c) of the Disclosure
Schedule, the consummation of the Contemplated Transactions will not in and of
itself entitle any current or former employee or officer of the Company to any
severance pay, unemployment compensation or any other payment that would not
have otherwise been payable had the Contemplated Transactions not been
consummated, and the consummation of the Contemplated Transactions will not in
and of itself accelerate the time or vesting of payments or increase the amount
of
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payments due to any current or former employee or officer of the Company in a
manner that would not have resulted had the Contemplated Transactions not been
consummated.
(d) With respect to each Employee Benefit Plan to which the
Company contributes or is required to contribute that is a Multiemployer Plan,
the Company has made all requested contributions to any such Multiemployer Plan.
(e) As used in this Section 3.22, the term "Company" shall be
deemed to include any other corporation, trade, business or other entity, other
than the Company, which would, together with the Company, now or in the past,
constitute a single employer within the meaning of IRC Section 414.
3.23 BOOKS AND RECORDS. The books of account, and other Books and
Records of Company are complete and correct in all material respects and have
been maintained in accordance with sound business practices. The Company has
provided or made available to Buyer a true and complete set of the Company's
Organizational Documents and minute books.
3.24 ASSETS NECESSARY FOR CONDUCT OF BUSINESS. After giving effect
to the transfer of the Retained Business, the Company shall own all the assets
and have all the rights necessary for the conduct of the Business as presently
conducted.
3.25 BANK ACCOUNTS. Part 3.25 of the Disclosure Schedule sets forth
the name of each bank or similar entity in which the Company has an account,
lock box or safe deposit box and the names of the persons authorized to draw
thereon or have access thereto.
3A. REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each of the Sellers, severally and not jointly, represents and warrants
to Buyer as follows with respect to himself:
3A.1 AUTHORITY OF SELLER; NO CONFLICT.
(a) This Agreement constitutes (assuming the valid execution
and delivery by the other parties hereto) the legal, valid, and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms except as may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the equitable principles and the discretion
of the court before which any proceeding therefor may be brought (whether at
laws or equity). Upon the execution and delivery by such Seller of any other
agreements to be executed at Closing pursuant to this Agreement, such agreements
will, assuming the valid execution and delivery by the other parties thereto,
constitute the legal, valid, and binding obligations of such Seller, enforceable
against
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such Seller in accordance with their respective terms except as may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the equitable principles and the discretion of the court before which any
proceeding therefor may be brought (whether at laws or equity). Subject to
release of the Pledge, repayment of the Bank Payment and the Perline Loan, and
the cancellation of the Shareholders' Agreement, such Seller has the absolute
and unrestricted right, power and authority to execute and deliver this
Agreement and the other agreements to which he is a Party, to transfer his
Shares to Buyer, and to perform his obligations hereunder and thereunder.
(b) Except as set forth in Part 3A.2 of the Disclosure Schedule,
neither the execution and delivery by such Seller of this Agreement and the
other agreements to which he is a party nor the consummation or performance by
such Seller of any of the Contemplated Transactions will:
(i) conflict with, violate or result in a breach of any
Legal Requirement or any Order to which such Seller may be subject; or
(ii) (A) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
Contract to which such Seller is a party or any interest or rights of
such Seller in or to his Shares; or (B) result in the imposition or
creation of any Encumbrance upon or with respect to any of his Shares.
(c) Except for filing under the HSR Act and as set forth
in Part 3A.2 of the Disclosure Schedule, such Seller is not and will not be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or any of the
Closing Documents or the consummation or performance of any of the Contemplated
Transactions.
3A.2 TITLE TO SHARES. Such Seller has, and will have at the Closing
Date, good title to the Shares to be conveyed by such Seller as provided in
Section 2.1 above, and such Seller owns such Shares free and clear of any
Encumbrances other than the Pledge, the Bank Payment, the restrictions contained
in the Shareholders' Agreement and the right of the Company to purchase
Perline's Shares under certain circumstances, all of which shall be released at
Closing.
3A.3 BROKERS OR FINDERS. Sellers have not incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement that will not be paid by Sellers at Closing, subject to provisions of
Section 11.1 hereof.
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4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement has been duly and validly executed and delivered
by Buyer and (assuming the valid execution and delivery by the Company and the
Sellers) constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the equitable principles and the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity). Upon the
execution and delivery by Buyer of the other agreements to be executed and
delivered at Closing to which Buyer is a party, such agreements will (assuming
the valid execution and delivery by the other parties thereto) constitute the
legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the equitable
principles and the discretion of the court before which any proceeding therefor
may be brought (whether at law or in equity). Buyer has the absolute and
unrestricted right, power, and authority to execute and deliver this Agreement
and the other agreements to which it is a party and to perform its obligations
thereunder. The execution and delivery of this Agreement and the other
agreements to which it is a party have been authorized by Buyer's Board of
Directors, and no other corporate or other proceedings are necessary to
authorize the execution and delivery of the Agreement or any other agreement to
be executed in connection herewith or the performance or consummation of any of
the Contemplated Transactions.
(b) Except for the consent of Buyer's Bank (which is not, however, a
condition to Buyer's obligation to close hereunder) neither the execution and
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will (i) conflict with, violate or
result in a breach of any provision of Buyer's Organizational Documents, or any
Legal Requirement or Order to which Buyer may be subject; (ii) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify
any material Contract to which Buyer is a party or by which Buyer may be bound;
or (iii) result in the imposition or creation of any Encumbrance upon or with
respect to any of the material assets of Buyer. Except for filings under the HSR
Act and except for the consent of Buyer's Bank (which is not, however, a
condition to Buyer's obligation
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to close hereunder), Buyer is not and will not be required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no Proceeding pending or, to
Buyer's Knowledge, Threatened that challenges, or may have the effect of
preventing, or otherwise interfering with any of the Contemplated Transactions.
4.4 BROKERS OR FINDERS. Buyer has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement that will
not be paid by the Buyer.
4.5 INVESTMENT. The Buyer is an Accredited Investor. The Buyer is
buying the Shares for its own account and not with a view to the public
distribution thereof, and will not sell or transfer such Shares in violation of
the Securities Act, or any applicable state securities or "blue sky" laws.
5. COVENANTS
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the Closing Date, Sellers will, and will cause the Company and its
Representatives to, afford Buyer and its Representatives reasonable access
during normal business hours to the Company's personnel, properties, Books and
Records, and other documents and data, and furnish Buyer and its Representatives
with copies of the same. Sellers and the Company shall cooperate with Buyer to
provide all information and take all actions reasonably requested by Buyer in
conjunction with Buyer's Financing Arrangements which shall specifically exclude
any payments of money.
5.2 OPERATION OF THE COMPANY. Except as otherwise set forth in
Part 5.2 of the Disclosure Schedule or as expressly contemplated by this
Agreement, between the date of this Agreement and the Closing Date, the Company
will:
(a) operate only in the Ordinary Course of Business;
(b) use commercially reasonable efforts to maintain the
Business, and maintain the relations and good will with advertisers, landlords,
employees, suppliers, distributors, customers and others associated with the
operation of the Company;
(c) confer on a regular and frequent basis with Buyer and its
Representatives to discuss operational matters and the general status of ongoing
operations;
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(d) promptly notify Buyer of any material changes in the
Business, or the properties, assets, condition (financial or other), results of
operations or prospects of the Company;
(e) notify Buyer at least twenty-four hours prior to entering
into a collective bargaining agreement, and give Buyer the reasonable
opportunity to comment with respect to the terms thereof; and
(f) be permitted to pay any professional fees to lawyers,
accountants, investment banking or brokerage fees incurred by the Sellers or the
Company, in each case in connection with the execution and delivery of this
Agreement and the performance of the Contemplated Transactions.
5.3 NEGATIVE COVENANT. Except for the transfer of the Retained
Business and the transfer of the name "Van Wagner" and related trademarks, logos
and similar Intangible Property as contemplated by Sections 5.12 and 5.13
hereof, and except as otherwise expressly contemplated by this Agreement or the
Disclosure Schedule, between the date of this Agreement and the Closing Date,
Sellers will not, and will not permit the Company to:
(a) take any action with respect to the Business that is not
in the Ordinary Course of Business.
(b) (i) amend or propose to amend the Company's charter or
bylaws; or (ii) split, combine or reclassify its outstanding capital stock or
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise;
(c) (i) authorize the issuance of, or issue, sell, grant,
pledge or dispose of, or agree to issue, sell, grant, pledge or dispose of, any
additional shares of, or any options, warrants, or rights of any kind to acquire
any shares of, the capital stock of the Company of any class or any debt or
equity securities convertible into or exchangeable for such capital stock, (ii)
amend or agree to amend any stock option plans of the Company or agreements with
respect thereto; (iii) sell (including, without limitation, by sale-leaseback),
pledge, dispose of or encumber any assets of the Company or interest therein,
other than as provided in Part 5.3(c) of the Disclosure Schedule, or
dispositions of assets (other than sales of advertising space pursuant to the
Advertising Contracts) in the Ordinary Course of Business not exceeding $250,000
in the aggregate, (iii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock, (iv) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(d) acquire, or publicly propose to acquire, all or any
substantial part of the business and properties or capital stock of any Person,
whether by merger, purchase of assets, tender offer or otherwise;
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(e) initiate, solicit or encourage, and will direct and use
its best efforts to cause any officer, director or employee, investment banker,
attorney, accountant or other agent employed or retained by the Company not to
initiate, solicit or encourage, any proposal or offer to acquire all or any
substantial part of the business and properties or capital stock of the Company,
whether by merger, purchase of assets, tender offer or otherwise; and will not
engage in any negotiations with respect thereto with any other Person; provided,
that the restrictions contained in this Section 5.3(e) shall be null and void
and of no further force and effect if the Closing has not occurred within 90
days of the date hereof;
(f) except as set forth on Part 5.3(f) of the Disclosure
Schedule, enter into or amend any employment, severance, bonus, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees of the
Company;
(g) except as set forth on Part 5.3(g) of the Disclosure
Schedule, adopt, enter into or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, health care,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee or retiree of the Company, except (i)
as required to comply with changes in applicable law occurring after the date
hereof and (ii) with respect to all plans, other than in the Ordinary Course of
Business;
(h) incur any indebtedness for money borrowed or guarantee any
such indebtedness or issue or sell any debt securities or make any loans or
advances, or make any capital expenditures except in the Ordinary Course of
Business;
(i) grant any general or limited power of attorney, proxy or
other similar delegation of authority, waive, toll or extend any statute of
limitations or compromise or settle any litigation, or arbitration, except (i)
to the extent that the defense or prosecution of any of the foregoing are in the
control of an insurance company on behalf of the Company, (ii) with respect to
the compromise or settlement of the pending arbitration listed on Part 3.14 of
the Disclosure Schedule, or (iii) for an amount less than $25,000;
(j) agree in writing, or otherwise, to take any of the
foregoing actions or any other action which would make any representation or
warranty of Sellers or the Company contained in this Agreement untrue or
incorrect in any material respect as of the Closing Date; and
(k) except as contemplated by Sections 5.13 and 5.14 hereof,
prepay any liability with respect to the Retained Business.
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5.4 REQUIRED APPROVALS AND CONSENTS. As promptly as practicable
after the date of this Agreement, Sellers will make, and will cause the Company
to make, and Buyer will make, all filings required by Legal Requirements,
including, without limitation, the HSR Act, to be made by them in order to
consummate the Contemplated Transactions.
5.5 BEST EFFORTS. (a) Between the date of this Agreement and the
Closing Date, Sellers will use their, and will cause Company to use its, Best
Efforts to cause the conditions in Article 7 and 8 to be satisfied, and will
take all actions contemplated by Article 6 hereof; provided, that this Agreement
will not require Sellers or Company to dispose of or make any change in any
portion of the Business prior to the Closing.
(b) Between the date of this Agreement and the Closing Date,
Buyer will use its Best Efforts to cause the conditions in Article 7 and 8 to be
satisfied.
5.6 NOTIFICATION. (a) Between the date of this Agreement and the
Closing Date, Sellers will notify Buyer in writing if Sellers, or either of
them, or the Company become aware of any fact or condition that causes or
constitutes a material breach of any of Sellers' representations and warranties
as of the date of this Agreement, or if Sellers or the Company become aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
material breach of any such representation or warranty had such representation
or warranty been made as of the time of occurrence or discovery of such fact or
condition. During the same period, Sellers will notify Buyer of the occurrence
of any event that may make the satisfaction of the conditions in Article 7
impossible or unlikely.
(b) Between the date of this Agreement and the Closing Date,
Buyer will notify Sellers in writing if Buyer becomes aware of any fact or
condition that causes or constitutes a material breach of any of Buyer's
representations and warranties as of the date of this Agreement, or if Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a material breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, Buyer will notify Sellers of
the occurrence of any breach of any covenant of Buyer in this Section 6 or of
the occurrence of any event that may make the satisfaction of the conditions in
Section 8 impossible or unlikely.
5.7 ENCUMBRANCES AND SECURITY INTERESTS. Sellers agrees to obtain
at or prior to Closing and deliver to Buyer at the Closing releases of all
Encumbrances on the assets of the Company or the Shares, other than Permitted
Liens.
5.8 NON-TRANSFERRED EMPLOYEES. At least twenty business days prior
to the Closing Date, Buyer shall notify Sellers in writing of those employees of
the Company whose
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employment Buyer shall terminate on or within thirty (30) days after the Closing
Date (the "Non-Transferred Employees").
5.9 FINANCIAL TRANSACTIONS AT THE CLOSING. At least two business days
prior to the Closing Date, Sellers shall notify Buyer in writing of the amount
of the Bank Payment and the Perline Loan on the expected Closing Date. The
Parties agree to take all actions and make all such payments as contemplated by
Section 2.5 hereof.
5.10 NON-SOLICITATION; RELEASE. Sellers shall, and shall cause each
Executive to, execute and deliver to Buyer at the Closing (i) a Non-Solicitation
Agreement in the form attached hereto as Exhibit A (the "Non-Solicitation
Agreements"); and (ii) a general release in favor of the Company in form and
substance mutually satisfactory to the parties. Buyer acknowledges and agrees
that (i) Sellers and the other Executives are currently engaged in the business
of leasing rotating signage systems and soliciting and selling advertising for
display on such signage, and the business of installing and maintaining
basketball backboards and soliciting and selling advertising or sponsorship
space thereon and other indoor and outdoor advertising business, and (ii)
Sellers and the other Executives may continue to operate such businesses, the
Retained Business and any other businesses not expressly prohibited by the terms
of their respective Non-Solicitation Agreements.
5.11 SECTION 338(H)(10) ELECTION. (a) Sellers hereby covenant and agree
with Buyer that if Buyer so elects, Sellers will join in making an election
under Section 338(h)(10) of the Code, and the regulations promulgated
thereunder, and any applicable analogous provision of state or local law, with
respect to the sale and acquisition of the Shares hereunder (the "Section
338(h)(10) Elections").
(b) In the case of any Section 338(h)(10) Elections that are made
in accordance with this Section 5.11,
(i) Buyer shall be responsible for the preparation and timely
filing of all Company returns, documents, statements and other forms
required to be filed with any federal, state or local taxing authority or
any other Governmental Body in connection with the Section 338(h)(10)
Elections (the "Section 338 Forms"); and
(ii) Sellers shall cooperate with Buyer to enable Buyer to
prepare and file all Section 338 Forms and shall execute and deliver to
Buyer such documents or forms as are required by the Code or the
regulations promulgated thereunder (and any applicable analogous provision
of state or local law) to properly complete the Section 338 Forms and to
complete the Section 338 Elections, provided that such material is
completed and delivered by Buyer to Sellers for execution at least 60 days
prior to the date Buyer wishes to file such material.
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(c) In the case of any Section 338(h)(10) Elections that are made
in accordance with this Section 5.11,
(i) Buyer shall be responsible for and pay any and all
tax liability or other Taxes of the Company that arises under the
provisions of Sections 1374 or 1375 of the Code that arises as a result
of such Section 338(h)(10) Elections and all state, local or other tax
liability or Taxes that arises as a result of such Section 338(h)(10)
Elections and shall, notwithstanding the provisions of Section 3.12 of
this Agreement, indemnify and hold the Sellers harmless from any such
tax liability or other Taxes; and
(ii) Buyer shall, as an increase to the Purchase Price set
forth in Section 2.3 of this Agreement, pay to Sellers, pro rata based
upon their respective stock ownership, an amount equal to (A) that
portion of any gain reported by the Company as a result of a Section
338(h)(10) Elections which is not characterized as capital gain, times
(B) the "Effective Tax Rate Differential," which shall equal the
highest marginal federal income tax rate on ordinary income in effect
for the period during the calendar year 1997 that includes the Closing
Date minus the federal capital gains tax rate in effect for the period
during the calendar year 1997 that includes the Closing Date, which
amount shall then be further divided by the result obtained by
subtracting (x) the sum of the federal capital gains tax rate in effect
for the period during the calendar year 1997 and the highest marginal
state income tax rate of the Sellers in effect for the period during
the calendar year 1997 that includes the Closing Date, minus such
marginal state and local income tax rate times highest marginal federal
income tax rate in effect for the period during the calendar year 1997
that includes the Closing Date from (y) one (1).
(iii) If (A) the gain reported by the Company on the final
S returns, or any amended returns or as a result of a final IRS
determination or otherwise, is more or less than the gain used in
determining the amount due under Section 5.11(c)(ii), and/or (B)
legislation is enacted which retroactively changes the tax rates to be
used in making such determination resulting in an Effective Tax Rate
Differential which is more or less than the Effective Tax Rate
Differential determined at the time the payment under Section
5.11(c)(ii) is made, then the Purchase Price shall be further increased
or decreased, as appropriate, to account for the foregoing. Any such
further adjustments to the Purchase Price under this Section
5.11(c)(iii), shall be promptly made by Sellers or Buyer upon
notification by such Party that such amounts are due.
(iv) All accountants,' legal and all other fees, costs and
other expenses which are not unconscionable and which are incurred by
the Sellers in good faith in connection with the filings and all other
transactions contemplated by this Section 5.11 shall be borne by Buyer.
(d) The Buyer shall be responsible for preparing the final
subchapter-S corporate tax returns of the Company for the year commencing
January 1, 1997 (the "S Return")
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which shall include the gain(s) reported as a result of the deemed sale of the
Company assets provided by such Section 338(h)(10) Elections provided however
that the Buyers shall include in such returns all information provided by
Sellers with respect to all items of income, loss, deduction, or credit that
arises from all activities other than the items resulting from such Section
338(h)(10) Election. Sellers and Buyer shall provide each other with such
information and cooperation as may reasonably be required to complete such
returns. Buyer shall provide Sellers with a copy of any such return, for their
review and comment, no later than sixty (60) days prior to the due date for
filing such return.
(e) For purposes of determining the payments to be made by Buyer
to Sellers in accordance with Section 5.11(c)(ii) hereof, Buyer shall notify
Sellers in writing of its intention to make a Section 338(h)(10) Election or
file the S Return not more than thirty (30) business days prior to the
anticipated date of such filing. Sellers shall, not more than ten (10) business
days thereafter, deliver to Buyer estimates of Sellers' accountants as to the
amounts to be paid by Buyer to Sellers under Section 5.11(c)(ii) hereof. All
amounts to be paid by Buyer to Sellers pursuant to Section 5.11(c)(ii) hereof
shall be made in immediately available funds no later than the one business day
prior to the date of the filing by Buyer of the S Return.
(f) All of the obligations of Sellers under this Section 5.11 are
conditioned upon and subject to payment by Buyer to Sellers of the payments due
as provided in this Section 5.11.
(g) Buyer shall pay to Sellers an amount equal to $100,000 for
each day any payment due under this Section 5.11 (other than the payments to be
made under Section 5.11(c)(iv)) has not been so paid on the date due.
5.12 DELIVERY OF FINANCIAL STATEMENTS. (a) Sellers agree to deliver
the Audited 1996 Financial Statements to Buyer not less than twenty days prior
to the Closing Date (provided, that if the Closing Date is prior to May 31,
1997, such delivery shall be made no later than seven days prior to the Closing
Date), which shall be prepared in accordance with GAAP applied on a consistent
basis through the periods covered thereby, and will present fairly the financial
condition of the Company as of December 31, 1996 and the results of operations
of the Company for the period then ordered.
(b) From the date hereof through the Closing Date, Sellers shall
use their Best Efforts to cause the Company to deliver to Buyer a monthly
statement of operations for the previous month as soon as available and in any
event within thirty (30) calendar days after the end of each month; provided,
that such statements for the months of January, February and March of 1997 shall
not be required to be provided to Buyer before May 15, 1997.
5.13 TRANSFER OF RETAINED BUSINESS. Sellers, Buyer and the Company
agree that as of a date which is prior to the Closing Date, the Company will
assign, transfer or otherwise divest itself of ("Transfer") the securities,
contracts and other assets owned by the Company listed on
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Part 5.13 of the Disclosure Schedule, all of which shall collectively be
referred to in this Agreement as the "Retained Business," and all obligations
with respect thereto shall be assumed by the assignee or other recipient
thereof. Notwithstanding any provision of this Agreement to the contrary,
including but not limited to Section 5.2(a), any business opportunity which
would not be a violation by Schaps under the Non-Solicitation Agreement if the
effective date thereof were the date hereof, shall be deemed to be an
opportunity derived for the benefit of Schaps and, at Schaps' discretion, may be
assigned prior to the Closing and shall, for purposes of this Agreement, be
deemed a "Retained Business".
5.14 INTERCOMPANY INDEBTEDNESS. The Parties hereto acknowledge that as
of a date which is prior to the Closing Date, the intercompany and related
company indebtedness set forth on Part 5.14 of the Disclosure Schedule owed to
the Company shall be contributed by the Company to the capital of the respective
debtors , or shall be cancelled in any such other manner as shall be determined
by Sellers, provided there is no adverse tax consequence to Buyer as a result
thereof.
5.15 TRANSFER AND USE OF NAME. At the Closing, the Company shall assign
to Schaps or his designee all of the Company's rights and interests in the name
"Van Wagner", together with any registered or unregistered trademarks, service
marks, trade names, logos or similar Intellectual Property relating to the name
"Van Wagner" of the Company (collectively, the "Names") without recourse or
warranty. At the Closing, the Parties shall take all actions necessary and
desirable to change the name of the Company in accordance with the provisions of
this Section 5.15. At the Closing, Schaps shall grant to the Company a
nonexclusive, royalty free, worldwide license to use the "Van Wagner" name for
thirty (30) days after the Closing Date in connection with the conduct of the
Business of the Company; provided that such license shall be for a period of 180
days after the Closing solely with respect to use of the Names on displays of
the Company. Buyer hereby agrees that, at the Closing, Buyer will change the
name of the Company or any successor to the Business of the Company from "Van
Wagner" or any name similar to or containing the words "Van Wagner" and that
neither the Buyer nor the Company nor any successor to the Business of the
Company nor any Affiliate of Buyer or the Company will continue to use the name
"Van Wagner" or any name similar to or containing the words "Van Wagner" in
connection with the Company or with the conduct of any Business. Within 180 days
following Closing, the Company shall modify all displays maintained by the
Company so that they no longer contain the name "Van Wagner".
5.16 TERMINATION/ASSIGNMENT OF CONTRACTS. At or prior to the Closing,
Sellers shall cause all of the agreements described on Parts 5.3(f), 5.3(g) and
5.16 of the Disclosure Schedule (except for the Profit Sharing Plan defined in
Section 5.18, the Group Major Medical, Dental and Life Insurance, the Vision
Service Plan and the Group Long Term Disability Plan, all as described in Part
5.3(g) of the Disclosure Schedule) to be terminated or assigned and, if
assigned, to be assumed by the assignee thereof, unless a release of the Company
is given with respect thereto.
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5.17 TAXES. (a) After the Closing, and subject to the provisions of
Section 5.11 hereof, Sellers shall have the exclusive authority and obligation
to prepare and file, or cause to be prepared and filed, all income Tax Returns
of the Company for, or with respect to, income Taxes for all taxable periods
ended or prior to the Closing; provided, however, that the Tax Returns with
respect to the income of the Company that relate to the taxable year or other
taxable period which includes the Closing Date shall, to the extent permitted by
applicable law, be prepared by treating all items on such Tax Returns in a
manner consistent with the past practices of the Company with respect to such
items.
(b) Except as otherwise provided in Section 5.11 and except with
respect to current liabilities as contemplated in the definition of Closing Date
Net Working Capital, Sellers shall pay all Taxes of the Company with respect to
periods prior to the Closing Date.
5.18 PROFIT SHARING PLAN. Buyer hereby covenants and agrees that, (a)
coincident with the Closing, the Company shall assume the Van Wagner
Communications, Inc. Profit Sharing Plan (the "Profit Sharing Plan"), retaining
all liabilities of the Profit Sharing Plan, (b) upon the Closing, the Company
shall (i) appoint a committee to administer the Profit Sharing Plan, (ii)
appoint a trustee or trustees of the trust maintained under the Profit Sharing
Plan, and (iii) enter into an agreement with such trustees to maintain the
Profit Sharing Plan, subject to the requirements of the Profit Sharing Plan and
(c) Buyer shall take all actions necessary to permit each Profit Sharing Plan
participant and beneficiary to receive prompt payment of any distribution to
which such participant or beneficiary is entitled under the Profit Sharing Plan.
Nothing in this Section 5.18 shall be construed to impose on the Buyer any
obligation to continue to maintain the Profit Sharing Plan with respect to
periods after the Closing Date.
5.19 PAYMENTS TO EMPLOYEES. On the Closing Date, the Company will have
paid or accrued as a current liability all wages (including vacation pay),
bonuses and commissions, which shall be prorated as of Closing, due to its
employees under any contracts or other agreements of the Company for payment of
any of the foregoing.
5.20 INSURANCE. Sellers agree that all of the insurance claims described
in Item 4 on Part 3.16 of the Disclosure Schedule shall remain the obligations
of Sellers (unless or until the insurance company of the Company (basic and
umbrella coverage) agrees that the claim is a covered claim), provided that
Buyer, at the expense of Sellers, (i) maintain in full force and effect the
insurance policy under which such claim is made, (ii) cooperate in the defense
of such claim, and (iii) take all actions reasonably requested by Sellers in
connection with the foregoing. Sellers shall have the sole right to control and
settle such claim, provided that Sellers pay all costs and expenses with respect
thereto.
6. COVENANTS OF THE PARTIES RELATING TO ANTITRUST MATTERS
6.1 ANTITRUST FILINGS. In addition to and without limiting the
covenants and agreements of the Parties contained elsewhere in this Agreement:
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(a) The Parties shall use their Best Efforts to (i) as soon as
practicable, take all actions necessary to make the filings and notifications
required of such parties or any of their Affiliates under the HSR Act or any
Antitrust Law (as hereinafter defined), (ii) comply at the earliest practicable
date with any request for additional information or documentary material
received by Buyer, Sellers or the Company or any of their affiliates from the
FTC or the Antitrust Division. The Parties shall take all action necessary,
proper and advisable under applicable Legal Requirements with respect to the
following: (x) to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable, including, without limitation,
by responding as promptly as practicable to any inquiries received from the FTC
or the Antitrust Division or any Governmental Body for additional information or
documentation, (y) to cause the expiration or termination of applicable waiting
periods, the satisfaction of such other filing requirements, or the issuance of
such approvals, consents or authorizations as may be required with respect to
the Antitrust Laws of any foreign jurisdiction or any Governmental Body, and (z)
to avoid the entry of any decree, judgment, injunction or other Order, whether
temporary, preliminary or permanent, under any Antitrust Law, that would have
the effect of prohibiting, preventing or restricting consummation of the
Contemplated Transactions.
(b) The Parties shall, in connection with the efforts
referenced in the foregoing paragraph to obtain all requisite approvals and
authorizations for the Contemplated Transactions under Antitrust Laws (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry; (ii)
promptly inform the other Party of any communication to it from any Governmental
Body and permit the other Party to review in advance any proposed communication
from it to any Governmental Body or third party; and (iii) not arrange for or
participate in any meeting with any Governmental Body in respect of any filings,
investigation or other inquiry without consulting with each other in advance,
and, to the extent permitted by such Governmental Body, giving the other Party
the opportunity to attend and participate thereat.
(c) The Parties shall use their Best Efforts to resolve such
objections, if any, as may be asserted with respect to the Contemplated
Transactions under any Antitrust Law. If any administrative, judicial or
legislative action or proceeding is instituted (or threatened to be instituted)
challenging the Contemplated Transactions as violative of any Antitrust Law,
Buyer, Sellers and the Company shall each cooperate and use its Best Efforts
vigorously to contest and resist any such action or proceeding, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other Order (whether temporary, preliminary or permanent) that is in effect and
that restricts, prevents or prohibits (or seeks to restrict, prevent or
prohibit) consummation of the Contemplated Transactions, including, without
limitation, by vigorously pursuing all available avenues of administrative and
judicial appeal and all available legislative actions. Notwithstanding the
foregoing, the Company shall not be required to divest or hold separate or
otherwise take or commit to take any action that, prior to the Closing Date,
limits its freedom of action with respect to, or its ability to retain, any of
its businesses or assets.
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(d) Buyer shall also take, or agree to also take any action
that may be required (i) by the applicable Governmental Body (including, without
limitation, the FTC, the Antitrust Division or any state attorney general) in
order to resolve any objections that such Governmental Body may have to the
Contemplated Transactions under such Antitrust Law, or (ii) by any domestic or
foreign court or other tribunal, in any action or proceeding brought by a
private party or Governmental Body challenging such transactions as violative of
any Antitrust Law, in order to avoid the entry of, or to effect the dissolution,
vacating, lifting or reversal of, any Order that has the effect of restricting,
preventing or prohibiting the consummation of any such transactions, including,
without limitation, divesting or agreeing to divest any stock or other equity
interest of a corporation or other entity or assets of any nature.
Notwithstanding any other provision of this Agreement, Buyer shall take any
action required by this Article 6 so as to enable the Closing to take place not
later than 150 days after the date hereof.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in writing, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. Sellers' representations and
warranties in this Agreement must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date (except for those
representations and warranties made as of a specific date which shall be
accurate in all material respects as of the date made), and Buyer shall have
received a certificate of Sellers, dated as of the Closing Date, as to such
accuracy.
7.2 SELLERS' PERFORMANCE. The covenants and obligations that
Sellers are required to perform or to comply with pursuant to this Agreement at
or prior to the Closing must have been performed and complied with in all
material respects, including, without limitation, the release of all
Encumbrances on the Shares, and Buyer shall have received a certificate of
Sellers, dated as of the Closing Date, as to such compliance.
7.3 ADDITIONAL DOCUMENTS. Each of the following documents must
have been delivered to Buyer:
(a) a favorable opinion of counsel to Sellers and the Company
dated the Closing Date, to the effect set forth on Exhibit B;
(b) the deliveries required from Sellers and the Company in
Section 2.5; and
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(c) such other documents as Buyer may reasonably request for the
purpose of (i) evidencing the satisfaction of any condition referred to in this
Article 7, or (ii) otherwise facilitating the consummation or performance of any
of the Contemplated Transactions.
7.4 NO PROCEEDINGS. Since the date of this Agreement, there must not have
been commenced and pending or Threatened any Proceeding (other than a Proceeding
relating to the HSR Act or other Antitrust Law) by a third party (i) involving
any challenge to, or seeking damages or other relief in connection with, any of
the Contemplated Transactions, or (ii) that prevents, makes illegal, or
otherwise materially interferes with any of the Contemplated Transactions or
seeks to do any of the foregoing.
7.5 CHANGE IN EBITDA. The EBITDA of the Company for the fiscal year ended
December 31, 1996, as calculated based on the Audited 1996 Financial Statements,
shall not be less than $7,816,000.
7.6 ABSENCE OF MATERIAL ADVERSE CHANGE. Since the date hereof, there will
not have been any Material Adverse Change.
7.7 TERMINATION/ASSIGNMENT OF AGREEMENTS AND PLANS. The agreements
described on Parts 5.3(f), 5.3(g) and 5.16 of the Disclosure Schedule (except
for the Profit Sharing Plan defined in Section 5.18, the Group Major Medical,
Dental and Life Insurance, the Vision Service Plan and the Group Long Term
Disability Plan, all as described in Part 5.3(g) of the Disclosure Schedule),
shall have been terminated or assigned and, if assigned, to be assumed by the
assignee thereof, unless a release of the Company is given with respect thereto.
7.8 NO PROHIBITION. Except for any Legal Requirement of or with respect to
the HSR Act or the Antitrust Division, there must not be in effect any Legal
Requirement or injunction or other Orders that prohibits or materially restricts
the consummation of the Contemplated Transactions.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS TO CLOSE
Sellers' obligations to sell the Shares and Sellers' obligations to take
the other actions required to be taken by Sellers at the Closing are subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Sellers, in writing, in whole or in
part):
8.1 ACCURACY OF REPRESENTATIONS. Buyer's representations and warranties in
this Agreement must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, and Sellers shall have received a
certificate of an executive officer of Buyer, dated as of the Closing Date, as
to such accuracy.
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8.2 BUYER'S PERFORMANCE. The covenants and obligations that Buyer
is required to perform or to comply with pursuant to this Agreement at or prior
to the Closing must have been performed and complied with in all material
respects, and Sellers shall have received a certificate of an executive officer
of Buyer, dated as of the Closing Date, as to such compliance.
8.3 PAYMENT OF PURCHASE PRICE. The Buyer shall have paid the
Purchase Price to Seller at Closing in accordance with the terms hereof.
8.4 ADDITIONAL DOCUMENTS. Buyer must have caused the following
documents to be delivered to Sellers:
(a) a favorable opinion of counsel to Buyer dated the Closing
Date, to the effect set forth in Exhibit C;
(b) the deliveries required from Buyer in Section 2.5; and
(c) such other documents as Sellers may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Article 8, or (ii) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.5 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced and pending or Threatened any Proceeding by a third
party (i) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (ii) that prevents,
makes illegal, or otherwise materially interferes with any of the Contemplated
Transactions or seeks to do any of the foregoing.
8.6 NO PROHIBITION. The applicable waiting period applicable under
the HSR Act shall have terminated or expired and there must not be in effect any
Legal Requirement or any injunction or other Order that prohibits or restricts
the consummation of the Contemplated Transactions; provided that Sellers shall
have taken all actions required of Sellers under Article 6 hereof.
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) by mutual written consent of Buyer and Sellers;
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has
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not waived such condition on or before the Closing Date; or (ii) by Sellers, if
any of the conditions in Article 8 has not been satisfied as of the Closing Date
or if satisfaction of such a condition is or becomes impossible (other than
through the failure of Sellers or the Company to comply with their respective
obligations under this Agreement) and Sellers have not waived such condition on
or before the Closing Date; or
(c) by Buyer, on the one hand, or Sellers, on the other hand,
if the Closing has not occurred on or before 150 days after the date of this
Agreement (other than through the failure of the other Party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement).
9.2 EFFECT OF TERMINATION.
Each Party's right of termination under Section 9.1 is in
addition to any other rights it may have under this Agreement. If this Agreement
is terminated pursuant to Section 9.1, all further obligations of the Parties
under this Agreement will terminate, except that the obligations in Section 11.1
will survive; provided, however, that if this Agreement is terminated by a Party
because of the breach of the Agreement by the other Party or because one or more
of the conditions to the terminating Party's obligations under this Agreement is
not satisfied as a result of the other Party's failure to comply with its
obligations under this Agreement, each Party's right to pursue all legal and
equitable remedies, including without limitation, specific performance,
separately or simultaneously will survive such termination unimpaired.
9.3 BUYER'S BREACH.
Notwithstanding anything to the contrary contained in this
Agreement, if the Closing has not occurred within 150 days from the date hereof
and all of the conditions set forth in Article 7 hereof (but specifically
excluding any conditions with respect to the HSR Act or the Antitrust Division)
have been fulfilled, Buyer shall be deemed to have breached its obligations
under this Agreement, and Sellers shall be entitled to exercise all of their
rights and remedies under this Agreement, including, without limitation, under
Articles 9 and 10 hereof, and to pursue all other legal and equitable remedies
available to them, as a result of such breach.
10. INDEMNIFICATION; REMEDIES
10.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS. From and
after the Closing Date and subject to the provisions of this Article 10, (i)
with respect to each of 10.1(a), 10.1(b) and 10.1(d), each of the Sellers,
severally in proportion to his Pro Rata Percentage (provided that, with respect
to the representations contained in Article 3.A hereof, each Seller shall
indemnify Buyer as otherwise provided hereunder severally with respect to
himself), and (ii) with respect to each of 10.1(c) and 10.1(e), Schaps, will
indemnify and hold harmless Buyer and its Affiliates (collectively, the "Seller
Indemnified Persons") for, and will pay to the Seller
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Indemnified Persons the amount of, any Damages arising directly or indirectly
from or in connection with:
(a) any breach of any representation or warranty made by
Sellers, or either of them, in this Agreement or the Disclosure Schedule or the
certificate described in Section 7.1 hereof, unless Buyer had Knowledge of such
breach at the time of the Closing and nonetheless elected to proceed with the
Closing;
(b) any breach by Sellers, or either of them, of any covenant
or obligation of Sellers, or either of them, in this Agreement or the
certificate described in Section 7.2 hereof, unless Buyer had Knowledge of such
breach at the time of the Closing and nonetheless elected to proceed with the
Closing;
(c) the Retained Business;
(d) the Dorna USA Employee Savings and Investment Plan; or
(e) (i) any amounts due under the Phantom Stock Plan of the
Company, and (ii) any bonus or other compensation payments claimed in respect of
the Executives, the Non-Transferred Employees and under any of the employment or
consulting agreements listed on Parts 5.3(f), 5.3(g) and 5.16 of the Disclosure
Schedule, in each case other than any bonus or other compensation payments
claimed with respect to services provided to the Company after the Closing Date.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Sellers and their respective Affiliates
(collectively, the "Buyer Indemnified Persons") for, and will pay to the Buyer
Indemnified Persons the amount of any Damages arising, directly or indirectly,
from or in connection with:
(a) any breach of any representation or warranty made by Buyer
in this Agreement or the Disclosure Schedule, unless any of the Executives had
Knowledge of such breach at the time of the Closing and Sellers nonetheless
elected to proceed with the Closing;
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement, (unless any of the Executives had knowledge of such breach at
the time of the Closing and Sellers nonetheless elected to proceed with the
Closing); or
(c) any Taxes or other tax liability of the Company incurred
by Sellers pursuant to or in connection with any Section 338(h)(10) Elections
made by Buyer in accordance with Section 5.11 hereof, in which case, any payment
made by the Buyer pursuant to this Section 10.2(c) shall be "grossed up" for any
federal, state or local tax liability payable in respect of such payments
(provided that this Section is not intended and shall not require more than one
"gross up").
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10.3 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 10.1 or 10.2, of notice of any claim against it, such Indemnified Person
will, if a claim is to be made against an Indemnifying Party under such Section,
give notice to the Indemnifying Party of the commencement of such claim, but the
failure to notify the Indemnifying Party will not relieve the Indemnifying Party
of any liability that it may have to any Indemnified Person, except to the
extent that the Indemnified Party is prejudiced by the Indemnifying Party's
failure to give such notice.
(b) If any claim referred to in Section 10.3(a) is brought
against an Indemnified Person and such Indemnified Person gives notice to the
Indemnifying Party of the commencement of a proceeding with respect to such
claim (a "Proceeding"), the Indemnifying Party will be entitled to participate
in such Proceeding and, to the extent that it chooses (unless the Indemnifying
Party is also a party to such Proceeding and the Indemnified Person determines
in good faith that the Indemnifying Party would have a conflict of interest in
assuming such defense) to assume the defense of such Proceeding with counsel
reasonably satisfactory to the Indemnified Person and, after notice from the
Indemnifying Party to the Indemnified Person of its election to assume the
defense of such Proceeding, the Indemnifying Party will not, as long as it
diligently conducts such defense, be liable to the Indemnified Person under this
Article 10 for any fees of other counsel (other than in the circumstances
provided above) or any other expenses with respect to the defense of such
Proceeding. If the Indemnifying Party assumes the defense of a claim, no
compromise or settlement of any such claim may be effected by the Indemnifying
Party without the Indemnified Person's consent, which consent shall not be
unreasonably withheld, unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any
Indemnified Person, and (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party. Subject to Section 10.3(c), if
notice is given to an Indemnifying Party of any claim and the Indemnifying Party
does not, within twenty (20) days after the Indemnified Person's notice is
given, give notice to the Indemnified Person of its election to assume the
defense of such claim, the Indemnifying Party will be bound by any determination
made in such Proceeding or any compromise or settlement effected by the
Indemnified Person and will be liable for all expenses if it wrongfully failed
to assume such defense.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying Party, assume the
exclusive right to defend, compromise, or settle such claim, but the
Indemnifying Party will not be bound by any determination of a claim so defended
or any compromise or settlement effected without its consent (which may not be
unreasonably withheld) or delayed.
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10.4 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim shall be
asserted by written notice to the Indemnifying Party from whom indemnification
is sought.
10.5 SURVIVAL/LIMITATIONS.
(a) The Parties hereto agree that (i) the representations and
warranties contained in Articles 3A and 4 shall survive for the applicable
statute of limitations; (ii) the covenants contained herein which are to be
performed after the Closing Date shall survive without limitation, (iii) the
representations and warranties in Sections 3.12 and 3.22 shall survive for three
(3) years, (iv) the representations and warranties in Section 3.11 shall survive
for eighteen (18) months, (v) the representations and warranties in Section 3.9
shall survive for thirty (30) months, and (vi) all other representations and
warranties shall survive for twelve (12) months, following the Closing Date
(subject, in the case of clauses (iii), (iv) and (v) and (vi) hereof, to any
applicable shorter statutes of limitation with respect to the subject matter
thereof). Any claim with respect to a breach of representations and warranties
must be made in a writing to the Indemnifying Party within the survival period
specified for such representations and warranties.
(b) Sellers shall have no obligation to indemnify the Seller
Indemnified Persons for Damages pursuant to Section 10.1(a) or (b) hereof
(except with respect to a breach of the representations contained in Section
3.A.2 hereof), except for any Damages in the aggregate in excess of Two Hundred
and Fifty Thousand Dollars ($250,000) the ("Floor") provided, however, that if
Damages in the aggregate exceed the Floor, the Sellers shall indemnify the
Seller Indemnified Persons only for the amount of all such Damages in excess of
the Floor. In no event shall Sellers, in the aggregate, have any obligation to
indemnify the Seller Indemnified Persons for Damages pursuant to Section 10.1(a)
or (b) hereof (except with respect to a breach of the representations contained
in Section 3.A.2 hereof) in an amount in excess of $25,000,000 in the aggregate.
(c) The amount of any indemnification required to be paid by Sellers
hereunder shall be reduced by any tax benefit received by Buyer directly as a
result of the Damages giving rise to a claim for indemnification.
10.6 EXCLUSIVE REMEDY. The indemnification provisions in this Article 10
are the exclusive remedy of the Parties from and after the Closing Date for any
breach of a representation, warranty or covenant contained herein.
10.7 GENERAL. (a) Each Indemnified Party shall be obligated in connection
with any claim for indemnification under this Article 10 to use all commercially
reasonable efforts to obtain any insurance proceeds available to such
Indemnified Party with regard to the applicable claim. The amount which an
Indemnifying Party is or may be required to pay to any Indemnified Party
pursuant to this Article 10 shall be reduced (retroactively, if necessary) by
any insurance
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proceeds or other amounts actually recovered (net of any relevant collection
costs) by or on behalf or such Indemnified party in reduction of the related
Damages. If an Indemnified Party shall have received the payment required by
this Agreement from an Indemnifying Party in respect of Damages and shall
subsequently receive insurance proceeds or other amounts in respect of such
Damages, then such Indemnified Party shall promptly repay to such Indemnifying
Party a sum equal to the amount of such insurance proceeds or other amounts
actually received (net of any relevant collection costs).
(b) In addition to the requirements of Section 10.7(a), each
Indemnified party shall be obligated in connection with any claim for
indemnification under this Article 10 to use all commercially reasonable efforts
to mitigate Damages upon and after becoming aware of any event which could
reasonably be expected to give rise to such Damages.
11. GENERAL PROVISIONS
11.1 EXPENSES. (a) Except as otherwise expressly provided in this
Agreement, Sellers shall pay Sellers' and the Company's (incurred prior to the
Closing) expenses, and Buyer shall pay Buyer's expenses, incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including, without limitation, all fees and expenses
of agents, representatives, brokers or finders, counsel, and accountants
(collectively, "Expenses"). In the event of termination of this Agreement, the
obligation of each Party to pay its own expenses will be subject to any rights
of such Party arising from a breach of this Agreement by another Party.
(b) All sales and other transfer taxes (other than those
arising in connection with the transfers of the Retained Business and the Name
contemplated by Sections 5.13 and 5.15, which shall be borne by Sellers) arising
out of or in connection with the Contemplated Transactions shall be borne by
Buyer or the Company.
(c) Buyer shall pay all of the expenses of the Sellers
incurred in connection with any 338(h)(10) Election made by Buyer, which
expenses shall include all fees, charges and expenses of attorneys, accountants
and other professionals retained by Sellers in connection with any matter
relating to the 338(h)(10) Election.
11.2 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Any public announcement
or similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as Buyer
and Seller agree in writing, provided that the Parties shall reasonably
cooperate in such announcements, and provided further that nothing contained
herein shall prevent any Party from at any time furnishing information required
by a Governmental Body. Unless consented to by Buyer and Seller in advance or
required by Legal Requirements, prior to the Closing, each Party shall, and
shall cause their respective Representatives to, keep this Agreement strictly
confidential and may not make any disclosure of
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this Agreement to any Person. Buyer agrees that Sellers shall have the
opportunity to review and make comment on, which comments shall be reasonably
considered by Buyer, any disclosures made by Buyer pursuant to any Legal
Requirements with respect to the Company. In addition, the terms of that certain
Confidentiality Agreement dated March 31, 1997 between Buyer and Sellers (the
"Confidentiality Agreement") are incorporated herein by reference; provided,
however, that the Confidentiality Agreement shall not preclude Buyer from making
any filings required by any Legal Requirement.
11.3 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
Party may designate by notice to the other Parties):
If to a Schaps, to:
Richard M. Schaps
c/o Van Wagner Communications, Inc.
420 Lexington Avenue.
New York, NY 10170
Telephone No.: (212) 953-7744
Facsimile No.:
With a copy to:
Baer Marks & Upham LLP
805 Third Avenue
New York, NY 10022
Attention: Steven S. Pretsfelder, Esq.
Telephone No.: (212) 702-5730
Facsimile No.: (212) 702-5941
If to Buyer, to:
Outdoor Systems, Inc.
2502 N. Black Canyon Highway
Phoenix, Arizona 85009
Attention: William S. Levine
Telephone No.: (608) 248-8181
Facsimile No.: (602) 248-0884
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With a copy to:
Powell, Goldstein, Frazer & Murphy LLP Sixteenth Floor 191 Peachtree
Street, N.E.
Atlanta, GA 30303
Attention: William B. Shearer, Esq.
Telephone No.: (404) 572-6600
Facsimile No.: (404) 572-6999
If to Perline to:
65 Central Park West
New York, New York 10023
With a copy to:
Cox Buchanan
Padmore & Shakarchy
603 Third Avenue
New York, NY 10017-6782
Attention: Larry Greenapple, Esq.
Telephone No.: (212) 953-6633
Facsimile No.: (212) 949-6943
11.4 FURTHER ASSURANCES. The Parties and the Company agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other Party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section 10).
11.5 WAIVER. Neither the failure nor any delay by any Party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.
11.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter and
constitutes (along with the documents referred to in, or executed in connection
with, this Agreement including, but not limited to, the Confidentiality
Agreement) a complete and exclusive statement of the terms of the agreement
between the Parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the Party to be charged
with the amendment.
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11.7 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Party; provided, however, that Buyer may assign its rights and obligations
hereunder to an Affiliate of Buyer or as security for Buyer's lender(s) in
connection with Buyer's Financing Arrangements; provided, further, however, that
no such assignment shall relieve Buyer of its obligations hereunder. This
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the Parties, their successors, and their permitted assigns. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.
11.8 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.9 POST-CLOSING ACCESS. Buyer agrees that all Books and Records
delivered to Buyer by Sellers pursuant to this Agreement shall be maintained
open for inspection by Sellers at any time during regular business hours upon
reasonable notice for a period of six (6) years (or for such longer period as
may be required by applicable Legal Requirements) following the Closing and
that, during such period, Sellers, at their expense, may make such copies
thereof as it may reasonably desire (subject in each case to Sellers'
obligations to maintain the confidentiality of such Books and Records).
11.10 HEADINGS; CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
11.11 APPLICABLE LAW. This Agreement shall be governed and controlled
as to validity, enforcement, interpretations, construction, effect and in all
other respects by the internal laws of the State of New York, without giving
effect to the conflicts of law provisions thereof. The Parties hereto agree to
submit exclusively to jurisdiction any federal or state court located in the
State of New York any dispute or controversy arising out of or relating to this
Agreement.
11.12 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits, Schedules
and Disclosure Schedule identified in this Agreement are incorporated herein by
reference and made a part hereof. Any matter disclosed on the Disclosure
Schedule pursuant to one provision, subprovision, section or subsection of this
Agreement is deemed disclosed for all other purposes of this Agreement or the
Disclosure Schedule.
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11.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first written above.
BUYER:
Outdoor Systems, Inc.
By: ______________________________________
Name: William S. Levine
Title: Chairman of the Board
SELLERS:
____________________________________________
RICHARD M. SCHAPS
____________________________________________
JASON PERLINE
COMPANY:
Van Wagner Communications, Inc.
By: ______________________________________
Name: Richard M. Schaps
Title: President
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EXHIBIT 99.3
SIGNBOARD EASEMENTS
SALE AGREEMENT
THIS AGREEMENT ("Agreement") is entered into this ______ day of March,
1997 between THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, a Delaware
corporation ("Seller") and OUTDOOR SYSTEMS, INC., a Delaware corporation
("Buyer").
WHEREAS, Seller and Seller's affiliates own certain interests in real
property underlying certain outdoor advertising facilities located in the
various states served by Seller's rail system;
WHEREAS, Seller or Seller's affiliates are licensor in many signboard
license agreements related to such outdoor advertising facilities;
WHEREAS, these signboard license agreements are managed for Seller by:
(1) Peterson Enterprises of Orlando Inc. ("Peterson"), under the terms of an
agreement between Seller's predecessor and Peterson dated October 1,1993; and
(2) Transportation Displays, Incorporated ("TDI"), under the terms of an
agreement between Seller's predecessor and TDI dated May 23, 1995 (collectively,
"Management Agreements");
WHEREAS, Seller's affiliates will convey to Seller multiple easements
allowing Seller to construct, operate, illuminate, maintain, modify, replace and
remove outdoor advertising facilities, over specific real estate parcels
involving signboard license agreements now managed by Peterson;
WHEREAS, Seller desires: (1) to convey to Buyer multiple easements, as
described herein, over specific real estate parcels underlying existing outdoor
advertising facilities, each easement allowing Buyer to construct, operate,
illuminate, maintain, modify, replace and remove outdoor advertising facilities;
and (2) to assign to Buyer Seller's signboard license agreements;
WHEREAS, completing the conveyances from Seller's affiliates to Seller,
and identifying the specific boundaries of the easements described above, will
take considerable time and work, so that this sale will be progressed as two
separate closings; and Seller desires that, in the interim, Buyer shall take
assignment of the Management Agreements and manage for Seller the signboard
license agreements to be assigned at the second Closing;
WHEREAS, Seller desires that Buyer use commercially reasonable efforts
to locate additional outdoor advertising facilities on other real property in
which Seller has an ownership interest, and enter into additional signboard
license agreements with respect to such facilities, after which Seller would
sell to Buyer similar easements for such new sites; and
WHEREAS, Buyer desires to purchase from Seller the easements over
specific real estate
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parcels underlying existing outdoor advertising facilities to allow Buyer to
construct, operate, illuminate, maintain, modify, replace and remove outdoor
advertising facilities, to receive assignment of Seller's signboard license
agreements, to manage Seller's signboard license agreements, and to use
commercially reasonable efforts to locate new outdoor advertising facilities on
real property in which Seller has an ownership interest, enter into additional
signboard license agreements with respect to such new facilities, and then
purchase from Seller similar easements for such new sites, all on the terms and
conditions set forth in this Agreement and Exhibits attached hereto;
NOW, THEREFORE, Seller and Buyer agree as follows:
Article I. Description of Rights to be Conveyed
Section 1.1 Conveyance of Easements.
(a) Except as modified in Section 1.1(b), at each of the
two Closings specified in this Agreement Seller shall
convey to Buyer multiple easements, each such
easement, or such lesser rights to the greatest
extent that Seller's ownership interest will support,
to be permanent and exclusive, except to the extent
set forth herein and therein, and to extend only over
a real property parcel in which Seller has an
ownership interest, which parcel underlies, or is
within one foot of the outside boundaries of, certain
outdoor advertising facilities, together with the
airspace occupied by or within three feet of, the
outdoor advertising facility structure (except the
one foot/three foot envelope for the land parcel and
the airspace shall be reduced or eliminated to the
extent it comes within 15 feet of the nearest rail of
any active railroad track); which easement shall
grant to Buyer the right to enter onto a specific
real property parcel described using the standard set
forth above ("Parcel") for the purpose of
constructing, operating, illuminating, maintaining,
modifying, replacing or removing any outdoor
advertising facilities located, or to be located, on
the Parcel, together with related rights to cross any
additional real property in which Seller has an
ownership interest as necessary to access such
Parcel, or provide electricity to such outdoor
advertising facilities, in a manner that does not
interfere with any business activities conducted on
or near the Parcel by Seller or any other party
having a right from Seller to conduct such activities
(and which access shall not cross any active railroad
track or come within 25 feet of such track without
Seller's prior written consent) ("Easement"). Each
Easement shall be subject to all encumbrances on the
Parcel (including Seller's mortgages) which Seller
has placed, or in the future will place, on the
Parcel, and any and all other easements, leases,
licenses, permits or agreements which now or in the
future relate to the Parcel. Each Easement shall
require that no outdoor advertising facilities may be
constructed,
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modified or replaced without prior written approval
of Seller, which approval Seller can withhold only
for reasons specified in the Easement. Easement shall
terminate automatically in the event that no outdoor
advertising facility has been present on the Parcel,
in functional condition, for twelve consecutive
months (except in circumstances where Buyer is using
its best efforts to replace a functional outdoor
advertising facility on the Parcel). On the date such
Easement terminates, Buyer shall deliver to Seller
two executed copies of Termination of Easement for
the parcel, on the form attached as Exhibit G, and
Seller shall execute both copies and return one such
copy to Buyer. Each Easement also shall be subject to
the other specific terms and conditions set forth in
Seller's Signboard Easement, attached hereto as
Exhibit A, and to Seller's right to terminate the
Easement on the terms and conditions set forth in
this Agreement. Buyer shall have the right to seek
compensation from any condemning authority for the
value of its Easement interest.
(b) The two groups of Easements to be conveyed are
identified in Exhibits B and C. The Easements
identified in Exhibit B will be conveyed at and after
the first Closing, as set forth in this subsection.
Initially, at the first Closing, Seller shall deliver
to Buyer an executed original copy of one Easement
that identifies the geographic location of the
parcels subject to the Easement by attaching Exhibit
B. Buyer and Seller acknowledge that: (1) the real
property descriptions attached to this Easement will
be incomplete and may not be legally sufficient; (2)
a few of the Easement locations listed in Exhibit B
and attached to the Easement actually are owned by
Seller's affiliates and not by Seller; and
accordingly (3) that this Easement shall contain
additional language stating: "The boundaries of this
Easement (and, for a few sites, the correct Grantor)
are not certain at this time, but definite boundaries
acceptable to Grantor will be developed promptly by
Grantee, at which time Grantor will grant multiple
replacement Easements to Grantee for each parcel
identified in Attachment 1, and this Easement then
shall become null and void." Accordingly, Buyer
agrees that this Easement shall not be recorded. For
each parcel identified in Exhibit B where Buyer's
investigation reveals that the ownership interest is
held by an affiliate of Seller, Buyer promptly shall
prepare complete and accurate property boundary
descriptions, and related exhibit prints, including
specific identification of each signboard located on
any bridge or overpass, or on any building owned by
Seller (collectively "Property Descriptions") subject
to review by Seller, and shall attach correct
property boundary descriptions to recordable form
Easements, on the form set forth as Exhibit A, except
that each such Easement shall be modified to be a
conveyance from Seller's affiliate to Seller (and
Seller acknowledges that, for any Easement, a quarter
quarter, section, township, range, meridian, county
and state description, together with an accurate
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exhibit print, is a sufficient property boundary
description). Seller shall assist Buyer in utilizing
Seller's outside engineering vendor to prepare
Property Descriptions for all of the individual
Easements. Seller shall arrange for these Easements
to be executed promptly by Seller's affiliates and
delivered to Seller, and Seller shall reimburse Buyer
the cost of preparing Property Descriptions, and
ascertaining the appropriate Seller affiliate
Grantor, for each of the Easements to be conveyed
from Seller's affiliates to Seller. Buyer shall use
its best efforts to record all Easements from
Seller's affiliates to Seller and promptly shall
provide to Seller evidence of these recordings.
Seller shall reimburse Buyer all recording fees, and
any transfer taxes, that are incurred by Buyer in
recording all Easements from Seller's affiliates to
Seller. Also, promptly after the first Closing Buyer,
shall prepare for each parcel identified in Exhibit B
complete and accurate Property Descriptions, subject
to review by Seller, and attach correct property
boundary descriptions to recordable form Easements on
the form set forth as Exhibit A. Promptly after
Seller has become the owner of all Easements that are
now owned by one of Seller's affiliates and Buyer has
prepared and delivered to Seller recordable form
Easements for each parcel identified in Exhibit B,
Seller shall execute and deliver to Buyer original
copies of all of these replacement Easements that are
approved by Seller. Buyer shall have the right, but
not the obligation, to record any or all of these
replacement Easements, each recording to be made at
Buyer's cost.
(c) For each parcel identified in Exhibit C, Buyer by
June 15, 1997 shall prepare complete and accurate
Property Descriptions, subject to review by Seller,
and shall attach correct property boundary
descriptions to recordable form Easements on the form
set forth as Exhibit A. At the second Closing, Seller
shall deliver to Buyer executed original copies of
all of these Easements that are approved by Seller.
Buyer shall have the right, but not the obligation,
to record any or all of these Easements, each
recording to be made at Buyer's cost.
Section 1.2 Assignment of Signboard License Agreements.
(a) At the first Closing, Seller shall assign to Buyer,
by execution and delivery to Buyer of two original
copies of the Assignment of Signboard Licenses
attached hereto as Exhibit D (one original copy of
which shall be executed by Buyer signifying Buyer's
acceptance of the assignment), all then effective
signboard license agreements of Seller that are
related to the outdoor advertising locations listed
in Exhibit B.
(b) At the second Closing, Seller shall assign to Buyer,
by execution and delivery to Buyer of two original
copies of the Assignment of Signboard Licenses
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attached hereto as Exhibit D (one original copy of
which shall be executed by Buyer and delivered to
Seller signifying Buyer's acceptance of the
assignment), all then effective signboard license
agreements of Seller that are related to the outdoor
advertising locations listed in Exhibit C.
Section 1.3 Assignment of Management Agreements.
Seller hereby assigns to Buyer, effective on the date
of the first Closing, all of Seller's rights and obligations
under the Management Agreements; and Buyer hereby accepts such
assignment effective on that date. Seller shall cooperate with
Buyer in obtaining files and Seller's signboard license
agreements now in the custody of Peterson and TDI. Seller
shall reimburse Buyer any shipping cost paid by Buyer in
collecting these documents from Peterson and TDI. Seller
hereby affirms that each Management Agreement may be cancelled
without cause with thirty days advance written notice to the
signboard license manager, and that Buyer may elect to cancel
the Management Agreement at any time after the date of the
first Closing.
Article II. Closings of Signboard Easements Sales
Section 2.1 Date and Place of Closings.
The first Closing shall occur on or before Wednesday,
March 26, 1997. The second Closing shall occur on or before
either Friday, June 27, 1997 or Friday, July 11, 1997 as may
be mutually agreed by Seller and Buyer, depending, among other
things, on Buyer's ability to prepare, and Seller's execution
of, the many specific Easements to be executed by Seller and
delivered to Buyer at the second Closing. Each Closing shall
take place at Seller's offices at 2650 Lou Menk Drive, Fort
Worth, Texas, or some other mutually agreeable location.
Section 2.2 Purchase Price.
The purchase price for the Easements to be conveyed
at the first Closing is SEVENTEEN MILLION DOLLARS
($17,000,000.00). On the date of this Agreement, Buyer shall
pay to Seller a non-refundable earnest money deposit toward
the purchase price, in the amount of $100,000.00. This amount
shall be applied toward the purchase price for the Easement to
be conveyed at the first Closing, so long as the first Closing
occurs on or before March 26, 1997. If for any reason (except
for Seller's failure to deliver to Buyer on March 26 the
documents specified in Section 2.3) the first Closing does not
occur on or before March 26, 1997, Seller shall retain the
earnest money deposit as liquidated damages. The purchase
price for the Easements to be conveyed at the second Closing
is TWELVE MILLION, FIVE HUNDRED THOUSAND DOLLARS
($12,500,000.00). Except for the
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nonrefundable earnest money deposit described above, the
purchase price payable for Easements conveyed at each Closing
shall be paid on the date of each Closing, by wire transfer of
immediately available funds, to either Seller or Federated
Services Company, or an alternative escrow agent, as specified
by Seller. Federated Services Company would be acting as
escrow agent for Apex Property & Track Exchange, Inc. ("APEX")
as Seller's intended assignee of Seller's right to receive
payment of the purchase price for the Easements. The wire
transfer by Buyer shall be made in accordance with written
wire transfer instructions provided by Seller. APEX is a
qualified intermediary within the meaning of Section 1031 of
the Internal Revenue Code of 1986, as amended, and Treasury
Regulation e1.103(k)-l(g). Seller intends to assign to APEX
Seller's right to receive payment of the purchase prices for
the Easements for the purpose of Seller completing two
tax-deferred like-kind exchanges of property. Buyer shall
cooperate with Seller with respect to these tax-deferred
exchanges and shall execute such documents as may be required
to effect any tax-deferred exchange of property. Seller shall
indemnify, defend and hold harmless Buyer against all
reasonable and necessary additional costs and liabilities
which Buyer incurs as a result of any such tax-deferred
exchange of property.
Section 2.3 Deliveries at Each Closing.
(a) At the first Closing, Seller shall deliver to Buyer
the following documents:
(1) An executed original copy of an Easement for
the locations specified in Exhibit B, which
later shall be replaced by multiple specific
Easements for each location specified in
Exhibit B; and
(2) Two executed original copies of the
Assignment of Signboard Licenses, as
described in Section 1.2(a).
(b) At the first Closing, Buyer shall deliver the
purchase price of $17,000,000.00, in the manner set
forth in Section 2.2, to either Seller or an escrow
agent for APEX, as specified by Seller. Buyer also
shall deliver to Seller a fully executed original
copy of the Assignment of Signboard Licenses, as
described in Section 1.2(a).
(c) At the second Closing, provided that Buyer has
completed the document preparation work specified in
Article I, Seller shall deliver to Buyer the
following documents:
(1) An executed, original copy of multiple
Easements for each location specified in
Exhibit C; and
(2) Two executed, original copies of the
Assignment of Signboard
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Licenses, as described in Section 1.2(b).
(d) At the second Closing, Buyer shall deliver the
purchase price of $12,500,000.00, in the manner set
forth in Section 2.2, to either Seller or an escrow
agent for APEX, as specified by Seller. Buyer also
shall deliver to Seller a fully executed original
copy of the Assignment of Signboard Licenses, as
described in Section 1.2(b).
Section 2.4 Responsibility for Closing and Recording Costs.
Buyer shall be responsible to pay all costs of
Closing and recording the Easements, including but not limited
to, any and all escrow and service fees, real estate interest
transfer taxes, documentary stamp taxes, recording fees for
all Easements from Seller to Buyer, and any sales taxes
associated with any of the conveyances governed by this
Agreement.
Article III. Interim Management of Signboard License Agreements
Section 3.1 Interim Management Term and Compensation to
Buyer.
Commencing on the date of the first Closing, until
the date of the second Closing or July 11, 1997 (or prior to
any Closing covered by Article IV, as applicable), Buyer shall
manage, as Seller's agent, all of the signboard license
agreements to be assigned by Seller to Buyer at the second
Closing (or such subsequent Closing) and shall enter into any
new signboard licenses during the interim management period
only in accordance with the procedures set forth in Section
4.2. Buyer's fee for such management shall be one-fourth (25%)
of all signboard license income attributable to this
management period. As owner of the property interest related
to the signboard license agreements, Seller, for the period of
Buyer's interim management, shall be responsible for paying
any and all real estate taxes or assessments which may be
levied on this property upon or on account of these signboard
license agreements.
Section 3.2 Interim Management Duties of Buyer.
As interim manager of these signboard license
agreements, Buyer shall be responsible: (a) to maintain, or
obtain if necessary, all rights and privileges, including any
necessary zoning approvals, for any and all outdoor
advertising conducted under the signboard license agreements;
(b) to enforce compliance by licensees with the terms of the
signboard license agreements; (c) to bill and collect all
license fees coming due under the terms of the signboard
license agreements, and to forward to Seller 75% of all fees
so collected; (d) to notify Seller promptly of any tax or land
use
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issues, or potential contractual, environmental or other
liability of Seller, of which Buyer becomes aware, in
connection with any of the property subject, or adjacent, to
these signboard licenses; (e) to use its best efforts to
prevent any mechanic's liens or other liens being placed on
any of Seller's property interests for any work or activity
connected in any way with the outdoor advertising facilities
or the signboard license agreements; (f) to pay for all
electrical equipment and power necessary to illuminate any
outdoor advertising facilities, to the extent such payments
are not made by the licensees under the signboard license
agreements; (g) to keep complete and accurate records of all
license fees received, all transactions completed, and all
notices received, in connection with the signboard license
agreements, and forward any of these records and reports to
Seller upon Seller's request; (h) to pursue prompt removal of
any advertisements that are offensive to a significant portion
of the population, and not to permit any advertisements for
political candidates; (i) to assure to the extent reasonable
that the outdoor advertising facilities comply with all
applicable federal, state and local laws, rules, ordinances
and regulations, and to pursue the prompt removal of any
equipment or advertising that is not in such compliance; (j)
to ensure to the extent reasonable that outdoor advertising
facilities are properly maintained; (k) to pursue to the
extent reasonable the removal of any dilapidated or likely
permanently unused outdoor advertising facilities, and where
any such removal occurs, to restore, or insure that others
restore, Seller's property to a reasonable condition under the
circumstances, free of any and all debris from any outdoor
advertising facilities; and (l) to take care that neither
Buyer, nor any of its employees, contractors, representatives
or invitees, nor any licensee under any signboard license
agreement, nor any of its employees, contractors, agents,
representatives or invitees, in the course of any inspections,
activities or presence on Seller's property, proceed in any
unsafe manner, or interfere with any business activities
conducted on the premises underlying or near the outdoor
advertising facilities by Seller or any other party having a
right from Seller to conduct such activities.
Section 3.3 Allocation of Liability
Commencing on, and following, the date of the first
Closing, Buyer shall be responsible for all losses and damages
to Seller, and shall indemnify and defend Seller from and
against all lawsuits and actions, that result from any claim
of losses, damages, costs, injuries or deaths to any person or
property, or result from any claim of any violation of any
federal, state or local law, rule, ordinance or regulation, to
the extent such losses and damages result from the acts or
omissions, or presence on or near any signboard licensee site,
of Buyer, or any of its employees, or any of Buyer's
contractors, agents, representatives or invitees, or any of
their employees, or in connection with Buyer's exercise or
failure to exercise any of Buyer's duties specified in Section
3.2, regardless of any contributory negligence of Seller,
except to the extent such losses and damages are caused by
Seller's gross negligence or intentional
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misconduct. In addition, commencing on, and following, the
date of the first Closing, Buyer shall be responsible for all
losses and damages to Seller, and shall indemnify and defend
Seller from and against all lawsuits and actions, that result
from any claim of losses, damages or costs in connection with
any actual or alleged infringement by Buyer or any signboard
licensee of any patent, trademark, service mark or copyright,
or arising from any actual or alleged unfair competition or
similar claims based on Buyer's business or Buyer's activities
under this Article III. Except as otherwise set forth in this
Agreement, Seller shall be responsible to Buyer for all losses
and damages to Buyer, that result from any claim of losses,
damages, costs, injuries or deaths to any person or property
as a result of the negligence or intentional conduct of Seller
or its employees.
Section 3.4 Buyer's Liability Insurance
On and after the date of Closing, for so long as any
Easement shall remain in effect Buyer, and each licensee under
a signboard license agreement, shall obtain and maintain
liability insurance with a deductible no higher than $25,000
per occurrence, from an insurance company (or companies)
licensed to do business in each state where the signboard
licenses are located, and possessing a current Best's
Insurance Guide Rating of B and Class X, or better, commercial
general liability insurance in an amount not less than Three
Million Dollars ($3,000,000.00) combined single limit per
occurrence, for any and all bodily injury, or death, and
property damage, with Seller named as an additional insured.
Buyer also either shall provide, and cause each applicable
licensee to provide, Railroad Protective Liability Insurance
in the event of, and during the course of, any construction or
demolition work undertaken within 25 feet of any active
railroad track; such insurance to contain a deductible no
higher than $25,000.00 per occurrence, and to be obtained from
an insurance company licensed to do business in the state
where this work is being performed, and possessing a current
Best's Insurance Guide Rating of B and Class X, or better, in
an amount not less than THREE MILLION DOLLARS ($3,000,000.00)
combined single limit per occurrence, for any and all bodily
injury, or death, and property damage, with Seller named as an
additional insured. Buyer, and any of its contractors working
on or near any signboard license agreement site, also shall
maintain Worker's Compensation and Employee's Liability
Insurance as required by applicable law, and such worker's
compensation insurance shall contain a waiver of subrogation
against Seller. Upon request, Buyer shall provide to Seller a
copy of insurance certificates and/or insurance policies
showing that Buyer has effective insurance as required by this
Section 3.4.
Article IV. Signboard Marketing and Future Signboard Easement Sales
Section 4.1 Buyer's Signboard Marketing Rights.
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Commencing on the day following the first Closing,
Buyer shall have the exclusive rights to market for use by
licensees of outdoor advertising facilities, and to enter into
signboard license agreements covering, any real property in
which Seller then has a sufficient ownership interest
(including land acquired by Seller in the future that is not
already encumbered by any signboard right or agreement, except
not including any land acquired in a merger involving Seller),
subject to Seller's prior approval of any specific signboard
license agreement and the terms and conditions in this Article
IV ("Buyer's Signboard Marketing Rights").
Buyer's Signboard Marketing Rights shall extend for a
period of ten years following the date of the first Closing,
except that: (a) if, after five years, Buyer has not purchased
new Easements from Seller, as described in Section 4.3, that
have resulted in Buyer paying to Seller aggregate purchase
prices of at least $500,000.00 (unless this is prevented by
Seller rejecting New Signboard License Agreements as permitted
under Section 4.2(b)) Seller, at its sole option may terminate
Buyer's Signboard Marketing Rights after providing to Buyer at
least 30 days' written notice of such termination, provided
that during this 30 day period Buyer does not cure this
breach; and (b) if, after eight years, Buyer has not purchased
such new Easements from Seller, as described in Section 4.3,
that have resulted in Buyer paying to Seller aggregate
purchase prices of at least $700,000.00 (unless this is
prevented by Seller rejecting New Signboard License Agreements
as permitted under Section 4.2(b)), Seller, at its sole
option, may terminate Buyer's Signboard Marketing Rights after
providing to Buyer at least 30 days' written notice of such
termination, provided that during this 30 day period Buyer
does not cure this breach. Either the five year, or the eight
year period referenced in the preceding sentence shall be
extended by any period during which federal law prevents
construction of new outdoor advertising facilities. If Buyer's
Signboard Marketing Rights continue for ten years, Seller
shall negotiate in good faith first with Buyer to extend
Buyer's Signboard Marketing Rights for another possible ten
year term; and if this negotiation does not result in an
agreement between Buyer and Seller on or before March 26, 2007
to extend Buyer's Signboard Marketing Rights, then Buyer shall
have a 30 day right of first refusal to match any bona fide
offer made by any third party to Seller, within the three
years after March 26, 2007, to market or purchase signboard
easements or licenses; and if Buyer does not match the offer,
in writing, on the same terms within 30 days of receiving
written notice from Seller of the terms of the third party's
offer, Buyer shall have no further rights with respect to
marketing signboards on real property in which Seller has an
ownership interest. By December 1 of each year Buyer shall
submit to Seller Buyer's written business plan for generating
at least $100,000.00 in new Easement purchases from Seller
during the following calendar year. For so long as Buyer has
Buyer's Signboard Marketing Rights, Seller shall not grant
rights to third parties, or exercise any rights on its own
behalf, to construct, operate, maintain, modify, replace and
remove outdoor advertising facilities on any real property in
which Seller has an ownership interest.
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Section 4.2 Signboard Marketing Procedures.
(a) Buyer shall have the exclusive rights, and the duty
to use commercially reasonable efforts, to locate
potential users and potential sites for outdoor
advertising facilities to be placed on real property
in which Seller has an ownership interest. Buyer
shall negotiate with a potential signboard licensee
the terms of new signboard license agreements, which
agreements initially shall be between Seller and the
licensee, and which agreements shall be consistent
with, and substantially in the form of, Seller's
standard form Signboard License Agreement attached
hereto as Exhibit E, and specifically must include
licensor's ability to terminate the signboard license
agreement upon no more than 30 days' prior written
notice to the licensee ("New Signboard License
Agreement"). Buyer also shall require each potential
signboard licensee to complete a Sign Site
Application containing the information specified on
Seller's standard form Sign Site Application attached
hereto as Exhibit F.
(b) Buyer first shall forward to Seller's Operating
Department and Engineering Department, for their
preliminary approval, as promptly as practicable, and
then shall forward to Seller's Assistant Vice
President-Property Management, or his designee, for
final approval or disapproval by Seller, each
proposed New Signboard License Agreement and Sign
Site Application. Buyer may not obligate Seller to
enter into any New Signboard License Agreement.
Seller, before 30 days following any submission for
final approval, shall review and either disapprove
the New Signboard License Agreement by written
notification to Buyer, or execute the agreement.
Seller's disapproval of the New Signboard License
Agreement must be reasonable and may be based only on
one or more of the following grounds: (1) the
proposed outdoor advertising facilities could
interfere with Seller's railroad operations or
maintenance, or with other current or reasonably
foreseeable activities of either Seller or any other
party having, or who foreseeably could have, a right
from Seller to conduct such activities; (2) the
proposed outdoor advertising facilities, or the use
of access rights to construct, operate, maintain,
modify, replace and remove such facilities, could
create a safety hazard; (3) the proposed outdoor
advertising facilities, to Seller's knowledge, could
violate one or more applicable federal, state or
local law, rule, ordinance or regulation; (4) the
proposed advertising material, exhibit material,
announcements, advertisements, or their manner of
presentation, likely would be offensive to a
significant portion of the population; and (5) the
proposed annual signboard license fee, which shall
include all compensation payable by licensee to
Buyer, with one third of any administrative and other
one-time only fees considered to be part of the
annual signboard license fee ("Signboard License
Fee"), in Seller's reasonable judgement is below the
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market value for such fees in such area.
(c) From the date any New Signboard License Agreement is
signed between Seller and the signboard licensee,
until the date of Subsequent Closing, as defined in
Section 4.3, the terms of Article III of this
Agreement shall apply, and Buyer shall be the interim
manager of such New Signboard License Agreement, as
agent for Seller.
Section 4.3 Purchase of New Signboard Easement.
On June 1 and December 1 of each year, commencing on
December 1, 1997, during which Buyer has the exclusive
signboard marketing rights described in Section 4.1, Buyer
shall have the right and the obligation to acquire from Seller
an Easement, on the form set forth in Exhibit A attached
hereto, over the real property parcels in which Seller has an
ownership interest, which parcels underly the outdoor
advertising facilities covered by each New Signboard License
Agreement entered into by Buyer on or before the immediately
preceding May 15 or November 15, respectively. The purchase
price for each such Easement shall be determined initially by
multiplying by 9.0 the Signboard License Fee in all New
Signboard License Agreements applicable to the Easement
parcel. This initially determined amount shall be paid to
Seller, or an escrow agent for APEX, as directed by Seller, at
the Subsequent Closing. This initially determined amount shall
be subject to adjustment on the third anniversary of the
Subsequent Closing, with Buyer obliged to pay to Seller on
that date for each Easement an additional amount determined by
multiplying by 9.0 any portion of the then current Signboard
License Fee that is in excess of 110% of the Signboard License
Fee on the date of the Subsequent Closing. Seller shall have
the right to audit Buyer's records to confirm Buyer's
compliance with this provision. Buyer shall prepare complete
and accurate Property Descriptions for each such Easement,
subject to review by Seller, and shall attach correct property
boundary descriptions to recordable form Easements on the form
set forth as Exhibit A. Each such June 1 and December 1
closing ("Subsequent Closing") shall be governed by the terms
set forth in Article III, as applicable to the second Closing,
except for: (a) a different Closing date; and (b) a different
purchase price.
Article V. Seller's Termination of Signboard Easements and Assistance
in Relocating Signboards
Section 5.1 Easement Termination Procedures.
Seller, by providing written notice to Buyer
identifying the Easement that Seller desires to terminate, may
terminate any Easement, at any time, only for a
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reason in one of the following categories: (a) to accommodate
a railroad related activity of Seller; (b) to accommodate a
real estate sale, lease, non-advertising license, permit or
development activity of Seller; (c) to accommodate any
industrial or business development activity of any of Seller's
customers or potential customers; or (d) in response to any
legal restrictions or problems. Seller agrees that Seller will
not terminate any Easement in order to sell a similar Easement
to another party. Within 10 days of receipt of such notice,
Buyer shall provide to Seller complete copies of any and all
currently effective signboard license agreements affecting
each Easement to be terminated ("Terminated Easement"), and
any and all other documents in Buyer's possession that relate
to the Terminated Easement or such signboard license
agreements, and Buyer shall disclose to Seller any other
information known to Buyer that relates to the Terminated
Easement, the Terminated Easement property or such signboard
license agreements. Thirty days, where practicable, and
otherwise within 60 days, after Buyer's receipt of such
notice, or some other date mutually agreeable to the parties
("Easement Termination Date"), Buyer and Seller shall execute
two original copies of Termination of Easement in recordable
form, on the form attached as Exhibit G to this Agreement, and
each party shall retain one fully executed original copy of
such Termination of Easement. Also on the Easement Termination
Date Buyer shall deliver to Seller two executed original
copies of an Assignment of Signboard Licenses, on the form
attached as Exhibit D, assigning to Seller any and all
signboard license agreements applicable to the Terminated
Easement property, and Seller shall execute one original copy
of such assignment and deliver it to Buyer, signifying
Seller's acceptance of this assignment.
Section 5.2 Easement Termination Price.
On each Easement Termination Date Seller shall
deliver to Buyer, or to Buyer's assignee, in accordance with
Buyer's payment instructions, an easement termination price
for each Terminated Easement. Each easement termination price
shall be determined by multiplying by 9.0 the then current
Signboard License Fee in all signboard license agreements
applicable to the Terminated Easement parcel. In the
alternative, Seller upon termination of any Easement may
provide to Buyer free of charge a substitute Easement at a
different location, provided such substitution is mutually
agreed between Buyer and Seller.
Section 5.3 Seller's Assistance in Relocating Signboards
If, after any Closing, a successful legal action is
brought by a third party based on either a claim that the
physical condition of the Parcel or Seller's ownership rights
to the Parcel are such, and were such on the date of that
Closing, that Buyer after the legal action is unable to use
the Parcel for outdoor advertising purposes, then Seller shall
use its best efforts to locate an alternative site for outdoor
advertising facilities
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on other real estate in which Seller has an ownership
interest, and shall convey to Buyer an Easement for this
alternative site, at no charge to Buyer; or where Seller can
not locate such an alternative site for outdoor advertising
facilities, then Seller will give to Buyer a credit toward the
purchase of one or more new Easements under Section 4.3, as
appropriate, in an amount determined by multiplying by 9.0 the
then current Signboard License Fee for all signboard licenses
included within the Easement Parcel, to the extent they are
included within the Easement Parcel.
Article VI. Representations and Warranties
Section 6.1 Representations and Warranties of Seller.
Seller hereby represents and warrants to Buyer the
following facts:
(a) Seller is a corporation duly organized, validly
existing, and in good standing;
(b) Seller has the corporate power and authority to enter
into this Agreement and carry out its obligations
under this Agreement;
(c) The execution and performance of this Agreement have
been duly authorized and approved by all necessary
corporate actions of Seller, and no further corporate
proceedings of Seller are required to complete the
transactions covered by this Agreement;
(d) All of Seller's obligations set forth in this
Agreement constitute legal, valid and binding
obligations of Seller which are enforceable against
Seller in accordance with their terms, except as
enforcement may be limited by law;
(e) There is no provision in the Certificate of
Incorporation or By-Laws of Seller which prohibits
the execution of this Agreement or consummation of
any of the transactions covered by this Agreement;
(f) The negotiations related to this Agreement have been
handled by Seller on its own behalf, without
intervention of any agent or other person, so that no
party has a valid claim on this basis for any
finder's fee, brokerage commission, or other similar
payment in connection with any of the transactions
covered by this Agreement;
(g) The officer executing this Agreement on behalf of
Seller is fully authorized to do so and his execution
of this Agreement thereby will bind Seller to its
terms;
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(h) The report attached hereto as Exhibit H lists what
Seller's business records report to be the total
actual gross revenue received during calendar year
1996 from all licensees under all signboard license
agreements to be assigned by Seller to Buyer at
either the first Closing or the second Closing; and
Seller has no reason to believe that this report is
not materially complete and accurate; and
(i) To Seller's actual knowledge, Seller having made no
investigation or inquiry whatsoever, Seller has not
furnished to Buyer any information that was
inaccurate in any material respect; nor has Seller
omitted to disclose any information actually known by
Seller that would materially adversely affect Buyer's
rights as contemplated in this Agreement.
Section 6.2 Buyer's Representations and Warranties.
(a) Buyer is a corporation duly organized, validly
existing, and in good standing;
(b) Buyer has the corporate power and authority to enter
into this Agreement and carry out its obligations
under this Agreement;
(c) Buyer has the financial capability to pay the agreed
purchase price for these Easements on the Closing
dates specified in this Agreement, without any delay
of any such Closing date;
(d) The execution and performance of this Agreement have
been duly authorized and approved by all necessary
corporate actions of Buyer, and no further corporate
proceedings of Buyer are required to complete the
transactions covered by this Agreement;
(e) All of Buyer's obligations set forth in this
Agreement constitute legal, valid and binding
obligations of Buyer which are enforceable against
Buyer in accordance with their terms, except as
enforcement may be limited by law;
(f) There is no provision in the Certificate of
Incorporation or By-Laws of Buyer which prohibits the
execution of this Agreement or consummation of any of
the transactions covered by this Agreement;
(g) The negotiations related to this Agreement have been
handled by Buyer on its own behalf, without
intervention of any agent or other person, so that no
party has a valid claim on this basis for any
finder's fee, brokerage commission, or other similar
payment in connection with any of the transactions
covered by this Agreement; and
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(h) The officer executing this Agreement on behalf of
Buyer is fully authorized to do so and his execution
of this Agreement thereby will bind Buyer to its
terms.
Article VII. Proration
Section 7.1 Proration of Payments from Licensees.
Except as set forth in Section 3.1, Seller shall be
entitled to all signboard license fees and other payments due
under each signboard license agreement to be assigned to Buyer
under the terms of this Agreement, for the period up to and
through the date on which such agreement is assigned to Buyer.
Buyer shall be entitled to all signboard license fees and
other payments due under each such signboard license agreement
commencing the day following the date on which such agreement
is assigned to Buyer. To the extent license fees under a
signboard license agreement have been prepaid, Seller shall
transfer to Buyer, within 60 days following the date of
assignment of such license agreement to Buyer, the amount to
which Buyer is entitled by the terms of this Section, together
with a statement showing how the amount was calculated. With
respect to: (a) license fees and payments due under some of
the signboard license agreements, which fees or payments are
payable after the use period; and (b) Signboard License Fees
collected by Buyer under the terms of Section 3.1, or Section
4.2(c), for which Seller is entitled to a portion of the
amounts payable, or collected, respectively, by the terms of
this Section, Buyer promptly shall determine and then shall
forward to Seller the amounts to which Seller is entitled,
together with a statement showing how these amounts were
calculated. Seller shall have the right to audit Buyer's
records to confirm Buyer's compliance with this provision.
Section 7.2 Ad Valorem Taxes.
To the extent any Easement after any Closing is
separately assessed and taxed, or to the extent after any
Closing Seller is taxed on either the Easement or any outdoor
advertising facilities on any Easement, Buyer shall pay any
and all such taxes that are due as they are due and shall
indemnify and defend Seller from and against all lawsuits and
actions that result therefrom. Seller, or its successors or
assignees, shall be responsible for paying any property taxes
on property interests that Seller, or its successors or
assignees, continue to own.
Article VIII. Certain Post Closing Obligations
Section 8.1 Seller's General Cooperation with Buyer.
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Seller reasonably shall assist and cooperate with
Buyer, and timely shall respond to Buyer's requests, after any
of the Closings, with respect to any and all matters affecting
any Easement or signboard license agreement assigned by Seller
to Buyer. Such cooperation shall include assistance in dealing
with government authorities who have taken, or may take,
actions that likely would materially adversely affect the
aggregate value to Buyer of the Easements or signboard license
agreements. Buyer, at Seller's request, shall reimburse Seller
its direct costs in providing such cooperation.
Section 8.2 Seller to Furnish Valuation or Engineering Maps
to Buyer.
At any time after December 31, 1997, Seller shall
furnish to Buyer, upon Buyer's request and after payment by
Buyer of reasonable copying and delivery costs, copies of
Seller's then current valuation or engineering maps which
reflect information known by Seller about the real property
where, and adjacent to, any Easement conveyed at the first and
second Closing. Seller also agrees to provide to Buyer, on the
same terms, at any time after 30 days following any Subsequent
Closing, copies of such valuation maps relating to any
Easement transferred to Buyer at any Subsequent Closing. Buyer
acknowledges that any valuation maps provided by Seller are
provided without any warranty that they are current, complete
or accurate.
Section 8.3 Buyer's General Cooperation with Seller.
Buyer reasonably shall assist and cooperate with
Seller, and timely shall respond to Seller's requests after
any of the Closings, with respect to any matters related to
Buyer's signboard license agreements or any outdoor
advertising facilities on any Easement. Seller, at Buyer's
request, shall reimburse Buyer its direct costs in providing
such cooperation.
Section 8.4 Buyer to Deliver Drawings to Seller.
Upon request from Seller, Buyer shall provide to
Seller, at no cost to Seller, any and all as built drawings in
its possession showing any outdoor advertising facilities
present on any Easement, including related structures and
connecting electrical lines.
Article IX. Buyer's Liability to Seller
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Section 9.1 Liability and Indemnification
Buyer shall be responsible for all losses and damages
to Seller, and shall indemnify and defend Seller from and
against all lawsuits and actions, that result from any claim
of losses, damages, costs, injuries or deaths to any person or
property, or result from any claim of any violation of any
federal, state or local law, rule, ordinance or regulation, to
the extent such losses and damages result from the acts or
omissions, or presence on or near any Parcel, of Buyer, or any
of its employees, or any of Buyer's contractors, agents,
representatives or invitees, or any of their employees, or any
signboard licensee, or any of its employees, or any
contractor, agent, representative or invitee of such licensee,
or any of their employees, or in connection with Buyer's
exercise or failure to exercise any of Buyer's duties under
this Agreement, regardless of Seller's negligence, except to
the extent such losses and damages are caused by Seller's
gross negligence or intentional misconduct.
Article X. Disclaimer of Seller's Liability
Section 10.1 Inspection and Conditions of Easement Property
(a) By signing this Agreement, Buyer expressly
acknowledges that: (1) Seller has made no
representation whatsoever to Buyer concerning the
state or condition of any real property in which
Seller has an ownership interest, the nature or
extent of Seller's ownership interest, or the state
or condition of any outdoor advertising facilities
present on real property in which Seller has an
ownership interest (collectively, "Seller Property");
(2) Buyer has not relied upon any statement or
declaration of Seller, oral or in writing, as an
inducement to entering into this Agreement, other
than as stated in this Agreement; and (3) the sole
consideration for execution of this Agreement by
Buyer is set forth in this Agreement.
(b) SELLER HEREBY DISCLAIMS ANY REPRESENTATION OR
WARRANTY, WHETHER EXPRESS OR IMPLIED, AS TO THE
DESIGN OR CONDITION OF ANY SELLER PROPERTY, ITS
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, THE QUALITY OF THE MATERIAL OR WORKMANSHIP
OF THE SELLER PROPERTY, OR THE CONFORMITY OF ANY
SELLER PROPERTY TO ITS INTENDED USES. SELLER SHALL
NOT BE LIABLE TO BUYER FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN
TORT) WITH RESPECT TO THE DESIGN, CONDITION, QUALITY,
SAFETY, MERCHANTABILITY, OR FITNESS FOR ANY
PARTICULAR PURPOSE, OF ANY SELLER PROPERTY, OR THE
CONFORMITY OF
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ANY SELLER PROPERTY TO ITS INTENDED USES. SELLER
OFFERS, AND BUYER ACCEPTS, ANY AND ALL RIGHTS TO ANY
SELLER PROPERTY INTERESTS CONVEYED UNDER THE TERMS OF
THIS AGREEMENT IN "AS IS, WHERE IS" AND "WITH ALL
FAULTS" CONDITION, AND SUBJECT TO ALL LIMITATIONS ON
SELLER'S RIGHTS, INTERESTS, AND TITLE TO ANY SELLER
PROPERTY.
Article XI. Miscellaneous Provisions
Section 11.1 Surviving Provisions.
All provisions of this Agreement shall survive the
Closings under this Agreement.
Section 11.2 Time is of the Essence.
Time is of the essence in this Agreement.
Section 11.3 Entire Agreement.
This Agreement, together with all Exhibits attached
hereto, constitutes the entire agreement and understanding
between Buyer and Seller with respect to the subject matters
hereof. Any other prior or contemporaneous agreements,
understandings, representations or statements, whether oral or
written, relating to this transaction are merged herein.
Section 11.4 Relationship of Parties.
This Agreement shall not create a partnership, joint
venture, or employer/employee relationship between the
parties, nor any agency relationship except to the extent
addressed herein, and nothing in this Agreement shall be
deemed to authorize either party to act for, represent or bind
the other party.
Section 11.5 Amendment.
This Agreement may be amended only by a written
amendment agreement signed by both Buyer and Seller.
Section 11.6 Assignment.
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Seller may assign its rights and obligations under
this Agreement, provided that Seller after such assignment
shall remain liable for all obligations hereunder, unless
expressly released therefrom by Buyer. Buyer may assign or
pledge its rights under this Agreement to: (a) a financial
institution assisting Buyer in its Easement acquisition
financing: (b) an affiliate of Buyer; or (c) a successor to
Buyer by merger; provided that: (i) any such assignment or
pledge agreement does not in any way diminish Seller's rights
under this Agreement; and (ii) Buyer after such assignment
shall continue to remain liable for all obligations hereunder
unless expressly released therefrom by Seller. Buyer shall
make no other assignment of this Agreement without Seller's
prior written consent, which shall not be unreasonably
withheld or delayed. Following any such assignment, Buyer
shall continue to be responsible for Buyer's obligations under
this Agreement, except to the extent expressly released
therefrom by Seller. Following any assignment by either Buyer
or Seller, the party receiving such assignment shall be bound
by all terms of this Agreement. This Agreement shall be
binding upon any successor(s) or permitted assignee(s) of
Buyer or Seller.
Section 11.7 Effect of Waiver.
Any waiver by either Buyer or Seller, or failure of
either Buyer or Seller to insist upon full and complete
performance by Seller or Buyer of its obligations set forth in
this Agreement, shall not constitute a waiver or release of
such party's right to insist upon full and complete
performance of any other obligations in this Agreement, or a
waiver or release of such party's right to insist upon full
and complete performance of the obligations that were waived
or not enforced for periods prior to, or following, the waiver
or failure to insist upon full and complete performance.
Section 11.8 Notices.
All notices and other communications under this
Agreement shall be in writing and deemed properly served if
delivered by hand to the party addressed or, if mailed, when
received by the United States Postal Service in registered or
certified mail, postage prepaid, or, if sent by a national
overnight service, when received by the carrier service in a
prepaid mailer, return receipt requested, addressed as
follows:
Seller: Mr. James J. O'Neil
Assistant Vice President
Property Management
BNSF
2650 Lou Menk Drive
Fort Worth, Texas 76131
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Buyer: Mr. William S. Levine
Chairman
1702 East Highland Ave.
Suite 310
Phoenix, Arizona 85016
Either party hereto may change its address or
addresses to which notices are to be given by providing
written notice of the change to the other party.
Section 11.9 Confidentiality.
Except to the extent that the terms of this Agreement
are required to be disclosed by order of any court of
competent jurisdiction or any governmental agency, or by
parties involved in financing this purchase, each party to
this Agreement shall not disclose the contents of this
Agreement to any other party, without the prior written
consent of the other party to this Agreement. To the extent
permitted by law, any party who learns of any of the terms of
this Agreement shall be required by the party to this
Agreement who is disclosing the information not to disclose
those terms to any other party without the prior written
consent of both parties to this Agreement.
Section 11.10 Applicable Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. Applicable law
to determine Buyer's Easement property rights shall be the law
of the state where the Easement Parcel is located. Venue for
any legal action to determine the meaning or application of
any terms of this Agreement shall be exclusively in state or
federal court in Tarrant County, Texas.
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IN WITNESS WHEREOF, authorized representatives of the parties have
executed this Agreement as of this ____ day of March, 1997.
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY,
a Delaware corporation
By: __________________________________________
Title: _________________________________________
OUTDOOR SYSTEMS, INC.
a Delaware corporation
By: __________________________________________
Title: _________________________________________
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Exhibit 99.4
ASSET PURCHASE AGREEMENT
dated as of February 24, 1997
by and between
OUTDOOR SYSTEMS, INC.
AND
GRTP, LTD.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS...................................................... 1
2. PURCHASE AND SALE OF THE ASSETS; CLOSING......................... 1
2.1 Agreement to Purchase and Sell.......................... 1
2.2 Purchased Assets........................................ 1
2.3 Agreement to Assume Certain Liabilities................. 2
2.4 Excluded Liabilities.................................... 3
2.5 Closing................................................. 3
2.6 Purchase Price.......................................... 3
2.7 Transactions at the Closing............................. 4
2.8 Third Party Consents.................................... 4
2.9 Joint Venture Assets.................................... 5
3. REPRESENTATIONS AND WARRANTIES OF SELLER......................... 5
3.1 Organization and Good Standing.......................... 5
3.2 Authority; No Conflict.................................. 5
3.3 Solvency................................................ 6
3.4 Books and Records....................................... 6
3.5 Structures.............................................. 6
3.6 Permits................................................. 6
3.7 Site Leases and Advertising Contracts................... 6
3.8 Real Property........................................... 7
3.9 Title, Encumbrances..................................... 7
3.11 Taxes................................................... 7
3.12 Compliance with Legal Requirements...................... 8
3.13 Legal Proceedings; Orders............................... 8
3.14 Other Contracts......................................... 8
3.15 Insurance............................................... 8
3.16 Environmental Matters................................... 8
3.17 Intangible Property..................................... 9
3.18 Relationships with Affiliates........................... 9
3.19 Brokers or Finders...................................... 9
3.20 Employee Benefit Matters................................ 9
3.21 HSR Compliance.......................................... 10
3.22 Seller's Formation...................................... 10
3.23 Disclosure.............................................. 11
4. REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 11
4.1 Organization and Good Standing.......................... 11
4.2 Authority; No Conflict.................................. 11
4.3 Certain Proceedings..................................... 11
4.4 Brokers or Finders...................................... 12
</TABLE>
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<TABLE>
<S> <C>
5. COVENANTS OF SELLER................................................ 12
5.1 Access and Investigation.................................. 12
5.2 Due Diligence............................................. 12
5.3 Operation of the Purchased Assets......................... 12
5.4 Negative Covenant......................................... 12
5.5 Required Approvals........................................ 12
5.6 Notification.............................................. 13
5.7 No Negotiation............................................ 13
5.8 Tax Clearance............................................. 13
5.9 Leases.................................................... 13
6. COVENANTS OF BUYER................................................. 13
6.1 Required Approvals........................................ 13
6.2 Best Efforts.............................................. 13
6.3 Imprints.................................................. 13
6.4 Notification.............................................. 14
6.5 Office Lease.............................................. 14
6.6 Transfer Taxes............................................ 14
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE................ 14
7.1 Accuracy of Representations............................... 14
7.2 Seller's Performance...................................... 14
7.3 Consents.................................................. 14
7.4 Additional Documents...................................... 15
7.5 No Proceedings............................................ 15
7.6 No Prohibition............................................ 15
7.7 No Material Adverse Change................................ 15
7.8 Due Diligence............................................. 15
7.9 Bank Lien................................................. 15
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE............... 15
8.1 Accuracy of Representations............................... 15
8.2 Buyer's Performance....................................... 16
8.3 Additional Documents...................................... 16
8.4 No Proceedings............................................ 16
8.5 No Prohibition............................................ 16
9. TERMINATION........................................................ 16
9.1 Termination Events........................................ 16
9.2 Effect of Termination..................................... 17
</TABLE>
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<TABLE>
<S> <C>
10. INDEMNIFICATION; REMEDIES........................................ 17
10.1 Indemnification and Payment of Damages by Seller........ 17
10.2 Indemnification and Payment of Damages by Buyer......... 17
10.3 Procedure for Indemnification -- Third Party Claims..... 18
10.4 Procedure for Indemnification -- Other Claims........... 18
10.5 Survival/Limitations.................................... 19
11. GENERAL PROVISIONS............................................... 19
11.1 Expenses................................................ 19
11.2 Headings; Construction.................................. 19
11.3 Public Announcements.................................... 19
11.4 Availability of Equitable Remedies...................... 19
11.5 Notices................................................. 20
11.6 Further Assurances...................................... 21
11.7 Waiver.................................................. 21
11.8 Entire Agreement and Modification....................... 21
11.9 Assignments, Successors, and No Third-Party Rights...... 21
11.10 Accounts Receivable..................................... 21
11.11 Severability............................................ 21
11.12 Risk of Loss............................................ 21
11.13 Post-Closing Access..................................... 22
11.14 Applicable Law.......................................... 22
11.15 Counterparts............................................ 22
</TABLE>
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<PAGE> 5
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A - Definitions
Exhibit B - Assignment of Contracts
Exhibit C - Assignment of Permits
Exhibit D - Assignment of Site Leases
Exhibit E - Bill of Sale, Assignment and Assumption Agreement
Exhibit F - Leases
</TABLE>
SCHEDULES
<TABLE>
<S> <C> <C>
Schedule 2.2(a) - Structures/Permits/Management Agreements
Schedule 2.2(b) - Site Leases
Schedule 2.2(c) - Advertising Contracts
Schedule 2.2(d) - Joint Venture Agreements
Schedule 2.2(x) - Excluded Assets
Schedule 2.3 - Assumed Liabilities
Schedule 2.9 - Purchase of Joint Venture Assets
</TABLE>
DISCLOSURE SCHEDULE
<TABLE>
<S> <C>
Part 3.2(b) Part 3.10
Part 3.2(c) Part 3.11(a)
Part 3.5 Part 3.13
Part 3.6 Part 3.14
Part 3.7 Part 3.16
Part 3.9(b) Part 3.18
Part 3.20
Part 3.21
</TABLE>
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<PAGE> 6
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of
February 24, 1997, by and between OUTDOOR SYSTEMS, INC., a Delaware corporation
("Buyer"), and GRTP, LTD., a Texas limited partnership ("Seller"). (Buyer and
Seller are sometimes herein referred to individually as a "Party" and
collectively as the "Parties".)
RECITALS
Seller is engaged in the business of owning and operating outdoor signs
and billboards and otherwise providing outdoor advertising services in the
metropolitan Dallas/Fort Worth area (the "Business"). Seller desires to sell and
assign certain outdoor advertising assets to Buyer, and Buyer desires to
purchase such assets and to assume certain liabilities associated with such
assets, pursuant to the terms, conditions, limitations and exclusions contained
in this Agreement.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms listed on Exhibit A attached
hereto have the meanings specified or referred to in Exhibit A.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING
2.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions
of this Agreement, Seller hereby agrees to grant, sell, assign, transfer, convey
and deliver all right, title and interest in and to the Purchased Assets, free
and clear of any liens, title claims, Encumbrances or Security Interests (except
as otherwise specifically permitted pursuant to the provisions of this
Agreement), and Buyer hereby agrees to buy and acquire the Purchased Assets from
Seller, and to assume the Assumed Liabilities upon the terms and conditions set
forth in this Agreement.
2.2 PURCHASED ASSETS. The Purchased Assets are all of the assets of
Seller used in the Business, including:
(a) All of the billboard displays and other out-of-home
advertising structures (including rights to walls), including, without
limitation, those set forth and described in Schedule 2.2(a) attached hereto,
together with all components, fixtures, parts, appurtenances, and equipment
attached to or made a part thereof that are existing, under construction or for
which Seller has any rights (collectively, the "Structures"); and all state and
local licenses or permits/tags which Seller has with respect to the Structures
and, to the extent assignable, all other Governmental Authorizations that are
required for the operation of the Structures, (collectively, the "Permits"),
including, without limitation, those Permits listed on Schedule 2.2(a);
<PAGE> 7
(b) All leases, licenses, easements, other rights of ingress
or egress, and all other grants of the right to place, construct, own, operate
or maintain the Structures on land, buildings and other real property owned by
third parties, and all rights therein (collectively, the "Site Leases"),
including, without limitation, those Site Leases listed on Schedule 2.2(b);
(c) All rights under existing and pending sales and
advertising contracts associated with the Structures, and all rights to the
advertising copy displayed on the Structures as of the Closing Date
(collectively, the "Advertising Contracts"), including, without limitation,
those Advertising Contracts listed on Schedule 2.2(c) attached hereto;
(d) All rights and interests in joint venture arrangements,
however organized, engaged in the outdoor advertising business ("Joint Venture
Agreements"), including, without limitation, those Joint Venture Agreements
listed on Schedule 2.2 (d);
(e) All rights and interests in agreements to manage
structures on behalf of third parties ("Management Agreements"), including,
without limitation, those listed on Schedule 2.2(a);
(f) The Office Lease;
(g) All pertinent Books and Records;
(h) All tangible personal property, including furniture,
equipment, computer hardware and software, owned by Seller and used in the
operation of the Business, save and except those items listed on Schedule
2.2(x);
(i) All Intangible Property used in connection with the
Business except the trade name "Reynolds"; and
(j) All rights (including any benefits arising therefrom),
causes of action, claims and demands of whatever nature (whether or not
liquidated) of Seller relating to the Purchased Assets, including, without
limitation, condemnation rights and proceeds, and all rights against suppliers
under warranties covering any of the Purchased Assets.
Notwithstanding the foregoing, the Purchased Assets shall not include the assets
listed on Schedule 2.2(x) (collectively, "Excluded Assets").
2.3 AGREEMENT TO ASSUME CERTAIN LIABILITIES. At the Closing, Buyer
shall assume and agree to discharge and perform all liabilities and obligations
that are set forth on Schedule 2.3 or arise or are attributable to events
occurring on or after the Closing Date pursuant to the Site Leases, the
Advertising Contracts, the Joint Venture Agreements, the Management Agreements
and the Office Lease (the "Assumed Liabilities") but to the extent and only to
the extent that:
(a) Such obligations are performable on or after the Closing
Date; and
(b) Such obligations are attributable to periods arising on or
after the Closing Date.
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<PAGE> 8
2.4 EXCLUDED LIABILITIES. All claims against and liabilities and
obligations of Seller not specifically assumed by Buyer pursuant to Section 2.3,
including, without limitation, the following claims against and liabilities of
Seller (the "Excluded Liabilities"), are excluded, and shall not be assumed or
discharged by Buyer, and shall be discharged in full when due by Seller:
(a) Any liabilities to the extent not attributable to the
Purchased Assets;
(b) Any liability of Seller for Taxes arising prior to or from
the sale of the Purchased Assets under this Agreement other than Transfer Taxes.
(c) Any liabilities for or related to indebtedness of Seller
to banks, financial institutions, or other Persons;
(d) Any liabilities of Seller for or with respect to any
employees of Seller, including, without limitation, any liabilities pursuant to
any compensation, collective bargaining, pension, retirement, severance,
termination, or other benefit plan, agreement or arrangement; and
(e) Any other liabilities of Seller that are attributable to
or arise from facts, events, or conditions that occurred or came into existence
prior to the Closing.
2.5 CLOSING. The purchase and sale of the Purchased Assets (the
"Closing") provided for in this Agreement will take place at the offices of
Strasburger & Price, L.L.P., in Dallas, Texas on February 28, 1997 or such later
time and place as the Parties may agree. The effective time of the Closing shall
be 11:59 p.m., Eastern Standard Time, on the Closing Date.
2.6 PURCHASE PRICE. In consideration for the Purchased Assets, Buyer
shall assume the Assumed Liabilities, and pay an amount (the "Purchase Price")
equal to Thirty Million Dollars ($30,000,000). The Purchase Price shall be
subject to adjustment as follows:
(a) The following items shall be prorated between Seller and
Buyer as of the Closing Date with respect to the Purchased Assets: power and
utility charges, real and personal property taxes, rents (including percentage
rents) prepaid leases and security deposits under Site Leases and payments and
security deposits under Advertising Contracts. Prorations will be on a
dollar-for-dollar basis based on the number of days of display before and after
the Closing. Percentage rents shall be prorated as of the Closing Date. Any
prorations not determined at the Closing shall be prorated on the basis of the
most current information available at Closing. On the Closing Date, Seller shall
provide to Buyer a list of items and the prorations required by this Section
2.6(a) ("Preliminary Adjustment") and the Purchase Price shall be adjusted
accordingly. Seller agree to furnish Buyer with any documents or records in
Seller's possession that may be needed for Buyer to confirm the adjustment and
prorations in this Section 2.6(a).
(b) Within ninety (90) days after the Closing Date, Buyer will
prepare and provide to Seller the final calculations of adjustments to the
Purchase Price (the "Closing Date Adjustment"). On the 120th day after the
Closing Date, all required refunds or payments under this Section 2.6, shall be
made on the basis of the Closing Date Adjustment.
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<PAGE> 9
(c) The parties agree to cooperate with each other in
determining and reaching an agreement in writing on the allocation of the
Purchase Price among the Purchased Assets on or prior to Closing.
2.7 TRANSACTIONS AT THE CLOSING. The following transactions shall take
place at the Closing:
(a) Seller shall enter into (as applicable) (and in the case
of certain Leases, Reynolds) and deliver to Buyer: (i) the Bill of Sale, (ii)
the Assignment of Contracts, (iii) the Assignment of Site Leases, (iv) the
Assignment of Permits, (v) the Leases, (vi) all applicable Tax Clearances, and
(vii) other instruments of transfer, evidence of consent and all other related
documents as may be necessary to evidence or perfect the sale, assignment,
transfer, and conveyance of good title to all of the Purchased Assets, in each
case free and clear of all Security Interests and Encumbrances. Seller shall
also deliver to Buyer all Books and Records, including the originals of the
Advertising Contracts and Site Leases.
(b) Buyer shall deliver to Seller the Purchase Price, as
adjusted pursuant to Section 2.6, by wire transfer of immediately available
funds.
(c) Buyer shall enter into (as applicable) and deliver to
Seller: (i) the Bill of Sale, (ii) the Assignment of Contracts, (iii) the
Assignment of Site Leases, (iv) the Assignment of Permits, (v) the Leases, and
(vi) other assumption agreements, instruments and other documents as may be
necessary to evidence the assumption by Buyer of the Assumed Liabilities.
(d) The Parties shall also deliver to each other the
agreements, instruments, opinions, certificates, and other documents referred to
in this Agreement.
2.8 THIRD PARTY CONSENTS. To the extent that Seller's rights under any
Advertising Contract, Site Lease or other interest in the Purchased Assets may
not be assigned without the consent of a third party and such consent has not
been obtained, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof or be
unlawful, and Seller and Buyer, to the maximum extent permitted by law and any
terms of or limitations relating to such asset, shall use their Best Efforts to
obtain for Buyer the benefits thereunder, and shall cooperate to the maximum
extent permitted by law and any terms of or limitations relating to such asset
in any reasonable arrangement designed to provide such benefits to Buyer,
including any sublease or subcontract or similar arrangement, and if Buyer has
obtained such benefits, Buyer shall discharge Seller's obligations thereunder
arising from and after the Closing Date, except for those obligations arising
because of Seller's breach.
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<PAGE> 10
2.9 JOINT VENTURE ASSETS. The parties agree that:
(a) in lieu of acquiring Seller's interest in the Joint
Venture Agreements, Buyer, at its option, may purchase at the Closing all of the
assets of each underlying joint venture for the purchase prices set forth on
Schedule 2.9 and upon such other terms and conditions mutually satisfactory to
the parties thereto; and
(b) in such event, the Joint Venture Agreements shall be
excluded from the Purchased Assets and Assumed Other Contracts, and the Purchase
Price shall be adjusted downward as set forth on Schedule 2.9.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Seller is a limited partnership and
the General Partner is a limited liability company, each of which is duly
organized, validly existing and in good standing under the laws of the State of
Texas. Seller's predecessor is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Delaware. Seller has the
full power and authority to conduct the Business as it is now being conducted,
to own or use the Purchased Assets, and to perform all its obligations. Seller
has delivered to Buyer true and complete copies of its Organizational Documents,
as currently in effect. Each of Seller, the General Partner and Seller's
predecessor is duly qualified to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against it in accordance with its terms. Upon
the execution and delivery by Seller of any documents to be executed at Closing
pursuant to this Agreement (collectively, the "Closing Documents"), such Closing
Documents will constitute the legal, valid, and binding obligations of Seller,
as applicable, enforceable against it in accordance with its terms. Seller has
the absolute and unrestricted right, power and authority to execute and deliver
this Agreement and the Closing Documents to which it is a party and to perform
its obligations thereunder. The execution, delivery and performance of this
Agreement has been specifically authorized by the general partner and sole
limited partner of Seller. Reynolds Outdoor, Inc. is the sole limited partner of
Seller and Reynolds owns all of the outstanding capital stock of Reynolds
Outdoor, Inc. Reynolds Texas Properties, LLC is the sole general partner of
Seller.
(b) Except as set forth in Part 3.2(b) of the Disclosure
Schedule, neither the execution and delivery by Seller of this Agreement nor the
consummation or performance by Seller of any of the Contemplated Transactions
will:
(i) conflict with, violate or result in a breach of
(A) any provision of the Organizational Documents of Seller; (B) to
Seller's Knowledge, any Legal Requirement or
5
<PAGE> 11
any Order to which Seller, the Business or any of the
Purchased Assets or Real Property may be subject; (C) to Seller's
Knowledge, any Governmental Authorization held by Seller or that
otherwise relates to the Business, the Purchased Assets or Real
Property; or (D) any material Contract to which Seller is a party or by
which Seller or the Purchased Assets may be bound; or
(ii) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
interest or rights of Seller in or to the Purchased Assets or Real
Property; or result in the imposition or creation of any Encumbrance
upon or with respect to any of the Purchased Assets or Real Property.
(c) Except as set forth in Part 3.2(c) of the Disclosure
Schedule, Seller is not and will not be required to give any notice to or obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 SOLVENCY. By consummating the transactions contemplated hereby,
Seller does not intend to hinder, delay or defraud any of Seller's present or
future creditors or those of Seller's predecessor. Before giving effect to the
transactions contemplated hereby, Seller and Seller's predecessor have been
paying its debts as they become due in the Ordinary Course of Business and,
after giving effect to the transactions contemplated hereby, each will have paid
or discharged all of its debts (or made adequate provision for the payment
thereof).
3.4 BOOKS AND RECORDS. The books of account, and other Books and
Records of Seller and Seller's predecessor maintained in connection with the
Purchased Assets are complete and correct in all material respects and have been
maintained in accordance with sound business practices.
3.5 STRUCTURES. Schedule 2.2(a) contains a complete and correct
description of the ownership of the Structures. Except as set forth in Part 3.5
of the Disclosure Schedule, to Seller's Knowledge, each Structure (i) is located
entirely on property covered by a Site Lease or is located entirely on the Real
Property, and (ii) complies in all material respects with the terms of the
Permits pertaining to it.
3.6 PERMITS. Except as set forth in Part 3.6 of the Disclosure
Schedule, the Permits constitute all material licenses, permits, registrations
and approvals necessary to operate the Business. Seller is, and Seller's
predecessor was, in material compliance with the terms of the Permits. Seller is
not aware of any fact or event which constitutes a material violation of any
Permit, and Seller and Seller's predecessor have not received written notice
that any Governmental Body issuing any Permit intends to cancel, terminate,
modify or amend any Permit.
3.7 SITE LEASES AND ADVERTISING CONTRACTS. Seller has delivered to
Buyer true and complete copies of the Advertising Contracts and the Site Leases.
Except as set forth on Part 3.7 of the Disclosure Schedule, all sales made to
advertisers in connection with the Structures have been made pursuant to
Advertising Contracts. The Site Leases and the Advertising Contracts are in full
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<PAGE> 12
force and effect, and are binding upon the parties thereto. Except as set forth
in Part 3.7 of the Disclosure Schedule, to the Knowledge of Seller, (x) no
default by Seller or any other party (including Seller's predecessor) has
occurred under the Site Leases or Advertising Contracts, and (y) no event,
occurrence or condition exists which (with or without notice or lapse of time or
the happening of any further event or condition) would become a default by
Seller thereunder or would entitle any other party to terminate a Site Lease or
Advertising Contract, to make a claim or set-off against Seller or otherwise to
amend such Site Lease or Advertising Contract or prevent such Site Lease or
Advertising Contract from being renewed in accordance with its terms. Neither
Seller nor Seller's predecessor has received any written notice of default,
termination or non-renewal under any Site Lease or Advertising Contract.
3.8 REAL PROPERTY. Seller has indefeasible record title to the Real
Property, such title being a fee interest in the Real Property. Neither Seller
nor Seller's predecessor has granted or agreed to grant to any Person (except to
Buyer pursuant to the Leases) any option, agreement or other right to purchase,
sell, lease or occupy any of the Real Property.
3.9 TITLE, ENCUMBRANCES.
(a) Seller has good title to all of the Purchased Assets, and
there are no existing agreements, options, commitments or rights with, of or to
any Person to acquire any of the Purchased Assets or any interest therein. All
of the Purchased Assets are owned by Seller free and clear of all Encumbrances
and Security Interests except for Permitted Liens and the Bank Lien.
(b) Except as set forth in Part 3.9(b) of the Disclosure
Schedule, none of the Structures, Site Leases or the Real Property are or will
be, to the Knowledge of Seller, subject to zoning, use, or building code
restrictions that will prohibit the continued effective ownership, leasing or
other use of such assets as currently owned and used by Seller or the lease of
the Real Property to Buyer pursuant to the Leases. Neither Seller nor Seller's
predecessor has received any notice of pending or Threatened claims,
Proceedings, planned public improvements, annexations, special assessments,
rezonings or other adverse claims affecting the Site Leases or the Real
Property.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.10 of
the Disclosure Schedule, neither Seller nor Seller's predecessor has any
material liabilities or obligations of any nature relating to the Purchased
Assets.
3.11 TAXES. With respect to the Purchased Assets and the Real Property:
(a) Seller and Seller's predecessor have filed or caused to be
filed all Tax Returns that are or were required to be filed by each of them
pursuant to applicable Legal Requirements. Seller and Seller's predecessor have
paid, or made provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by Seller or Seller's predecessor, except such Taxes, if
any, as are listed in Part 3.11(a) of the Disclosure Schedule and are being
contested in good faith.
(b) No unpaid Taxes create an Encumbrance (other than
Permitted Liens) on the Purchased Assets or the Real Property.
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<PAGE> 13
(c) Buyer shall not be liable for any Taxes of Seller or
Seller's predecessor as a result of the Contemplated Transactions.
3.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller and Seller's
predecessor have complied with all Legal Requirements applicable to their
respective ownership or use of the Purchased Assets and Real Property, except
for noncompliances or failures that, individually or in the aggregate, would not
be reasonably expected to have a Material Adverse Effect.
3.13 LEGAL PROCEEDINGS; ORDERS. Except as set forth in Part 3.13 of the
Disclosure Schedule, there is no Proceeding pending or, to the Knowledge of
Seller, Threatened against Seller or Seller's predecessor or affecting any of
the Purchased Assets or the Real Property, and there is no Order to which
Seller, Seller's predecessor, the Purchased Assets or the Real Property is
subject.
3.14 OTHER CONTRACTS Seller is not a party to or bound by any Other
Contract, except for the Office Lease, the Joint Venture Agreements, the
Management Agreements and as disclosed in Part 3.14 of the Disclosure Schedule.
Seller has delivered to Buyer true and complete copies of the Assumed Other
Contracts. The Assumed Other Contracts are in full force and effect, and are
binding upon the parties thereto. Except as set forth in Part 3.14 of the
Disclosure Schedule, to the Knowledge of Seller, (x) no default by Seller or any
other party (including Seller's predecessor) has occurred under the Assumed
Other Contracts, and (y) no event, occurrence or condition exists which (with or
without notice or lapse of time or the happening of any further event or
condition) would become a default by Seller thereunder or would entitle any
other party to terminate an Assumed Other Contract, to make a claim or set-off
against Seller or otherwise to amend such Assumed Other Contract or prevent such
Assumed Other Contract from being renewed in accordance with its terms. Neither
Seller nor Seller's predecessor has received any written notice of default,
termination or non-renewal under any Assumed Other Contract.
3.15 INSURANCE. Seller maintains in full force and effect policies of
fire and other casualty, liability, title and other forms of insurance covering
the Purchased Assets, the Real Property and the Business, and the operation
thereof, of the types and with the amounts of coverage as are consistent with
industry standards for outdoor advertising businesses comparable to the
Business.
3.16 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.16 of the
Disclosure Schedule, with respect to the Purchased Assets and the Real Property
and the use or operation thereof: to Seller's Knowledge, (i) Seller and Seller's
predecessor are, and have been, in material compliance with all Environmental
Laws; (ii) Seller and Seller's predecessor have timely filed all material
reports, obtained all required approvals and permits relating to the Business,
and generated and maintained all material data, documentation and records under
any applicable Environmental Laws; (iii) to the Knowledge of Seller, there has
not been any release of the Hazardous Materials at or in the vicinity of the
Business, including the Real Property, or in areas for which Seller or Seller's
predecessor would have responsibility under Environmental Laws; (iv) neither
Seller nor Seller's predecessor has received any written notice from any
Governmental Body or private or public entity advising it that it is or may be
responsible for response costs with respect to a Release, a threatened Release
or clean up of Hazardous Materials produced by, or resulting from, its Business,
operations or processes; and (v) Seller has delivered to Buyer true and complete
copies and results of any reports, studies, analyses,
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<PAGE> 14
tests, or monitoring possessed by Seller or Seller's predecessor pertaining to
Hazardous Materials in, on, or under the properties included in the Purchased
Assets or the Real Property.
3.17 INTANGIBLE PROPERTY. Seller uses, and Seller's predecessor used,
no Intangible Property in connection with the operation of the Purchased Assets
except for the Permits, the Books and Records, the trade name "Reynolds", and
licenses for commonly available software programs under which Seller is
currently the licensee.
3.18 RELATIONSHIPS WITH AFFILIATES. Except as set forth on Part 3.18 of
the Disclosure Schedule, Seller is not, and Seller's predecessor has not been, a
party to any contract with an Affiliate of Seller or Seller's predecessor
relating to the Purchased Assets, the Real Property or the Business. None of
Seller, Seller's predecessor or any of their respective Affiliates is the owner
(of record or as a beneficial owner) of an equity interest or any other
financial or profit interest in, a Person (other than Seller or Seller's
predecessor) that has business dealings or a material financial interest in any
transaction with Seller or Seller's predecessor involving the Purchased Assets,
the Real Property or the Business.
3.19 BROKERS OR FINDERS. Neither Seller nor Seller's predecessor has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.20 EMPLOYEE BENEFIT MATTERS. Except as disclosed on Part 3.20 of the
Disclosure Schedule, with respect to each of Seller and Seller's predecessor:
(a) Each does not maintain and has never maintained an
"employee benefit pension plan", within the meaning of ERISA Section 3(2), that
is or was subject to Title IV of ERISA.
(b) Each does not have and has not ever had any past, present
or future obligation or liability to contribute any "multiemployer plan", as
defined in ERISA Section 3(37).
For purposes of this Section 3.20 the terms "Seller" and "Seller's predecessor"
shall be deemed to include any other corporation, trade, business or other
entity, other than Seller or Seller's predecessor, which would together with
Seller or Seller's predecessor, respectively, now or in the past, constitute a
single employer within the meaning of Section 414 of the IRC.
3.21 HSR COMPLIANCE.
(a) None of the Seller, its Partners nor Reynolds is a person
(or included in a person), that has total assets of $10 million or more or
annual net sales of $10 million or more, within the meaning of, and all as
determined in accordance with, the HSR Act. Seller has consulted with its
counsel in determining and making such representation.
(b) Attached hereto as Part 3.21 of the Disclosure Schedules
as the following financial statements (collectively, "Financial Statements"):
(a) unaudited financial statements for the fiscal year ended December 31, 1996
for the Seller's predecessor and (b) the most recently regularly prepared
balance sheet of the Seller's
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predecessor, being the unaudited balance sheet of the Seller's predecessor as of
and for the one month ended January 31, 1997. The Financial Statements have been
prepared in accordance with the accounting principles normally used by the
Seller's predecessor on a consistent basis throughout the periods covered
thereby. Seller does not have its own balance sheet or an annual financial
statement.
3.22 SELLER'S FORMATION.
(a) Seller was formed on February 19, 1997 (the "Formation
Date"). Pursuant to the Agreement of Limited Partnership dated February 19, 1997
between the General Partner and the Limited Partner (the "Acquisition
Agreement"), Seller acquired all of the assets and liabilities of Seller's
predecessor related to the Business (the "Acquisition"). Seller has heretofore
delivered to Buyer accurate and complete copy of the Acquisition Agreement.
Prior to the Acquisition, Seller had conducted no business and incurred no
liabilities, other than in connection with its formation, and all such
liabilities have been paid or discharged.
(b) The execution and delivery of the Acquisition Agreement
and the consummation of the transactions contemplated thereby (including,
without limitation, the Acquisition) were duly and validly authorized by all
necessary action on the part of the parties thereto. The Acquisition Agreement
was duly and validly executed by each of the parties thereto and constituted the
valid and binding agreement of each party thereto, enforceable against each such
party in accordance with its terms.
(c) Neither the execution and delivery of the Acquisition
Agreement by the parties thereto nor the consummation or performance of any of
the transactions contemplated thereby by the parties thereto:
(i) conflicted with, violated or resulted in a breach
of (A) any provision of the Organizational Documents of Seller or
Seller's predecessor; (B) to Seller's Knowledge, any Legal Requirement
or any Order to which Seller, Seller's predecessor, the Business or any
of the Purchased Assets or Real Property may have been subject; (C) to
Seller's Knowledge, any Governmental Authorization held by Seller or
Seller's predecessor or that otherwise relates to the Business, the
Purchased Assets or Real Property; or (D) any material Contract to
which Seller or Seller's predecessor was a party or by which Seller,
Seller's predecessor or the Purchased Assets may have been bound; or
(ii) contravened, conflicted with, or resulted in a
violation or breach of any provision of, or gave any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
interest or rights of Seller or Seller's predecessor in or to the
Purchased Assets or Real Property; or resulted in the imposition or
creation of any Encumbrance upon or with respect to any of the
Purchased Assets or Real Property.
(d) All notices and Consents required from any Person in
connection with the execution and delivery of the Acquisition Agreement or the
consummation or performance of any of the transactions contemplated thereby were
given or obtained as required.
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3.23 DISCLOSURE. No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Schedule omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Closing Documents to which Buyer
is a party, such Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Closing Documents and to
perform its obligations under this Agreement and the Closing Documents to which
Buyer is a party.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to (i)
any provision of Buyer's Organizational Documents; (ii) any resolution adopted
by the board of directors or the stockholders of Buyer; (iii) any Legal
Requirement or Order to which Buyer may be subject; or (iv) any material
Contract to which Buyer is a party or by which Buyer may be bound. Buyer is not
and will not be required to obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. Except as set forth on Part 4.3 of the Disclosure
Schedule, to Buyer's Knowledge, no such Proceeding has been Threatened in
writing and no event has occurred or circumstance exist that may give rise to or
serve as a basis for the commencement of any Proceeding.
4.4 BROKERS OR FINDERS. Buyer has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
5. COVENANTS OF SELLER
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the Closing Date, Seller will, and will cause its Representatives to, afford
Buyer and its Representatives reasonable
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access during normal business hours to Seller's personnel, properties, Books and
Records, and other documents and data relating to the Purchased Assets and the
Business, and furnish Buyer and its Representatives with copies of the same.
5.2 DUE DILIGENCE. Buyer shall have the right, and Seller shall afford
access to Buyer and its Representatives, at all reasonable times upon advance
notice to perform due diligence on the Purchased Assets and the Business from
the date hereof through and including the date that occurs seven (7) calendar
days after the date hereof (the "Due Diligence Period").
5.3 OPERATION OF THE PURCHASED ASSETS. Between the date of this
Agreement and the Closing Date, Seller will:
(a) operate the Business only in the Ordinary Course of
Business;
(b) use its Best Efforts to maintain the Purchased Assets, and
maintain the relations and good will with advertisers, landlords and others
associated with the operation of the Business; and
(c) confer with Buyer concerning any new Advertising Contract,
Site Lease or Other Contract which involves a term of more than three (3) months
or payment of amounts in excess of $50,000.
5.4 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Seller will
operate the Business consistent in all material respects with past practice,
except as otherwise provided in this Agreement.
5.5 REQUIRED APPROVALS AND CONSENTS. As promptly as practicable after
the date of this Agreement, Seller will make all filings required by Legal
Requirements to be made by it in order to consummate the Contemplated
Transactions and use its Best Efforts to obtain such of the Consents identified
in Section 3.2(c) for the transfer of the Purchased Assets.
5.6 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Seller will promptly notify Buyer in writing if Seller become aware of any
fact or condition that causes or constitutes a material breach of any of
Seller's representations and warranties as of the date of this Agreement, or if
Seller become aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a material breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. During the same period,
Seller will promptly notify Buyer of the occurrence of any material breach of
any covenant of Seller in this Section 5 or of the occurrence of any event that
may make the satisfaction of the conditions in Section 7 impossible or unlikely.
5.7 NO NEGOTIATION. Until the earlier of March 31, 1997 or such time,
if any, as this Agreement is terminated pursuant to Section 9, neither Seller
nor any Affiliate will, nor will it permit its Representatives to, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any
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unsolicited inquiries or proposals from, any Person (other than Buyer or its
Representatives) relating to or affecting any transaction involving the sale of
the Purchased Assets.
5.8 TAX CLEARANCE. Seller shall obtain all certificates of clearances
for Taxes ("Tax Clearances"), if any, required by the State of Texas and
applicable local jurisdictions, or, if such Tax Clearances are required but not
available at the Closing, certificates from the State of Texas and such local
jurisdictions certifying as to the payment by or on behalf of Seller of all
Taxes due on or prior to a date not more than thirty (30) days prior to the
Closing Date (it being agreed and understood that, notwithstanding the
foregoing, if any Tax Clearances are not obtained prior to the Closing, Seller
shall obtain such Tax Clearances after the Closing and shall be responsible for,
and shall discharge in full, all liabilities and obligations therefor).
5.9 LEASES. Seller agrees to enter into, or to cause Reynolds to enter
into, a Lease with Buyer for each location listed on Exhibit F for a term of 25
years.
6. COVENANTS OF BUYER
6.1 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, Buyer will make all filings required by Legal Requirements to be
made by it to consummate the Contemplated Transactions.
6.2 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, Buyer will use its Best Efforts to cause the conditions in Sections 7 and
8 to be satisfied; provided that this Agreement will not require Buyer to
dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.
6.3 IMPRINTS. No later than 150 days after the Closing, Buyer shall
remove from all Structures included in the Purchased Assets all imprints used by
Seller containing Seller's trade name; provided, however, until the earlier of
(i) such removal or (ii) the expiration of such 150- day period, Buyer may
display Seller's trade names on such Structures.
6.4 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Buyer will promptly notify Seller in writing if Buyer becomes aware of any
fact or condition that causes or constitutes a breach of any of Buyer's
representations and warranties as of the date of this Agreement, or if Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, Buyer will promptly notify
Seller of the occurrence of any breach of any covenant of Buyer in this Section
6 or of the occurrence of any event that may make the satisfaction of the
conditions in Section 8 impossible or unlikely.
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6.5 OFFICE LEASE. Reynolds, Tommy Reynolds and Sandy Disbrow shall be
permitted to continue to use their current office space and supporting office
equipment (such as copiers, fax machine, etc) until the expiration of the
current term of the Office Lease; provided, however, that such use is for office
purposes and that such use does not interfere with Buyer's use of the remainder
of the premises.
6.6 TRANSFER TAXES. Buyer agrees to pay any Transfer Taxes, and such
taxes, if any, shall not be considered a liability of Seller for any purpose,
including, without limitation, for purposes of Section 2.4(b).
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Purchased Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. Seller's representations and
warranties in this Agreement must have been accurate as of the date of this
Agreement, and must be accurate in all material respects as of the Closing Date
as if made on the Closing Date, and Buyer shall have received a certificate of
an executive officer of Seller, dated as of the Closing Date, as to such
accuracy.
7.2 SELLER'S PERFORMANCE. The covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been performed and complied with in all material respects,
and Buyer shall have received a certificate of an executive officer of Seller,
dated as of the Closing Date, as to such compliance.
7.3 CONSENTS. Each of the Consents required pursuant to Section 3.2 (c)
must have been obtained and must be in full force and effect. These shall
include, without limitation, the consents of Seller's joint venture partners
under the Joint Venture Agreements, and the joint venture partners' waivers of
any rights of first refusal, with respect to the Contemplated Transactions.
7.4 ADDITIONAL DOCUMENTS. Each of the following documents must have
been delivered to Buyer:
(a) an opinion of Strasburger & Price, L.L.P dated the Closing
Date, in form and substance reasonably satisfactory to Buyer;
(b) the deliveries required from Seller in Section 2.7; and
(c) such other documents as Buyer may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Section 7, or (ii) otherwise facilitating the consummation or performance
of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced and pending or Threatened by any Person or any Proceeding
(i) involving any challenge to, or seeking damages or other relief in connection
with, any of the Contemplated Transactions,
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(ii) that prevents, makes illegal, or otherwise materially interferes with any
of the Contemplated Transactions or seeks to do any of the foregoing, or (iii)
that involves any material claim against Seller.
7.6 NO PROHIBITION. There must not be in effect any Legal Requirement
or any injunction or other Order that prohibits or restricts the consummation of
the Contemplated Transactions, including, without limitation, HSR Act
compliance.
7.7 NO MATERIAL ADVERSE CHANGE. There shall not have been a Material
Adverse Change since the date hereof.
7.8 DUE DILIGENCE. Buyer's due diligence investigation and review of
the Business with respect to the Purchased Assets, the Real Property, the
Business and the Assumed Liabilities shall not reveal any fact or circumstance
not disclosed to Seller in the Disclosure Schedule prior to the execution hereof
which in Buyer's judgment, exercised in good faith, would cause or be likely to
cause a Material Adverse Change to the value of the Purchased Assets.
7.9 BANK LIEN. The Bank Lien shall have been released.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Purchased Assets and Seller's
obligations to take the other actions required to be taken by Seller at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Seller, in whole or in
part):
8.1 ACCURACY OF REPRESENTATIONS. Buyer's representations and warranties
in this Agreement must have been accurate as of the date of this Agreement and
must be accurate in all material respects as of the Closing Date as if made on
the Closing Date, and Seller shall have received a certificate of an executive
officer of Buyer, dated as of the Closing Date, as to such accuracy.
8.2 BUYER'S PERFORMANCE. The covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been performed and complied with in all material respects,
and Seller shall have received a certificate of an executive officer of Buyer,
dated as of the Closing Date, as to such compliance.
8.3 ADDITIONAL DOCUMENTS. Buyer must have caused the following
documents to be delivered to Seller:
(a) an opinion of Powell, Goldstein, Frazer & Murphy, dated
the Closing Date, in form and substance reasonably acceptable to Seller;
(b) the deliveries required from Buyer in Section 2.7; and
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(c) such other documents as Seller may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Section 8, or (ii) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.4 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced and pending or Threatened any Proceeding (i) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (ii) that prevents, makes illegal, or otherwise
materially interferes with any of the Contemplated Transactions or seeks to do
any of the foregoing.
8.5 NO PROHIBITION. There must not be in effect any Legal Requirement
or any injunction or other Order that prohibits or restricts the consummation of
the Contemplated Transactions.
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by mutual consent of Buyer and Seller;
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Seller, if any of the conditions in
Section 8 has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Seller to comply with its obligations under this Agreement) and Seller has not
waived such condition on or before the Closing Date; or
(c) by Buyer, on the one hand, or Seller, on the other hand,
if the Closing has not occurred (other than through the failure of the other
Party seeking to terminate this Agreement to comply fully with its obligations
under this Agreement) on or before March 31, 1997, or such later date as the
Parties may agree upon.
9.2 EFFECT OF TERMINATION. Each Party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement.
If this Agreement is terminated pursuant to Section 9.1, all further obligations
of the Parties under this Agreement will terminate, except that the obligations
in Sections 11.1, 11.3 and 11.4 will survive; provided, however, that if this
Agreement is terminated by a Party because of the breach of the Agreement by the
other Party or because one or more of the conditions to the terminating Party's
obligations under this Agreement is not satisfied as a result of the other
Party's failure to comply with its obligations under this Agreement, the
terminating Party's right to pursue all legal and equitable remedies, separately
or simultaneously, (including specific performance) will survive such
termination unimpaired.
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10. INDEMNIFICATION; REMEDIES
10.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. Seller will
indemnify and hold harmless Buyer, stockholders, controlling Persons, and
Affiliates (collectively, the "Seller Indemnified Persons") for, and will pay to
the Seller Indemnified Persons the amount of, any loss, liability, claim,
damage, expense (including reasonable costs of investigation and defense and
reasonable attorneys' fees), whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any material breach of any representation or warranty made
by Seller in this Agreement, the Disclosure Schedule, or any other certificate
or document delivered by Seller pursuant to this Agreement;
(b) any breach by Seller of any covenant or obligation of
Seller in this Agreement or any certificate or document delivered by Seller
pursuant to this Agreement;
(c) the failure of Seller to satisfy and discharge any
Excluded Liabilities, except only the Assumed Liabilities; and
(d) the failure of Seller to comply with bulk sales or other
similar laws in any applicable jurisdiction.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Seller and its stockholders, controlling Persons,
and Affiliates (collectively, the "Buyer Indemnified Persons") for, and will pay
to the Buyer Indemnified Persons the amount of any Damages arising, directly or
indirectly, from or in connection with:
(a) any material breach of any representation or warranty made
by Buyer in this Agreement or in any certificate or document delivered by Buyer
pursuant to this Agreement; and
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement including, without limitation, any failure to pay Assumed
Liabilities after the Closing.
10.3 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 10.1 or 10.2, of notice of any claim against it, such Indemnified Person
will, if a claim is to be made against an Indemnifying Party under such Section,
give notice to the Indemnifying Party of the commencement of such claim, but the
failure to notify the Indemnifying Party will not relieve the Indemnifying Party
of any liability that it may have to any Indemnified Person, except to the
extent that the Indemnifying Party demonstrates that the defense of such action
is prejudiced by the Indemnifying Party's failure to give such notice.
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(b) If any claim referred to in Section 10.3(a) is brought
against an Indemnified Person and it gives written notice to the Indemnifying
Party of such claim, the Indemnifying Party may, at its option, assume the
defense of such claim with counsel satisfactory to the Indemnified Person and,
after written notice from the Indemnifying Party to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will
not, as long as it diligently conducts such defense, be liable to the
Indemnified Person under this Article 10 for any fees of other counsel or any
other expenses with respect to the defense of such claim, subsequently incurred
by the Indemnified Person in connection with the defense of such claim, other
than reasonable costs of investigation. If the Indemnifying Party assumes the
defense of a claim, (i) no compromise or settlement of such claims may be
effected by the Indemnifying Party without the Indemnified Person's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person, and (B) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party; and (ii) the Indemnified Person will have no liability with respect to
any compromise or settlement of such claims effected without its consent.
Subject to Section 10.3(c), if notice is given to an Indemnifying Party of any
claim and the Indemnifying Party does not, within twenty days after the
Indemnified Person's notice is given, give notice to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will be
bound by any determination made in such Proceeding or any compromise or
settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying Party, assume the
exclusive right to defend, compromise, or settle such claim, but the
Indemnifying Party will not be bound by any determination of a claim so defended
or any compromise or settlement effected or expenses incurred without its
consent (which consent may not be unreasonably withheld).
10.4 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim shall be
asserted by written notice to the Indemnifying Party from whom indemnification
is sought.
10.5 SURVIVAL/LIMITATIONS.
(a) The parties hereto agree that (i) the covenants and
agreements contained in Sections 10.1 and 10.2 and in Article 11 hereto shall
survive the Closing without limitation (unless expressly limited by their
terms), and (ii) all other covenants, agreements, representations and warranties
contained herein shall survive until the first anniversary following the Closing
Date.
(b) Seller's obligation to indemnify the Seller Indemnified
Persons for Damages pursuant to Section 10.1 hereof is subject to the following
limitations: (i) in no event shall Seller's obligation to indemnify the Seller
Indemnified Persons exceed Three Million Dollars ($3,000,000); and (ii) any
claims made with respect to matters described in Section 10.5(a)(ii) must be
made on or before the first anniversary of the Closing Date.
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11. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each Party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, brokers or finders, counsel, and accountants. In the
event of termination of this Agreement, the obligation of each Party to pay its
own expenses will be subject to any rights of such Party arising from a breach
of this Agreement by another Party.
11.2 HEADINGS; CONSTRUCTION. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
11.3 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as Buyer
and Seller agree in writing, provided that the parties shall reasonably
cooperate in such announcements, and provided further that nothing contained
herein shall prevent any party from at any time furnishing information required
by a Governmental Body. Unless consented to by Buyer and Seller in advance or
required by Legal Requirements, prior to the Closing, each Party shall, and
shall cause their respective Representatives to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
11.4 AVAILABILITY OF EQUITABLE REMEDIES. The Parties acknowledge and
agree that (i) a breach of the provisions of this Agreement could not adequately
be compensated by money damages, and (ii) any Party shall be entitled, either
before or after the Closing, in addition to any other right or remedy available
to it, to an injunction restraining such breach and to specific performance of
this Agreement, and no bond or other security shall be required in connection
therewith.
11.5 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
Party may designate by notice to the other Parties):
If to Seller, to:
Mr. George T. Reynolds III
GRTP, Ltd.
2911 Turtle Creek Boulevard
Suite #880
Dallas, Texas 75219
Telephone No.: (214) 559-3844
Facsimile No.: (214) 552-7041
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With a copy to:
Strasburger & Price, L.L.P.
901 Main Street
Suite 4300
Dallas, Texas 75202
Attention: Mike Joplin, Esq.
Telephone No.: (214) 651-4300
Facsimile No.: (214) 651-4330
If to Buyer, to:
Outdoor Systems, Inc.
2502 North Black Canyon Highway
Phoenix, Arizona 85009
Telephone No.: (602) 246-9569
Facsimile No.: (602) 433-2482
Attention: William S. Levine
and
William S. Levine
1702 E. Highland Avenue, Suite 310
Phoenix, Arizona 85016
Telephone No.: (602) 248-8181
Facsimile No.: (602) 248-0884
With a copy to:
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, NE, 16th Floor
Atlanta, Georgia 30303
Attention: William B. Shearer, Jr., Esq.
Telephone No.: (404) 572-6600
Facsimile No.: (404) 572-6999
11.6 FURTHER ASSURANCES. The Parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things, all as
the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
11.7 WAIVER. Neither the failure nor any delay by any Party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
11.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the
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agreement between the Parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the Party to be
charged with the amendment.
11.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Parties except that Buyer may assign any of its rights under this
Agreement to any affiliate of Buyer. This Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the Parties, and their
successors, by liquidation or otherwise, and their permitted assigns. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.
11.10 ACCOUNTS RECEIVABLE. Buyer agrees to forward to Seller any
payments that Buyer may receive with respect to any accounts receivable of
Seller.
11.11 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.12 RISK OF LOSS. Material risk of loss or damage to the Purchased
Assets from any cause whatsoever prior to the Closing shall be borne by Seller,
and after the Closing shall be borne by Buyer.
11.13 POST-CLOSING ACCESS. Buyer agrees that all Books and Records
delivered to Buyer by Seller pursuant to this Agreement shall be maintained open
for inspection by Seller at any time during regular business hours upon
reasonable notice for a period of six (6) years (or for such longer period as
may be required by applicable Legal Requirements) following the Closing and
that, during such period, Seller, at its expense, may make such copies thereof
as it may reasonably desire. Seller agrees that all books and records relating
to the Purchased Assets and retained by Seller shall be maintained open for
inspection by Buyer at any time during regular business hours for a period of
six (6) years (or for such longer period as may be required by applicable Legal
Requirements) following the Closing and that, during such period, Buyer, at its
expense, may make such copies thereof as it may reasonably desire. Nothing
contained in this Section 11.13 shall obligate any Party hereto to make
available any books and records if to do so would violate the terms of any
Contract or Legal Requirement to which it is a party or to which it or its
assets are subject.
11.14 APPLICABLE LAW. This Agreement shall be governed and controlled
as to validity, enforcement, interpretations, construction, effect and in all
other respects by the internal laws of the State of Texas applicable to
contracts made in that State. The parties hereto agree to submit exclusively to
any federal or state court located in the State of Texas any dispute or
controversy arising out of or relating to this Agreement.
11.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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<PAGE> 27
IN WITNESS WHEREOF, the Parties have executed, sealed and delivered
this Agreement as of the date first written above.
BUYER:
OUTDOOR SYSTEMS, INC.
By:
-----------------------------------
Arte Moreno
President
SELLER:
GRTP, LTD.
By: Reynolds Texas Properties LLC,
General Partner
By:
-----------------------------------
George T. Reynolds, III
President
22
<PAGE> 28
EXHIBIT A
DEFINITIONS
"ADVERTISING CONTRACTS" -- as defined in Section 2.2(c).
"AFFILIATES" -- when used with reference to a specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Specified
Person. For purposes of this definition of Affiliate, "control" means the
possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies of the Person in question, whether through
the ownership of voting securities or by contract or otherwise.
"ASSIGNMENT OF CONTRACTS" -- the Assignment and Assumption of Contracts
in the form of Exhibit B attached hereto.
"ASSIGNMENT OF PERMITS" -- the Assignment and Assumption of Permits in
the form of Exhibit C attached hereto.
"ASSIGNMENT OF SITE LEASES" -- the Assignment and Assumption of Site
Leases in the form of Exhibit D attached hereto.
"ASSUMED LIABILITIES" -- as defined in Section 2.3.
"ASSUMED OTHER CONTRACTS" -- the Office Lease, the Joint Venture
Agreements and the Management Agreements.
"BANK LIEN" -- that certain security interest and lien in the Purchased
Assets held by Bank One.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances.
"BILL OF SALE" -- the Bill of Sale, Assignment and Assumption Agreement
in the form of Exhibit E attached hereto.
"BOOKS AND RECORDS" -- All of Seller's books and records relating to
the Purchased Assets, including, without limitation, all Site Lease files,
Advertising Contract files, Permit files, maintenance and other records for the
Structures, logs, advertiser, customer and supplier lists.
"BUYER" -- as defined in the first paragraph of this Agreement.
"CLOSING" -- as defined in Section 2.5.
"CLOSING DATE" -- the date and time as of which the Closing actually
takes place.
A-1
<PAGE> 29
"CLOSING DOCUMENTS" -- as defined in Section 3.2(a).
"CONFIDENTIAL INFORMATION" -- any information concerning the businesses
and affairs of Seller that is not generally available to the public.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including: (a) the purchase of the Purchased Assets by Buyer
from Seller and assignment to and assumption by Buyer of the Assumed
Liabilities, (b) the execution and delivery by Buyer and Seller of the Leases,
and (c) the performance by Buyer and Seller of their respective covenants and
obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" -- as defined in Section 10.1.
"DEEDS" -- limited warranty deeds (or the statutory equivalent thereof
with covenants against grantor's acts only), in recordable form, with respect to
the Owned Real Property.
"DISCLOSURE SCHEDULE" -- the disclosure schedule, delivered by Seller
to Buyer concurrently with the execution and delivery of this Agreement.
"DUE DILIGENCE PERIOD" -- as defined in Section 5.2.
"ENCUMBRANCE" -- any charge, claim, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW" -- any Legal Requirement pertaining to
environmental discharges, Release, emissions or spills or the manufacture, sale,
processing, handling, transportation, storage or disposal of any Hazardous
Materials, or relating to any environmental processes or condition, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act ("RCRA"), the Endangered Species Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Surface Mining Control and Reclamation Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Coastal Zone Management Act, the National
Environmental Policy Act, the Noise Control Act. As used in this Agreement,
Environmental Laws shall mean any of such laws or regulations as the same exist
now or at the Closing Date.
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<PAGE> 30
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"EXCLUDED ASSETS" -- as defined in Section 2.2.
"EXCLUDED LIABILITIES" -- as defined in Section 2.4.
"GENERAL PARTNER" -- Reynolds Texas Properties, LLC.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"HSR ACT" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and any regulations and rules promulgated thereunder.
"JOINT VENTURE AGREEMENTS" -- as defined in Section 2.2(e).
"INDEMNIFIED PERSON" -- any of the Seller Indemnified Persons or the
Buyer Indemnified Persons, as the context requires.
"INDEMNIFYING PARTY" -- the Buyer or the Seller, as the context
requires.
"INTANGIBLE PROPERTY" -- All right, title and interest in and to the
goodwill and other intangible property (except for Seller's corporate or trade
names and trade logos) used in connection with the Purchased Assets, all
licenses, permits and authorizations pertaining to the Purchased Assets or the
right to own and operate the Purchased Assets and all right, title and interest
in and to (i) any intellectual property used in connection with the Purchased
Assets, and (ii) all records and data relating specifically to the Purchased
Assets.
"IRC" -- the Internal Revenue Code of 1986, as amended from time to
time, or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
A-3
<PAGE> 31
"KNOWLEDGE" -- a Person will be deemed to have "Knowledge" of a
particular fact or other matter only if such Person is actually aware of such
fact or other matter without making any independent inquiry or investigation. A
Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or, in the case of
Seller, any of Seller's Partners) (or in any similar capacity) has Knowledge of
such fact or other matter.
"LEASES" -- those leases pertaining to the Real Property leased by
Seller, and the real property leased by Reynolds, to Buyer substantially in the
form of Exhibit F and on the terms further described on Exhibit F.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"LIMITED PARTNER" -- Reynolds Outdoor, Inc.
"MANAGEMENT AGREEMENTS" -- as defined in Section 2.2(e).
"MATERIAL ADVERSE CHANGE" -- a change that will probably cause a
Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" -- a material adverse effect on the Business,
the Purchased Assets, or the Real Property or operations or conditions
(financial or otherwise) relating thereto, taken as a whole.
"OFFICE LEASE" -- that certain Office Lease for office space in Dallas,
Texas between Reynolds Outdoor, Inc. and Summer Springs Joint Venture Limited
Partnership dated February 19, 1989, as amended April 20, 1989 and September 2,
1993.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" if such action is
consistent with the past custom and practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person (including
with respect to quantity and frequency).
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
A-4
<PAGE> 32
"OTHER CONTRACT" -- any Contract (other than a Site Lease, Management
Contract or Advertising Contract) relating to or affecting the Purchased Assets,
the Real Property, or the operation thereof (i) under which Seller has or may
acquire any rights, (ii) under which Seller has or may become subject to any
obligation or liability, or (iii) by which Seller or any of the Purchased Assets
or the Real Property is or may become bound.
"PARTNERS" -- the General Partner and the Limited Partner.
"PARTY" -- as defined in the first paragraph of this Agreement.
"PERMITS" -- as defined in Section 2.2(d).
"PERMITTED LIENS" -- liens for taxes not yet delinquent, mechanic's,
materialmen's and similar liens which have arisen in the ordinary course of
business, and purchase money security interests.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" -- as defined in Section 2.6.
"PURCHASED ASSETS" -- as defined in Section 2.2.
"REAL PROPERTY" -- as defined in Schedule 2.2(x).
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REYNOLDS" -- George T. Reynolds, III, a resident of Highland Park,
Dallas County, Texas.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITY INTEREST" -- any mortgage, pledge, lien, encumbrance, charge
or other security interest or option or right of any third party with respect
thereto.
"SELLER" -- as defined in the first paragraph of this Agreement.
"SELLER'S PREDECESSOR" -- Reynolds Outdoor, Inc.
"SITE LEASES" -- as defined in Section 2.2(b).
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<PAGE> 33
"STRUCTURES" -- as defined in Section 2.2(a).
"TAX" -- shall mean all tax (including income tax, capital gains tax,
value added tax, sales tax, property tax, transfer tax or intangibles tax), levy
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including fine, penalty and interest) imposed, assessed or collected by
or under the authority of any Governmental Body.
"TAX CLEARANCES" -- as defined in Section 5.9.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"TRANSFER TAXES" -- any sales, use or transfer taxes arising from the
transfer of the Purchased Assets from Seller to Buyer hereunder.
"THREATENED" -- a claim, Proceeding or dispute will be deemed to have
been "THREATENED" if any demand or statement has been made or any notice has
been given that would lead a prudent Person to conclude that such a claim,
Proceeding or dispute is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
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<PAGE> 34
SCHEDULE 2.2(x)
1. All of the real property owned in fee by Seller, and all buildings,
facilities, fixtures, leasehold and other improvements located therein (other
than the Structures), listed on the attached list.
2. All accounts receivable of Seller.
<PAGE> 35
SCHEDULE 2.9
<TABLE>
<CAPTION>
Total Adjustment to
Purchase Price Purchase Price
Joint Venture for Assets Payable to GRTP, Ltd.
------------- ---------- ---------------------
<S> <C> <C>
RV Outdoor Sign Joint Venture $1,500,000 ($ 750,000.00)
Reynolds/McCrary Joint Venture 332,615 ( 166,307.50)
Outdoor Sign Joint Venture 376,095 ( 188,047.50)
</TABLE>
<PAGE> 1
EXHIBIT 99.5
JOINT VENTURE
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of
February 28, 1997 ("Closing Date"), by and between OUTDOOR SYSTEMS, INC., a
Delaware corporation ("Buyer"), and REYNOLDS/TOWER OUTDOOR SIGN JOINT VENTURE, a
Texas joint venture ("Seller"). (Buyer and Seller are sometimes herein referred
to individually as a "Party" and collectively as the "Parties".)
RECITALS
Seller is engaged in the business of owning and operating outdoor signs
and billboards and otherwise providing outdoor advertising services in the
metropolitan Dallas/Fort Worth area (the "Business"). Seller desires to sell and
assign the outdoor advertising assets to Buyer, and Buyer desires to purchase
such assets and to assume certain liabilities associated with such assets,
pursuant to the terms, conditions, limitations and exclusions contained in this
Agreement.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms listed on Exhibit A attached
hereto have the meanings specified or referred to in Exhibit A.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING
2.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions
of this Agreement, Seller hereby grants, sells, assigns, transfers, conveys and
delivers all right, title and interest in and to the Purchased Assets, free and
clear of any liens, title claims, Encumbrances or Security Interests (except for
Permitted Liens), and Buyer hereby buys and acquires the Purchased Assets from
Seller, and assumes the Assumed Liabilities upon the terms and conditions set
forth in this Agreement.
2.2 PURCHASED ASSETS. The Purchased Assets are all of the assets of
Seller used in the Business, including:
(a) All of the billboard displays and other out-of-home
advertising structures (including rights to walls), including, without
limitation, those set forth and described in Schedule 2.2(a) attached hereto,
together with all components, fixtures, parts, appurtenances, and equipment
attached to or made a part thereof that are existing, under construction or for
which Seller has any rights (collectively, the "Structures");
(b) All leases, licenses, easements, other rights of ingress
or egress, and all other grants of the right to place, construct, own, operate
or maintain the Structures on land, buildings and
<PAGE> 2
other real property owned by third parties, and all rights therein
(collectively, the "Site Leases"), including, without limitation, those Site
Leases listed on Schedule 2.2(b); and all state and local licenses or
permits/tags which Seller has with respect to the Structures and, to the extent
assignable, all other Governmental Authorizations that are required for the
operation of the Structures, (collectively, the "Permits"), including, without
limitation, those Permits listed on Schedule 2.2(b);
(c) All rights under existing and pending sales and
advertising contracts associated with the Structures, and all rights to the
advertising copy displayed on the Structures as of the Closing Date
(collectively, the "Advertising Contracts"), including, without limitation,
those Advertising Contracts listed on Schedule 2.2(a) attached hereto;
(d) All pertinent Books and Records;
(e) All Intangible Property used in connection with the
Business except the trade name "Reynolds"; and
(f) All rights (including any benefits arising therefrom),
causes of action, claims and demands of whatever nature (whether or not
liquidated) of Seller relating to the Purchased Assets, including, without
limitation, condemnation rights and proceeds, and all rights against suppliers
under warranties covering any of the Purchased Assets.
Notwithstanding the foregoing, the Purchased Assets shall not include the assets
listed on Schedule 2.2(x) (collectively, "Excluded Assets").
2.3 AGREEMENT TO ASSUME CERTAIN LIABILITIES. Buyer hereby assumes and
agrees to discharge and perform all liabilities and obligations that arise or
are attributable to events occurring on or after the Closing Date pursuant to
the Site Leases and the Advertising Contracts(the "Assumed Liabilities") but to
the extent and only to the extent that:
(a) Such obligations are performable on or after the Closing
Date; and
(b) Such obligations are attributable to periods arising on or
after the Closing Date.
2.4 EXCLUDED LIABILITIES. All claims against and liabilities and
obligations of Seller not specifically assumed by Buyer pursuant to Section 2.3,
including, without limitation, the following claims against and liabilities of
Seller (the "Excluded Liabilities"), are excluded, and shall not be assumed or
discharged by Buyer, and shall be discharged in full when due by Seller:
(a) Any liabilities to the extent not attributable to the
Purchased Assets;
(b) Any liability of Seller for Taxes arising prior to or from
the sale of the Purchased Assets under this Agreement other than Transfer Taxes.
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<PAGE> 3
(c) Any liabilities for or related to indebtedness of Seller
to banks, financial institutions, or other Persons;
(d) Any liabilities of Seller for or with respect to any
employees of Seller, including, without limitation, any liabilities pursuant to
any compensation, collective bargaining, pension, retirement, severance,
termination, or other benefit plan, agreement or arrangement; and
(e) Any other liabilities of Seller that are attributable to
or arise from facts, events, or conditions that occurred or came into existence
prior to the Closing.
2.5 PURCHASE PRICE. The Purchase Price for the Assets is Three Hundred
Seventy Six Thousand Ninety Five Dollars ($376,095). The Purchase Price shall be
subject to adjustment as follows:
(a) The following items shall be prorated between Seller and
Buyer as of the Closing Date with respect to the Purchased Assets: power and
utility charges, real and personal property taxes, rents (including percentage
rents) prepaid leases and security deposits under Site Leases and payments and
security deposits under Advertising Contracts. Prorations will be on a
dollar-for-dollar basis based on the number of days of display before and after
the Closing Date. Percentage rents shall be prorated as of the Closing Date. The
effective time of the Closing shall be 11:59 p.m., Eastern Standard Time, on the
Closing Date.
(b) Within ninety (90) days after the Closing Date, Buyer will
prepare and provide to Seller the final calculations of adjustments to the
Purchase Price (the "Closing Date Adjustment"). On the 120th day after the
Closing Date, all required refunds or payments under this Section 2.5, shall be
made on the basis of the Closing Date Adjustment.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Seller is a joint venture duly
organized, validly existing and in good standing under the laws of the State of
Texas. Seller has the full power and authority to conduct the Business as it is
now being conducted, to own or use the Purchased Assets, and to perform all its
obligations. Seller has delivered to Buyer true and complete copies of its
Organizational Documents, as currently in effect. Seller is duly qualified to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary.
3.2 AUTHORITY; NO CONFLICT.
(a) Each of this Agreement and any documents executed
contemporaneously herewith pursuant to this Agreement (collectively, the
"Closing Documents") constitutes the legal, valid, and binding obligation of
Seller, enforceable against it in accordance with its terms. Seller has the
absolute and unrestricted right, power and authority to execute and deliver this
Agreement and the
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<PAGE> 4
Closing Documents to which it is a party and to perform its obligations
thereunder. The Joint Venturers are the sole holders of any interest in Seller.
The execution, delivery and performance of this Agreement has been specifically
authorized by the Joint Venturers.
(b) Neither the execution and delivery by Seller of this
Agreement nor the consummation or performance by Seller of any of the
Contemplated Transactions will:
(i) conflict with, violate or result in a breach of
(A) any provision of the Organizational Documents of Seller; (B) to
Seller's Knowledge, any Legal Requirement or any Order to which Seller,
the Business or any of the Purchased Assets may be subject; (C) to
Seller's Knowledge, any Governmental Authorization held by Seller or
that otherwise relates to the Business or the Purchased Assets; or (D)
any material Contract to which Seller is a party or by which Seller or
the Purchased Assets may be bound; or
(ii) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
interest or rights of Seller in or to the Purchased Assets; or result
in the imposition or creation of any Encumbrance upon or with respect
to any of the Purchased Assets;
(c) Except as set forth in Part 3.2(c) of the Disclosure
Schedule, Seller is not and will not be required to give any notice to or obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 SOLVENCY. By consummating the transactions contemplated hereby,
Seller does not intend to hinder, delay or defraud any of Seller's present or
future creditors. Before giving effect to the transactions contemplated hereby,
Seller has been paying its debts as they become due in the ordinary course of
business and, after giving effect to the transactions contemplated hereby,
Seller will have paid or discharged all of its debts (or made adequate provision
for the payment thereof).
3.4 BOOKS AND RECORDS. The books of account, and other Books and
Records of Seller maintained in connection with the Purchased Assets are
complete and correct in all material respects and have been maintained in
accordance with sound business practices.
3.5 STRUCTURES. Seller owns all of the Structures. To Seller's
Knowledge, each Structure (i) is located entirely on property covered by a Site
Lease or is located entirely on the Real Property, and (ii) complies in all
material respects with the terms of the Permits pertaining to it.
3.6 PERMITS. The Permits constitute all material licenses, permits,
registrations and approvals necessary to operate the Business. Seller is in
material compliance with the terms of the Permits. Seller is not aware of any
fact or event which constitutes a material violation of any Permit, and Seller
has not received written notice that any Governmental Body issuing any Permit
intends to cancel, terminate, modify or amend any Permit.
-4-
<PAGE> 5
3.7 SITE LEASES AND ADVERTISING CONTRACTS. Seller has delivered to
Buyer true and complete copies of the Advertising Contracts and the Site Leases.
All sales made to advertisers in connection with the Structures have been made
pursuant to Advertising Contracts. The Site Leases and the Advertising Contracts
are in full force and effect, and are binding upon the parties thereto. To the
Knowledge of Seller, (x) no default by Seller or any other party has occurred
under the Site Leases or Advertising Contracts, and (y) no event, occurrence or
condition exists which (with or without notice or lapse of time or the happening
of any further event or condition) would become a default by Seller or Manager
thereunder or would entitle any other party to terminate a Site Lease or
Advertising Contract, to make a claim or set-off against Seller or Manager or
otherwise to amend such Site Lease or Advertising Contract or prevent such Site
Lease or Advertising Contract from being renewed in accordance with its terms.
Neither Seller nor Manager has received any written notice of default,
termination or non-renewal under any Site Lease or Advertising Contract.
3.8 TITLE, ENCUMBRANCES.
(a) Seller has good title to all of the Purchased Assets, and
there are no existing agreements, options, commitments or rights with, of or to
any Person to acquire any of the Purchased Assets or any interest therein. All
of the Purchased Assets are owned by Seller free and clear of all Encumbrances
and Security Interests except for Permitted Liens.
(b) None of the Structure or Site Leases are or will be, to
the Knowledge of Seller, subject to zoning, use, or building code restrictions
that will prohibit the continued effective ownership, leasing or other use of
such assets as currently owned and used by Seller. Neither Seller nor Manager
has received any notice of pending or Threatened claims, Proceedings, planned
public improvements, annexations, special assessments, rezonings or other
adverse claims affecting the Site Leases.
3.9 NO UNDISCLOSED LIABILITIES. Seller has no material liabilities or
obligations of any nature relating to the Purchased Assets.
3.10 TAXES. With respect to the Purchased Assets;
(a) Seller and the Joint Venturers have filed or caused to be
filed all Tax Returns that are or were required to be filed by each of them
pursuant to applicable Legal Requirements. Seller and the Joint Venturers have
paid, or made provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by Seller or the Joint Venturers.
(b) No unpaid Taxes create an Encumbrance (other than
Permitted Liens) on the Purchased Assets or the Real Property.
(c) Buyer shall not be liable for any Taxes of Seller or the
Joint Venturers as a result of the Contemplated Transactions.
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<PAGE> 6
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller has complied with all
Legal Requirements applicable to its ownership or use of the Purchased Assets
and Real Property, except for noncompliances or failures that, individually or
in the aggregate, would not be reasonably expected to have a Material Adverse
Effect.
3.12 LEGAL PROCEEDINGS; ORDERS. There is no Proceeding pending or, to
the Knowledge of Seller, Threatened against Seller or the Joint Venturers or
affecting any of the Purchased Assets, and there is no Order to which Seller or
the Joint Venturers or the Purchased Assets are subject.
3.13 OTHER CONTRACTS Seller is not a party to or bound by any Other
Contract.
3.14 ENVIRONMENTAL MATTERS. With respect to the Purchased Assets and
the use or operation thereof: to Seller's Knowledge, (i) Seller is, and has
been, in material compliance with all Environmental Laws; (ii) Seller has timely
filed all material reports, obtained all required approvals and permits relating
to the Business, and generated and maintained all material data, documentation
and records under any applicable Environmental Laws; (iii) to the Knowledge of
Seller, there has not been any release of the Hazardous Materials at or in the
vicinity of the Business, or in areas for which Seller would have responsibility
under Environmental Laws; (iv) Seller has not received any written notice from
any Governmental Body or private or public entity advising it that it is or may
be responsible for response costs with respect to a Release, a threatened
Release or clean up of Hazardous Materials produced by, or resulting from, its
Business, operations or processes; and (v) Seller has delivered to Buyer true
and complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed by Seller pertaining to Hazardous Materials in, on, or
under the properties included in the Purchased Assets.
3.15 INTANGIBLE PROPERTY. Seller uses no Intangible Property in
connection with the operation of the Purchased Assets except for the Permits,
the Books and Records, the trade name "Reynolds", and licenses for commonly
available software programs under which Seller is currently the licensee.
3.16 RELATIONSHIPS WITH AFFILIATES. Except as set forth on Part 3.16 of
the Disclosure Schedule, Seller is not a party to any contract with an Affiliate
of Seller or Seller's predecessor relating to the Purchased Assets, the Real
Property or the Business. None of Seller or any of its Affiliates is the owner
(of record or as a beneficial owner) of an equity interest or any other
financial or profit interest in, a Person (other than Seller) that has business
dealings or a material financial interest in any transaction with Seller
involving the Purchased Assets or the Business.
3.17 BROKERS OR FINDERS. Neither Seller nor any Affiliate of Seller has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.18 EMPLOYEE BENEFIT MATTERS. With respect to each of Seller and each
Joint Venturer:
(a) Each does not maintain and has never maintained an
"employee benefit pension plan", within the meaning of ERISA Section 3(2), that
is or was subject to Title IV of ERISA.
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(b) Each does not have and has not ever had any past, present
or future obligation or liability to contribute any "multiemployer plan", as
defined in ERISA Section 3(37).
For purposes of this Section 3.18, the terms "Seller" and "Joint Venturer" shall
be deemed to include any other corporation, trade, business or other entity,
other than Seller or the Joint Venturer, which would, together with Seller or
the Joint Venturer, now or in the past, constitute a single employer within the
meaning of Section 414 of the IRC.
3.19 DISCLOSURE. No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Schedule omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Closing Documents to which Buyer
is a party, such Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Closing Documents and to
perform its obligations under this Agreement and the Closing Documents to which
Buyer is a party.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to (i)
any provision of Buyer's Organizational Documents; (ii) any resolution adopted
by the board of directors or the stockholders of Buyer; (iii) any Legal
Requirement or Order to which Buyer may be subject; or (iv) any material
Contract to which Buyer is a party or by which Buyer may be bound. Buyer is not
and will not be required to obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened in writing and no event has occurred or circumstance exist that may
give rise to or serve as a basis for the commencement of any Proceeding.
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4.4 BROKERS OR FINDERS. Buyer has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
5. INDEMNIFICATION; REMEDIES
5.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. Seller will
indemnify and hold harmless Buyer, stockholders, controlling Persons, and
Affiliates (collectively, the "Seller Indemnified Persons") for, and will pay to
the Seller Indemnified Persons the amount of, any loss, liability, claim,
damage, expense (including reasonable costs of investigation and defense and
reasonable attorneys' fees), whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any material breach of any representation or warranty made
by Seller in this Agreement, the Disclosure Schedule, or any other certificate
or document delivered by Seller pursuant to this Agreement;
(b) any breach by Seller of any covenant or obligation of
Seller in this Agreement or any certificate or document delivered by Seller
pursuant to this Agreement;
(c) the failure of Seller to satisfy and discharge any
Excluded Liabilities, except only the Assumed Liabilities; and
(d) the failure of Seller to comply with bulk sales or other
similar laws in any applicable jurisdiction; provided, however, that any claim
for Damages pursuant to this Section 5.1 must be made on or before the first
anniversary of the Closing Date.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Seller and its stockholders, controlling Persons,
and Affiliates (collectively, the "Buyer Indemnified Persons") for, and will pay
to the Buyer Indemnified Persons the amount of any Damages arising, directly or
indirectly, from or in connection with:
(a) any material breach of any representation or warranty made
by Buyer in this Agreement or in any certificate or document delivered by Buyer
pursuant to this Agreement; and
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement including, without limitation, any failure to pay Assumed
Liabilities after the Closing;
provided, however, that any claim for Damages pursuant to this Section 5.2 must
be made on or before the first anniversary of the Closing.
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5.3 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 5.1 or 5.2, of notice of any claim against it, such Indemnified Person
will, if a claim is to be made against an Indemnifying Party under such Section,
give notice to the Indemnifying Party of the commencement of such claim, but the
failure to notify the Indemnifying Party will not relieve the Indemnifying Party
of any liability that it may have to any Indemnified Person, except to the
extent that the Indemnifying Party demonstrates that the defense of such action
is prejudiced by the Indemnifying Party's failure to give such notice.
(b) If any claim referred to in Section 5.3(a) is brought
against an Indemnified Person and it gives written notice to the Indemnifying
Party of such claim, the Indemnifying Party may, at its option, assume the
defense of such claim with counsel satisfactory to the Indemnified Person and,
after written notice from the Indemnifying Party to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will
not, as long as it diligently conducts such defense, be liable to the
Indemnified Person under this Article 5 for any fees of other counsel or any
other expenses with respect to the defense of such claim, subsequently incurred
by the Indemnified Person in connection with the defense of such claim, other
than reasonable costs of investigation. If the Indemnifying Party assumes the
defense of a claim, (i) no compromise or settlement of such claims may be
effected by the Indemnifying Party without the Indemnified Person's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person, and (B) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party; and (ii) the Indemnified Person will have no liability with respect to
any compromise or settlement of such claims effected without its consent.
Subject to Section 5.3(c), if notice is given to an Indemnifying Party of any
claim and the Indemnifying Party does not, within twenty days after the
Indemnified Person's notice is given, give notice to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will be
bound by any determination made in such Proceeding or any compromise or
settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying Party, assume the
exclusive right to defend, compromise, or settle such claim, but the
Indemnifying Party will not be bound by any determination of a claim so defended
or any compromise or settlement effected or expenses incurred without its
consent (which consent may not be unreasonably withheld).
5.4 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim shall be
asserted by written notice to the Indemnifying Party from whom indemnification
is sought.
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5.5 SURVIVAL/LIMITATIONS.
(a) The parties hereto agree that (i) the covenants and
agreements contained in Article 5 and in Article 6 hereto shall survive the
Closing without limitation (unless expressly limited by their terms), and (ii)
all other covenants, agreements, representations and warranties contained herein
shall survive until the first anniversary following the Closing Date.
(b) Seller's obligation to indemnify the Seller Indemnified
Persons for Damages pursuant to Section 5.1 hereof is subject to the following
limitation: in no event shall Seller's obligation to indemnify the Seller
Indemnified Persons exceed ten percent (10%) of the Purchase Price.
6. GENERAL PROVISIONS
6.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each Party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, brokers or finders, counsel, and accountants. Buyer shall pay
any Transfer Taxes, and such Taxes, if any, shall not be considered a liability
of Seller for any purpose, including, without limitation, for purposes of
Section 2.4(b) hereof. In the event of termination of this Agreement, the
obligation of each Party to pay its own expenses will be subject to any rights
of such Party arising from a breach of this Agreement by another Party.
6.2 HEADINGS; CONSTRUCTION. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
6.3 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as Buyer
and Seller agree in writing, provided that the parties shall reasonably
cooperate in such announcements, and provided further that nothing contained
herein shall prevent any party from at any time furnishing information required
by a Governmental Body.
6.4 AVAILABILITY OF EQUITABLE REMEDIES. The Parties acknowledge and
agree that (i) a breach of the provisions of this Agreement could not adequately
be compensated by money damages, and (ii) any Party shall be entitled, in
addition to any other right or remedy available to it, to an injunction
restraining such breach and to specific performance of this Agreement, and no
bond or other security shall be required in connection therewith.
6.5 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt
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requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
Party may designate by notice to the other Parties):
If to Seller, to:
Mr. George T. Reynolds III
Reynolds/Tower Outdoor Sign Joint Venture
2911 Turtle Creek Boulevard
Suite #880
Dallas, Texas 75219
Telephone No.: (214) 559-3844
Facsimile No.: (214) 522-7041
With a copy to:
Strasburger & Price, L.L.P.
901 Main Street
Suite 4300
Dallas, Texas 75202
Attention: Mike Joplin, Esq.
Telephone No.: (214) 651-4300
Facsimile No.: (214) 651-4330
If to Buyer, to:
Outdoor Systems, Inc.
2502 North Black Canyon Highway
Phoenix, Arizona 85009
Telephone No.: (602) 246-9569
Facsimile No.: (602) 433-2482
Attention: William S. Levine
and
William S. Levine
1702 E. Highland Avenue, Suite 310
Phoenix, Arizona 85016
Telephone No.: (602) 248-8181
Facsimile No.: (602) 248-0884
With a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, NE, 16th Floor
Atlanta, Georgia 30303
Attention: William B. Shearer, Jr., Esq.
Telephone No.: (404) 572-6600
Facsimile No.: (404) 572-6999
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6.6 FURTHER ASSURANCES. The Parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things, all as
the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
6.7 WAIVER. Neither the failure nor any delay by any Party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
6.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the Parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the Party to be charged with the amendment.
6.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Parties except that Buyer may assign any of its rights under this
Agreement to any affiliate of Buyer. This Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the Parties, and their
successors, by liquidation or otherwise, and their permitted assigns. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.
6.10 ACCOUNTS RECEIVABLE. Buyer agrees to forward to Seller any
payments that Buyer may receive with respect to any accounts receivable of
Seller.
6.11 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
6.12 POST-CLOSING ACCESS. Buyer agrees that all Books and Records
delivered to Buyer by Seller pursuant to this Agreement shall be maintained open
for inspection by Seller at any time during regular business hours upon
reasonable notice for a period of six (6) years (or for such longer period as
may be required by applicable Legal Requirements) following the Closing and
that, during such period, Seller, at its expense, may make such copies thereof
as it may reasonably desire. Seller agrees that all books and records relating
to the Purchased Assets and retained by Seller shall be maintained open for
inspection by Buyer at any time during regular business hours for a period of
six (6) years (or for such longer period as may be required by applicable Legal
Requirements) following the Closing and that, during such period, Buyer, at its
expense, may make such copies thereof as it may reasonably desire. Nothing
contained in this Section 6.12 shall obligate any Party hereto to make
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<PAGE> 13
available any books and records if to do so would violate the terms of any
Contract or Legal Requirement to which it is a party or to which it or its
assets are subject.
6.13 APPLICABLE LAW. This Agreement shall be governed and controlled as
to validity, enforcement, interpretations, construction, effect and in all other
respects by the internal laws of the State of Texas applicable to contracts made
in that State. The parties hereto agree to submit exclusively to any federal or
state court located in the State of Texas any dispute or controversy arising out
of or relating to this Agreement.
6.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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<PAGE> 14
IN WITNESS WHEREOF, the Parties have executed, sealed and delivered
this Agreement as of the date first written above.
BUYER:
OUTDOOR SYSTEMS, INC.
By:
----------------------------------
William S. Levine
Chairman
SELLER:
REYNOLDS/TOWER OUTDOOR SIGN JOINT
VENTURE
By: GRTP, Ltd., Manager
By: Reynolds Texas Properties, L.C.,
General Partner
By:
----------------------------------
George T. Reynolds, III
Manager
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<PAGE> 15
EXHIBIT A
DEFINITIONS
"ADVERTISING CONTRACTS" -- as defined in Section 2.2(c).
"AFFILIATES" -- when used with reference to a specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Specified
Person. For purposes of this definition of Affiliate, "control" means the
possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies of the Person in question, whether through
the ownership of voting securities or by contract or otherwise.
"ASSUMED LIABILITIES" -- as defined in Section 2.3.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances.
"BOOKS AND RECORDS" -- All of Seller's books and records relating to
the Purchased Assets, including, without limitation, all Site Lease files,
Advertising Contract files, Permit files, maintenance and other records for the
Structures, logs, advertiser, customer and supplier lists.
"BUYER" -- as defined in the first paragraph of this Agreement.
"CLOSING" -- as defined in Section 2.5.
"CLOSING DATE" -- as defined in the first paragraph of this Agreement.
"CLOSING DOCUMENTS" -- as defined in Section 3.2(a).
"CONFIDENTIAL INFORMATION" -- any information concerning the businesses
and affairs of Seller that is not generally available to the public.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including: (a) the purchase of the Purchased Assets by Buyer
from Seller and assignment to and assumption by Buyer of the Assumed
Liabilities, and (b) the performance by Buyer and Seller of their respective
covenants and obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" -- as defined in Section 5.1.
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"DISCLOSURE SCHEDULE" -- the disclosure schedule, delivered by Seller
to Buyer concurrently with the execution and delivery of this Agreement.
"ENCUMBRANCE" -- any charge, claim, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW" -- any Legal Requirement pertaining to
environmental discharges, Release, emissions or spills or the manufacture, sale,
processing, handling, transportation, storage or disposal of any Hazardous
Materials, or relating to any environmental processes or condition, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act ("RCRA"), the Endangered Species Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Surface Mining Control and Reclamation Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Coastal Zone Management Act, the National
Environmental Policy Act, the Noise Control Act. As used in this Agreement,
Environmental Laws shall mean any of such laws or regulations as the same exist
now or at the Closing Date.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"EXCLUDED ASSETS" -- as defined in Section 2.2.
"EXCLUDED LIABILITIES" -- as defined in Section 2.4.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"INDEMNIFIED PERSON" -- any of the Seller Indemnified Persons or the
Buyer Indemnified Persons, as the context requires.
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<PAGE> 17
"INDEMNIFYING PARTY" -- the Buyer or the Seller, as the context
requires.
"INTANGIBLE PROPERTY" -- All right, title and interest in and to the
goodwill and other intangible property (except for Seller's corporate or trade
names and trade logos) used in connection with the Purchased Assets, all
licenses, permits and authorizations pertaining to the Purchased Assets or the
right to own and operate the Purchased Assets and all right, title and interest
in and to (i) any intellectual property used in connection with the Purchased
Assets, and (ii) all records and data relating specifically to the Purchased
Assets.
"IRC" -- the Internal Revenue Code of 1986, as amended from time to
time, or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"JOINT VENTURERS" -- Manager and Tower Sign Company, Inc.
"KNOWLEDGE" -- a Person will be deemed to have "Knowledge" of a
particular fact or other matter only if such Person is actually aware of such
fact or other matter without making any independent inquiry or investigation. A
Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or, in the case of
Seller, the Manager) (or in any similar capacity) has Knowledge of such fact or
other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"MANAGER" -- GRTP, Ltd., a Texas limited partnership.
"MATERIAL ADVERSE CHANGE" -- a change that will probably cause a
Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" -- a material adverse effect on the Business,
the Purchased Assets, or the Real Property or operations or conditions
(financial or otherwise) relating thereto, taken as a whole.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
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"OTHER CONTRACT" -- any Contract (other than a Site Lease or
Advertising Contract) relating to or affecting the Purchased Assets or the
operation thereof (i) under which Seller has or may acquire any rights, (ii)
under which Seller has or may become subject to any obligation or liability, or
(iii) by which Seller or any of the Purchased Assets is or may become bound.
"PARTY" -- as defined in the first paragraph of this Agreement.
"PERMITS" -- as defined in Section 2.2(d).
"PERMITTED LIENS" -- liens for taxes not yet delinquent.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" -- as defined in Section 2.5.
"PURCHASED ASSETS" -- as defined in Section 2.2.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITY INTEREST" -- any mortgage, pledge, lien, encumbrance, charge
or other security interest or option or right of any third party with respect
thereto.
"SELLER" -- as defined in the first paragraph of this Agreement.
"SITE LEASES" -- as defined in Section 2.2(b).
"STRUCTURES" -- as defined in Section 2.2(a).
"TAX" -- shall mean all tax (including income tax, capital gains tax,
value added tax, sales tax, property tax, transfer tax or intangibles tax), levy
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including fine, penalty and interest) imposed, assessed or collected by
or under the authority of any Governmental Body.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
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or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"TRANSFER TAXES" -- any sales, use or transfer taxes arising from the
transfer of the Purchased Assets from Seller to Buyer hereunder.
"THREATENED" -- a claim, Proceeding or dispute will be deemed to have
been "THREATENED" if any demand or statement has been made or any notice has
been given that would lead a prudent Person to conclude that such a claim,
Proceeding or dispute is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
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SCHEDULE 2.2(x)
EXCLUDED ASSETS
1. Cash and Accounts Receivable
<PAGE> 1
Exhibit 99.6
JOINT VENTURE
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of
February 28, 1997 ("Closing Date"), by and between OUTDOOR SYSTEMS, INC., a
Delaware corporation ("Buyer"), and REYNOLDS/MCCRARY JOINT VENTURE, a Texas
joint venture ("Seller"). (Buyer and Seller are sometimes herein referred to
individually as a "Party" and collectively as the "Parties".)
RECITALS
Seller is engaged in the business of owning and operating outdoor signs
and billboards and otherwise providing outdoor advertising services in the
metropolitan Dallas/Fort Worth area (the "Business"). Seller desires to sell and
assign the outdoor advertising assets to Buyer, and Buyer desires to purchase
such assets and to assume certain liabilities associated with such assets,
pursuant to the terms, conditions, limitations and exclusions contained in this
Agreement.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms listed on Exhibit A attached
hereto have the meanings specified or referred to in Exhibit A.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING
2.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions
of this Agreement, Seller hereby grants, sells, assigns, transfers, conveys and
delivers all right, title and interest in and to the Purchased Assets, free and
clear of any liens, title claims, Encumbrances or Security Interests (except for
Permitted Liens), and Buyer hereby buys and acquires the Purchased Assets from
Seller, and assumes the Assumed Liabilities upon the terms and conditions set
forth in this Agreement.
2.2 PURCHASED ASSETS. The Purchased Assets are all of the assets of
Seller used in the Business, including:
(a) All of the billboard displays and other out-of-home
advertising structures (including rights to walls), including, without
limitation, those set forth and described in Schedule 2.2(a) attached hereto,
together with all components, fixtures, parts, appurtenances, and equipment
attached to or made a part thereof that are existing, under construction or for
which Seller has any rights (collectively, the "Structures");
(b) All leases, licenses, easements, other rights of ingress
or egress, and all other grants of the right to place, construct, own, operate
or maintain the Structures on land, buildings and other real property owned by
third parties, and all rights therein (collectively, the "Site Leases"),
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including, without limitation, those Site Leases listed on Schedule 2.2(b); and
all state and local licenses or permits/tags which Seller has with respect to
the Structures and, to the extent assignable, all other Governmental
Authorizations that are required for the operation of the Structures,
(collectively, the "Permits"), including, without limitation, those Permits
listed on Schedule 2.2(b);
(c) All rights under existing and pending sales and
advertising contracts associated with the Structures, and all rights to the
advertising copy displayed on the Structures as of the Closing Date
(collectively, the "Advertising Contracts"), including, without limitation,
those Advertising Contracts listed on Schedule 2.2(a) attached hereto;
(d) All pertinent Books and Records;
(e) All Intangible Property used in connection with the
Business except the trade name "Reynolds"; and
(f) All rights (including any benefits arising therefrom),
causes of action, claims and demands of whatever nature (whether or not
liquidated) of Seller relating to the Purchased Assets, including, without
limitation, condemnation rights and proceeds, and all rights against suppliers
under warranties covering any of the Purchased Assets.
Notwithstanding the foregoing, the Purchased Assets shall not include the assets
listed on Schedule 2.2(x) (collectively, "Excluded Assets").
2.3 AGREEMENT TO ASSUME CERTAIN LIABILITIES. Buyer hereby assumes and
agrees to discharge and perform all liabilities and obligations that arise or
are attributable to events occurring on or after the Closing Date pursuant to
the Site Leases and the Advertising Contracts(the "Assumed Liabilities") but to
the extent and only to the extent that:
(a) Such obligations are performable on or after the Closing
Date; and
(b) Such obligations are attributable to periods arising on or
after the Closing Date.
2.4 EXCLUDED LIABILITIES. All claims against and liabilities and
obligations of Seller not specifically assumed by Buyer pursuant to Section 2.3,
including, without limitation, the following claims against and liabilities of
Seller (the "Excluded Liabilities"), are excluded, and shall not be assumed or
discharged by Buyer, and shall be discharged in full when due by Seller:
(a) Any liabilities to the extent not attributable to the
Purchased Assets;
(b) Any liability of Seller for Taxes arising prior to or from
the sale of the Purchased Assets under this Agreement other than Transfer Taxes.
(c) Any liabilities for or related to indebtedness of Seller
to banks, financial institutions, or other Persons;
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(d) Any liabilities of Seller for or with respect to any
employees of Seller, including, without limitation, any liabilities pursuant to
any compensation, collective bargaining, pension, retirement, severance,
termination, or other benefit plan, agreement or arrangement; and
(e) Any other liabilities of Seller that are attributable to
or arise from facts, events, or conditions that occurred or came into existence
prior to the Closing.
2.5 PURCHASE PRICE. The Purchase Price for the Assets is Three Hundred
Thirty Two Thousand Six Hundred Fifteen Dollars ($332,615). The Purchase Price
shall be subject to adjustment as follows:
(a) The following items shall be prorated between Seller and
Buyer as of the Closing Date with respect to the Purchased Assets: power and
utility charges, real and personal property taxes, rents (including percentage
rents) prepaid leases and security deposits under Site Leases and payments and
security deposits under Advertising Contracts. Prorations will be on a
dollar-for-dollar basis based on the number of days of display before and after
the Closing Date. Percentage rents shall be prorated as of the Closing Date. The
effective time of the Closing shall be 11:59 p.m., Eastern Standard Time, on the
Closing Date.
(b) Within ninety (90) days after the Closing Date, Buyer will
prepare and provide to Seller the final calculations of adjustments to the
Purchase Price (the "Closing Date Adjustment"). On the 120th day after the
Closing Date, all required refunds or payments under this Section 2.5, shall be
made on the basis of the Closing Date Adjustment.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Seller is a joint venture duly
organized, validly existing and in good standing under the laws of the State of
Texas. Seller has the full power and authority to conduct the Business as it is
now being conducted, to own or use the Purchased Assets, and to perform all its
obligations. Seller has delivered to Buyer true and complete copies of its
Organizational Documents, as currently in effect. Seller is duly qualified to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary.
3.2 AUTHORITY; NO CONFLICT.
(a) Each of this Agreement and any documents executed
contemporaneously herewith pursuant to this Agreement (collectively, the
"Closing Documents") constitutes the legal, valid, and binding obligation of
Seller, enforceable against it in accordance with its terms. Seller has the
absolute and unrestricted right, power and authority to execute and deliver this
Agreement and the Closing Documents to which it is a party and to perform its
obligations thereunder. The Joint Venturers are the sole holders of any interest
in Seller. The execution, delivery and performance of this Agreement has been
specifically authorized by the Joint Venturers.
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(b) Neither the execution and delivery by Seller of this
Agreement nor the consummation or performance by Seller of any of the
Contemplated Transactions will:
(i) conflict with, violate or result in a breach of
(A) any provision of the Organizational Documents of Seller; (B) to
Seller's Knowledge, any Legal Requirement or any Order to which Seller,
the Business or any of the Purchased Assets may be subject; (C) to
Seller's Knowledge, any Governmental Authorization held by Seller or
that otherwise relates to the Business or the Purchased Assets; or (D)
any material Contract to which Seller is a party or by which Seller or
the Purchased Assets may be bound; or
(ii) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
interest or rights of Seller in or to the Purchased Assets; or result
in the imposition or creation of any Encumbrance upon or with respect
to any of the Purchased Assets;
(c) Except as set forth in Part 3.2(c) of the Disclosure
Schedule, Seller is not and will not be required to give any notice to or obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 SOLVENCY. By consummating the transactions contemplated hereby,
Seller does not intend to hinder, delay or defraud any of Seller's present or
future creditors. Before giving effect to the transactions contemplated hereby,
Seller has been paying its debts as they become due in the ordinary course of
business and, after giving effect to the transactions contemplated hereby,
Seller will have paid or discharged all of its debts (or made adequate provision
for the payment thereof).
3.4 BOOKS AND RECORDS. The books of account, and other Books and
Records of Seller maintained in connection with the Purchased Assets are
complete and correct in all material respects and have been maintained in
accordance with sound business practices.
3.5 STRUCTURES. Seller owns all of the Structures. To Seller's
Knowledge, each Structure (i) is located entirely on property covered by a Site
Lease or is located entirely on the Real Property, and (ii) complies in all
material respects with the terms of the Permits pertaining to it.
3.6 PERMITS. The Permits constitute all material licenses, permits,
registrations and approvals necessary to operate the Business. Seller is in
material compliance with the terms of the Permits. Seller is not aware of any
fact or event which constitutes a material violation of any Permit, and Seller
has not received written notice that any Governmental Body issuing any Permit
intends to cancel, terminate, modify or amend any Permit.
3.7 SITE LEASES AND ADVERTISING CONTRACTS. Seller has delivered to
Buyer true and complete copies of the Advertising Contracts and the Site Leases.
All sales made to advertisers in connection with the Structures have been made
pursuant to Advertising Contracts. The Site Leases and the Advertising Contracts
are in full force and effect, and are binding upon the parties thereto. To
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the Knowledge of Seller, (x) no default by Seller or any other party has
occurred under the Site Leases or Advertising Contracts, and (y) no event,
occurrence or condition exists which (with or without notice or lapse of time or
the happening of any further event or condition) would become a default by
Seller or Manager thereunder or would entitle any other party to terminate a
Site Lease or Advertising Contract, to make a claim or set-off against Seller or
Manager or otherwise to amend such Site Lease or Advertising Contract or prevent
such Site Lease or Advertising Contract from being renewed in accordance with
its terms. Neither Seller nor Manager has received any written notice of
default, termination or non-renewal under any Site Lease or Advertising
Contract.
3.8 TITLE, ENCUMBRANCES.
(a) Seller has good title to all of the Purchased Assets, and
there are no existing agreements, options, commitments or rights with, of or to
any Person to acquire any of the Purchased Assets or any interest therein. All
of the Purchased Assets are owned by Seller free and clear of all Encumbrances
and Security Interests except for Permitted Liens.
(b) None of the Structure or Site Leases are or will be, to
the Knowledge of Seller, subject to zoning, use, or building code restrictions
that will prohibit the continued effective ownership, leasing or other use of
such assets as currently owned and used by Seller. Neither Seller nor Manager
has received any notice of pending or Threatened claims, Proceedings, planned
public improvements, annexations, special assessments, rezonings or other
adverse claims affecting the Site Leases.
3.9 NO UNDISCLOSED LIABILITIES. Seller has no material liabilities or
obligations of any nature relating to the Purchased Assets.
3.10 TAXES. With respect to the Purchased Assets;
(a) Seller and the Joint Venturers have filed or caused to be
filed all Tax Returns that are or were required to be filed by each of them
pursuant to applicable Legal Requirements. Seller and the Joint Venturers have
paid, or made provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by Seller or the Joint Venturers.
(b) No unpaid Taxes create an Encumbrance (other than
Permitted Liens) on the Purchased Assets or the Real Property.
(c) Buyer shall not be liable for any Taxes of Seller or the
Joint Venturers as a result of the Contemplated Transactions.
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller has complied with all
Legal Requirements applicable to its ownership or use of the Purchased Assets
and Real Property, except for noncompliances or failures that, individually or
in the aggregate, would not be reasonably expected to have a Material Adverse
Effect.
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3.12 LEGAL PROCEEDINGS; ORDERS. There is no Proceeding pending or, to
the Knowledge of Seller, Threatened against Seller or the Joint Venturers or
affecting any of the Purchased Assets, and there is no Order to which Seller or
the Joint Venturers or the Purchased Assets are subject.
3.13 OTHER CONTRACTS Seller is not a party to or bound by any Other
Contract.
3.14 ENVIRONMENTAL MATTERS. With respect to the Purchased Assets and
the use or operation thereof: to Seller's Knowledge, (i) Seller is, and has
been, in material compliance with all Environmental Laws; (ii) Seller has timely
filed all material reports, obtained all required approvals and permits relating
to the Business, and generated and maintained all material data, documentation
and records under any applicable Environmental Laws; (iii) to the Knowledge of
Seller, there has not been any release of the Hazardous Materials at or in the
vicinity of the Business, or in areas for which Seller would have responsibility
under Environmental Laws; (iv) Seller has not received any written notice from
any Governmental Body or private or public entity advising it that it is or may
be responsible for response costs with respect to a Release, a threatened
Release or clean up of Hazardous Materials produced by, or resulting from, its
Business, operations or processes; and (v) Seller has delivered to Buyer true
and complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed by Seller pertaining to Hazardous Materials in, on, or
under the properties included in the Purchased Assets.
3.15 INTANGIBLE PROPERTY. Seller uses no Intangible Property in
connection with the operation of the Purchased Assets except for the Permits,
the Books and Records, the trade name "Reynolds", and licenses for commonly
available software programs under which Seller is currently the licensee.
3.16 RELATIONSHIPS WITH AFFILIATES. Except as set forth on Part 3.16 of
the Disclosure Schedule, Seller is not a party to any contract with an Affiliate
of Seller or Seller's predecessor relating to the Purchased Assets, the Real
Property or the Business. None of Seller or any of its Affiliates is the owner
(of record or as a beneficial owner) of an equity interest or any other
financial or profit interest in, a Person (other than Seller) that has business
dealings or a material financial interest in any transaction with Seller
involving the Purchased Assets or the Business.
3.17 BROKERS OR FINDERS. Neither Seller nor any Affiliate of Seller has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.18 EMPLOYEE BENEFIT MATTERS. With respect to each of Seller and each
Joint Venturer:
(a) Each does not maintain and has never maintained an
"employee benefit pension plan", within the meaning of ERISA Section 3(2), that
is or was subject to Title IV of ERISA.
(b) Each does not have and has not ever had any past, present
or future obligation or liability to contribute any "multiemployer plan", as
defined in ERISA Section 3(37).
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For purposes of this Section 3.18, the terms "Seller" and "Joint Venturer" shall
be deemed to include any other corporation, trade, business or other entity,
other than Seller or the Joint Venturer, which would, together with Seller or
the Joint Venturer, now or in the past, constitute a single employer within the
meaning of Section 414 of the IRC.
3.19 DISCLOSURE. No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Schedule omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Closing Documents to which Buyer
is a party, such Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Closing Documents and to
perform its obligations under this Agreement and the Closing Documents to which
Buyer is a party.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to (i)
any provision of Buyer's Organizational Documents; (ii) any resolution adopted
by the board of directors or the stockholders of Buyer; (iii) any Legal
Requirement or Order to which Buyer may be subject; or (iv) any material
Contract to which Buyer is a party or by which Buyer may be bound. Buyer is not
and will not be required to obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened in writing and no event has occurred or circumstance exist that may
give rise to or serve as a basis for the commencement of any Proceeding.
4.4 BROKERS OR FINDERS. Buyer has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
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5. INDEMNIFICATION; REMEDIES
5.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. Seller will
indemnify and hold harmless Buyer, stockholders, controlling Persons, and
Affiliates (collectively, the "Seller Indemnified Persons") for, and will pay to
the Seller Indemnified Persons the amount of, any loss, liability, claim,
damage, expense (including reasonable costs of investigation and defense and
reasonable attorneys' fees), whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any material breach of any representation or warranty made
by Seller in this Agreement, the Disclosure Schedule, or any other certificate
or document delivered by Seller pursuant to this Agreement;
(b) any breach by Seller of any covenant or obligation of
Seller in this Agreement or any certificate or document delivered by Seller
pursuant to this Agreement;
(c) the failure of Seller to satisfy and discharge any
Excluded Liabilities, except only the Assumed Liabilities; and
(d) the failure of Seller to comply with bulk sales or other
similar laws in any applicable jurisdiction; provided, however, that any claim
for Damages pursuant to this Section 5.1 must be made on or before the first
anniversary of the Closing Date.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Seller and its stockholders, controlling Persons,
and Affiliates (collectively, the "Buyer Indemnified Persons") for, and will pay
to the Buyer Indemnified Persons the amount of any Damages arising, directly or
indirectly, from or in connection with:
(a) any material breach of any representation or warranty made
by Buyer in this Agreement or in any certificate or document delivered by Buyer
pursuant to this Agreement; and
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement including, without limitation, any failure to pay Assumed
Liabilities after the Closing;
provided, however, that any claim for Damages pursuant to this Section 5.2 must
be made on or before the first anniversary of the Closing.
5.3 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 5.1 or 5.2, of notice of any claim against it, such Indemnified Person
will, if a claim is to be made against an Indemnifying Party under such Section,
give notice to the Indemnifying Party of the commencement of such claim, but the
failure to notify the Indemnifying Party will not relieve the Indemnifying Party
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of any liability that it may have to any Indemnified Person, except to the
extent that the Indemnifying Party demonstrates that the defense of such action
is prejudiced by the Indemnifying Party's failure to give such notice.
(b) If any claim referred to in Section 5.3(a) is brought
against an Indemnified Person and it gives written notice to the Indemnifying
Party of such claim, the Indemnifying Party may, at its option, assume the
defense of such claim with counsel satisfactory to the Indemnified Person and,
after written notice from the Indemnifying Party to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will
not, as long as it diligently conducts such defense, be liable to the
Indemnified Person under this Article 5 for any fees of other counsel or any
other expenses with respect to the defense of such claim, subsequently incurred
by the Indemnified Person in connection with the defense of such claim, other
than reasonable costs of investigation. If the Indemnifying Party assumes the
defense of a claim, (i) no compromise or settlement of such claims may be
effected by the Indemnifying Party without the Indemnified Person's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person, and (B) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party; and (ii) the Indemnified Person will have no liability with respect to
any compromise or settlement of such claims effected without its consent.
Subject to Section 5.3(c), if notice is given to an Indemnifying Party of any
claim and the Indemnifying Party does not, within twenty days after the
Indemnified Person's notice is given, give notice to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will be
bound by any determination made in such Proceeding or any compromise or
settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying Party, assume the
exclusive right to defend, compromise, or settle such claim, but the
Indemnifying Party will not be bound by any determination of a claim so defended
or any compromise or settlement effected or expenses incurred without its
consent (which consent may not be unreasonably withheld).
5.4 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim shall be
asserted by written notice to the Indemnifying Party from whom indemnification
is sought.
5.5 SURVIVAL/LIMITATIONS.
(a) The parties hereto agree that (i) the covenants and
agreements contained in Article 5 and in Article 6 hereto shall survive the
Closing without limitation (unless expressly limited by their terms), and (ii)
all other covenants, agreements, representations and warranties contained herein
shall survive until the first anniversary following the Closing Date.
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(b) Seller's obligation to indemnify the Seller Indemnified
Persons for Damages pursuant to Section 5.1 hereof is subject to the following
limitation: in no event shall Seller's obligation to indemnify the Seller
Indemnified Persons exceed ten percent (10%) of the Purchase Price.
6. GENERAL PROVISIONS
6.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each Party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, brokers or finders, counsel, and accountants. Buyer shall pay
any Transfer Taxes, and such Taxes, if any, shall not be considered a liability
of Seller for any purpose, including, without limitation, for purposes of
Section 2.4(b) hereof. In the event of termination of this Agreement, the
obligation of each Party to pay its own expenses will be subject to any rights
of such Party arising from a breach of this Agreement by another Party.
6.2 HEADINGS; CONSTRUCTION. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
6.3 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as Buyer
and Seller agree in writing, provided that the parties shall reasonably
cooperate in such announcements, and provided further that nothing contained
herein shall prevent any party from at any time furnishing information required
by a Governmental Body.
6.4 AVAILABILITY OF EQUITABLE REMEDIES. The Parties acknowledge and
agree that (i) a breach of the provisions of this Agreement could not adequately
be compensated by money damages, and (ii) any Party shall be entitled, in
addition to any other right or remedy available to it, to an injunction
restraining such breach and to specific performance of this Agreement, and no
bond or other security shall be required in connection therewith.
6.5 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
Party may designate by notice to the other Parties):
If to Seller, to:
Mr. George T. Reynolds III
Reynolds/McCrary Joint Venture
2911 Turtle Creek Boulevard
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Suite #880
Dallas, Texas 75219
Telephone No.: (214) 559-3844
Facsimile No.: (214) 522-7041
With a copy to:
Strasburger & Price, L.L.P.
901 Main Street
Suite 4300
Dallas, Texas 75202
Attention: Mike Joplin, Esq.
Telephone No.: (214) 651-4300
Facsimile No.: (214) 651-4330
If to Buyer, to:
Outdoor Systems, Inc.
2502 North Black Canyon Highway
Phoenix, Arizona 85009
Telephone No.: (602) 246-9569
Facsimile No.: (602) 433-2482
Attention: William S. Levine
and
William S. Levine
1702 E. Highland Avenue, Suite 310
Phoenix, Arizona 85016
Telephone No.: (602) 248-8181
Facsimile No.: (602) 248-0884
With a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, NE, 16th Floor
Atlanta, Georgia 30303
Attention: William B. Shearer, Jr., Esq.
Telephone No.: (404) 572-6600
Facsimile No.: (404) 572-6999
6.6 FURTHER ASSURANCES. The Parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things, all as
the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
6.7 WAIVER. Neither the failure nor any delay by any Party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
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privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
6.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the Parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the Party to be charged with the amendment.
6.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Parties except that Buyer may assign any of its rights under this
Agreement to any affiliate of Buyer. This Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the Parties, and their
successors, by liquidation or otherwise, and their permitted assigns. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.
6.10 ACCOUNTS RECEIVABLE. Buyer agrees to forward to Seller any
payments that Buyer may receive with respect to any accounts receivable of
Seller.
6.11 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
6.12 POST-CLOSING ACCESS. Buyer agrees that all Books and Records
delivered to Buyer by Seller pursuant to this Agreement shall be maintained open
for inspection by Seller at any time during regular business hours upon
reasonable notice for a period of six (6) years (or for such longer period as
may be required by applicable Legal Requirements) following the Closing and
that, during such period, Seller, at its expense, may make such copies thereof
as it may reasonably desire. Seller agrees that all books and records relating
to the Purchased Assets and retained by Seller shall be maintained open for
inspection by Buyer at any time during regular business hours for a period of
six (6) years (or for such longer period as may be required by applicable Legal
Requirements) following the Closing and that, during such period, Buyer, at its
expense, may make such copies thereof as it may reasonably desire. Nothing
contained in this Section 6.12 shall obligate any Party hereto to make available
any books and records if to do so would violate the terms of any Contract or
Legal Requirement to which it is a party or to which it or its assets are
subject.
6.13 APPLICABLE LAW. This Agreement shall be governed and controlled as
to validity, enforcement, interpretations, construction, effect and in all other
respects by the internal laws of the State of Texas applicable to contracts made
in that State. The parties hereto agree to submit exclusively to any federal or
state court located in the State of Texas any dispute or controversy arising out
of or relating to this Agreement.
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6.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the Parties have executed, sealed and delivered
this Agreement as of the date first written above.
BUYER:
OUTDOOR SYSTEMS, INC.
By:
----------------------------------
William S. Levine
Chairman
SELLER:
REYNOLDS/MCCRARY JOINT VENTURE
By: GRTP, Ltd., Manager
By: Reynolds Texas Properties, L.C.,
General Partner
By:
----------------------------------
George T. Reynolds, III
Manager
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<PAGE> 15
EXHIBIT A
DEFINITIONS
"ADVERTISING CONTRACTS" -- as defined in Section 2.2(c).
"AFFILIATES" -- when used with reference to a specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Specified
Person. For purposes of this definition of Affiliate, "control" means the
possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies of the Person in question, whether through
the ownership of voting securities or by contract or otherwise.
"ASSUMED LIABILITIES" -- as defined in Section 2.3.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances.
"BOOKS AND RECORDS" -- All of Seller's books and records relating to
the Purchased Assets, including, without limitation, all Site Lease files,
Advertising Contract files, Permit files, maintenance and other records for the
Structures, logs, advertiser, customer and supplier lists.
"BUYER" -- as defined in the first paragraph of this Agreement.
"CLOSING" -- as defined in Section 2.5.
"CLOSING DATE" -- as defined in the first paragraph of this Agreement.
"CLOSING DOCUMENTS" -- as defined in Section 3.2(a).
"CONFIDENTIAL INFORMATION" -- any information concerning the businesses
and affairs of Seller that is not generally available to the public.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including: (a) the purchase of the Purchased Assets by Buyer
from Seller and assignment to and assumption by Buyer of the Assumed
Liabilities, and (b) the performance by Buyer and Seller of their respective
covenants and obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" -- as defined in Section 5.1.
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"DISCLOSURE SCHEDULE" -- the disclosure schedule, delivered by Seller
to Buyer concurrently with the execution and delivery of this Agreement.
"ENCUMBRANCE" -- any charge, claim, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW" -- any Legal Requirement pertaining to
environmental discharges, Release, emissions or spills or the manufacture, sale,
processing, handling, transportation, storage or disposal of any Hazardous
Materials, or relating to any environmental processes or condition, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act ("RCRA"), the Endangered Species Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Surface Mining Control and Reclamation Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Coastal Zone Management Act, the National
Environmental Policy Act, the Noise Control Act. As used in this Agreement,
Environmental Laws shall mean any of such laws or regulations as the same exist
now or at the Closing Date.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"EXCLUDED ASSETS" -- as defined in Section 2.2.
"EXCLUDED LIABILITIES" -- as defined in Section 2.4.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"INDEMNIFIED PERSON" -- any of the Seller Indemnified Persons or the
Buyer Indemnified Persons, as the context requires.
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"INDEMNIFYING PARTY" -- the Buyer or the Seller, as the context
requires.
"INTANGIBLE PROPERTY" -- All right, title and interest in and to the
goodwill and other intangible property (except for Seller's corporate or trade
names and trade logos) used in connection with the Purchased Assets, all
licenses, permits and authorizations pertaining to the Purchased Assets or the
right to own and operate the Purchased Assets and all right, title and interest
in and to (i) any intellectual property used in connection with the Purchased
Assets, and (ii) all records and data relating specifically to the Purchased
Assets.
"IRC" -- the Internal Revenue Code of 1986, as amended from time to
time, or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"JOINT VENTURERS" -- Manager and Mark McCrary.
"KNOWLEDGE" -- a Person will be deemed to have "Knowledge" of a
particular fact or other matter only if such Person is actually aware of such
fact or other matter without making any independent inquiry or investigation. A
Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or, in the case of
Seller, the Manager) (or in any similar capacity) has Knowledge of such fact or
other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"MANAGER" -- GRTP, Ltd., a Texas limited partnership.
"MATERIAL ADVERSE CHANGE" -- a change that will probably cause a
Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" -- a material adverse effect on the Business,
the Purchased Assets, or the Real Property or operations or conditions
(financial or otherwise) relating thereto, taken as a whole.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
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<PAGE> 18
"OTHER CONTRACT" -- any Contract (other than a Site Lease or
Advertising Contract) relating to or affecting the Purchased Assets or the
operation thereof (i) under which Seller has or may acquire any rights, (ii)
under which Seller has or may become subject to any obligation or liability, or
(iii) by which Seller or any of the Purchased Assets is or may become bound.
"PARTY" -- as defined in the first paragraph of this Agreement.
"PERMITS" -- as defined in Section 2.2(d).
"PERMITTED LIENS" -- liens for taxes not yet delinquent.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" -- as defined in Section 2.5.
"PURCHASED ASSETS" -- as defined in Section 2.2.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITY INTEREST" -- any mortgage, pledge, lien, encumbrance, charge
or other security interest or option or right of any third party with respect
thereto.
"SELLER" -- as defined in the first paragraph of this Agreement.
"SITE LEASES" -- as defined in Section 2.2(b).
"STRUCTURES" -- as defined in Section 2.2(a).
"TAX" -- shall mean all tax (including income tax, capital gains tax,
value added tax, sales tax, property tax, transfer tax or intangibles tax), levy
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including fine, penalty and interest) imposed, assessed or collected by
or under the authority of any Governmental Body.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with
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or submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"TRANSFER TAXES" -- any sales, use or transfer taxes arising from the
transfer of the Purchased Assets from Seller to Buyer hereunder.
"THREATENED" -- a claim, Proceeding or dispute will be deemed to have
been "THREATENED" if any demand or statement has been made or any notice has
been given that would lead a prudent Person to conclude that such a claim,
Proceeding or dispute is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
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<PAGE> 20
SCHEDULE 2.2(x)
EXCLUDED ASSETS
1. Cash and Accounts Receivable
<PAGE> 1
EXHIBIT 99.7
JOINT VENTURE
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of
February 28, 1997 ("Closing Date"), by and between OUTDOOR SYSTEMS, INC., a
Delaware corporation ("Buyer"), and RV OUTDOOR SIGN JOINT VENTURE, a Texas joint
venture ("Seller"). (Buyer and Seller are sometimes herein referred to
individually as a "Party" and collectively as the "Parties".)
RECITALS
Seller is engaged in the business of owning and operating outdoor signs
and billboards and otherwise providing outdoor advertising services in the
metropolitan Dallas/Fort Worth area (the "Business"). Seller desires to sell and
assign the outdoor advertising assets to Buyer, and Buyer desires to purchase
such assets and to assume certain liabilities associated with such assets,
pursuant to the terms, conditions, limitations and exclusions contained in this
Agreement.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms listed on Exhibit A attached
hereto have the meanings specified or referred to in Exhibit A.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING
2.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions
of this Agreement, Seller hereby grants, sells, assigns, transfers, conveys and
delivers all right, title and interest in and to the Purchased Assets, free and
clear of any liens, title claims, Encumbrances or Security Interests (except for
Permitted Liens), and Buyer hereby buys and acquires the Purchased Assets from
Seller, and assumes the Assumed Liabilities upon the terms and conditions set
forth in this Agreement.
2.2 PURCHASED ASSETS. The Purchased Assets are all of the assets of
Seller used in the Business, including:
(a) All of the billboard displays and other out-of-home
advertising structures (including rights to walls), including, without
limitation, those set forth and described in Schedule 2.2(a) attached hereto,
together with all components, fixtures, parts, appurtenances, and equipment
attached to or made a part thereof that are existing, under construction or for
which Seller has any rights (collectively, the "Structures");
(b) All leases, licenses, easements, other rights of ingress
or egress, and all other grants of the right to place, construct, own, operate
or maintain the Structures on land, buildings and other real property owned by
third parties, and all rights therein (collectively, the "Site Leases"),
<PAGE> 2
including, without limitation, those Site Leases listed on Schedule 2.2(b); and
all state and local licenses or permits/tags which Seller has with respect to
the Structures and, to the extent assignable, all other Governmental
Authorizations that are required for the operation of the Structures,
(collectively, the "Permits"), including, without limitation, those Permits
listed on Schedule 2.2(b);
(c) All rights under existing and pending sales and
advertising contracts associated with the Structures, and all rights to the
advertising copy displayed on the Structures as of the Closing Date
(collectively, the "Advertising Contracts"), including, without limitation,
those Advertising Contracts listed on Schedule 2.2(a) attached hereto;
(d) All pertinent Books and Records;
(e) All Intangible Property used in connection with the
Business except the trade name "Reynolds"; and
(f) All rights (including any benefits arising therefrom),
causes of action, claims and demands of whatever nature (whether or not
liquidated) of Seller relating to the Purchased Assets, including, without
limitation, condemnation rights and proceeds, and all rights against suppliers
under warranties covering any of the Purchased Assets.
Notwithstanding the foregoing, the Purchased Assets shall not include the assets
listed on Schedule 2.2(x) (collectively, "Excluded Assets").
2.3 AGREEMENT TO ASSUME CERTAIN LIABILITIES. Buyer hereby assumes and
agrees to discharge and perform all liabilities and obligations that arise or
are attributable to events occurring on or after the Closing Date pursuant to
the Site Leases and the Advertising Contracts(the "Assumed Liabilities") but to
the extent and only to the extent that:
(a) Such obligations are performable on or after the Closing
Date; and
(b) Such obligations are attributable to periods arising on or
after the Closing Date.
2.4 EXCLUDED LIABILITIES. All claims against and liabilities and
obligations of Seller not specifically assumed by Buyer pursuant to Section 2.3,
including, without limitation, the following claims against and liabilities of
Seller (the "Excluded Liabilities"), are excluded, and shall not be assumed or
discharged by Buyer, and shall be discharged in full when due by Seller:
(a) Any liabilities to the extent not attributable to the
Purchased Assets;
(b) Any liability of Seller for Taxes arising prior to or from
the sale of the Purchased Assets under this Agreement other than Transfer Taxes.
(c) Any liabilities for or related to indebtedness of Seller
to banks, financial institutions, or other Persons;
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(d) Any liabilities of Seller for or with respect to any
employees of Seller, including, without limitation, any liabilities pursuant to
any compensation, collective bargaining, pension, retirement, severance,
termination, or other benefit plan, agreement or arrangement; and
(e) Any other liabilities of Seller that are attributable to
or arise from facts, events, or conditions that occurred or came into existence
prior to the Closing.
2.5 PURCHASE PRICE. The Purchase Price for the Assets is One Million
Five Hundred Thousand Dollars ($1,500,000). The Purchase Price shall be subject
to adjustment as follows:
(a) The following items shall be prorated between Seller and
Buyer as of the Closing Date with respect to the Purchased Assets: power and
utility charges, real and personal property taxes, rents (including percentage
rents) prepaid leases and security deposits under Site Leases and payments and
security deposits under Advertising Contracts. Prorations will be on a
dollar-for-dollar basis based on the number of days of display before and after
the Closing Date. Percentage rents shall be prorated as of the Closing Date. The
effective time of the Closing shall be 11:59 p.m., Eastern Standard Time, on the
Closing Date.
(b) Within ninety (90) days after the Closing Date, Buyer will
prepare and provide to Seller the final calculations of adjustments to the
Purchase Price (the "Closing Date Adjustment"). On the 120th day after the
Closing Date, all required refunds or payments under this Section 2.5, shall be
made on the basis of the Closing Date Adjustment.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Seller is a joint venture duly
organized, validly existing and in good standing under the laws of the State of
Texas. Seller has the full power and authority to conduct the Business as it is
now being conducted, to own or use the Purchased Assets, and to perform all its
obligations. Seller has delivered to Buyer true and complete copies of its
Organizational Documents, as currently in effect. Seller is duly qualified to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary.
3.2 AUTHORITY; NO CONFLICT.
(a) Each of this Agreement and any documents executed
contemporaneously herewith pursuant to this Agreement (collectively, the
"Closing Documents") constitutes the legal, valid, and binding obligation of
Seller, enforceable against it in accordance with its terms. Seller has the
absolute and unrestricted right, power and authority to execute and deliver this
Agreement and the Closing Documents to which it is a party and to perform its
obligations thereunder. The Joint Venturers are the sole holders of any interest
in Seller. The execution, delivery and performance of this Agreement has been
specifically authorized by the Joint Venturers.
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(b) Neither the execution and delivery by Seller of this
Agreement nor the consummation or performance by Seller of any of the
Contemplated Transactions will:
(i) conflict with, violate or result in a breach of
(A) any provision of the Organizational Documents of Seller; (B) to
Seller's Knowledge, any Legal Requirement or any Order to which Seller,
the Business or any of the Purchased Assets may be subject; (C) to
Seller's Knowledge, any Governmental Authorization held by Seller or
that otherwise relates to the Business or the Purchased Assets; or (D)
any material Contract to which Seller is a party or by which Seller or
the Purchased Assets may be bound; or
(ii) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
interest or rights of Seller in or to the Purchased Assets; or result
in the imposition or creation of any Encumbrance upon or with respect
to any of the Purchased Assets;
(c) Except as set forth in Part 3.2(c) of the Disclosure
Schedule, Seller is not and will not be required to give any notice to or obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 SOLVENCY. By consummating the transactions contemplated hereby,
Seller does not intend to hinder, delay or defraud any of Seller's present or
future creditors. Before giving effect to the transactions contemplated hereby,
Seller has been paying its debts as they become due in the ordinary course of
business and, after giving effect to the transactions contemplated hereby,
Seller will have paid or discharged all of its debts (or made adequate provision
for the payment thereof).
3.4 BOOKS AND RECORDS. The books of account, and other Books and
Records of Seller maintained in connection with the Purchased Assets are
complete and correct in all material respects and have been maintained in
accordance with sound business practices.
3.5 STRUCTURES. Seller owns all of the Structures. To Seller's
Knowledge, each Structure (i) is located entirely on property covered by a Site
Lease or is located entirely on the Real Property, and (ii) complies in all
material respects with the terms of the Permits pertaining to it.
3.6 PERMITS. The Permits constitute all material licenses, permits,
registrations and approvals necessary to operate the Business. Seller is in
material compliance with the terms of the Permits. Seller is not aware of any
fact or event which constitutes a material violation of any Permit, and Seller
has not received written notice that any Governmental Body issuing any Permit
intends to cancel, terminate, modify or amend any Permit.
3.7 SITE LEASES AND ADVERTISING CONTRACTS. Seller has delivered to
Buyer true and complete copies of the Advertising Contracts and the Site Leases.
All sales made to advertisers in connection with the Structures have been made
pursuant to Advertising Contracts. The Site Leases and the Advertising Contracts
are in full force and effect, and are binding upon the parties thereto. To
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<PAGE> 5
the Knowledge of Seller, (x) no default by Seller or any other party has
occurred under the Site Leases or Advertising Contracts, and (y) no event,
occurrence or condition exists which (with or without notice or lapse of time or
the happening of any further event or condition) would become a default by
Seller or Manager thereunder or would entitle any other party to terminate a
Site Lease or Advertising Contract, to make a claim or set-off against Seller or
Manager or otherwise to amend such Site Lease or Advertising Contract or prevent
such Site Lease or Advertising Contract from being renewed in accordance with
its terms. Neither Seller nor Manager has received any written notice of
default, termination or non-renewal under any Site Lease or Advertising
Contract.
3.8 TITLE, ENCUMBRANCES.
(a) Seller has good title to all of the Purchased Assets, and
there are no existing agreements, options, commitments or rights with, of or to
any Person to acquire any of the Purchased Assets or any interest therein. All
of the Purchased Assets are owned by Seller free and clear of all Encumbrances
and Security Interests except for Permitted Liens.
(b) None of the Structure or Site Leases are or will be, to
the Knowledge of Seller, subject to zoning, use, or building code restrictions
that will prohibit the continued effective ownership, leasing or other use of
such assets as currently owned and used by Seller. Neither Seller nor Manager
has received any notice of pending or Threatened claims, Proceedings, planned
public improvements, annexations, special assessments, rezonings or other
adverse claims affecting the Site Leases.
3.9 NO UNDISCLOSED LIABILITIES. Seller has no material liabilities
or obligations of any nature relating to the Purchased Assets.
3.10 TAXES. With respect to the Purchased Assets;
(a) Seller and the Joint Venturers have filed or caused to be
filed all Tax Returns that are or were required to be filed by each of them
pursuant to applicable Legal Requirements. Seller and the Joint Venturers have
paid, or made provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by Seller or the Joint Venturers.
(b) No unpaid Taxes create an Encumbrance (other than
Permitted Liens) on the Purchased Assets or the Real Property.
(c) Buyer shall not be liable for any Taxes of Seller or the
Joint Venturers as a result of the Contemplated Transactions.
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller has complied with all
Legal Requirements applicable to its ownership or use of the Purchased Assets
and Real Property, except for noncompliances or failures that, individually or
in the aggregate, would not be reasonably expected to have a Material Adverse
Effect.
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<PAGE> 6
3.12 LEGAL PROCEEDINGS; ORDERS. There is no Proceeding pending or, to
the Knowledge of Seller, Threatened against Seller or the Joint Venturers or
affecting any of the Purchased Assets, and there is no Order to which Seller or
the Joint Venturers or the Purchased Assets are subject.
3.13 OTHER CONTRACTS Seller is not a party to or bound by any Other
Contract.
3.14 ENVIRONMENTAL MATTERS. With respect to the Purchased Assets and
the use or operation thereof: to Seller's Knowledge, (i) Seller is, and has
been, in material compliance with all Environmental Laws; (ii) Seller has timely
filed all material reports, obtained all required approvals and permits relating
to the Business, and generated and maintained all material data, documentation
and records under any applicable Environmental Laws; (iii) to the Knowledge of
Seller, there has not been any release of the Hazardous Materials at or in the
vicinity of the Business, or in areas for which Seller would have responsibility
under Environmental Laws; (iv) Seller has not received any written notice from
any Governmental Body or private or public entity advising it that it is or may
be responsible for response costs with respect to a Release, a threatened
Release or clean up of Hazardous Materials produced by, or resulting from, its
Business, operations or processes; and (v) Seller has delivered to Buyer true
and complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed by Seller pertaining to Hazardous Materials in, on, or
under the properties included in the Purchased Assets.
3.15 INTANGIBLE PROPERTY. Seller uses no Intangible Property in
connection with the operation of the Purchased Assets except for the Permits,
the Books and Records, the trade name "Reynolds", and licenses for commonly
available software programs under which Seller is currently the licensee.
3.16 RELATIONSHIPS WITH AFFILIATES. Except as set forth on Part 3.16 of
the Disclosure Schedule, Seller is not a party to any contract with an Affiliate
of Seller or Seller's predecessor relating to the Purchased Assets, the Real
Property or the Business. None of Seller or any of its Affiliates is the owner
(of record or as a beneficial owner) of an equity interest or any other
financial or profit interest in, a Person (other than Seller) that has business
dealings or a material financial interest in any transaction with Seller
involving the Purchased Assets or the Business.
3.17 BROKERS OR FINDERS. Neither Seller nor any Affiliate of Seller has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.18 EMPLOYEE BENEFIT MATTERS. With respect to each of Seller and each
Joint Venturer:
(a) Each does not maintain and has never maintained an
"employee benefit pension plan", within the meaning of ERISA Section 3(2), that
is or was subject to Title IV of ERISA.
(b) Each does not have and has not ever had any past, present
or future obligation or liability to contribute any "multiemployer plan", as
defined in ERISA Section 3(37).
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For purposes of this Section 3.18, the terms "Seller" and "Joint Venturer" shall
be deemed to include any other corporation, trade, business or other entity,
other than Seller or the Joint Venturer, which would, together with Seller or
the Joint Venturer, now or in the past, constitute a single employer within the
meaning of Section 414 of the IRC.
3.19 DISCLOSURE. No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Schedule omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Closing Documents to which Buyer
is a party, such Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Closing Documents and to
perform its obligations under this Agreement and the Closing Documents to which
Buyer is a party.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to (i)
any provision of Buyer's Organizational Documents; (ii) any resolution adopted
by the board of directors or the stockholders of Buyer; (iii) any Legal
Requirement or Order to which Buyer may be subject; or (iv) any material
Contract to which Buyer is a party or by which Buyer may be bound. Buyer is not
and will not be required to obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened in writing and no event has occurred or circumstance exist that may
give rise to or serve as a basis for the commencement of any Proceeding.
4.4 BROKERS OR FINDERS. Buyer has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
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5. INDEMNIFICATION; REMEDIES
5.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. Seller will
indemnify and hold harmless Buyer, stockholders, controlling Persons, and
Affiliates (collectively, the "Seller Indemnified Persons") for, and will pay to
the Seller Indemnified Persons the amount of, any loss, liability, claim,
damage, expense (including reasonable costs of investigation and defense and
reasonable attorneys' fees), whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any material breach of any representation or warranty made
by Seller in this Agreement, the Disclosure Schedule, or any other certificate
or document delivered by Seller pursuant to this Agreement;
(b) any breach by Seller of any covenant or obligation of
Seller in this Agreement or any certificate or document delivered by Seller
pursuant to this Agreement;
(c) the failure of Seller to satisfy and discharge any
Excluded Liabilities, except only the Assumed Liabilities; and
(d) the failure of Seller to comply with bulk sales or other
similar laws in any applicable jurisdiction;
provided, however, that any claim for Damages pursuant to this Section 5.1 must
be made on or before the first anniversary of the Closing Date.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Seller and its stockholders, controlling Persons,
and Affiliates (collectively, the "Buyer Indemnified Persons") for, and will pay
to the Buyer Indemnified Persons the amount of any Damages arising, directly or
indirectly, from or in connection with:
(a) any material breach of any representation or warranty made
by Buyer in this Agreement or in any certificate or document delivered by Buyer
pursuant to this Agreement; and
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement including, without limitation, any failure to pay Assumed
Liabilities after the Closing;
provided, however, that any claim for Damages pursuant to this Section 5.2 must
be made on or before the first anniversary of the Closing.
5.3 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 5.1 or 5.2, of notice of any claim against it, such Indemnified Person
will, if a claim is to be made against an Indemnifying Party under such Section
, give notice to the Indemnifying Party of the commencement of such claim, but
the failure to notify the Indemnifying Party will not relieve the Indemnifying
Party
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<PAGE> 9
of any liability that it may have to any Indemnified Person, except to the
extent that the Indemnifying Party demonstrates that the defense of such action
is prejudiced by the Indemnifying Party's failure to give such notice.
(b) If any claim referred to in Section 5.3(a) is brought
against an Indemnified Person and it gives written notice to the Indemnifying
Party of such claim, the Indemnifying Party may, at its option, assume the
defense of such claim with counsel satisfactory to the Indemnified Person and,
after written notice from the Indemnifying Party to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will
not, as long as it diligently conducts such defense, be liable to the
Indemnified Person under this Article 5 for any fees of other counsel or any
other expenses with respect to the defense of such claim, subsequently incurred
by the Indemnified Person in connection with the defense of such claim, other
than reasonable costs of investigation. If the Indemnifying Party assumes the
defense of a claim, (i) no compromise or settlement of such claims may be
effected by the Indemnifying Party without the Indemnified Person's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person, and (B) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party; and (ii) the Indemnified Person will have no liability with respect to
any compromise or settlement of such claims effected without its consent.
Subject to Section 5.3(c), if notice is given to an Indemnifying Party of any
claim and the Indemnifying Party does not, within twenty days after the
Indemnified Person's notice is given, give notice to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will be
bound by any determination made in such Proceeding or any compromise or
settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying Party, assume the
exclusive right to defend, compromise, or settle such claim, but the
Indemnifying Party will not be bound by any determination of a claim so defended
or any compromise or settlement effected or expenses incurred without its
consent (which consent may not be unreasonably withheld).
5.4 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim shall be
asserted by written notice to the Indemnifying Party from whom indemnification
is sought.
5.5 SURVIVAL/LIMITATIONS.
(a) The parties hereto agree that (i) the covenants and
agreements contained in Article 5 and in Article 6 hereto shall survive the
Closing without limitation (unless expressly limited by their terms), and (ii)
all other covenants, agreements, representations and warranties contained herein
shall survive until the first anniversary following the Closing Date.
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<PAGE> 10
(b) Seller's obligation to indemnify the Seller Indemnified
Persons for Damages pursuant to Section 5.1 hereof is subject to the following
limitation: in no event shall Seller's obligation to indemnify the Seller
Indemnified Persons exceed ten percent (10%) of the Purchase Price.
6. GENERAL PROVISIONS
6.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each Party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, brokers or finders, counsel, and accountants. Buyer shall pay
any Transfer Taxes, and such Taxes, if any, shall not be considered a liability
of Seller for any purpose, including, without limitation, for purposes of
Section 2.4(b) hereof. In the event of termination of this Agreement, the
obligation of each Party to pay its own expenses will be subject to any rights
of such Party arising from a breach of this Agreement by another Party.
6.2 HEADINGS; CONSTRUCTION. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
6.3 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as Buyer
and Seller agree in writing, provided that the parties shall reasonably
cooperate in such announcements, and provided further that nothing contained
herein shall prevent any party from at any time furnishing information required
by a Governmental Body.
6.4 AVAILABILITY OF EQUITABLE REMEDIES. The Parties acknowledge and
agree that (i) a breach of the provisions of this Agreement could not adequately
be compensated by money damages, and (ii) any Party shall be entitled, in
addition to any other right or remedy available to it, to an injunction
restraining such breach and to specific performance of this Agreement, and no
bond or other security shall be required in connection therewith.
6.5 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
Party may designate by notice to the other Parties):
If to Seller, to:
Mr. George T. Reynolds III
RV Outdoor Sign Joint Venture
2911 Turtle Creek Boulevard
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<PAGE> 11
Suite #880
Dallas, Texas 75219
Telephone No.: (214) 559-3844
Facsimile No.: (214) 522-7041
With a copy to:
Strasburger & Price, L.L.P.
901 Main Street
Suite 4300
Dallas, Texas 75202
Attention: Mike Joplin, Esq.
Telephone No.: (214) 651-4300
Facsimile No.: (214) 651-4330
If to Buyer, to:
Outdoor Systems, Inc.
2502 North Black Canyon Highway
Phoenix, Arizona 85009
Telephone No.: (602) 246-9569
Facsimile No.: (602) 433-2482
Attention: William S. Levine
and
William S. Levine
1702 E. Highland Avenue, Suite 310
Phoenix, Arizona 85016
Telephone No.: (602) 248-8181
Facsimile No.: (602) 248-0884
With a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, NE, 16th Floor
Atlanta, Georgia 30303
Attention: William B. Shearer, Jr., Esq.
Telephone No.: (404) 572-6600
Facsimile No.: (404) 572-6999
6.6 FURTHER ASSURANCES. The Parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things, all as
the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
6.7 WAIVER. Neither the failure nor any delay by any Party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
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<PAGE> 12
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
6.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the Parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the Party to be charged with the amendment.
6.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Parties except that Buyer may assign any of its rights under this
Agreement to any affiliate of Buyer. This Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the Parties, and their
successors, by liquidation or otherwise, and their permitted assigns. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.
6.10 ACCOUNTS RECEIVABLE. Buyer agrees to forward to Seller any
payments that Buyer may receive with respect to any accounts receivable of
Seller.
6.11 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
6.12 POST-CLOSING ACCESS. Buyer agrees that all Books and Records
delivered to Buyer by Seller pursuant to this Agreement shall be maintained open
for inspection by Seller at any time during regular business hours upon
reasonable notice for a period of six (6) years (or for such longer period as
may be required by applicable Legal Requirements) following the Closing and
that, during such period, Seller, at its expense, may make such copies thereof
as it may reasonably desire. Seller agrees that all books and records relating
to the Purchased Assets and retained by Seller shall be maintained open for
inspection by Buyer at any time during regular business hours for a period of
six (6) years (or for such longer period as may be required by applicable Legal
Requirements) following the Closing and that, during such period, Buyer, at its
expense, may make such copies thereof as it may reasonably desire. Nothing
contained in this Section 6.12 shall obligate any Party hereto to make available
any books and records if to do so would violate the terms of any Contract or
Legal Requirement to which it is a party or to which it or its assets are
subject.
6.13 APPLICABLE LAW. This Agreement shall be governed and controlled as
to validity, enforcement, interpretations, construction, effect and in all other
respects by the internal laws of the State of Texas applicable to contracts made
in that State. The parties hereto agree to submit exclusively to any federal or
state court located in the State of Texas any dispute or controversy arising out
of or relating to this Agreement.
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<PAGE> 13
6.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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<PAGE> 14
IN WITNESS WHEREOF, the Parties have executed, sealed and delivered
this Agreement as of the date first written above.
BUYER:
OUTDOOR SYSTEMS, INC.
By: ____________________________________
William S. Levine
Chairman
SELLER:
RV OUTDOOR SIGN JOINT VENTURE
By: GRTP, Ltd., Manager
By: Reynolds Texas Properties, L.C.,
General Partner
By: ____________________________________
George T. Reynolds, III
Manager
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<PAGE> 15
EXHIBIT A
DEFINITIONS
"ADVERTISING CONTRACTS" -- as defined in Section 2.2(c).
"AFFILIATES" -- when used with reference to a specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Specified
Person. For purposes of this definition of Affiliate, "control" means the
possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies of the Person in question, whether through
the ownership of voting securities or by contract or otherwise.
"ASSUMED LIABILITIES" -- as defined in Section 2.3.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances.
"BOOKS AND RECORDS" -- All of Seller's books and records relating to
the Purchased Assets, including, without limitation, all Site Lease files,
Advertising Contract files, Permit files, maintenance and other records for the
Structures, logs, advertiser, customer and supplier lists.
"BUYER" -- as defined in the first paragraph of this Agreement.
"CLOSING" -- as defined in Section 2.5.
"CLOSING DATE" -- as defined in the first paragraph of this Agreement.
"CLOSING DOCUMENTS" -- as defined in Section 3.2(a).
"CONFIDENTIAL INFORMATION" -- any information concerning the businesses
and affairs of Seller that is not generally available to the public.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including: (a) the purchase of the Purchased Assets by Buyer
from Seller and assignment to and assumption by Buyer of the Assumed
Liabilities, and (b) the performance by Buyer and Seller of their respective
covenants and obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" -- as defined in Section 5.1.
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<PAGE> 16
"DISCLOSURE SCHEDULE" -- the disclosure schedule, delivered by Seller
to Buyer concurrently with the execution and delivery of this Agreement.
"ENCUMBRANCE" -- any charge, claim, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW" -- any Legal Requirement pertaining to
environmental discharges, Release, emissions or spills or the manufacture, sale,
processing, handling, transportation, storage or disposal of any Hazardous
Materials, or relating to any environmental processes or condition, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act ("RCRA"), the Endangered Species Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Surface Mining Control and Reclamation Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Coastal Zone Management Act, the National
Environmental Policy Act, the Noise Control Act. As used in this Agreement,
Environmental Laws shall mean any of such laws or regulations as the same exist
now or at the Closing Date.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"EXCLUDED ASSETS" -- as defined in Section 2.2.
"EXCLUDED LIABILITIES" -- as defined in Section 2.4.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"INDEMNIFIED PERSON" -- any of the Seller Indemnified Persons or the
Buyer Indemnified Persons, as the context requires.
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<PAGE> 17
"INDEMNIFYING PARTY" -- the Buyer or the Seller, as the context
requires.
"INTANGIBLE PROPERTY" -- All right, title and interest in and to the
goodwill and other intangible property (except for Seller's corporate or trade
names and trade logos) used in connection with the Purchased Assets, all
licenses, permits and authorizations pertaining to the Purchased Assets or the
right to own and operate the Purchased Assets and all right, title and interest
in and to (i) any intellectual property used in connection with the Purchased
Assets, and (ii) all records and data relating specifically to the Purchased
Assets.
"IRC" -- the Internal Revenue Code of 1986, as amended from time to
time, or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"JOINT VENTURERS" -- Manager and RV Investment Associates.
"KNOWLEDGE" -- a Person will be deemed to have "Knowledge" of a
particular fact or other matter only if such Person is actually aware of such
fact or other matter without making any independent inquiry or investigation. A
Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or, in the case of
Seller, the Manager) (or in any similar capacity) has Knowledge of such fact or
other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"MANAGER" -- GRTP, Ltd., a Texas limited partnership.
"MATERIAL ADVERSE CHANGE" -- a change that will probably cause a
Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" -- a material adverse effect on the Business,
the Purchased Assets, or the Real Property or operations or conditions
(financial or otherwise) relating thereto, taken as a whole.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
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"OTHER CONTRACT" -- any Contract (other than a Site Lease or
Advertising Contract) relating to or affecting the Purchased Assets or the
operation thereof (i) under which Seller has or may acquire any rights, (ii)
under which Seller has or may become subject to any obligation or liability, or
(iii) by which Seller or any of the Purchased Assets is or may become bound.
"PARTY" -- as defined in the first paragraph of this Agreement.
"PERMITS" -- as defined in Section 2.2(d).
"PERMITTED LIENS" -- liens for taxes not yet delinquent.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" -- as defined in Section 2.5.
"PURCHASED ASSETS" -- as defined in Section 2.2.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITY INTEREST" -- any mortgage, pledge, lien, encumbrance, charge
or other security interest or option or right of any third party with respect
thereto.
"SELLER" -- as defined in the first paragraph of this Agreement.
"SITE LEASES" -- as defined in Section 2.2(b).
"STRUCTURES" -- as defined in Section 2.2(a).
"TAX" -- shall mean all tax (including income tax, capital gains tax,
value added tax, sales tax, property tax, transfer tax or intangibles tax), levy
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including fine, penalty and interest) imposed, assessed or collected by
or under the authority of any Governmental Body.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
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or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"TRANSFER TAXES" -- any sales, use or transfer taxes arising from the
transfer of the Purchased Assets from Seller to Buyer hereunder.
"THREATENED" -- a claim, Proceeding or dispute will be deemed to have
been "THREATENED" if any demand or statement has been made or any notice has
been given that would lead a prudent Person to conclude that such a claim,
Proceeding or dispute is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
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SCHEDULE 2.2(x)
EXCLUDED ASSETS
1. Cash and Accounts Receivable
<PAGE> 1
EXHIBIT 99.8
================================================================================
ASSET PURCHASE AGREEMENT
dated as of January 21, 1997
by and among
OUTDOOR SYSTEMS, INC.
AND
SCADRON ENTERPRISES,
ROBERT B. SCADRON,
JEFFREY SCADRON
AND
BARRY SCADRON
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS................................................................. 1
2. PURCHASE AND SALE OF THE ASSETS; CLOSING.................................... 1
2.1 Agreement to Purchase and Sell..................................... 1
2.2 Purchased Assets................................................... 2
2.3 Agreement to Assume Certain Liabilities............................ 2
2.4 Excluded Liabilities............................................... 3
2.5 Closing............................................................ 3
2.6 Purchase Price..................................................... 3
2.7 Transactions at the Closing........................................ 5
2.8 Third Party Consents............................................... 5
2.9 New Assets......................................................... 6
2.10 Escrow............................................................. 6
3. REPRESENTATIONS AND WARRANTIES OF SELLER.................................... 7
3.1 Organization and Good Standing..................................... 8
3.2 Authority; No Conflict............................................. 8
3.3 Solvency........................................................... 9
3.4 Books and Records.................................................. 9
3.5 Purchased Assets................................................... 9
3.6 Title, Encumbrances................................................ 11
3.7 No Undisclosed Liabilities......................................... 11
3.8 Taxes.............................................................. 11
3.9 Compliance with Legal Requirements; Governmental Authorizations.... 12
3.10 Legal Proceedings; Orders.......................................... 12
3.11 Other Contracts.................................................... 13
3.12 Insurance.......................................................... 13
3.13 Environmental Matters.............................................. 13
3.14 Intangible Property................................................ 13
3.15 Disclosure......................................................... 13
3.16 Relationships with Related Persons................................. 14
3.17 Brokers or Finders................................................. 14
3.18 Employee Benefit Matters........................................... 14
3.19 Bulk Sales......................................................... 14
4. REPRESENTATIONS AND WARRANTIES OF BUYER..................................... 14
4.1 Organization and Good Standing..................................... 14
4.2 Authority; No Conflict............................................. 14
4.3 Certain Proceedings................................................ 15
4.4 Brokers or Finders................................................. 15
4.5 License............................................................ 15
4.6 Disclosure......................................................... 15
</TABLE>
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<TABLE>
<S> <C>
5. COVENANTS OF SELLER................................................... 15
5.1 Access and Investigation..................................... 15
5.2 Non-Solicitation............................................. 16
5.3 Operation of the Purchased Assets............................ 16
5.4 Negative Covenant............................................ 16
5.5 Required Approvals........................................... 16
5.6 Consents..................................................... 16
5.7 Notification................................................. 16
5.8 No Negotiation............................................... 17
5.9 Tax Clearance................................................ 17
5.10 Best Efforts................................................. 17
6. COVENANTS OF BUYER.................................................... 17
6.1 Approvals of Governmental Bodies............................. 17
6.2 Best Efforts................................................. 17
6.3 Imprints..................................................... 18
6.4 Notification................................................. 18
6.5 Buyer's Covenants Regarding Certain Locations................ 18
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE................... 19
7.1 Accuracy of Representations.................................. 19
7.2 Seller's Performance......................................... 19
7.3 Consents..................................................... 19
7.4 Additional Documents......................................... 19
7.5 No Proceedings............................................... 19
7.6 No Prohibition............................................... 19
7.7 No Material Adverse Change................................... 19
7.8 Release of Liens............................................. 20
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.................. 20
8.1 Accuracy of Representations.................................. 20
8.2 Buyer's Performance.......................................... 20
8.3 Additional Documents......................................... 20
8.4 No Prohibition............................................... 20
8.5 No Proceedings............................................... 20
9. TERMINATION........................................................... 21
9.1 Termination Events........................................... 21
9.2 Effect of Termination........................................ 21
10. INDEMNIFICATION; REMEDIES............................................. 21
10.1 Indemnification and Payment of Damages by Seller............. 21
10.2 Indemnification and Payment of Damages by Buyer.............. 22
10.3 Procedure for Indemnification -- Third Party Claims.......... 23
10.4 Procedure for Indemnification -- Other Claims................ 23
10.5 Survival/Limitations......................................... 24
10.6 Exclusive Remedies........................................... 24
</TABLE>
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11. GENERAL PROVISIONS................................................ 24
11.1 Expenses................................................. 24
11.2 Public Announcements..................................... 24
11.3 Availability of Equitable Remedies....................... 25
11.4 Notices.................................................. 25
11.5 Further Assurances....................................... 26
11.6 Waiver................................................... 26
11.7 Entire Agreement and Modification........................ 27
11.8 Assignments, Successors, and No Third-Party Rights....... 27
11.9 Accounts Receivable...................................... 27
11.10 Severability............................................. 27
11.11 Risk of Loss............................................. 27
11.12 Post-Closing Access...................................... 27
11.13 Article and Section Headings; Construction............... 28
11.14 Applicable Law........................................... 28
11.15 Counterparts............................................. 28
11.16 Joint and Several........................................ 28
EXHIBITS
Exhibit A - Definitions
Exhibit B - Advertising Services Agreements
Exhibit C - Leases
Exhibit D - Bill of Sale, Assignment and Assumption Agreement
Exhibit E - Assignment of Advertising Services Agreements
Exhibit F - Assignment of Site Leases
Exhibit G - Assignment of Permits
Exhibit H - Opinion of Gardner, Carton & Douglas, Counsel to Seller
Exhibit I - Opinion of Powell, Goldstein, Frazer & Murphy, Counsel
to Buyer
Exhibit J - Confidentiality Agreement
DISCLOSURE SCHEDULE
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of
January 21, 1997, by and among OUTDOOR SYSTEMS, INC., a Delaware corporation
("Buyer"), SCADRON ENTERPRISES, an Illinois general partnership (the "Company"),
ROBERT B. SCADRON, an individual residing in the State of Illinois ("Scadron")
and Managing Partner of the Company, JEFFREY SCADRON, an individual residing in
the State of Illinois and a Partner of the Company ("J. Scadron") and BARRY
SCADRON ("B. Scadron"), an individual residing in the State of Illinois and a
Partner of the Company (hereinafter, Scadron, J. Scadron, B. Scadron and the
Company are sometimes referred to collectively as the "Seller"). (Buyer and
Seller are sometimes herein referred to individually as a "Party" and
collectively as the "Parties".)
RECITALS
Seller is engaged in the business of owning and operating outdoor signs
and billboards and otherwise providing outdoor advertising services in the
Chicago metropolitan area (the "Business"). Seller desires to sell and assign
certain out-of-home assets to Buyer, and Buyer desires to purchase such assets
and to assume certain liabilities associated with such assets, pursuant to the
terms, conditions, limitations and exclusions contained in this Agreement.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms listed on Exhibit A attached
hereto have the meanings specified or referred to in Exhibit A.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING
2.1 AGREEMENT TO PURCHASE AND SELL. On the basis of the
representations, warranties, covenants, and agreements contained in this
Agreement and subject to the terms and conditions of this Agreement, Seller
hereby agrees to grant, sell, assign, transfer, convey and deliver all right,
title and interest in and to the Purchased Assets, free and clear of any liens,
title claims, Encumbrances or Security Interests (except as otherwise
specifically permitted pursuant to the provisions of this Agreement) and to
enter into the Leases, and Buyer hereby agrees to buy and acquire the Purchased
Assets from Seller, to enter into the Leases and to assume the Assumed
Liabilities upon the terms and conditions set forth in this Agreement. The
Purchased Assets with respect to which consent from third parties are required
to transfer Seller's rights shall be transferred by the Company to Buyer at
Closing. All other Purchased Assets shall be transferred by the Scadrons to
Buyer at Closing.
<PAGE> 6
2.2 PURCHASED ASSETS. The Purchased Assets are:
(a) All of the billboard displays and other out-of-home
advertising structures set forth and described in the Master Disclosure Schedule
("MDS") attached hereto, together with all necessary panels, moldings,
components, assigned rights to walls, sections, fixtures, parts, appurtenances,
and equipment attached to or made a part thereof, including, for illuminated
structures, all electrical components, wiring, and lighting components
associated therewith that are existing, under construction or for which Seller
has any rights (collectively, the "Structures");
(b) All leases, licenses, easements, other rights of ingress
or egress, occupancy agreements, and all other grants of the right to place,
construct, own, operate or maintain the Structures on land, buildings and other
real property owned by third parties, and all extensions, modifications, or
renewals thereof and rights therein (except for any claims for reimbursement of
taxes or other similar items relating to taxes paid by Seller for the period
prior to Closing) (collectively, the "Site Leases"), which Site Leases are set
forth and described in the MDS;
(c) All rights under existing and pending sales and
advertising contracts associated with the Structures and all rights, title and
interest to the advertising copy displayed on the Structures as of the Closing
Date (except for any claims for reimbursement of taxes or other similar items
relating to taxes paid by Seller for the period prior to Closing) (collectively,
the "Advertising Services Agreements"), which Advertising Services Agreements
are set forth and described on Exhibit B attached hereto;
(d) All state and local licenses or permits/tags which Seller
has with respect to the Structures and, to the extent assignable, all other
Governmental Authorizations that are required for the operation of the
Structures that Seller has with respect to the Structures, including, without
limitation, all Governmental Authorizations to erect and maintain the Structures
or to occupy any sites covered by the Site Leases (collectively, the "Permits"),
which Permits are set forth and described in the MDS;
(e) All Books and Records; and
(f) All rights (including any benefits arising therefrom),
causes of action, claims and demands of whatever nature (whether or not
liquidated) relating to the Purchased Assets, including, without limitation,
condemnation rights and proceeds, and all rights against suppliers under
warranties that Seller has covering any of the Purchased Assets (except for any
claims for reimbursement of taxes or other similar items relating to taxes paid
by Seller for the period prior to Closing) .
2.3 AGREEMENT TO ASSUME CERTAIN LIABILITIES. At the Closing, Buyer
shall assume and agree to discharge and perform all liabilities and obligations
that arise or are attributable to events occurring on or after the Closing Date
pursuant to the Site Leases and the Advertising Services Agreements (the
"Assumed Liabilities") but to the extent and only to the extent that:
(a) Such obligations are performable on or after the Closing
Date; and
(b) Such obligations accrue on or after the Closing Date and
are attributable to periods arising on or after the Closing Date.
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<PAGE> 7
2.4 EXCLUDED LIABILITIES. All claims against and liabilities and
obligations of Seller not specifically assumed by Buyer pursuant to Section 2.3,
including, without limitation, the following claims against and liabilities of
Seller (the "Excluded Liabilities"), which are excluded, shall not be assumed or
discharged by Buyer, and shall be discharged in full when due by Seller:
(a) Any liabilities to the extent not attributable to the
Purchased Assets;
(b) Any liability of Seller for Taxes arising prior to or from
the sale of the Purchased Assets under this Agreement;
(c) Any liabilities for or related to indebtedness of Seller
to banks, financial institutions, or other Persons;
(d) Any liabilities of Seller under any leases, contracts,
insurance policies, commitments, sales orders, or purchase orders that are not
assigned to Buyer pursuant to this Agreement or to the extent that such
liabilities arise or are attributable to events occurring prior to the Closing;
(e) Any liabilities of Seller for or with respect to any
employees of Seller, including, without limitation, any liabilities for accrued
and unpaid wages, salaries, bonuses, commissions, sick leave, vacation time, or
compensated time off owing by Seller to its employees or pursuant to any
compensation, collective bargaining, pension, retirement, severance,
termination, or other benefit plan, agreement or arrangement; and
(f) Any other liabilities of Seller that are attributable to
or arise from facts, events, or conditions that occurred or came into existence
prior to the Closing.
2.5 CLOSING. The purchase and sale of the Purchased Assets (the
"Closing") provided for in this Agreement will take place at the offices of
Gardner, Carton & Douglas, in Chicago, Illinois, on February 15, 1997 or such
earlier time as all the conditions to Closing set forth herein have been
satisfied. The effective time of the Closing shall be 11:59 p.m., Eastern
Standard Time, on the Closing Date. Subject to the provisions of Section 9,
failure to consummate the purchase and sale provided for in this Agreement on
the date and time and at the place determined pursuant to this Section 2.5 will
not result in the termination of this Agreement and will not relieve any Party
of any obligation under this Agreement.
2.6 PURCHASE PRICE. In consideration for the Purchased Assets, Buyer
shall assume the Assumed Liabilities, and pay an amount (the "Purchase Price")
equal to Twenty-Eight Million Dollars ($28,000,000), of which the Total Escrow
Amount shall be paid to the Escrow Agent and the balance to the Seller (which
balance shall be allocated among and paid to the Company and the Scadrons in
such amounts as they shall jointly designate in writing to Buyer.) The Purchase
Price shall be subject to adjustment as set forth in Sections 2.8 and 2.9 hereof
and as follows:
(a) The following items shall be prorated between Seller and
Buyer as of the Closing Date with respect to the Purchased Assets: power and
utility charges, real (if any) and personal property taxes, rents (including
percentage rents) and security deposits under Site Leases, and payments and
security deposits under Advertising Services Agreements. Prorations will be on a
dollar-for-dollar basis based on the number of days of display before and after
the Closing. Any
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<PAGE> 8
prorations (except percentage rents) not determined at the Closing shall be
prorated on the basis of the most current information available at Closing. On
the Closing Date, Seller shall provide to Buyer a list of items and the
prorations required by this Section 2.6(a) ("Preliminary Adjustment") and the
Purchase Price shall be adjusted accordingly. Seller agrees to furnish Buyer
with any documents or records in Seller's possession that may be needed for
Buyer to confirm the adjustment and prorations in this Section 2.6(a).
(b) Within ninety (90) days after the Closing Date, Buyer will
prepare and provide to Seller an adjusted list of items to be prorated as of the
Closing and reflecting the items to be adjusted and prorated pursuant to Section
2.6(a) and showing the recalculation of adjustments to the Purchase Price
pursuant to the Preliminary Adjustment (the "Closing Date Adjustment"). On the
120th day after the Closing Date, all required refunds or payments under Section
2.6(a) and this 2.6(b), shall be made on the basis of the Closing Date
Adjustment.
(c) Notwithstanding Sections 2.6(a) and 2.6(b), the proration
as of the Closing Date of percentage rents payable under any particular Site
Lease shall be made by Buyer and notice thereof (showing the applicable
calculations) given to Seller, within thirty (30) days following the expiration
of the period over which the percentage rents are calculated under such Site
Lease. The proration notice shall be accompanied by any amounts due Seller as
shown therein, or in the event Seller owes Buyer as shown therein, Seller shall
reimburse Buyer such amount within ten (10) days of receipt of the amount.
(d) If any dispute arises over any amount to be refunded and
paid under this Section 2.6 (whether pursuant to the Preliminary Adjustment, the
Closing Date Adjustment or the percentage rent prorations), such refund or
payment shall nonetheless be promptly made to the extent such amount is not in
dispute. If any such dispute cannot be resolved by the Parties, it shall be
submitted to Buyer's accountants and Seller's accountants for resolution by such
accountants. If such dispute is not resolved by such accountants within thirty
(30) days after the dispute is first submitted to both accountants for
resolution, then Buyer's accountants and Seller's accountants shall jointly
designate a third independent certified public accountant (the "Third
Accountant"), and the resolution of such dispute shall be made by the Third
Accountant. The determination of the Third Accountant shall be final and binding
upon the parties to this Agreement. Buyer and Seller shall each pay one-half of
the fees and expenses of the Third Accountant. Each party shall otherwise bear
its own costs and expenses associated with the resolution of such dispute,
including the fees and expenses of their respective accountants and attorneys.
(e) Buyer and Seller agree to determine the allocation of the
Purchase Price in writing on or before the Closing, and Buyer and Seller shall
use such allocation for reporting the purchase and sale of the Purchased Assets
for Federal, state and local tax purposes and for completing the Form 8594
required to be filed with the IRS.
2.7 TRANSACTIONS AT THE CLOSING. The following transactions shall take
place at the Closing:
(a) Seller shall deliver to Buyer (i) the Bills of Sale, (ii)
the Assignments of Advertising Services Agreements, (iii) the Assignments of
Site Leases, (iv) the Assignments of Permits, (v) the originals of the
Advertising Services Agreements and Site Leases, (vi) the Leases, (vii)
instruments of assignment of all warranties, guarantees and indemnities now in
effect with
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<PAGE> 9
respect to all of the Purchased Assets, (viii) all applicable Tax Clearances,
and (ix) other instruments of transfer, evidence of consent and all other
related documents as may be necessary to evidence or perfect the sale,
assignment, transfer, and conveyance of good title to all of the Purchased
Assets, in each case free and clear of all liens, Security Interests, pledges,
charges, and Encumbrances. Seller shall also deliver to Buyer all Books and
Records; provided, however, that Seller and its officers, employees, counsel,
and agents shall be afforded free and full access to any tax or accounting
records included in the Books and Records and shall be permitted to make
extracts from and copies of such records.
(b) Buyer shall deliver to Seller the Purchase Price, as
adjusted pursuant to Section 2.6, by wire transfer of immediately available
funds to an account designated in writing by Seller.
(c) Buyer shall deliver to Seller the Leases and such
assumption agreements, instructions and other documents as may be necessary to
evidence the assumption by Buyer of the Assumed Liabilities.
(d) The Parties shall also deliver to each other the
agreements, instruments, opinions, certificates, and other documents referred to
in this Agreement.
2.8 THIRD PARTY CONSENTS. To the extent that Seller's rights under any
Advertising Services Agreement, Site Lease or other interest in the Purchased
Assets may not be assigned without the consent of a third party and such consent
has not been obtained, this Agreement shall not constitute an agreement to
assign the same if an attempted assignment would constitute a breach thereof or
be unlawful, and Seller, at its expense, shall use Best Efforts to obtain any
such required consent promptly following the Closing Date. If any such consent
shall not be obtained and the Advertising Services Agreement, the Site Lease or
other interest in the Purchased Assets in question permits Seller to subcontract
its rights and obligations thereunder, then Seller shall subcontract such rights
and obligations to Buyer and Buyer shall accept such subcontract. In the event
that on or before the Closing, any Site Lease cannot be assigned or the rights
therein subcontracted to Buyer hereunder for failure to obtain a consent, or
another mutually acceptable arrangement entered into, the Site Lease and its
related Structures, Permits, Site Leases and Advertising Services Agreements
shall not be included in the Purchased Assets purchased at Closing and the
related liabilities not included in the Assumed Liabilities assumed at Closing,
and the Purchase Price shall be reduced by the Site Lease Purchase Price for
such Site Lease and related assets. At such time as the Required Consent(s) for
the transfer of such Site Lease have been obtained, the Seller shall transfer
the Site Lease and the associated Structures, Permits, Site Leases and
Advertising Services Agreements, and the Buyer shall pay Seller the Site Lease
Purchase Price, subject to any applicable prorations determined in accordance
with Section 2.6, in cash, for the same, and in all other respects the purchase
of such assets shall be in accordance with and subject to the terms of this
Agreement as if such transfer had occurred at the Closing. Seller agrees to use
its Best Efforts to deliver all the Required Consents on or before August 15,
1997. After such date, neither Buyer nor Seller shall have any further
obligations hereunder with respect to any Required Consent and related assets
not delivered to Buyer on or prior to such date. Notwithstanding anything
contained herein to the contrary, Buyer shall have the right to waive the
obtaining of any Consent required for the transfer of any particular Purchased
Asset and, in such case, Seller shall transfer such Purchased Asset to Buyer at
Closing and Buyer shall assume all risks associated with the failure to obtain
such Consent.
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2.9 NEW ASSETS. Notwithstanding anything to the contrary set forth
herein, the parties acknowledge and agree that the New Assets shall not be
purchased by Buyer until and unless, in the case of each New Structure, the
construction of the New Structure has been completed and all appropriate Permits
for such New Structure have been obtained, and the New Structure and the related
Permits, Site Lease and Advertising Services Agreements, if any, otherwise
conform with the representations and warranties set forth herein for such
assets. To the extent that such conditions have not been satisfied with respect
to any New Structure on the Closing Date, the New Structure and its related
Permits, Site Leases and any Advertising Services Agreement shall not be
included in the Purchased Assets purchased at Closing and the related
liabilities not included in the Assumed Liabilities assumed at Closing, and the
Purchase Price shall be reduced by the New Structure Purchase Price for such New
Structure and related New Assets. At such time as the conditions for any such
New Structure have been met, the Seller shall transfer the New Structure and the
associated Permits, Site Leases and any Advertising Services Agreement, and the
Buyer shall pay Seller the New Asset Purchase Price, subject to any applicable
prorations determined in accordance with Section 2.6, in cash, for the same, and
in all other respects the purchase of such New Assets shall be in accordance
with and subject to the terms of this Agreement as if such transfer had occurred
at the Closing. Seller agrees to use its Best Efforts to deliver all the New
Assets on or before February 15, 1998. After such date, neither Buyer nor Seller
shall have any further obligations hereunder with respect to any New Assets not
delivered to Buyer on or prior to such date.
2.10 ESCROW. Notwithstanding anything to the contrary contained herein,
the parties agree that to the extent any of the New Permits have not been issued
to Seller or cannot be transferred to Buyer on or before the Closing Date, with
respect to the New Permit Assets related to such New Permit:
(a) the parties shall enter into an escrow agreement at
Closing containing the terms and conditions set forth in this Section 2.10 and
such other terms and conditions as may be mutually agreeable;
(b) there shall be deducted from the Purchase Price and
deposited by Buyer with the Escrow Agent an amount equal to the Escrow Amount
for each such New Permit which has not been issued or is not transferable;
(c) Seller shall operate the New Permit Assets on behalf of
Buyer, as Buyer's agent. Seller shall pay all expenses of such operations from
revenues derived from such sites (provided, that if such expenses exceed
revenues, Buyer shall reimburse Seller for the excess upon termination of the
escrow) and Seller shall deliver to Buyer on or before the 15th of each month a
statement, certified by Seller, setting forth Seller's determination of the Cash
Flow for each site for the New Permit for the preceding month;
(d) upon issuance of the New Permit, the Escrow Amount for
such New Permit, together with interest, shall be released from escrow to Seller
provided, however, that simultaneously therewith Seller shall deliver to Buyer
an amount equal to the aggregate Cash Flow since the Closing Date for the site
for the New Permit;
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<PAGE> 11
(e) in the event that any of the New Permits have not been
issued or obtained by December 15, 1997, then, unless Buyer elects on or prior
to December 30, 1997 pursuant to the option described in subsection (f) below to
sell the New Permit Assets related to such New Permits back to Seller, the
Escrow Amounts then held in escrow, together with interest earned thereon, shall
be delivered to Seller provided that simultaneously therewith Seller shall
deliver to Buyer an amount equal to the aggregate Cash Flow since the Closing
Date for such New Permit Assets;
(f) Seller hereby agrees to repurchase from Buyer all New
Permit Assets related to any or all New Permits which have not been issued or
obtained by December 15, 1997, upon written request by Buyer given on or prior
to December 30, 1997, at a purchase price equal to the Escrow Amount for such
New Permit Assets, plus interest, less the aggregate Cash Flow since the Closing
Date for such New Permit Assets and the purchase shall be effected on or prior
to December 31, 1997 as follows: Buyer shall execute and deliver appropriate
transfer documents in favor of Seller, the aggregate Cash Flow since the Closing
Date shall be retained by Seller and the Escrow Amount plus interest earned
thereon, shall be delivered from the Escrow to Buyer; and
(g) Notwithstanding anything to the contrary contained in this
Section 2.10, if any New Permit is not issued because the Site Lease for the
site for any such New Permit is cancelled or terminated after the Closing
through no act or omission of Seller's, the option contained in subsection (f)
will not apply to the New Permit Assets related to such New Permit and the
Escrow Amount plus interest earned thereon shall be released from escrow to
Seller within five (5) days after cancellation or Termination of the Site Lease;
provided that simultaneously therewith Seller shall deliver to Buyer an amount
equal to the aggregate Cash Flow since the Closing Date for such New Permit
Assets.
In the event that on or before the Closing, a Permit is cancelled or terminated,
it shall be deemed a New Permit hereunder, and, in each case, the Structures,
Permits, Site Leases and Advertising Services Agreements associated therewith
shall be deemed New Permit Assets for all purposes hereunder, including without
limitation the provisions of this Section 2.10.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
The Company and each of the Scadrons jointly and severally represent
and warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Part 3.1 of the Disclosure Schedule
contains a complete and accurate list of (i) the counties where the Structures,
Site Leases and the Real Property are located, (ii) the Company's name and
jurisdiction of organization, (iii) names that Seller has used or conducted the
Business under during the past five (5) years, and (iv) the addresses at which
Seller has conducted the Business during such five (5)-year period. The Company
is a general partnership duly organized, validly existing and in good standing
under the laws of Illinois, with full power and authority to conduct the
Business as it is now being conducted, to own or use the Purchased Assets and
the Real Property, and to perform all its obligations. The Company has delivered
to Buyer copies of its Organizational Documents, as currently in effect. Scadron
is the sole Managing Partner of and owns approximately 85% of the partnership
interests in the Company. Each Scadron is a general partner of the Company, and
the Scadrons collectively own 100% of the partnership interests in the Company.
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<PAGE> 12
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of each of the Company and the Scadrons, enforceable against each of
them, respectively, in accordance with its terms. Upon the execution and
delivery by the Company and the Scadrons, as applicable, of any documents to be
executed at Closing pursuant to this Agreement (collectively, the "Closing
Documents"), such Closing Documents will constitute the legal, valid, and
binding obligations of each of the Company and the Scadrons, as applicable,
enforceable against each of them in accordance with their respective terms. Each
of the Company and the Scadrons has the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and the Closing
Documents to which each is a party and to perform its or his obligations
thereunder. The execution, delivery and performance of this Agreement has been
specifically authorized by the Partners of the Company.
(b) Except as set forth on the MDS or in Part 3.2 of the
Disclosure Schedule, neither the execution and delivery by the Company and the
Scadrons of this Agreement nor the consummation or performance by the Company
and the Scadrons of any of the Contemplated Transactions will:
(i) conflict with, violate or result in a breach of
(A) any provision of the Organizational Documents of the Company, or
any resolution adopted by the Partners of the Company; (B) any Legal
Requirement or any Order to which the Company or the Scadrons or any of
the Purchased Assets or Real Property may be subject; (C) any
Governmental Authorization that is held by the Company or the Scadrons
or that otherwise relates to the Purchased Assets or Real Property or
the business associated therewith; or (D) any material Contract to
which the Company or the Scadrons is a party or by which the Company or
the Scadrons may be bound; or
(ii) (A) cause Buyer to become liable for the payment
of, any taxes in Illinois arising from the transfer of the Purchased
Assets; (B) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any interest or
rights of Seller in or to the Purchased Assets or the Real Property; or
(C) result in the imposition or creation of any Encumbrance upon or
with respect to any of the Purchased Assets or the Real Property.
Except as set forth on the MDS or in Part 3.2 of the Disclosure Schedule and in
Section 5.9, neither the Company nor any of the Scadrons is or will be required
to give any notice to or obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions. None of the representations in this
Section 3.2(b) shall be deemed to apply to Consents to the transfer of any
Advertising Services Agreements pursuant to this Agreement .
(c) None of the Scadrons nor the Company is a person (or
included in a person), that has total assets of $10 million or more or annual
net sales of $10 million or more, within the meaning of, and as determined in
accordance with, the HSR Act.
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3.3 SOLVENCY. By consummating the transactions contemplated hereby,
including, without limitation, the distribution of any Purchased Assets by the
Company to the Scadrons prior to the Closing, Seller does not intend to hinder,
delay or defraud any of Seller's present or future creditors. Before giving
effect to the transactions contemplated hereby, Seller has been paying its debts
in the ordinary course of business and, after giving effect to the transactions
contemplated hereby, Seller will have paid or discharged all of its debts (or
made adequate provision for the payment thereof) in the Ordinary Course of
Business. Without limiting the foregoing, Seller will pay on or prior to
maturity all of the debts described in Section 2.4 that become due and properly
payable except as such are Assumed Liabilities.
3.4 BOOKS AND RECORDS. The Books and Records of the Company maintained
in connection with the Purchased Assets are complete and correct in all material
respects and have been maintained in accordance with sound business practices.
3.5 PURCHASED ASSETS.
(a) Except as set forth on the MDS or in Part 3.5(a) of the
Disclosure Schedule, each Structure (i) has (or, in the case of Structures
covered by the Leases, on the Closing Date will have) a valid written Site
Lease, (ii) to the Knowledge of the Company and Scadron, is in adequate
condition and repair for the uses to which it is being put, (iii) to the
Knowledge of the Company and Scadron, has available reasonable and appropriate
means of ingress and egress to allow such Structures to be maintained and
operated without violating the rights of third parties, and (iv) is not
currently the subject of any dispute with any lessor, any owner or lessee of
adjacent or nearby property, or any other Person. Except as set forth on the MDS
or in Part 3.5(a) of the Disclosure Schedule, to the Knowledge of the Company
and Scadron, (x) such Structures are located entirely on the property covered by
a Site Lease or the Real Property, and no such Structure encroaches on any
adjoining property, public or private and (y) no other Contract exists that
relates to the Structures other than the Site Leases and the Advertising
Services Agreements.
(b) Seller has delivered or will deliver prior to Closing to
Buyer true and complete copies of the Advertising Services Agreements (including
any and all amendments and addenda thereto), and Seller has delivered or will
deliver the original Site Leases to Buyer at or prior to the Closing. Except as
set forth on Part 3.5(b) of the Disclosure Schedule, all sales made to
advertisers in connection with the Structures have been made pursuant to
Advertising Services Agreements.
(c) Except as set forth on the MDS or on Part 3.5(c) of the
Disclosure Schedule, the Permits constitute all necessary licenses, permits,
registrations, approvals, agreements and consents for the installation,
maintenance and operation of the Structures. Except as set forth in the MDS or
on Part 3.5(c) of the Disclosure Schedule, (i) each Permit is in full force and
effect, and all fees payable in connection therewith have been paid, (ii) each
Structure to which a Permit pertains complies with the terms and conditions of
such Permit (including, without limitation, terms as to size and location),
(iii) no violation of a Permit by Seller has occurred thereunder which has not
been cured, and no event, occurrence or condition exists which (with or without
notice or lapse of time or the happening of any further event or condition)
would become a violation by Seller thereunder or would have an adverse effect on
the use of any Structure, as currently used in the operation of the Purchased
Assets, (iv) Seller has not received notice of any violation which has not been
cured or notice of any termination or cancellation of any Permit, and (v) to the
Knowledge of the Company and Scadron, there is no legislation (other than
legislation that affects the outdoor advertising industry
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generally), in effect or proposed, pertaining to the ownership or operation of
billboard displays or other out-of-home structures in the area in which the
Business operates that would require the removal of any Structure; provided,
however, that this Section 3.5(c) shall not apply to any item or items unless
such item or items (individually or in the aggregate) could have a Material
Adverse Effect or it is likely that, with the lapse of time or the happening of
any further probable event or condition, such item or items (individually or in
the aggregate) could have a Material Adverse Effect; and provided, further, that
this Section 3.5(c) will not give rise to a claim for indemnification for a
breach of this Section 3.5(c) unless Buyer suffers damages with respect to the
operation of Structures to which forty percent (40%) or more of the Purchase
Price (as adjusted on the Closing Date) is attributable, determined by applying
the Price Formula to such Structures.
(d) The MDS and Part 3.5(d) of the Disclosure Schedule
contains a complete and accurate list of all Site Leases to which the Company
and the Scadrons is a party and which relate to the Purchased Assets, setting
forth, with respect to each Site Lease, (i) term, (ii) options, if any, to
renew, (iii) rentals or other payments to be made thereunder for 1997, (iv)
security deposits, if any, paid thereunder, and (v) the location of Structures.
Seller has previously delivered or will deliver to Buyer true and complete
copies of all such Site Leases (including any and all amendments and addenda
thereto). Except as set forth in the MDS or on Parts 3.5(a) and 3.5(d) of the
Disclosure Schedule, the Site Leases are in full force and effect, are binding
upon the parties thereto and to the Knowledge of the Company and Scadron, no
default by Seller has occurred thereunder. Except as set forth on the MDS or in
3.5(d) of the Disclosure Schedule, (x) to the Knowledge of the Company and
Scadron, no default by any other party has occurred under the Site Leases, (y)
to the Knowledge of the Company and Scadron, no event, occurrence or condition
exists which (with or without notice or lapse of time or the happening of any
further event or condition) would become a default by Seller thereunder or would
entitle any other party to terminate a Site Lease, to make a claim or set-off
against Seller or otherwise to amend such Site Lease or prevent such Site Lease
from being renewed in accordance with its terms, and (z) neither the Company nor
Scadron has received any written notice of default, termination or non-renewal
under any Site Lease.
3.6 TITLE, ENCUMBRANCES.
(a) Good and marketable record title to the Real Property that
will be subject to the Leases (the "Real Property") is held by land trusts of
which the Company or Scadron is the sole beneficiary, such title being a fee
interest in the Real Property. Seller has not granted to any Person any option,
contract or other agreement with respect to a purchase, sale, acquisition, lease
or other occupancy relating to the Real Property or any portion thereof or any
interest therein. Seller has not received any notice of pending or threatened
claims, actions, proceedings, planned public improvements, annexations, special
assessments, rezonings or other adverse claims affecting the Real Property.
(b) Except as set forth on the MDS or in Part 3.6(b) of the
Disclosure Schedule, Seller owns or has good title to all of the Purchased
Assets, and there are no existing agreements, options, commitments or rights
with, of or to any Person to acquire any of the Purchased Assets or the Real
Property or any interest therein. Except as set forth on the MDS or on Part
3.6(b) of the Disclosure Schedule, all of the Purchased Assets and the Real
Property are free and clear of all Encumbrances and Security Interests and are
not subject, to the Knowledge of the Company and Scadron, to any rights of way,
building use restrictions, exceptions, variances, reservations, or limitations
of any nature, other than liens for current taxes not yet due.
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(c) Except as set forth on the MDS or in Part 3.6(c) of the
Disclosure Schedule, to the Knowledge of the Company and Scadron, none of the
Structures, Site Leases or the Real Property lie in an area that is or will, be
subject to zoning, use, or building code restrictions that will prohibit the
continued effective ownership, leasing or other use of such assets as currently
owned and used and, to the Knowledge of the Company and Scadron, no
circumstances exist which prevent or will prevent the continued effective
ownership, leasing or other use of such assets as currently owned and used.
3.7 NO UNDISCLOSED LIABILITIES. Except as set forth on the MDS or on
Part 3.7 of the Disclosure Schedule, Seller has no liabilities or obligations of
any nature relating to the Purchased Assets or the Real Property.
3.8 TAXES. With respect to the Purchased Assets and the Real Property:
(a) Seller has filed or caused to be filed all Tax Returns
that are or were required to be filed by Seller, pursuant to applicable Legal
Requirements. Seller has paid, or made provision for the payment of, all Taxes
that have or may have become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by Seller, except such Taxes, if any, as are
listed in Part 3.8(a) of the Disclosure Schedule and are being contested in good
faith.
(b) Except as listed in Part 3.8(b) of the Disclosure
Schedule, no unpaid Taxes create an Encumbrance on the Purchased Assets or the
Real Property.
3.9 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
Except as set forth on the MDS or in Part 3.9 of the Disclosure Schedule:
(a) Seller has complied with all Legal Requirements applicable
to ownership or use of any of the Purchased Assets and the Real Property, except
for noncompliances or failures to file that, individually or in the aggregate,
would not be reasonably expected to have a Material Adverse Effect;
(b) The present uses and operation of the Purchased Assets and
the Real Property do not violate or fail to comply with any such Legal
Requirements except for noncompliances that, individually or in the aggregate,
would not be reasonably expected to have a Material Adverse Effect;
(c) To the knowledge of the Company and Scadron, no basis
exists for any claim for compensation or damage or other legal or equitable
relief from any violation of the foregoing, the effect of which violations,
individually or in the aggregate, would be reasonably expected to have a
Material Adverse Effect; and
(d) Seller has not received any written notice within the
preceding one (1) year of any violation or failure to comply with any Legal
Requirement relating to the Purchased Assets or the Real Property or the use or
operation thereof which violation or failure has not been cured.
As used in Sections 3.9(a), (b) and (c), the term "Legal Requirement"
does not include any Occupational Safety and Health Law or Environmental Law.
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<PAGE> 16
3.10 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth on the MDS or in Part 3.10(a) of the
Disclosure Schedule, there is no pending Proceeding, (i) that has been commenced
by or against Seller that relates to or may affect the Purchased Assets, the
Real Property or the Leases; or (ii) that challenges, or that may have the
effect of preventing, making illegal, or otherwise delaying, any of the
Contemplated Transactions. To the Knowledge of the Company and Scadron, (x) no
such Proceeding has been Threatened in writing, and (y) no event has occurred or
circumstance exist that may give rise to or serve as a basis for the
commencement of any such Proceeding. Seller will deliver to Buyer copies of all
pleadings, and non-privileged correspondence, and other documents relating to
each Proceeding listed in Part 3.10(a) of the Disclosure Schedule immediately
upon execution hereof. The Proceedings listed in Part 3.10(a) of the Disclosure
Schedule will not have a Material Adverse Effect.
(b) Except as set forth in Part 3.10(b) of the Disclosure
Schedule, (i) there is no Order to which any of the Company or the Scadrons is
subject that relates to any of the Purchased Assets or the Real Property; and
(ii) to the Knowledge of the Company and Scadron, no officer, director, agent,
or employee of Seller is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing the operation of or
any conduct, activity, or practice relating to the Purchased Assets, the Real
Property or the Leases.
3.11 OTHER CONTRACTS Seller is not a party to or bound by any Other
Contract, except as disclosed in the MDS or on Part 3.11 of the Disclosure
Schedule.
3.12 INSURANCE. Seller has maintained, and will maintain through the
Closing, policies of fire and other casualty, liability, title and other forms
of insurance covering the Purchased Assets, the Real Property and the operation
thereof, of the types and with the amounts of coverage as are consistent with
industry standards for outdoor advertising businesses comparable to the
Business. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the Closing Date have
been paid, and no notice of cancellation or termination has been received by
Seller with respect to any such policy. Except as set forth on Part 3.12 of the
Disclosure Schedule, no claims are pending or, to the Knowledge of the Company
and Scadron, Threatened under any such insurance policy with respect to the
Purchased Assets or Real Property.
3.13 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.13 of the
Disclosure Schedule, with respect to the Purchased Assets, the Real Property and
the operation thereof:
(a) Seller is, and at all times has been, in material
compliance with, and has not been and is not in material violation of or liable
under, any Environmental Law, resulting from any action or omission of Scadron
or the Company.
(b) To the Knowledge of the Company and Scadron, there are no
pending or Threatened claims in writing or Encumbrances resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the properties
included in the Purchased Assets or to be subject to the Leases.
(c) Neither the Company nor Scadron has Knowledge of, nor has
Seller received, any citation, directive, inquiry, notice, Order, summons,
warning, or other communication that relates to any alleged actual or potential
liability with respect to Hazardous Materials.
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<PAGE> 17
(d) Seller has delivered to Buyer true and complete copies, if
any, and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by Seller or any Related Person, if any, pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the properties
included in the Purchased Assets or to be subject to the Leases or Site Leases.
3.14 INTANGIBLE PROPERTY. Seller uses no Intangible Property in
connection with the operation of the Purchased Assets except for the Permits and
licenses for commonly available software programs under which Seller is the
licensee.
3.15 DISCLOSURE. No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Schedule omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
3.16 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth on Part
3.16 of the Disclosure Schedule, Seller is not a party to any contract with a
Related Person of Seller relating to the Purchased Assets or the Real Property
or their operation. Neither Seller nor any Related Person of Seller is the owner
(of record or as a beneficial owner) of an equity interest or any other
financial or profit interest in, a Person that has business dealings or a
material financial interest in any transaction with Seller involving the
Purchased Assets, the Real Property or the Business associated therewith. Except
as set forth on Part 3.16 of the Disclosure Schedule, neither Seller nor any
Related Person of Seller has any claim or right against, the Purchased Assets or
Real Property.
3.17 BROKERS OR FINDERS. Seller and its Representatives have not
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.18 EMPLOYEE BENEFIT MATTERS. Except as disclosed on Part 3.18 of the
Disclosure Schedule:
(a) Seller does not maintain and has never maintained an
"employee benefit pension plan", within the meaning of ERISA Section 3(2), that
is or was subject to Title IV of ERISA.
(b) Seller does not have and has not ever had any past,
present or future obligation or liability to contribute any "multiemployer
plan", as defined in ERISA Section 3(37).
For purposes of this Section 3.18, the term Seller shall be deemed to include
any other corporation, trade, business or other entity, other than Seller, which
would together with the Seller, now or in the past constitute a single employer
within the meaning of Section 414 of the IRC.
3.19 BULK SALES. The Contemplated Transactions are not subject to any
"bulk sales law" or similar bulk transfer laws or regulations.
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4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Closing Documents to which Buyer
is a party, such Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Closing Documents and to
perform its obligations under this Agreement and the Closing Documents to which
Buyer is a party.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to (i)
any provision of Buyer's Organizational Documents; (ii) any resolution adopted
by the board of directors or the stockholders of Buyer; (iii) any Legal
Requirement or Order to which Buyer may be subject; or (iv) any material
Contract to which Buyer is a party or by which Buyer may be bound. Buyer is not
and will not be required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, making illegal, or otherwise delaying, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened in
writing and no event has occurred or circumstance exists that may give rise to
or serve as a basis for the commencement of any Proceeding.
4.4 BROKERS OR FINDERS. Buyer and its Representatives have not incurred
any obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement.
4.5 LICENSE. There is no legal impediment to Buyer's acceptance of the
transfer of the Purchased Assets. Buyer is licensed and bonded in the State of
Illinois in accordance with applicable Legal Requirements to operate in the
outdoor advertising business.
4.6 DISCLOSURE. No representation or warranty of Buyer in this
Agreement omits to state a material fact necessary to make the statements
herein, in light of the circumstances in which they were made, not misleading.
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<PAGE> 19
5. COVENANTS OF SELLER
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the Closing Date, Seller will, and will cause its Representatives to, (a) afford
Buyer and its Representatives reasonable access to Seller's personnel (provided,
that Buyer shall obtain Scadron's consent prior to initiating any contact with
Seller's personnel and shall not, under any circumstances, disclose any
Confidential Information to Seller's personnel), properties, Books and Records,
and other documents and data relating to the Purchased Assets or Real Property,
(b) furnish Buyer and its Representatives with copies of all Books and Records,
and other existing documents and data as Buyer may reasonably request relating
to the Purchased Assets or Real Property, and (c) furnish Buyer and its
Representatives with such additional financial, operating, and other data and
information relating to the Purchased Assets or Real Property as Buyer may
reasonably request.
5.2 NON-SOLICITATION. Each of the Company and the Scadrons hereby
agrees not to, directly or indirectly, solicit or enter into agreements of any
kind, either oral or written, regarding purchase or leasing of advertising signs
or wall or billboard space at any of the sign locations which are the subject of
the Site Leases, or to otherwise interfere with Buyer's use of such locations,
for a period of two years following the termination date of the existing lease
or any renewals or extensions thereof for each such location.
5.3 OPERATION OF THE PURCHASED ASSETS. Between the date of this
Agreement and the Closing Date, Seller will:
(a) operate the Purchased Assets and the Real Property only in
the Ordinary Course of Business;
(b) use its Best Efforts to maintain the Purchased Assets and
the Real Property, and maintain the relations and good will with advertisers,
landlords and others associated with the operation of the Purchased Assets and
the Real Property; and
(c) confer with Buyer concerning any new Advertising Services
Agreement which involves a term of more than three (3) months.
5.4 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Seller will
not, without the prior consent of Buyer, take any affirmative action, or fail to
take any reasonable action within their or its control, as a result of which any
Material Adverse Effect is reasonably likely to occur.
5.5 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, Seller will make all filings, if any, required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Seller
will (i) cooperate with Buyer with respect to all filings that Buyer elects to
make or is required by Legal Requirements to make in connection with the
Contemplated Transactions, and (ii) cooperate with Buyer in obtaining all
consents referenced in Section 3.2.
5.6 CONSENTS. Seller shall use its Best Efforts to obtain such of the
Consents identified in Section 3.2 for the transfer of Site Leases as Buyer
deems necessary and are legally required; provided, however, that Seller shall
not make any agreement or reach any understanding that would
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<PAGE> 20
impose additional obligations or burdens on Buyer without the approval in
writing by Buyer as a condition for obtaining such Consents.
5.7 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Seller will promptly notify Buyer in writing if Seller becomes aware of
any fact or condition that causes or constitutes a breach of any of Seller's
representations and warranties as of the date of this Agreement, or if Seller
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, Seller will promptly notify
Buyer of the occurrence of any breach of any covenant of Seller in this Section
5 or of the occurrence of any event that may make the satisfaction of the
conditions in Section 7 impossible or unlikely.
5.8 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, neither Seller nor any Related Person will,
nor will they permit their respective Representatives to, directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer or its
Representatives) relating to or affecting any transaction involving the sale of
the Purchased Assets or affecting the Real Property or the Leases.
5.9 TAX CLEARANCE. Seller shall obtain all certificates of clearances
for Taxes ("Tax Clearances"), if any, required by the State of Illinois or, if
such Tax Clearances are required but not available at the Closing, certificates
from the State of Illinois certifying as to the payment by or on behalf of
Seller of all Taxes due on or prior to a date not more than thirty (30) days
prior to the Closing Date (it being agreed and understood that, notwithstanding
the foregoing, if any Tax Clearances are not obtained prior to the Closing,
Seller shall obtain such Tax Clearances after the Closing and shall be
responsible for, and shall discharge in full, all liabilities and obligations
therefor).
5.10 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, Seller will use Best Efforts to cause the conditions in Sections 7 and 8
to be satisfied. After the Closing Date Seller will use Best Efforts (i) until
February 15, 1998 to cause the conditions to the consummation of the transfer of
New Assets set forth in Section 2.9 to be satisfied, (ii) until December 15,
1997 to obtain the New Permits, and (iii) until August 15, 1997, to obtain any
Required Consents. Seller will use Best Efforts in acting as Buyer's agent for,
and will reasonably cooperate with Buyer in, the management and operation of the
New Permit Assets until the Escrow Amounts with respect thereto are released
from escrow.
6. COVENANTS OF BUYER
6.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable after
the date of this Agreement, Buyer will make all filings, if any, required by
Legal Requirements to be made by it to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will cooperate
with Seller (i) with respect to all filings that Seller is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (ii)
in obtaining all consents identified in Part 3.2 of the Disclosure Schedule,
provided that this Agreement will not
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<PAGE> 21
require Buyer to dispose of or make any change in any portion of its business or
to incur any other burden to obtain a Governmental Authorization.
6.2 BEST EFFORTS. Except as set forth in the proviso to Section 6.1,
between the date of this Agreement and the Closing Date, Buyer will use its Best
Efforts to cause the conditions in Sections 7 and 8 to be satisfied. Buyer will
reasonably cooperate with Seller in the management and operation of the New
Permit Assets until the Escrow Amounts with respect thereto are released from
escrow.
6.3 IMPRINTS. No later than 150 days after the Closing, Buyer shall
remove from all Structures included in the Purchased Assets (except for New
Permit Assets) all imprints used by Seller containing Seller's trade name;
provided, however, until the earlier of (i) such removal or (ii) the expiration
of such 150-day period, Buyer may display Seller's trade name on such
Structures. With respect to the New Permit Assets, no later than 90 days after
the release of the Escrow Amount with respect to each New Permit Asset from
Seller to Buyer, Buyer shall remove from all Structures included in such New
Permit Asset all imprints used by Seller containing Seller's trade name.
6.4 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Buyer will promptly notify Seller in writing if Buyer becomes aware of any
fact or condition that causes or constitutes a breach of any of Buyer's
representations and warranties as of the date of this Agreement, or if Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, Buyer will promptly notify
Seller of the occurrence of any breach of any covenant of Buyer in this Section
6 or of the occurrence of any event that may make the satisfaction of the
conditions in Section 8 impossible or unlikely.
6.5 BUYER'S COVENANTS REGARDING CERTAIN LOCATIONS.
(a) With respect to item Nos. 18 and 27 in the MDS, Buyer
acknowledges that Seller is lessee under a lease for a new sign with the owners
of the property immediately south of this location. Buyer agrees not to increase
the height of item Nos. 18 and 27 on the MDS, provided however, that Buyer shall
be entitled to add extensions to these two panels not exceeding an additional
five feet, six inches. Seller hereby grants Buyer the right of first refusal
with respect to the sale or other transfer of such lease and/or sign.
(b) With respect to item Nos. 24 and 53 in the MDS, Buyer
acknowledges that Seller is currently negotiating with an adjacent property
owner for a new sign across the street from this location. Buyer agrees not to
interfere with Seller's negotiations with the adjacent property owner for a
period of twenty-four (24) months from the date hereof.
(c) With respect to item No. 110 on the MDS, Buyer
acknowledges that Seller is currently negotiating with the owner of a vacant lot
adjacent to the west wall of the building (which owner is also the lessor under
the Site Lease for this location) to build a new sign on the adjacent lot. Buyer
agrees to waive any right it has or may acquire as lessee under the Site Lease
for this location to prohibit the lessor thereunder from entering into a lease
agreement with Seller for the new sign and
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not to interfere with Buyer's negotiation with the lessor for a period of
twenty-four (24) months from the date hereof.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Purchased Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. Seller's representations and
warranties in this Agreement must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date, and Buyer shall have
received a certificate of an executive officer of Seller, dated as of the
Closing Date, as to such accuracy.
7.2 SELLER'S PERFORMANCE. The covenants and obligations that Seller and
any Related Person of Seller are required to perform or to comply with pursuant
to this Agreement at or prior to the Closing must have been performed and
complied with in all material respects, and Buyer shall have received a
certificate of an executive officer of the Company, dated as of the Closing
Date, as to such compliance.
7.3 CONSENTS. [INTENTIONALLY OMITTED.]
7.4 ADDITIONAL DOCUMENTS. Each of the following documents must have
been delivered to Buyer:
(a) an opinion of Gardner, Carton & Douglas dated the Closing
Date, to the effect set forth on Exhibit I, subject to customary assumptions and
qualifications;
(b) the deliveries required from Seller in Section 2.7; and
(c) such other documents as Buyer may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Section 7, or (ii) otherwise facilitating the consummation or performance
of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced and pending or Threatened in writing against Buyer, or
against any Person affiliated with Buyer, any Proceeding (i) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, (ii) that prevents, makes illegal, or otherwise
delays any of the Contemplated Transactions or seeks to do any of the foregoing,
or (iii) that involves any material claim against Seller that could create an
Encumbrance on the Purchased Assets or impose a liability on the transferee of
the Purchased Assets.
7.6 NO PROHIBITION. There must not be in effect any Legal Requirement
or any injunction or other Order that prohibits or restricts the consummation of
the Contemplated Transactions.
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7.7 NO MATERIAL ADVERSE CHANGE. There shall not have been a Material
Adverse Change since the date hereof.
7.8 RELEASE OF LIENS. Buyer shall have obtained the release of all
liens on the Purchased Assets held by Manufacturers Bank and any other lien not
permitted by this Agreement.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Purchased Assets and Seller's
obligations to take the other actions required to be taken by Seller at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Seller, in whole or in
part):
8.1 ACCURACY OF REPRESENTATIONS. Buyer's representations and warranties
in this Agreement must have been accurate in all material respects as of the
date of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, and Seller shall have received a
certificate of an executive officer of Buyer, dated as of the Closing Date, as
to such accuracy.
8.2 BUYER'S PERFORMANCE. The covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been performed and complied with in all material respects,
and Seller shall have received a certificate of an executive officer of Buyer,
dated as of the Closing Date, as to such compliance.
8.3 ADDITIONAL DOCUMENTS. Buyer must have caused the following
documents to be delivered to Seller:
(a) an opinion of Powell, Goldstein, Frazer & Murphy, dated
the Closing Date, to the effect set forth on Exhibit J, subject to customary
assumptions and qualifications; and
(b) the deliveries required from Buyer in Section 2.7; and
(c) such other documents as Seller may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Section 8, or (ii) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.4 NO PROHIBITION. There must not be in effect any Legal Requirement
or any injunction or other Order that prohibits or restricts the consummation of
the Contemplated Transactions.
8.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced and pending or Threatened in writing against Seller, or
against any Person affiliated with Seller, any Proceeding (i) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (ii) that prevents, makes illegal, or otherwise
delays any of the Contemplated Transactions or seeks to do any of the foregoing.
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9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by Buyer, on the one hand, or Seller, on the other hand,
if a material breach of any provision of this Agreement has been committed by
the other Party or Parties and such breach has not been cured or waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Seller, if any of the conditions in
Section 8 has not been satisfied of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of Seller
to comply with their respective obligations under this Agreement) and Seller
have not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Seller; or
(d) by Buyer, on the one hand, or Seller, on the other hand,
if the Closing has not occurred (other than through the failure of any Party
seeking to terminate this Agreement to comply fully with its obligations under
this Agreement) on or before February 28, 1997, or such later date as the
Parties may agree upon.
9.2 EFFECT OF TERMINATION. Each Party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the Parties under this Agreement will terminate, except
that the obligations in Sections 11.1 and 11.2 will survive; provided, however,
that if this Agreement is terminated by a Party because of the breach of the
Agreement by the other Party or because one or more of the conditions to the
terminating Party's obligations under this Agreement is not satisfied as a
result of the other Party's failure to comply with its obligations under this
Agreement, the terminating Party's right to pursue all legal and equitable
remedies, separately or simultaneously, (including specific performance) will
survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. The Company and
each of the Scadrons, jointly and severally, will indemnify and hold harmless
Buyer and its respective Representatives, stockholders, controlling Persons, and
affiliates (collectively, the "Seller Indemnified Persons") for, and will pay to
the Seller Indemnified Persons the amount of, any loss, liability, claim,
damage, expense (including costs of investigation and defense and reasonable
attorneys' fees), whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
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(a) any breach of any representation or warranty made by
Seller in this Agreement, the MDS or the Disclosure Schedule, or any other
certificate or document delivered by Seller pursuant to this Agreement;
(b) any breach by Seller of any covenant or obligation of
Seller in this Agreement or any certificate or document delivered by Seller
pursuant to this Agreement;
(c) the failure of Seller to satisfy and discharge any
obligations or liabilities arising out of or related to the ownership, operation
and use of the Purchased Assets or the Real Property prior to the Closing,
except only the Assumed Liabilities;
(d) any claims or demands arising out of, or in any manner
connected with, the consummation of the Contemplated Transactions which are made
or asserted by any officer, partner, noteholder, debtor, employee, independent
contractor, agent, attorney or representative of Seller, or any of their
respective heirs, executors, successors or assigns, but excluding any such
claims or demands arising from any breach by Buyer of any of its
representations, warranties or agreements contained herein;
(e) any claims or demands of third parties which are based, in
whole or in part, on any actions or conduct of Seller on or before the Closing,
excepting only claims or demands specifically included in the Assumed
Liabilities;
(f) all matters which relate, directly or indirectly, to the
Excluded Liabilities; or
(g) any Damages arising, directly or indirectly, under or
pursuant to any Environmental Law which results from an act or omission of
Seller at any time on or prior to the Closing Date and relates to the Purchased
Assets or the Real Property subject to the Leases.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Seller and Seller's respective Representatives,
partners, controlling Persons, affiliates and heirs (collectively, the "Buyer
Indemnified Persons") for, and will pay to the Buyer Indemnified Persons the
amount of any Damages arising, directly or indirectly, from or in connection
with:
(a) any breach of any representation or warranty made by Buyer
in this Agreement or in any certificate or document delivered by Buyer pursuant
to this Agreement;
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement including, without limitation, any failure to pay Assumed
Liabilities after the Closing;
(c) any claims or demands arising out of, or in any manner
connected with, the consummation of the Contemplated Transactions which are made
or asserted by any officer, director, partner, noteholder, debtor, employee,
independent contractor, agent, attorney or representative of Buyer, or any of
their respective heirs, executors, successors or assigns, but excluding any such
claims or demands arising from any breach by Seller of any of its
representations, warranties or agreements contained herein; or
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(d) any claims or demands of third parties which are based, in
whole or in part, on any actions, conduct or omissions of Buyer after the
Closing with respect to the operation of the Purchased Assets.
10.3 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 10.1 or 10.2, of notice of any claim against it, such Indemnified
Person will, if a claim is to be made against an Indemnifying Party under such
Section , give notice to the Indemnifying Party of the commencement of such
claim, but the failure to notify the Indemnifying Party will not relieve the
Indemnifying Party of any liability that it may have to any Indemnified Person,
except to the extent that the Indemnifying Party demonstrates that the defense
of such action is prejudiced by the Indemnified Person's failure to give such
notice.
(b) If any claim referred to in Section 10.3(a) is brought
against an Indemnified Person and it gives written notice to the Indemnifying
Party of such claim, the Indemnifying Party may, at its option, assume the
defense of such claim with counsel reasonably satisfactory to the Indemnified
Person and, after written notice from the Indemnifying Party to the Indemnified
Person of its election to assume the defense of such claim, the Indemnifying
Party will not, as long as it diligently conducts such defense, be liable to the
Indemnified Person under this Article 10 for any fees of other counsel or any
other expenses with respect to the defense of such claim, subsequently incurred
by the Indemnified Person in connection with the defense of such claim, other
than reasonable costs of investigation. If the Indemnifying Party assumes the
defense of a claim, (i) no compromise or settlement of such claims may be
effected by the Indemnifying Party without the Indemnified Person's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person, and (B) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party; and (ii) the Indemnified Person will have no liability with respect to
any compromise or settlement of such claims effected without its consent.
Subject to Section 10.3(c), if notice is given to an Indemnifying Party of any
claim and the Indemnifying Party does not, within twenty days after the
Indemnified Person's notice is given, give notice to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will be
bound by any determination made in such claim or any compromise or settlement
effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by written notice to the Indemnifying Party, assume the
exclusive right to defend, compromise, or settle such claim, but the
Indemnifying Party will not be bound by any determination of a claim so defended
or any compromise or settlement effected without its consent (which may not be
unreasonably withheld).
10.4 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim shall be
asserted by written notice to the Indemnifying Party from whom indemnification
is sought.
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10.5 SURVIVAL/LIMITATIONS.
(a) The parties hereto agree that (i) the covenants and
agreements contained in the Agreement and any document delivered pursuant hereto
and the representations and warranties contained in Sections 3.1, 3.2(a), 3.3,
3.6(b), 4.1 and 4.2(a) shall survive without limitation; (ii) the
representations and warranties contained in Sections 3.8, 3.13, 3.17, 3.18, 3.19
and 4.4 shall survive until 90 days after the expiration of all applicable
statutes of limitation with respect to the subject matter thereof, and (iii) all
other representations and warranties in Article 3 and Article 4 (other than the
sections specifically mentioned in clauses (i) and (ii)) shall survive until the
first anniversary following the Closing Date.
(b) The Seller's obligation to indemnify the Seller
Indemnified Persons for Damages pursuant to Section 10.1 hereof is subject to
the following limitations: (i) no indemnification shall be made by the Seller
for Damages arising solely from Section 10.1(a) unless the aggregate amount of
such Damages exceeds $100,000 and then to the full extent of such Damages; and
(ii) in no event shall the Seller's obligation to indemnify the Seller
Indemnified Persons exceed the Purchase Price.
10.6 EXCLUSIVE REMEDIES. Subject to Section 11.3, the remedies provided
in this Article 10 will be exclusive and limit any other remedies that may be
available to the Parties hereto or the other Indemnified Persons.
11. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each Party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, brokers or finders, counsel, and accountants. In the
event of termination of this Agreement, the obligation of each Party to pay its
own expenses will be subject to any rights of such Party arising from a breach
of this Agreement by another Party.
11.2 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as Buyer
and Seller agree in writing, provided that the parties shall reasonably
cooperate in such announcements, and provided further that nothing contained
herein shall prevent any party from at any time furnishing information required
by a Governmental Body. Unless consented to by Buyer and Seller in advance or
required by Legal Requirements, prior to the Closing, each Party shall, and
shall cause their respective Representatives to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
Seller and Buyer will consult with each other concerning the means by which
Seller's employees, customers, suppliers, landlords and other Governmental
Bodies having dealings with Seller will be informed of the Contemplated
Transactions. From the date hereof until the Closing, Buyer agrees not to
disclose Confidential Information of Seller to Seller's employees or other
Representatives. The terms of the Confidentiality Agreement are hereby
incorporated by reference; provided, however, that (i) notwithstanding Article 2
thereof, Buyer shall be permitted to use or disclose Confidential Information if
(a) the use of such information is necessary in making any filing required by
Legal Requirements and only to the extent necessary, or (b) the furnishing or
use of such information is
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required by or necessary in connection with legal proceedings, and (ii) Buyer's
obligations under Article 5 of the Confidentiality Agreement with respect to the
Purchased Assets (other than New Assets) shall terminate upon the Closing;
provided, however, that to the extent any New Permit Assets are repurchased by
Seller pursuant to Section 2(f), such obligations under Article 5 shall be
reinstated upon such repurchase but only with respect to such repurchased New
Permit Assets. Buyer's obligations under Article 5 of the Confidentiality
Agreement shall terminate with respect to any New Assets when and to the extent
the same are sold to Buyer in accordance with Section 2.9 hereof.
11.3 AVAILABILITY OF EQUITABLE REMEDIES. The Parties acknowledge and
agree that (i) a breach of the provisions of this Agreement could not adequately
be compensated by money damages, and (ii) any Party shall be entitled, either
before or after the Closing, in addition to any other right or remedy available
to it, to an injunction restraining such breach and to specific performance of
this Agreement, and no bond or other security shall be required in connection
therewith.
11.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
Party may designate by notice to the other Parties):
If to Seller, to:
Mr. Robert B. Scadron
1257 Lynn Terrace
Highland Park, Illinois 60035
Telephone No.: (847) 433-0535
Facsimile No.: (847) 433-0535
and
Mr. Robert B. Scadron
Scadron Outdoor Advertising
1015 W. Grand Avenue
Chicago, Illinois 60622
Telephone No.: (312) 666-7500
Facsimile No.: (312) 666-8983
With a copy to:
Gardner, Carton & Douglas
Quaker Tower
321 N. Clark Street
Suite 3100
Chicago, Illinois 60610-4795
Attention: Dennis J. Carlin, Esq.
Telephone No.: (312) 644-3000
Facsimile No.: (312) 644-3381
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If to Buyer, to:
Outdoor Systems, Inc.
2502 North Black Canyon Highway
Phoenix, Arizona 85009
Telephone No.: (602) 246-9569
Facsimile No.: (602) 433-2482
Attention: William S. Levine
and
William S. Levine
1702 E. Highland Avenue, Suite 310
Phoenix, Arizona 85016
Telephone No.: (602) 248-8181
Facsimile No.: (602) 248-0884
With a copy to:
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, NE, 16th Floor
Atlanta, Georgia 30303
Attention: William B. Shearer, Jr., Esq.
Telephone No.: (404) 572-6600
Facsimile No.: (404) 572-6999
11.5 FURTHER ASSURANCES. The Parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things, all as
the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
11.6 WAIVER. Neither the failure nor any delay by any Party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
11.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement and the
Confidentiality Agreement (as incorporated and amended herein) supersede all
prior agreements between the Parties with respect to its subject matter and
constitute (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the Parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the Party to be charged with the amendment.
11.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Parties except that Buyer may assign any of its rights under this
Agreement to any affiliate of Buyer. Notwithstanding the foregoing, Seller
reserves the right to assign the contractual rights to the proceeds from the
sale of certain of the Purchased Assets as part of a Section 1031 tax-deferred
exchange. Buyer agrees to cooperate with Seller (at Seller's cost) in connection
with such exchange transaction, to execute all
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documents reasonably required for the exchange transaction, and to pay all or
such portion of the Purchase Price to a person other than Seller as Seller
directs in such documents, provided that Buyer shall not be required to make any
payment or incur any cost not otherwise required to be made or incurred by Buyer
hereunder and that Buyer shall not otherwise be prejudiced thereby, and any such
payment made by Buyer to a designee of Seller hereunder shall satisfy Buyer's
obligations hereunder as if made to Seller directly. This Agreement will apply
to, be binding in all respects upon, and inure to the benefit of the successors
and permitted assigns of the Parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the Parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
Parties to this Agreement and their successors and assigns.
11.9 ACCOUNTS RECEIVABLE. Buyer agrees to forward to Seller any
payments that Buyer may receive with respect to any accounts receivable of
Seller (except for any payment with respect to an Advertising Services Agreement
that has been prorated in favor of Buyer pursuant to Section 2.6 hereof).
11.10 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.11 RISK OF LOSS. Material risk of loss or damage to the Purchased
Assets or Real Property from any cause whatsoever prior to the Closing shall be
borne by Seller, and after the Closing shall be borne by Buyer.
11.12 POST-CLOSING ACCESS. Buyer agrees that all Books and Records
delivered to Buyer by Seller pursuant to this Agreement shall be open for
inspection by Seller at any time during regular business hours upon reasonable
notice for a period of seven (7) years (or for such longer period as may be
required by applicable Legal Requirements) following the Closing and that,
during such period, Seller, at its expense, may make such copies thereof as it
may reasonably desire. Without limiting the generality of the foregoing, Buyer
shall not destroy or give up possession of any original or final copy of any
such Books and Records delivered to Buyer hereunder (whether stored on
electronic media or otherwise) without first offering Seller the opportunity, at
Seller's expense, to obtain such original or final copy or a copy thereof.
Seller agrees that all books and records relating to the Purchased Assets and
retained by Seller shall be open for inspection by Buyer at any time during
regular business hours for a period of seven (7) years (or for such longer
period as may be required by applicable Legal Requirements) following the
Closing and that, during such period, Buyer, at its expense, may make such
copies thereof as it may reasonably desire. Without limiting the generality of
the foregoing, Seller shall not destroy or give up possession of any original or
final copy of any such books and records relating to the Purchased Assets and
retained by Seller hereunder (whether stored on electronic media or otherwise)
without first offering Buyer the opportunity, at Buyer's expense, to obtain such
original or final copy or a copy thereof. Nothing contained in this Section
11.12 shall obligate any Party hereto to make available any books and records if
to do so would violate the terms of any Contract or Legal Requirement to which
it is a party or to which it or its assets are subject.
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<PAGE> 31
11.13 ARTICLE AND SECTION HEADINGS; CONSTRUCTION. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Article" or "Articles" or
"Section " or "Sections " refer to the corresponding Article or Articles or
Section or Sections of this Agreement. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
11.14 APPLICABLE LAW. This Agreement shall be governed and controlled
as to validity, enforcement, interpretations, construction, effect and in all
other respects by the internal laws of the State of Illinois applicable to
contracts made in that State. The parties hereto agree to submit exclusively to
any federal or state court located in the State of Illinois any dispute or
controversy arising out of or relating to this Agreement.
11.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
11.16 JOINT AND SEVERAL. The obligations of the Company and each of the
Scadrons hereunder shall be joint and several.
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<PAGE> 32
IN WITNESS WHEREOF, the Parties have executed, sealed and delivered
this Agreement as of the date first written above.
BUYER:
OUTDOOR SYSTEMS, INC.
By: _________________________________
Title: ______________________________
THE COMPANY:
SCADRON ENTERPRISES
By: _________________________________
Title: ______________________________
_____________________________________
THE SCADRONS:
_____________________________________
ROBERT B. SCADRON
_____________________________________
BARRY SCADRON
_____________________________________
JEFFREY SCADRON
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<PAGE> 33
EXHIBIT A
DEFINITIONS
"ADVERTISING SERVICES AGREEMENTS" -- as defined in Section 2.2(c) and
listed on Exhibit B.
"ASSIGNMENTS OF ADVERTISING SERVICES AGREEMENTS" -- the Assignments and
Assumptions of Advertising Services Agreements from each of the Company and the
Scadrons in the form of Exhibit D attached hereto.
"ASSIGNMENTS OF SITE LEASES" -- the Assignments and Assumptions of Site
Leases from each of the Company and the Scadrons in the form of Exhibit F
attached hereto.
"ASSIGNMENTS OF PERMITS" -- the Assignments and Assumptions of Permits
from each of the Company and the Scadrons in the form of Exhibit G attached
hereto.
"ASSUMED LIABILITIES" -- as defined in Section 2.3.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"BILLS OF SALE" -- the Bill of Sale, Assignment and Assumption
Agreements from each of the Company and the Scadrons in the form of Exhibit D
attached hereto.
"BOOKS AND RECORDS" -- All of the Company's books and records relating
to the Purchased Assets, including, without limitation, all Site Lease files,
Advertising Services Agreements, Permit files, warranties, site surveys and
construction data and files, and a listing of all advertising revenue for 1995
and 1996 relating to the Purchased Assets. Books and Records shall not include
client or customer lists or any financial statements of Seller.
"BUYER" -- as defined in the first paragraph of this Agreement.
"CASH FLOW" -- with respect to operation of the New Permit Assets,
revenues less rent and other direct cash expenses, being production costs,
maintenance and commissions.
"CLOSING" -- as defined in Section 2.5.
"CLOSING DATE" -- the date and time as of which the Closing actually
takes place.
"CLOSING DOCUMENTS" -- as defined in Section 3.2(a).
"CONFIDENTIAL INFORMATION" -- as defined in the Confidentiality
Agreement.
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<PAGE> 34
"CONFIDENTIALITY AGREEMENT" -- Confidentiality and NonDisclosure
Agreement dated July 27, 1996, by and between Company, Buyer, Arthur Moreno and
Walter Kelly, as amended by letter agreement with Ronald Ipjian dated August 23,
1996 and by letter agreement with Doug Whitson dated December 18, 1996, which
are attached hereto as Exhibit J.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including: (a) the purchase of the Purchased Assets (including
the New Permit Assets) and of the New Assets by Buyer from Seller and assignment
to and assumption by Buyer of the Assumed Liabilities, (b) the execution and
delivery by Seller and Buyer of the Leases, and (c) the performance by Buyer,
the Company and Scadron of their respective covenants and obligations under this
Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" -- as defined in Section 10.1.
"DISCLOSURE SCHEDULE" -- the disclosure schedule, other than the Master
Disclosure Schedule, delivered by Seller to Buyer concurrently with the
execution and delivery of this Agreement.
"DUE DILIGENCE PERIOD" -- as defined in Section 5.2.
"ENCUMBRANCE" -- any charge, claim, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law, including fines,
penalties, financial responsibility for cleanup costs, corrective action,
removal, remedial actions and response actions, and any other compliance,
corrective, investigative, or remedial measures required under Environmental Law
or Occupational Safety and Health Law. The terms "removal," "remedial," and
"response action," include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA").
"ENVIRONMENTAL LAW" -- any Legal Requirement that requires or relates
to Releases of pollutants or hazardous substances or materials, violations of
discharge limits, or other similar prohibitions; preventing or reducing to
acceptable levels the Release of pollutants or hazardous
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substances or materials into the Environment; reducing the quantities,
preventing the Release, or minimizing the hazardous characteristics of wastes
that are generated; reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances; cleaning up pollutants that have been Released, preventing
the threat of Release, or paying the costs of such clean up or prevention; or
making responsible parties pay private parties, or groups of them, for damages
done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ESCROW AGENT" -- LaSalle National Bank.
"ESCROW AGREEMENT" -- the Escrow Agreement to be entered into between
Seller and Buyer described in Section 2.10(a).
"ESCROW AMOUNT" -- shall be determined by applying the Price Formula
with respect to the Structure which is the subject of the applicable New
Permit(s).
"EXCLUDED LIABILITIES" -- as defined in Section 2.4.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS ACTIVITIES" -- the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the properties subject to the Site Leases or the Real Property or
any part thereof into the Environment, and any other act, business, operation,
or thing that increases the danger, or risk of danger, or poses an unreasonable
risk of harm to Persons or property on or off the properties subject to the Site
Leases or the Real Property.
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"HSR ACT" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and any regulations and rules promulgated thereunder.
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<PAGE> 36
"INDEMNIFIED PERSON" -- any of the Seller Indemnified Persons or the
Buyer Indemnified Persons, as the context requires.
"INDEMNIFYING PARTY" -- the Company and Scadron or the Buyer, as the
context requires.
"INTANGIBLE PROPERTY" -- All right, title and interest in and to the
goodwill and other intangible property (except for Seller's corporate or trade
names and trade logos) used in connection with the Purchased Assets, all
licenses, permits and authorizations pertaining to the Purchased Assets or the
right to own and operate the Purchased Assets and all right, title and interest
in and to (i) any intellectual property used in connection with the Purchased
Assets, and (ii) all records and data relating specifically to the Purchased
Assets.
"IRC" -- the Internal Revenue Code of 1986, as amended from time to
time, or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has Knowledge of such fact or other matter.
"LEASES" -- the three (3) Leases pertaining to the Real Property, to be
entered into between Seller and Buyer in the form of Exhibit C, provided,
however, that the Lease with respect to the Structures numbered 50 and 55 on the
MDS shall provide that no advertising on such Structures shall compete with
Menards.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"MASTER DISCLOSURE SCHEDULE" or "MDS" -- the Master Disclosure Schedule
and the Notes thereto delivered to Buyer concurrently with the execution and
delivery of this Agreement, as the same may be amended as provided herein.
"MATERIAL OR "MATERIAL" -- What is considered material for purposes of
this Agreement shall be determined in light of the facts and circumstances of
the matter in question. No particular monetary amount cited in this Agreement
shall be deemed to determine materiality.
"MATERIAL ADVERSE CHANGE" -- a change that would cause a Material
Adverse Effect.
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"MATERIAL ADVERSE EFFECT" -- an adverse effect on the Purchased Assets,
or the Real Property operations, or conditions (financial or otherwise) relating
thereto, taken as a whole.
"NEW ASSETS" -- the New Structures and the Permits, Site Leases and
Advertising Services Agreements related thereto.
"NEW PERMIT ASSETS" -- the Structures, Site Leases, Advertising
Services Agreements and other Permits related to the sites for the New Permits.
"NEW PERMITS" -- the permits to be obtained by Seller on the MDS for
those Structures identified as Nos. 3, 8, 13, 28, 63 and 96 in the MDS.
"NEW STRUCTURE PURCHASE PRICE" -- the price determined in accordance
with the Price Formula for such New Structure.
"NEW STRUCTURES" -- those Structures identified as Nos. 2, 9, 41, 42,
84, 110, 111, and 112 in the MDS.
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" if such action is
consistent with the past custom and practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person (including
with respect to quantity and frequency).
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"OTHER CONTRACT" -- any Contract (other than a Site Lease or
Advertising Services Agreement) relating to or affecting the Purchased Assets,
the Real Property, or the Leases or the operation thereof (i) under which Seller
has or may acquire any rights, (ii) under which Seller has or may become subject
to any obligation or liability, or (iii) by which Seller or any of the Purchased
Assets or the Real Property is or may become bound.
"PARTY" -- as defined in the first paragraph of this Agreement.
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"PERMITS" -- as defined in Section 2.2(d) and described in the MDS.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PRICE FORMULA" -- 10.81 times the Gross Revenue for a Structure or New
Structure as designated on the MDS, provided, however, that with respect to the
New Structures identified as Nos. 110, 111, and 112 in the MDS, the multiple
shall be 9.955 rather than 10.81.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" -- as defined in Section 2.6.
"PURCHASED ASSETS" -- as defined in Section 2.2.
"REAL PROPERTY" -- as defined in Section 3.6(a).
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
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<PAGE> 39
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 5% of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least 5% of the outstanding equity securities or equity
interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"REQUIRED CONSENTS" -- those consents to the transfer of Site Leases
which have not been obtained on or before Closing, the obtaining of which has
not otherwise been waived by Buyer.
"SCADRONS" -- Scadron, J. Scadron and B. Scadron.
"SECURITY INTEREST" -- any mortgage, pledge, lien, encumbrance, charge
or other security interest or option or right of any third party with respect
thereto.
"SELLER" -- as defined in the first paragraph of this Agreement.
"SITE LEASE PURCHASE PRICE" -- the price determined in accordance with
the Price Formula for the Structure(s) related to the Site Lease requiring a
Required Consent.
"SITE LEASES" -- as defined in Section 2.2(b) and listed in the MDS.
"STRUCTURES" -- as defined in Section 2.2(a) and listed in the MDS.
"TAX" -- shall mean all tax (including income tax, capital gains tax,
value added tax, sales tax, property tax, transfer tax or intangibles tax), levy
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including fine, penalty and interest) imposed, assessed or collected by
or under the authority of any Governmental Body.
"TAX CLEARANCES" -- as defined in Section 5.9.
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<PAGE> 40
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREATENED" -- a claim, Proceeding or dispute will be deemed to have
been "THREATENED" if any demand or statement has been made or any notice has
been given that would lead a prudent Person to conclude that such a claim,
Proceeding or dispute is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
"TOTAL ESCROW AMOUNT" -- the aggregate of the Escrow Amounts for each
New Permit which is not delivered at Closing.
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EXHIBIT 99.9
================================================================================
ASSET PURCHASE AGREEMENT
dated as of December ___, 1996
by and among
OUTDOOR SYSTEMS, INC.
VILLEPIGUE OUTDOOR ADVERTISING CORPORATION,
VILLEPIGUE INTERNATIONAL ADVERTISING, INC.,
S.B. PROPERTIES, INC.,
THIRD & EIGHTH REALTY CORP
AND
MOBILE OUTDOOR MEDIA, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
1. DEFINITIONS............................................... 1
2. PURCHASE AND SALE OF THE ASSETS; CLOSING.................. 1
2.1 Agreement to Purchase and Sell................... 1
2.2 Purchased Assets................................. 1
2.3 Agreement to Assume Certain Liabilities.......... 2
2.4 Excluded Liabilities............................. 3
2.5 Closing.......................................... 3
2.6 Purchase Price................................... 3
2.7 Transactions at the Closing...................... 4
2.8 Third Party Consents............................. 4
3. REPRESENTATIONS AND WARRANTIES OF SELLER.................. 4
3.1 Organization and Good Standing................... 4
3.2 Authority; No Conflict........................... 5
3.3 Solvency......................................... 5
3.4 Books and Records................................ 6
3.5 Structures....................................... 6
3.6 Permits.......................................... 6
3.7 Site Leases and Advertising Contracts............ 6
3.8 Owned Real Property.............................. 6
3.9 Title, Encumbrances.............................. 6
3.10 No Undisclosed Liabilities....................... 7
3.11 Taxes............................................ 7
3.12 Compliance with Legal Requirements............... 7
3.13 Legal Proceedings; Orders........................ 7
3.14 Other Contracts.................................. 7
3.15 Insurance........................................ 7
3.16 Environmental Matters............................ 7
3.17 Intangible Property.............................. 8
3.18 Relationships with Affiliates.................... 8
3.19 Brokers or Finders............................... 8
3.20 Employee Benefit Matters......................... 8
3.21 HSR Act.......................................... 8
3.22 Disclosure....................................... 8
4. REPRESENTATIONS AND WARRANTIES OF BUYER................... 9
4.1 Organization and Good Standing................... 9
4.2 Authority; No Conflict........................... 9
4.3 Certain Proceedings.............................. 9
4.4 Brokers or Finders............................... 9
i
<PAGE> 3
5. COVENANTS OF SELLER.............................................. 9
5.1 Access and Investigation................................ 9
5.2 Due Diligence........................................... 10
5.3 Operation of the Purchased Assets....................... 10
5.4 Negative Covenant....................................... 10
5.5 Required Approvals...................................... 10
5.6 Notification............................................ 10
5.7 No Negotiation.......................................... 10
5.8 Tax Clearance........................................... 11
6. COVENANTS OF BUYER............................................... 11
6.1 Required Approvals...................................... 11
6.2 Best Efforts............................................ 11
6.3 Imprints................................................ 11
6.4 Notification............................................ 11
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.............. 11
7.1 Accuracy of Representations............................. 12
7.2 Sellers' Performance.................................... 12
7.3 Consents................................................ 12
7.4 Additional Documents.................................... 12
7.5 No Proceedings.......................................... 12
7.6 No Prohibition.......................................... 12
7.7 No Material Adverse Change.............................. 12
7.8 Due Diligence........................................... 12
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE............. 13
8.1 Accuracy of Representations............................. 13
8.2 Buyer's Performance..................................... 13
8.3 Additional Documents.................................... 13
8.4 No Proceedings.......................................... 13
8.5 No Prohibition.......................................... 13
9. TERMINATION...................................................... 13
9.1 Termination Events...................................... 13
9.2 Effect of Termination................................... 14
10. INDEMNIFICATION; REMEDIES........................................ 14
10.1 Indemnification and Payment of Damages by Seller........ 14
10.2 Indemnification and Payment of Damages by Buyer......... 15
10.3 Procedure for Indemnification -- Third Party Claims..... 15
10.4 Procedure for Indemnification -- Other Claims........... 16
10.5 Survival/Limitations.................................... 16
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<PAGE> 4
11. GENERAL PROVISIONS............................................... 16
11.1 Expenses................................................ 16
11.2 Bulk Sales Waiver and Indemnification................... 16
11.3 Public Announcements.................................... 16
11.4 Availability of Equitable Remedies...................... 16
11.5 Notices................................................. 17
11.6 Further Assurances...................................... 18
11.7 Waiver.................................................. 18
11.8 Entire Agreement and Modification....................... 18
11.9 Assignments, Successors, and No Third-Party Rights...... 18
11.10 Accounts Receivable..................................... 18
11.11 Severability............................................ 18
11.12 Risk of Loss............................................ 19
11.13 Post-Closing Access..................................... 19
11.14 Headings; Construction.................................. 19
11.15 Applicable Law.......................................... 19
11.16 Counterparts............................................ 19
EXHIBITS
Exhibit A - Definitions
Exhibit B - Allocation of Purchase Price
Exhibit C - Assignment of Advertising Services Agreements
Exhibit D - Assignment of Permits
Exhibit E - Assignment of Site Leases
Exhibit F - Bill of Sale, Assignment and Assumption Agreement
SCHEDULES
Schedule 2.2 - Billboard Displays
Schedule 2.2(b) - Site Leases
Schedule 2.2(c) - Real Property
Schedule 2.2(d) - Advertising Contracts and Permits
DISCLOSURE SCHEDULE
Part 3.2 Part 3.11(a) Part 3.16
Part 3.5 Part 3.13 Part 3.18
Part 3.6 Part 3.14 Part 3.20
Part 3.7
Part 3.9(b)
Part 3.10
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of
December ___, 1996, by and among OUTDOOR SYSTEMS, INC., a Delaware corporation
("Buyer"), VILLEPIGUE OUTDOOR ADVERTISING CORPORATION, a New York corporation,
VILLEPIGUE INTERNATIONAL ADVERTISING, INC., S.B. PROPERTIES, INC. THIRD & EIGHTH
REALTY CORP, and MOBILE OUTDOOR MEDIA, INC., (referred to collectively as the
"Sellers"). (Buyer and Sellers are sometimes herein referred to individually as
a "Party" and collectively as the "Parties".)
RECITALS
Sellers are engaged in the business of owning and operating outdoor
signs and billboards and otherwise providing outdoor advertising services in the
metropolitan New York area (the "Business"). Sellers desire to sell and assign
certain outdoor advertising assets to Buyer, and Buyer desires to purchase such
assets and to assume certain liabilities associated with such assets, pursuant
to the terms, conditions, limitations and exclusions contained in this
Agreement.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms listed on Exhibit A attached
hereto have the meanings specified or referred to in Exhibit A.
2. PURCHASE AND SALE OF THE ASSETS; CLOSING
2.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions
of this Agreement, Sellers hereby agree to grant, sell, assign, transfer, convey
and deliver all right, title and interest in and to the Purchased Assets, free
and clear of any liens, title claims, Encumbrances or Security Interests (except
as otherwise specifically permitted pursuant to the provisions of this
Agreement), and Buyer hereby agrees to buy and acquire the Purchased Assets from
Seller, and to assume the Assumed Liabilities upon the terms and conditions set
forth in this Agreement.
2.2 PURCHASED ASSETS. The Purchased Assets are all of the assets of
Sellers used in the Business, including:
(a) All of the billboard displays and other out-of-home
advertising structures (including rights to walls) set forth and described in
Schedule 2.2 attached hereto, together with all components, fixtures, parts,
appurtenances, and equipment attached to or made a part thereof that are
existing, under construction or for which Sellers have any rights (collectively,
the "Structures");
<PAGE> 6
(b) All leases, licenses, easements, other rights of ingress
or egress, and all other grants of the right to place, construct, own, operate
or maintain the Structures on land, buildings and other real property owned by
third parties, and all rights therein (collectively, the "Site Leases"), which
Site Leases are listed on Schedule 2.2(b);
(c) All of the real property owned in fee by Sellers and any
rights therein, and all buildings, facilities, structures, fixtures, leasehold
and other improvements located therein, listed on Schedule 2.2(c);
(d) All rights under existing and pending sales and
advertising contracts associated with the Structures, and all rights to the
advertising copy displayed on the Structures as of the Closing Date
(collectively, the "Advertising Contracts"), which Advertising Contracts are
listed on Schedule 2.2(d) attached hereto;
(e) All state and local licenses or permits/tags which Sellers
have with respect to the Structures and, to the extent assignable, all other
Governmental Authorizations that are required for the operation of the
Structures, (collectively, the "Permits"), which Permits are listed on Schedule
2.2(d);
(f) All pertinent Books and Records;
(g) All tangible personal property, including furniture,
vehicles, equipment, computer hardware and software, owned by Sellers and used
in the operation of the Business;
(h) All Intangible Property used in connection with the
Business except the tradename Villepigue; and
(i) All rights (including any benefits arising therefrom),
causes of action, claims and demands of whatever nature (whether or not
liquidated) of Sellers relating to the Purchased Assets, including, without
limitation, condemnation rights and proceeds, and all rights against suppliers
under warranties covering any of the Purchased Assets.
2.3 AGREEMENT TO ASSUME CERTAIN LIABILITIES. At the Closing, Buyer
shall assume and agree to discharge and perform all liabilities and obligations
that are set forth on Schedule or arise or are attributable to events occurring
on or after the Closing Date pursuant to the Site Leases and the Advertising
Contracts (the "Assumed Liabilities") but to the extent and only to the extent
that:
(a) Such obligations are performable on or after the Closing
Date; and
(b) Such obligations are attributable to periods arising on or
after the Closing Date.
2.4 EXCLUDED LIABILITIES. All claims against and liabilities and
obligations of Sellers not specifically assumed by Buyer pursuant to Section
2.3, including, without limitation, the following claims against and liabilities
of Sellers (the "Excluded Liabilities"), are excluded, and shall not be assumed
or discharged by Buyer, and shall be discharged in full when due by Seller:
(a) Any liabilities to the extent not attributable to the
Purchased Assets;
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<PAGE> 7
(b) Any liability of Sellers for Taxes arising prior to or
from the sale of the Purchased Assets under this Agreement;
(c) Any liabilities for or related to indebtedness of Sellers
to banks, financial institutions, or other Persons;
(d) Any liabilities of Sellers for or with respect to any
employees of Seller, including, without limitation, any liabilities pursuant to
any compensation, collective bargaining, pension, retirement, severance,
termination, or other benefit plan, agreement or arrangement; and
(e) Any other liabilities of Sellers that are attributable to
or arise from facts, events, or conditions that occurred or came into existence
prior to the Closing.
2.5 CLOSING. The purchase and sale of the Purchased Assets (the
"Closing") provided for in this Agreement will take place at the offices of
Ferber Greilsheimer Chan & Essner, 530 Fifth Avenue, New York, New York, on
January 9, 1997 or such later time and place as the Parties may agree. The
effective time of the Closing shall be 12:01 a.m., Eastern Standard Time, on the
Closing Date.
2.6 PURCHASE PRICE. In consideration for the Purchased Assets, Buyer
shall assume the Assumed Liabilities, and pay an amount (the "Purchase Price")
equal to Twenty-Seven Million Dollars ($27,000,000). The Purchase Price shall be
subject to adjustment as follows:
(a) The following items shall be prorated between Sellers and
Buyer as of the Closing Date with respect to the Purchased Assets: power and
utility charges, real and personal property taxes, rents (including percentage
rents) and security deposits under Site Leases and payments and security
deposits under Advertising Contracts. Prorations will be on a dollar-for-dollar
basis based on the number of days of display before and after the Closing.
Percentage rents shall be prorated as of the Closing Date. Any prorations not
determined at the Closing shall be prorated on the basis of the most current
information available at Closing. On the Closing Date, Sellers shall provide to
Buyer a list of items and the prorations required by this Section 2.6(a)
("Preliminary Adjustment") and the Purchase Price shall be adjusted accordingly.
Sellers agree to furnish Buyer with any documents or records in Sellers'
possession that may be needed for Buyer to confirm the adjustment and prorations
in this Section 2.6(a).
(b) Within ninety (90) days after the Closing Date, Buyer will
prepare and provide to Sellers the final calculations of adjustments to the
Purchase Price (the "Closing Date Adjustment"). On the 120th day after the
Closing Date, all required refunds or payments under this Section 2.6, shall be
made on the basis of the Closing Date Adjustment.
[(c) The parties agree that the Purchase Price shall be
allocated as set forth in Exhibit B attached hereto for completing the Form 8594
required to be filed with the IRS.
2.7 TRANSACTIONS AT THE CLOSING. The following transactions shall take
place at the Closing:
(a) Sellers shall deliver to Buyer (i) the Bill of Sale, (ii)
the Assignment of Advertising Contracts, (iii) the Assignment of Site Leases,
(iv) the Assignment of Permits, (v) the
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<PAGE> 8
Deeds, (vi) all applicable Tax Clearances, and (vii) other instruments of
transfer, evidence of consent and all other related documents as may be
necessary to evidence or perfect the sale, assignment, transfer, and conveyance
of good title to all of the Purchased Assets, in each case free and clear of all
liens, Security Interests, pledges, charges, and Encumbrances. Sellers shall
also deliver to Buyer all Books and Records, including the originals of the
Advertising Contracts and Site Leases.
(b) Buyer shall deliver to Sellers the Purchase Price, as
adjusted pursuant to Section 2.6, by wire transfer of immediately available
funds.
(c) Buyer shall deliver to Sellers such assumption agreements,
instructions and other documents as may be necessary to evidence the assumption
by Buyer of the Assumed Liabilities.
(d) The Parties shall also deliver to each other the
agreements, instruments, opinions, certificates, and other documents referred to
in this Agreement.
2.8 THIRD PARTY CONSENTS. To the extent that Sellers' rights under any
Advertising Contract, Site Lease or other interest in the Purchased Assets may
not be assigned without the consent of a third party and such consent has not
been obtained, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof or be
unlawful, and Sellers and Buyer, to the maximum extent permitted by law and any
terms of or limitations relating to such asset, shall use their Best Efforts to
obtain for Buyer the benefits thereunder, and shall cooperate to the maximum
extent permitted by law and any terms of or limitations relating to such asset
in any reasonable arrangement designed to provide such benefits to Buyer,
including any sublease or subcontract or similar arrangement, and if Buyer has
obtained such benefits, Buyer shall discharge Sellers' obligations thereunder
arising from and after the Closing Date, except for those obligations arising
because of Sellers' breach.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
The Sellers jointly and severally represent and warrant to Buyer as
follows:
3.1 ORGANIZATION AND GOOD STANDING. Each of the Sellers is a
corporation duly organized, validly existing and in good standing under the laws
of its incorporation, with full power and authority to conduct the Business as
it is now being conducted, to own or use the Purchased Assets, and to perform
all its obligations. Each of the Sellers has delivered to Buyer true and
complete copies of its respective Organizational Documents, as currently in
effect. To Seller's knowledge, each of the Sellers is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of each Seller, enforceable against each of them, respectively, in
accordance with its terms. Upon the execution and delivery by each of the
Sellers, as applicable, of any documents to be executed at Closing pursuant to
this Agreement (collectively, the "Closing Documents"), such Closing Documents
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will constitute the legal, valid, and binding obligations of each of the
Sellers, as applicable, enforceable against each of them in accordance with
their respective terms. Each of the Sellers has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and the Closing
Documents to which each is a party and to perform its obligations thereunder.
The execution, delivery and performance of this Agreement has been specifically
authorized by the Directors and shareholders of each Seller.
(b) Except as set forth in Part 3.2 of the Disclosure
Schedule, neither the execution and delivery by the Sellers of this Agreement
nor the consummation or performance by the Sellers of any of the Contemplated
Transactions will:
(i) conflict with, violate or result in a breach of
(A) any provision of the Organizational Documents of the Sellers; (B)
to the Seller's knowledge, any Legal Requirement or any Order to which
the Sellers or any of the Purchased Assets may be subject; (C) to the
Seller's knowledge, any Governmental Authorization held by the Sellers
or that otherwise relates to the Purchased Assets; or (D) any material
Contract to which any of the Sellers is a party or by which any of the
Sellers may be bound; or
(ii) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
interest or rights of Sellers in or to the Purchased Assets; or result
in the imposition or creation of any Encumbrance upon or with respect
to any of the Purchased Assets.
(c) Except as set forth in Part 3.2 of the Disclosure
Schedule, none of the Sellers is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 SOLVENCY. By consummating the transactions contemplated hereby,
Sellers do not intend to hinder, delay or defraud any of Sellers' present or
future creditors. Before giving effect to the transactions contemplated hereby,
Sellers have been paying their debts in the Ordinary Course of Business and,
after giving effect to the transactions contemplated hereby, Sellers will have
paid or discharged all of their respective debts (or made adequate provision for
the payment thereof) in the Ordinary Course of Business.
3.4 BOOKS AND RECORDS. The books of account, and other Books and
Records of Sellers maintained in connection with the Purchased Assets are
complete and correct in all material respects and have been maintained in
accordance with sound business practices.
3.5 STRUCTURES. Except as set forth in Part 3.5 of the Disclosure
Schedule, Sellers own all of the Structures. Except as set forth in Part 3.5 of
the Disclosure Schedule, to Seller's knowledge, each Structure (i) is located
entirely on property covered by a Site Lease or is located entirely on the Owned
Real Property, and (ii) complies in all material respects with the terms of the
Permits pertaining to it.
3.6 PERMITS. Except as set forth in Part 3.6, to Seller's knowledge,
the Permits constitute all material licenses, permits, registrations and
approvals necessary to operate the Business. The
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Sellers are in material compliance with the terms of the Permits. The Sellers
are not aware of any fact or event which constitutes a material violation of any
Permit, and Sellers have not received written notice that any Governmental Body
issuing any Permit intends to cancel, terminate, modify or amend any Permit.
3.7 SITE LEASES AND ADVERTISING CONTRACTS. Sellers have delivered to
Buyer true and complete copies of the Advertising Contracts and the Site Leases.
Except as set forth on Part 3.7 of the Disclosure Schedule, all sales made to
advertisers in connection with the Structures have been made pursuant to
Advertising Contracts. The Site Leases and the Advertising Contracts are in full
force and effect, and are binding upon the parties thereto. Except as set forth
in Part 3.7 of the Disclosure Schedule, to the knowledge of the Sellers, (x) no
default by Sellers or any other party has occurred under the Site Leases or
Advertising Leases, and (y) no event, occurrence or condition exists which (with
or without notice or lapse of time or the happening of any further event or
condition) would become a default by Sellers thereunder or would entitle any
other party to terminate a Site Lease or Advertising Contract, to make a claim
or set-off against Sellers or otherwise to amend such Site Lease or Advertising
Contract or prevent such Site Lease or Advertising Contract from being renewed
in accordance with its terms. None of the Sellers have received any written
notice of default, termination or non-renewal under any Site Lease or
Advertising Contract.
3.8 OWNED REAL PROPERTY. Sellers have good and marketable record title
to the Owned Real Property, such title being a fee interest in the Owned Real
Property. Sellers have not received any notice of pending or Threatened claims,
Proceedings, planned public improvements, annexations, special assessments,
rezonings or other adverse claims affecting the Owned Real Property.
3.9 TITLE, ENCUMBRANCES.
(a) Except as set forth in ______________, Sellers own or have
good title to all of the Purchased Assets, and there are no existing agreements,
options, commitments or rights with, of or to any Person to acquire any of the
Purchased Assets or any interest therein. All of the Purchased Assets, including
the Owned Real Property, are owned free and clear of all Encumbrances except for
Permitted Liens.
(b) Except as set forth in Part 3.9(b) of the Disclosure
Schedule, none of the Structures, Site Leases or the Owned Real Property are or
will be, to the Knowledge of the Sellers, subject to zoning, use, or building
code restrictions that will prohibit the continued effective ownership, leasing
or other use of such assets as currently owned and used by Sellers.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.10 of
the Disclosure Schedule, Sellers have no material liabilities or obligations of
any nature relating to the Purchased Assets.
3.11 TAXES. With respect to the Purchased Assets and the Real Property:
(a) Sellers have filed or caused to be filed all Tax Returns
that are or were required to be filed by Sellers, pursuant to applicable Legal
Requirements. Sellers have paid, or made provision for the payment of, all Taxes
that have or may have become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by Seller, except such Taxes, if any, as are
listed in Part 3.11(a) of the Disclosure Schedule and are being contested in
good faith.
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(b) No unpaid Taxes create an Encumbrance (other than
Permitted Liens) on the Purchased Assets or the Owned Real Property.
(c) Buyer shall not be liable for any Taxes of Sellers as a
result of the Contemplated Transactions.
3.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Sellers have complied with all
Legal Requirements applicable to Sellers' ownership or use of the Purchased
Assets, except for noncompliances or failures that, individually or in the
aggregate, would not be reasonably expected to have a Material Adverse Effect.
3.13 LEGAL PROCEEDINGS; ORDERS. Except as set forth in Part 3.13 of the
Disclosure Schedule, there is no Proceeding pending or, to the Knowledge of the
Sellers, Threatened against any of the Sellers or affecting any of the Purchased
Assets, and there is no Order to which any the Sellers or the Purchased Assets
is subject.
3.14 OTHER CONTRACTS None of the Sellers is a party to or bound by any
Other Contract, except as disclosed in Part 3.14 of the Disclosure Schedule.
3.15 INSURANCE. Sellers maintain in full force and effect policies of
fire and other casualty, liability, title and other forms of insurance covering
the Purchased Assets and the Business, and the operation thereof, of the types
and with the amounts of coverage as are consistent with industry standards for
outdoor advertising businesses comparable to the Business.
3.16 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.16 of the
Disclosure Schedule, with respect to the Purchased Assets and the use or
operation thereof: to their knowledge, (i) Sellers are, and have been, in
material compliance with all Environmental Laws; (ii) Sellers have timely filed
all material reports, obtained all required approvals and permits relating to
the Business, and generated and maintained all material data, documentation and
records under any applicable Environmental Laws; (iii) to the Knowledge of
Sellers, there has not been any release of the Hazardous Materials at or in the
vicinity of the Business or in areas for which Sellers would have responsibility
under Environmental Laws; (iv) none of the Sellers has received any written
notice from any Governmental Body or private or public entity advising it that
it is or may be responsible for response costs with respect to a Release, a
threatened Release or clean up of Hazardous Materials produced by, or resulting
from, its Business, operations or processes; and (v) Sellers have delivered to
Buyer true and complete copies and results of any reports, studies, analyses,
tests, or monitoring possessed by Sellers pertaining to Hazardous Materials in,
on, or under the properties included in the Purchased Assets.
3.17 INTANGIBLE PROPERTY. Sellers use no Intangible Property in
connection with the operation of the Purchased Assets except for the Permits,
the Books and Records, the trade names "Villepigue", and licenses for commonly
available software programs under which Sellers are the licensee.
3.18 RELATIONSHIPS WITH AFFILIATES. Except as set forth on Part 3.18 of
the Disclosure Schedule, Sellers are not a party to any contract with an
Affiliate of Sellers relating to the Purchased Assets or the Business. Neither
Sellers nor any Affiliate of Sellers are the owner (of record or as a
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beneficial owner) of an equity interest or any other financial or profit
interest in, a Person (other than the Sellers) that has business dealings or a
material financial interest in any transaction with Sellers involving the
Purchased Assets, or the Business.
3.19 BROKERS OR FINDERS. Sellers have not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
3.20 EMPLOYEE BENEFIT MATTERS. Except as disclosed on Part 3.20 of the
Disclosure Schedule, with respect to each Seller:
(a) Seller does not maintain and has never maintained an
"employee benefit pension plan", within the meaning of ERISA Section 3(2), that
is or was subject to Title IV of ERISA.
(b) Seller does not have and has not ever had any past,
present or future obligation or liability to contribute any "multiemployer
plan", as defined in ERISA Section 3(37).
For purposes of this Section 3.20 the term Seller shall be deemed to include any
other corporation, trade, business or other entity, other than Sellers, which
would together with the Sellers, now or in the past constitute a single employer
within the meaning of Section 414 of the IRC.
3.21 HSR ACT. None of the Sellers is a person (or included in a
person), that has total assets of $10 million or more or annual net sales of $10
million or more, within the meaning of, and as determined in accordance with,
the HSR Act.
3.22 DISCLOSURE. No representation or warranty of Sellers in this
Agreement and no statement in the Disclosure Schedule omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Closing Documents to which Buyer
is a party, such Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Closing Documents and to
perform its obligations under this Agreement and the Closing Documents to which
Buyer is a party.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any
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Person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to (i) any provision of Buyer's
Organizational Documents; (ii) any resolution adopted by the board of directors
or the stockholders of Buyer; (iii) any Legal Requirement or Order to which
Buyer may be subject; or (iv) any material Contract to which Buyer is a party or
by which Buyer may be bound. Buyer is not and will not be required to give any
notice to or obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. Except as set forth on Schedule 4.3, to Buyer's
Knowledge, no such Proceeding has been Threatened in writing and no event has
occurred or circumstance exist that may give rise to or serve as a basis for the
commencement of any Proceeding.
4.4 BROKERS OR FINDERS. Buyer has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
5. COVENANTS OF SELLER
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the Closing Date, Sellers will, and will cause their Representatives to, afford
Buyer and its Representatives reasonable access during normal business hours to
Sellers' personnel, properties, Books and Records, and other documents and data
relating to the Purchased Assets and the Business, and furnish Buyer and its
Representatives with copies of the same.
5.2 DUE DILIGENCE. Buyer shall have the right, and Sellers shall afford
access to Buyer and its Representatives, at all reasonable times upon advance
notice to perform due diligence on the Purchased Assets and the Business from
the date hereof through and including the date that occurs seven (7) calendar
days after the date hereof (the "Due Diligence Period").
5.3 OPERATION OF THE PURCHASED ASSETS. Between the date of this
Agreement and the Closing Date, Sellers will:
(a) operate the Business only in the Ordinary Course of
Business;
(b) use their Best Efforts to maintain the Purchased Assets,
and maintain the relations and good will with advertisers, landlords and others
associated with the operation of the Business; and
(c) confer with Buyer concerning any new Advertising Contract,
Site Lease or Other Contract which involves a term of more than three (3) months
or payment of amounts in excess of $50,000.
5.4 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
operate the business consistent in all material respects with past practice,
except as otherwise provided in this Agreement.
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5.5 REQUIRED APPROVALS AND CONSENTS. As promptly as practicable after
the date of this Agreement, Sellers will make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions and use their Best Efforts to obtain such of the Consents
identified in Section 3.2 for the transfer of the Purchased Assets.
5.6 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Sellers will promptly notify Buyer in writing if Sellers become aware of
any fact or condition that causes or constitutes a material breach of any of
Sellers' representations and warranties as of the date of this Agreement, or if
Sellers become aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a material breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. During the same period,
Sellers will promptly notify Buyer of the occurrence of any material breach of
any covenant of Sellers in this Section 5 or of the occurrence of any event that
may make the satisfaction of the conditions in Section 7 impossible or unlikely.
5.7 NO NEGOTIATION. Until the earlier of January 20, 1997 or such time,
if any, as this Agreement is terminated pursuant to Section 9, neither Sellers
nor any Affiliate will, nor will they permit their respective Representatives
to, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than Buyer or its Representatives) relating to or affecting any
transaction involving the sale of the Purchased Assets.
5.8 TAX CLEARANCE. Sellers shall obtain all certificates of clearances
for Taxes ("Tax Clearances"), if any, required by the State of New York or, if
such Tax Clearances are required but not available at the Closing, certificates
from the State of New York certifying as to the payment by or on behalf of
Sellers of all Taxes due on or prior to a date not more than thirty (30) days
prior to the Closing Date (it being agreed and understood that, notwithstanding
the foregoing, if any Tax Clearances are not obtained prior to the Closing,
Sellers shall obtain such Tax Clearances after the Closing and shall be
responsible for, and shall discharge in full, all liabilities and obligations
therefor).
6. COVENANTS OF BUYER
6.1 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, Buyer will make all filings required by Legal Requirements to be
made by it to consummate the Contemplated Transactions.
6.2 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, Buyer will use its Best Efforts to cause the conditions in Sections 7 and
8 to be satisfied; provided that this Agreement will not require Buyer to
dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.
6.3 IMPRINTS. No later than 150 days after the Closing, Buyer shall
remove from all Structures included in the Purchased Assets all imprints used by
Sellers containing Sellers' trade name; provided, however, until the earlier of
(i) such removal or (ii) the expiration of such 150- day period, Buyer may
display Sellers' trade names on such Structures.
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6.4 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Buyer will promptly notify Sellers in writing if Buyer becomes aware of
any fact or condition that causes or constitutes a breach of any of Buyer's
representations and warranties as of the date of this Agreement, or if Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, Buyer will promptly notify
Sellers of the occurrence of any breach of any covenant of Buyer in this Section
6 or of the occurrence of any event that may make the satisfaction of the
conditions in Section 8 impossible or unlikely.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Purchased Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. Sellers' representations and
warranties in this Agreement must have been accurate as of the date of this
Agreement, and must be accurate in all material respects as of the Closing Date
as if made on the Closing Date, and Buyer shall have received a certificate of
an executive officer of Sellers, dated as of the Closing Date, as to such
accuracy.
7.2 SELLERS' PERFORMANCE. The covenants and obligations that Sellers
are required to perform or to comply with pursuant to this Agreement at or prior
to the Closing must have been performed and complied with in all material
respects, and Buyer shall have received a certificate of an executive officer of
each Seller, dated as of the Closing Date, as to such compliance.
7.3 CONSENTS. Except as set forth in _____________, each of the
Consents required pursuant to Section 5.5 must have been obtained and must be in
full force and effect.
7.4 ADDITIONAL DOCUMENTS. Each of the following documents must have
been delivered to Buyer:
(a) an opinion of Ferber Greilsheimer Chan & Essner dated the
Closing Date, in form and substance reasonably satisfactory to Buyer;
(b) the deliveries required from Sellers in Section 2.7; and
(c) such other documents as Buyer may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Section 7, or (ii) otherwise facilitating the consummation or performance
of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced and pending or Threatened by any Person other than one
affiliated with TDI or threatened in writing by a Person affiliated with TDI any
Proceeding (i) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, (ii) that
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prevents, makes illegal, or otherwise materially interferes with any of the
Contemplated Transactions or seeks to do any of the foregoing, or (iii) that
involves any material claim against Seller.
7.6 NO PROHIBITION. There must not be in effect any Legal Requirement
or any injunction or other Order that prohibits or restricts the consummation of
the Contemplated Transactions, including, without limitation, HSR Act
compliance.
7.7 NO MATERIAL ADVERSE CHANGE. There shall not have been a Material
Adverse Change since the date hereof.
7.8 DUE DILIGENCE. Buyer's due diligence investigation and review of
the Business with respect to the Purchased Assets, the Business and the Assumed
Liabilities shall not reveal any fact or circumstance not disclosed to Sellers
in the Disclosure Schedule prior to the execution hereof which in Buyer's
judgment, exercised in good faith, would cause or be likely to cause a Material
Adverse Change to the value of the Purchased Assets.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Purchased Assets and Sellers'
obligations to take the other actions required to be taken by Sellers at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Seller, in whole or in
part):
8.1 ACCURACY OF REPRESENTATIONS. Buyer's representations and warranties
in this Agreement must have been accurate as of the date of this Agreement and
must be accurate in all material respects as of the Closing Date as if made on
the Closing Date, and Sellers shall have received a certificate of an executive
officer of Buyer, dated as of the Closing Date, as to such accuracy.
8.2 BUYER'S PERFORMANCE. The covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been performed and complied with in all material respects,
and Sellers shall have received a certificate of an executive officer of Buyer,
dated as of the Closing Date, as to such compliance.
8.3 ADDITIONAL DOCUMENTS. Buyer must have caused the following
documents to be delivered to Seller:
(a) an opinion of Powell, Goldstein, Frazer & Murphy, dated
the Closing Date, in form and substance reasonably acceptable to Sellers;
(b) the deliveries required from Buyer in Section 2.7; and
(c) such other documents as Sellers may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Section 8, or (ii) otherwise facilitating the consummation of any of the
Contemplated Transactions.
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8.4 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced and pending or Threatened any Proceeding (i) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (ii) that prevents, makes illegal, or otherwise
materially interferes with any of the Contemplated Transactions or seeks to do
any of the foregoing.
8.5 NO PROHIBITION. There must not be in effect any Legal Requirement
or any injunction or other Order that prohibits or restricts the consummation of
the Contemplated Transactions.
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by mutual consent of Buyer and Sellers;
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Sellers, if any of the conditions in
Section 8 has not been satisfied of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of Sellers
to comply with their respective obligations under this Agreement) and Sellers
have not waived such condition on or before the Closing Date;
(c) by Buyer, on the one hand, or Sellers, on the other hand,
if the Closing has not occurred (other than through the failure of other Party
seeking to terminate this Agreement to comply fully with its obligations under
this Agreement) on or before January 31, 1997, or such later date as the Parties
may agree upon; or
9.2 EFFECT OF TERMINATION. Each Party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement.
If this Agreement is terminated pursuant to Section 9.1, all further obligations
of the Parties under this Agreement will terminate, except that the obligations
in Sections 11.1 and 11.2 will survive; provided, however, that if this
Agreement is terminated by a Party because of the breach of the Agreement by the
other Party or because one or more of the conditions to the terminating Party's
obligations under this Agreement is not satisfied as a result of the other
Party's failure to comply with its obligations under this Agreement, the
terminating Party's right to pursue all legal and equitable remedies, separately
or simultaneously, (including specific performance) will survive such
termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. The Sellers,
jointly and severally, will indemnify and hold harmless Buyer, stockholders,
controlling Persons, and affiliates (collectively, the "Seller Indemnified
Persons") for, and will pay to the Seller Indemnified Persons the amount of, any
loss, liability, claim, damage, expense (including reasonable costs of
investigation and
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defense and reasonable attorneys' fees), whether or not involving a third-party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any material breach of any representation or warranty made
by Sellers in this Agreement, the Disclosure Schedule, or any other certificate
or document delivered by Sellers pursuant to this Agreement;
(b) any breach by Sellers of any covenant or obligation of
Sellers in this Agreement or any certificate or document delivered by Sellers
pursuant to this Agreement;
(c) the failure of Sellers to satisfy and discharge any
Excluded Liabilities, except only the Assumed Liabilities; and
(d) the failure of Sellers to comply with bulk sales or other
similar laws in any applicable jurisdiction.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Sellers and partners, controlling Persons,
affiliates and heirs (collectively, the "Buyer Indemnified Persons") for, and
will pay to the Buyer Indemnified Persons the amount of any Damages arising,
directly or indirectly, from or in connection with:
(a) any material breach of any representation or warranty made
by Buyer in this Agreement or in any certificate or document delivered by Buyer
pursuant to this Agreement; and
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement including, without limitation, any failure to pay Assumed
Liabilities after the Closing.
10.3 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 10.1 or 10.2, of notice of any claim against it, such Indemnified
Person will, if a claim is to be made against an Indemnifying Party under such
Section , give notice to the Indemnifying Party of the commencement of such
claim, but the failure to notify the Indemnifying Party will not relieve the
Indemnifying Party of any liability that it may have to any Indemnified Person,
except to the extent that the Indemnifying Party demonstrates that the defense
of such action is prejudiced by the Indemnifying Party's failure to give such
notice.
(b) If any claim referred to in Section 10.3(a) is brought
against an Indemnified Person and it gives written notice to the Indemnifying
Party of such claim, the Indemnifying Party may, at its option, assume the
defense of such claim with counsel satisfactory to the Indemnified Person and,
after written notice from the Indemnifying Party to the Indemnified Person of
its election to assume the defense of such claim, the Indemnifying Party will
not, as long as it diligently conducts such defense, be liable to the
Indemnified Person under this Article 10 for any fees of other counsel or any
other expenses with respect to the defense of such claim, subsequently incurred
by the Indemnified Person in connection with the defense of such claim, other
than reasonable costs of investigation. If the Indemnifying Party assumes the
defense of a claim, (i) no compromise or settlement of such claims may be
effected by the Indemnifying Party without the Indemnified Person's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any
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<PAGE> 19
violation of the rights of any Person, and (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party; and (ii) the
Indemnified Person will have no liability with respect to any compromise or
settlement of such claims effected without its consent. Subject to Section
10.3(c), if notice is given to an Indemnifying Party of any claim and the
Indemnifying Party does not, within twenty days after the Indemnified Person's
notice is given, give notice to the Indemnified Person of its election to assume
the defense of such claim, the Indemnifying Party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying Party, assume the
exclusive right to defend, compromise, or settle such claim, but the
Indemnifying Party will not be bound by any determination of a claim so defended
or any compromise or settlement effected without its consent (which may not be
unreasonably withheld).
10.4 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim shall be
asserted by written notice to the Indemnifying Party from whom indemnification
is sought.
10.5 SURVIVAL/LIMITATIONS.
(a) The parties hereto agree that (i) the covenants and
agreements contained in the Agreement and any document delivered pursuant hereto
and the representations and warranties contained in Sections 3.1, 3.2(a), 3.3,
3.8, 3.9(a), 4.1, 4.2(a), 3.11, 3.16, 3.19, and 3.20 shall survive until 90 days
after the expiration of all applicable statutes of limitation with respect to
the subject matter thereof, and (iii) all other representations and warranties
shall survive until the first anniversary following the Closing Date.
(b) The Sellers' obligation to indemnify the Sellers
Indemnified Persons for Damages pursuant to Section 10.1 hereof is subject to
the following limitation: (i) in no event shall the Sellers' obligation to
indemnify the Sellers Indemnified Persons exceed 3.5 Million Dollars.
11. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each Party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, brokers or finders, counsel, and accountants. In the
event of termination of this Agreement, the obligation of each Party to pay its
own expenses will be subject to any rights of such Party arising from a breach
of this Agreement by another Party.
11.2 BULK SALES WAIVER AND INDEMNIFICATION.
11.3 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at
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<PAGE> 20
such time and in such manner as Buyer and Sellers agree in writing, provided
that the parties shall reasonably cooperate in such announcements, and provided
further that nothing contained herein shall prevent any party from at any time
furnishing information required by a Governmental Body. Unless consented to by
Buyer and Sellers in advance or required by Legal Requirements, prior to the
Closing, each Party shall, and shall cause their respective Representatives to,
keep this Agreement strictly confidential and may not make any disclosure of
this Agreement to any Person.
11.4 AVAILABILITY OF EQUITABLE REMEDIES. The Parties acknowledge and
agree that (i) a breach of the provisions of this Agreement could not adequately
be compensated by money damages, and (ii) any Party shall be entitled, either
before or after the Closing, in addition to any other right or remedy available
to it, to an injunction restraining such breach and to specific performance of
this Agreement, and no bond or other security shall be required in connection
therewith.
11.5 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
Party may designate by notice to the other Parties):
If to Sellers, to:
Mr. Kent H. Villepigue
Villepigue Outdoor Advertising Corporation
49-62 Van Dam Street
Long Island City, New York 11101
Telephone No.: (718) 392-1500
Facsimile No.: (718) 482-9433
With a copy to:
Ferber Greilsheimer Chan & Essner
530 Fifth Avenue
New York, N.Y. 10036-5101
Attention: David I. Ferber, Esq.
Telephone No.: (212) 944-2200
Facsimile No.: (212) 944-7630
If to Buyer, to:
Outdoor Systems, Inc.
2502 North Black Canyon Highway
Phoenix, Arizona 85009
Telephone No.: (602) 246-9569
Facsimile No.: (602) 433-2482
Attention: William S. Levine
and
William S. Levine
1702 E. Highland Avenue, Suite 310
Phoenix, Arizona 85016
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<PAGE> 21
Telephone No.: (602) 248-8181
Facsimile No.: (602) 248-0884
With a copy to:
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, NE, 16th Floor
Atlanta, Georgia 30303
Attention: William B. Shearer, Jr., Esq.
Telephone No.: (404) 572-6600
Facsimile No.: (404) 572-6999
11.6 FURTHER ASSURANCES. The Parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things, all as
the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
11.7 WAIVER. Neither the failure nor any delay by any Party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
11.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the Parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the Party to be charged with the amendment.
11.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Parties except that Buyer may assign any of its rights under this
Agreement to any affiliate of Buyer. This Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the Parties, and their
successors, by liquidation or otherwise, and their permitted assigns. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.
11.10 ACCOUNTS RECEIVABLE. Buyer agrees to forward to Sellers any
payments that Buyer may receive with respect to any accounts receivable of
Sellers (except for any payment with respect to an Advertising Contract that has
been prorated in favor or Buyer pursuant to Section 2.6 hereof).
11.11 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
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<PAGE> 22
11.12 RISK OF LOSS. Material risk of loss or damage to the Purchased
Assets from any cause whatsoever prior to the Closing shall be borne by Seller,
and after the Closing shall be borne by Buyer.
11.13 POST-CLOSING ACCESS. Buyer agrees that all Books and Records
delivered to Buyer by Sellers pursuant to this Agreement shall be maintained
open for inspection by Sellers at any time during regular business hours upon
reasonable notice for a period of six (6) years (or for such longer period as
may be required by applicable Legal Requirements) following the Closing and
that, during such period, Sellers, at their expense, may make such copies
thereof as it may reasonably desire. Sellers agree that all books and records
relating to the Purchased Assets and retained by Sellers shall be maintained
open for inspection by Buyer at any time during regular business hours for a
period of six (6) years (or for such longer period as may be required by
applicable Legal Requirements) following the Closing and that, during such
period, Buyer, at its expense, may make such copies thereof as it may reasonably
desire. Nothing contained in this Section 11.13 shall obligate any Party hereto
to make available any books and records if to do so would violate the terms of
any Contract or Legal Requirement to which it is a party or to which it or its
assets are subject.
11.14 HEADINGS; CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
11.15 APPLICABLE LAW. Except as to matters pertaining to the Owned Real
Property, which matters shall be governed by the laws of the State of New York,
this Agreement shall be governed and controlled as to validity, enforcement,
interpretations, construction, effect and in all other respects by the internal
laws of the State of Delaware applicable to contracts made in that State. The
parties hereto agree to submit exclusively to any federal or state court located
in the State of Delaware any dispute or controversy arising out of or relating
to this Agreement, except for any dispute or controversy relating to Owned Real
Property and which is governed by the laws of the State of New York, which shall
be submitted to any federal or state court located in the State of New York.
11.16 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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<PAGE> 23
IN WITNESS WHEREOF, the Parties have executed, sealed and delivered
this Agreement as of the date first written above.
BUYER:
OUTDOOR SYSTEMS, INC.
By: __________________________________
Title: _______________________________
SELLERS:
VILLEPIGUE OUTDOOR ADVERTISING
CORPORATION
By: __________________________________
Title: _______________________________
VILLEPIGUE INTERNATIONAL
ADVERTISING, INC.
By: __________________________________
Title: _______________________________
S.B. PROPERTIES, INC.
By: __________________________________
Title: _______________________________
THIRD & EIGHTH REALTY CORP.
By: __________________________________
Title: _______________________________
MOBILE OUTDOOR MEDIA, INC.
By: __________________________________
Title: _______________________________
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<PAGE> 24
EXHIBIT A
DEFINITIONS
"ADVERTISING CONTRACTS" -- as defined in Section 2.2(c).
"AFFILIATES" -- when used with reference to a specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Specified
Person. For purposes of this definition of Affiliate, "control" means the
possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies of the Person in question, whether through
the ownership of voting securities or by contract or otherwise.
"ASSIGNMENT OF ADVERTISING CONTRACTS" -- the Assignment and Assumption
of Advertising Contracts in the form of Exhibit C attached hereto.
"ASSIGNMENT OF PERMITS" -- the Assignment and Assumption of Permits in
the form of Exhibit D attached hereto.
"ASSIGNMENT OF SITE LEASES" -- the Assignment and Assumption of Site
Leases in the form of Exhibit E attached hereto.
"ASSUMED LIABILITIES" -- as defined in Section 2.3.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances.
"BILL OF SALE" -- the Bill of Sale, Assignment and Assumption Agreement
in the form of Exhibit F attached hereto.
"BOOKS AND RECORDS" -- All of Sellers' books and records relating to
the Purchased Assets, including, without limitation, all Site Lease files,
Advertising Contract files, Permit files, maintenance and other records for the
Structures, logs, advertiser, customer and supplier lists.
"BUYER" -- as defined in the first paragraph of this Agreement.
"CLOSING" -- as defined in Section 2.5.
"CLOSING DATE" -- the date and time as of which the Closing actually
takes place.
"CLOSING DOCUMENTS" -- as defined in Section 3.2(a).
"CONFIDENTIAL INFORMATION" -- any information concerning the businesses
and affairs of Sellers that is not generally available to the public.
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<PAGE> 25
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including: (a) the purchase of the Purchased Assets by Buyer
from Sellers and assignment to and assumption by Buyer of the Assumed
Liabilities, and (b) the performance by Buyer and the Sellers of their
respective covenants and obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" -- as defined in Section 10.1.
"DEEDS" -- limited warranty deeds (or the statutory equivalent thereof
with covenants against grantor's acts only), in recordable form, with respect to
the Owned Real Property.
"DISCLOSURE SCHEDULE" -- the disclosure schedule, delivered by Sellers
to Buyer concurrently with the execution and delivery of this Agreement.
"DUE DILIGENCE PERIOD" -- as defined in Section 5.2.
"ENCUMBRANCE" -- any charge, claim, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW" -- any Legal Requirement pertaining to
environmental discharges, Release, emissions or spills or the manufacture, sale,
processing, handling, transportation, storage or disposal of any Hazardous
Materials, or relating to any environmental processes or condition, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act ("RCRA"), the Endangered Species Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Surface Mining Control and Reclamation Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Coastal Zone Management Act, the National
Environmental Policy Act, the Noise Control Act. As used in this Agreement,
Environmental Laws shall mean any of such laws or regulations as the same exist
now or at the Closing Date.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"EXCLUDED LIABILITIES" -- as defined in Section 2.4.
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<PAGE> 26
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"HSR ACT" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and any regulations and rules promulgated thereunder.
"INDEMNIFIED PERSON" -- any of the Seller Indemnified Persons or the
Buyer Indemnified Persons, as the context requires.
"INDEMNIFYING PARTY" -- the Buyer or the Sellers, as the context
requires.
"INTANGIBLE PROPERTY" -- All right, title and interest in and to the
goodwill and other intangible property (except for Sellers' corporate or trade
names and trade logos) used in connection with the Purchased Assets, all
licenses, permits and authorizations pertaining to the Purchased Assets or the
right to own and operate the Purchased Assets and all right, title and interest
in and to (i) any intellectual property used in connection with the Purchased
Assets, and (ii) all records and data relating specifically to the Purchased
Assets.
"IRC" -- the Internal Revenue Code of 1986, as amended from time to
time, or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"KNOWLEDGE" -- a Person will be deemed to have "Knowledge" of a
particular fact or other matter only if such Person is actually aware of such
fact or other matter without making any independent inquiry or investigation. A
Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has Knowledge of such fact or other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"MATERIAL ADVERSE CHANGE" -- a change that will probably cause a
Material Adverse Effect.
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<PAGE> 27
"MATERIAL ADVERSE EFFECT" -- a material adverse effect on the Business,
the Purchased Assets, or the Owned Real Property or operations or conditions
(financial or otherwise) relating thereto, taken as a whole.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" if such action is
consistent with the past custom and practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person (including
with respect to quantity and frequency).
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"OTHER CONTRACT" -- any Contract (other than a Site Lease or
Advertising Contract) relating to or affecting the Purchased Assets, the Real
Property, or the operation thereof (i) under which Sellers have or may acquire
any rights, (ii) under which Sellers have or may become subject to any
obligation or liability, or (iii) by which Sellers or any of the Purchased
Assets or the Real Property is or may become bound.
"OWNED REAL PROPERTY" -- as defined in Section 3.6(a).
"PARTY" -- as defined in the first paragraph of this Agreement.
"PERMITS" -- as defined in Section 2.2(d).
"PERMITTED LIENS" -- liens for taxes not yet delinquent, for
mechanic's, materialmen's and similar liens which have arisen in the ordinary
course of business, purchase money security interests, or for other liens which
are immaterial in amount or character.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" -- as defined in Section 2.6.
"PURCHASED ASSETS" -- as defined in Section 2.2.
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<PAGE> 28
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITY INTEREST" -- any mortgage, pledge, lien, encumbrance, charge
or other security interest or option or right of any third party with respect
thereto.
"SELLER" -- as defined in the first paragraph of this Agreement.
"SITE LEASES" -- as defined in Section 2.2(b).
"STRUCTURES" -- as defined in Section 2.2(a).
"TAX" -- shall mean all tax (including income tax, capital gains tax,
value added tax, sales tax, property tax, transfer tax or intangibles tax), levy
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including fine, penalty and interest) imposed, assessed or collected by
or under the authority of any Governmental Body.
"TAX CLEARANCES" -- as defined in Section 5.9.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREATENED" -- a claim, Proceeding or dispute will be deemed to have
been "THREATENED" if any demand or statement has been made or any notice has
been given that would lead a prudent Person to conclude that such a claim,
Proceeding or dispute is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
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<PAGE> 1
Exhibit 99.10
AMENDMENT
AMENDMENT, dated as of March 12, 1997 (this "Amendment"), to the Fourth
Amended and Restated Credit Agreement, dated as of October 22, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among OUTDOOR SYSTEMS, INC., (the "Company"), MEDIACOM, INC. (the "Canadian
Borrower; together with the Company, the Borrowers"), the several banks and
other financial institutions from time to time parties thereto (the "Lenders")
CANADIAN IMPERIAL BANK OF COMMERCE, as Canadian Administrative Agent, and
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as8 US Administrative Agent
(in such capacity, the "US Administrative Agent"; together with the Canadian
Administrative Agent, the "Agents").
W I T N E S S E T H:
WHEREAS, the Borrowers, the Lenders and the Agents are parties to the
Credit Agreement;
WHEREAS, the Company intends to issue additional Subordinated
Indebtedness and/or, in lieu of a portion of such additional Subordinated
Indebtedness as set forth herein, increase its availability under the US
Revolving Credit Commitments;
WHEREAS, to permit the foregoing, the borrowers have requested that the
Lenders and the Agents agree to amend certain provisions of the Credit
Agreement, and the Lenders and the Agents are agreeable to such request upon the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other valuable consideration the receipt of which is
hereby acknowledged, the Borrowers, the Lenders and the Agents hereby agree as
follows:
1. Definitions. (a) All terms defined in the Credit Agreement shall
have such defined meanings when used herein unless otherwise defined herein.
(b) The definitions of "Senior Subordinated Indenture" and
"Senior Subordinated Notes" are hereby amended by replacing such definitions
with the following respective new definitions:
"Senior Subordinated Indenture": the collective reference to
(i) the Indenture, dated as of October 15, 1996, among the Company,
certain of its Subsidiaries and The Bank of New York, as Trustee,
relating to the Senior Subordinated Notes referred to in clause (i) of
the definition thereof, and (ii) such new indenture entered into by the
Company relating to the Senior Subordinated Notes referred to in clause
(ii) of the definition thereof, provided that such new indenture, and
the Senior Subordinated Notes issued thereunder, shall (a) have terms
and provisions (other than aggregate principal amount, stated interest
rate and final scheduled maturity) that are substantially the same as
those of the indenture referred to in clause (i) above and (b) in any
event contain no material term or provision (other than aggregate
principal amount and stated interest rate) less favorable to the
Company, its Subsidiaries or the Lenders than the corresponding terms
and provisions of such indenture, as so certified in writing by the
Company.
<PAGE> 2
"Senior Subordinated Notes": the collective reference to (i)
those 9-3/8% Senior Subordinated Notes due 2006 issued by the Company
pursuant to the Senior Subordinated Indenture and (ii) the senior
subordinated notes issued by the Company pursuant to the Senior
Subordinated Indenture referred to in clause (ii) of the definition
thereof in accordance with the terms of such definition.
(c) The definition of "Permitted Acquisitions" is hereby
amended by deleting the amount "$150,000,000" that appears therein and replacing
it with the amount $250,000,000".
(d) The definition of "Senior Leverage Ratio" and "Total
Leverage Ratio" are each hereby amended by adding the following new proviso to
the end of each such definition:
", and provided, further, that, for the purpose of its use in this
definition, Consolidated Operating Cash Flow shall be calculated on a
pro forma basis (i) to include the pro forma effect on Consolidated
Operating Cash Flow of each Permitted Acquisition for the portion of
each four-quarter test period under Section 8.1(a) and (b) occurring
prior to such date of consummation of such Permitted Acquisition, which
pro forma determination may include Consolidated Operating Cash Flow
associated with such Permitted Acquisition for such portion of such
test period, and (ii) to include pro forma adjustments for any net cost
and expense reductions relating to such Permitted Acquisition as set
forth in reasonable detail on a schedule distributed to the Lenders, so
long as Majority Lenders consent to such adjustment in writing."
2. Amendment of Subsection 8.2(f). Subsection 8.2(f) of the Credit
Agreement is hereby amended by replacing it with the following new clause (f):
"(f) Subordinated Indebtedness, provided that (i) any
additional Senior Subordinated Notes issued after March 6, 1997 shall
be issued prior to June 30, 1997 and (ii) prior to the issuance of any
such additional Senior Subordinated Notes, the Company shall have
demonstrated, by written certificate delivered to the US Administrative
Agent, compliance with the financial covenants set forth in subsection
8.1, determined on a projected pro forma basis, after giving effect to
such issuance and the application of the proceeds thereof, for the
period of four consecutive fiscal quarters of the Company most recently
completed prior to the date of such issuance for which financial
statements are available for the purposes hereof, as if such issuance
and application of proceeds had occurred on the first day of such
four-quarter test period;"
3. Consent to Commitment Increase. (a) The Lenders hereby consent to
the increase of the US Revolving Credit Commitments after the date hereof by up
to an additional US$100,000,000 in the aggregate by one or more (but not
necessarily all) of the Lenders having US Revolving Credit Commitments, provided
that (i) in the event of any such increase, each Lender having a US Revolving
Credit Commitment that is increased thereby shall have agreed to such increase
of its US Revolving Credit Commitment and (ii) the aggregate amount of all such
increases shall be limited to US$100,000,000 less the amount (the "Sub Debt
Reduction Amount") by which the aggregate principal amount of additional
Subordinated Indebtedness issued after the date hereof and on or prior to June
30, 1997 exceeds US$150,000,000. In furtherance of the foregoing, the Lenders
hereby consent to the automatic amendment of Schedule 1.1A to the Credit
Agreement to reflect any such increase in accordance with the foregoing or any
decrease required by clause (c) below.
<PAGE> 3
(b) Any such increase in a US Revolving Credit Commitment (a
"Commitment Increase") by any Lender (an "Increased Lender") shall have the
following effect during the interim period from the date of the first such
Commitment Increase to and including the date (the "Final Adjustment Date") that
is the earlier of June 30, 1997 and the first date of issuance of additional
Subordinated Inde2btedness during the period from March 20, 1997 through June
30, 1997 (and any affected provisions of the Credit Agreement shall be deemed to
be appropriate modified):
(i) Borrowings. US Revolving Credit Loans made after
such Commitment Increase shall be made first by the US
Revolving Credit Lenders pro rata based on their US Revolving
Credit Commitment Percentages in effect immediately prior to
the first such Commitment Increase (the "Existing Commitment
Percentages") until the Lenders other than any Increased
Lender have no remaining availability under their US Revolving
Credit Commitments, and thereafter such Loans shall be made by
Increased Lenders (pro rata based upon their respective
Commitment increases) to the extent of remaining availability
under their applicable Commitment Increases (such Loans made
only by Increased Lenders, "New Commitment Loans").
(ii) Repayments. Repayments of US Revolving Credit
Loans shall be applied first to New Commitment Loans (pro rata
if held by more than one Increased Lender) and then, pro rata
based on the Existing Commitment Percentages, to the remaining
US Revolving Credit Loans, provided that if any such payment
is insufficient to pay all US Revolving Credit Loans then due
and unpaid at the time of such payment, such payment shall be
applied pro rata based on outstanding principal amounts in
accordance with the third sentence of subsection 4.8(a) of the
Credit Agreement.
(iii) Interest and Fees. Interest shall be applied by
the US Administrative Agent in a manner that reflects any
differences in interest rate applicable to any non pro rata
borrowings or repayments made as described above, and payments
of commitment fees in respect of the US Revolving Credit
Commitments will be made ratably according to the Lenders'
respective Available US Revolving Credit Commitments then in
effect.
(c) The Increased Commitments shall on the Final Adjustment
Date automatically be reduced (pro rata, if held by more than one Increased
Lender) by the Sub Debt Reduction Amount. On the Final Adjustment Date, after
giving effect to any prepayments from the proceeds of any additional
Subordinated Debt, if any, issued on such Date, the Borrower shall prepay all
then outstanding US Revolving Credit Loans (subject to payment of breakage
costs, if any, payable under subsection 4.12 of the Credit Agreement) and
reborrow pro rata from all Lenders having US Revolving Credit Commitments an
amount equal to the lesser of (i) the aggregate amount of US Revolving Credit
Loans outstanding immediately prior to such prepayment and (ii) the aggregate
amount of the US Revolving Credit Commitments then in effect. Unless the
Borrower shall have given the required notice for a borrowing of Eurodollar
Loans in accordance with subsection 2.4 of the Credit Agreement, all Loans
pursuant to such reborrowing shall be borrowed as ABR Loans. Such reborrowing,
and all borrowings, prepayments, continuations and conversions of all US
Revolving Credit Loans thereafter, shall be made pro rata according to the US
Revolving Credit Commitments then in effect.
4. Amendment of Subsection 2.7(b). Subsection 2.7(b) of the Credit
Agreement is hereby amended by replacing the first sentence thereof in its
entirety with the following sentence:
<PAGE> 4
"The US Revolving Credit Commitments shall automatically be
permanently reduced on December 31 of each year, commencing on December
31, 1998, by the percentage set forth below opposite each such date
multiplied by the greatest aggregate amount of the US Revolving Credit
Commitments in effect prior to December 31, 1998:
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1998 16%
December 31, 1999 16%
December 31, 2000 20%
December 31, 2001 24%
December 31, 2002 24%"
</TABLE>
5. Application of Additional Subordinated Indebtedness. Notwithstanding
any applicable provision of the Credit Agreement to the contrary, the proceeds
of additional Subordinated Indebtedness issued after the date hereof as
permitted by the amendment in paragraph 2 above shall be applied first, promptly
after receipt thereof by the Company, to the repayment (without any commitment
reduction) of US Revolving Credit Loans to the extent of the amount thereof
outstanding on such date of repayment, with the remainder of such proceeds to be
retained by the Company to be used for its general corporate purposes, including
acquisitions permitted under the Credit Agreement.
6. Conditions to Effectiveness. This Amendment shall become effective
on and as of the date that the US Administrative Agent shall have received
counterparts of this Amendment, duly executed and delivered by a duly authorized
officer of each of the Borrower, the Agents and the Majority Lenders, it being
agreed that if the Lenders shall have received the schedule of pro forma net
cost and expense reductions referred to in clause (ii) of the new proviso set
forth in paragraph 1(d) with respect to any Permitted Acquisition consummated
prior to the date of such effectiveness, the effectiveness hereof shall also be
deemed to be the consent of the Majority Lenders to the pro forma adjustment
referred to in such schedule in respect of any such Permitted Acquisition.
7. Limited Amendment. Except as expressly amended herein, the Credit
Agreement shall continue to be, and shall remain, in full force and effect. This
Amendment shall not be deemed to be a waiver of, or consent to, or a
modification or amendment of, any other term or condition of the Credit
Agreement (including, without limitation, the financial covenants set forth in
subsection 8.1) or any other Loan Document or to prejudice any other right or
rights which the Lenders may now have or may have in the future under or in
connection with the Credit Agreement or any of the instruments or agreements
referred to therein, as to the same may be amended from time to time.
8. Counterparts. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date first above written.
OUTDOOR SYSTEMS, INC.
By:______________________________________
Title:
MEDIACOM, INC.
By:______________________________________
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY, as
US Administrative Agent
By:______________________________________
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Canadian Administrative Agent
and as a Lender
By:______________________________________
Title:
CIBC, INC., as a Lender
By:______________________________________
Title:
<PAGE> 6
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY, as
a Lender
By:______________________________________
Title:
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By:______________________________________
Title:
BANK OF AMERICA CANADA
By:______________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:______________________________________
Title:
BANQUE PARIBAS
By:______________________________________
Title:
By:______________________________________
Title:
PARIBAS BANK OF CANADA
By:______________________________________
Title:
<PAGE> 7
PARIBAS CAPITAL FUNDING LLC
By:______________________________________
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:______________________________________
Title:
THE BANK OF NOVA SCOTIA
By:______________________________________
Title:
By:______________________________________
Title:
By:______________________________________
Title:
BANK ONE, ARIZONA, NA
By:______________________________________
Title:
CORESTATES BANK, N.A.
By:______________________________________
Title:
DRESDNER BANK CANADA
By:______________________________________
Title:
<PAGE> 8
DRESDNER BANK AG NEW YORK & GRAND
CAYMAN BRANCHES
By:______________________________________
Title:
FLEET NATIONAL BANK
By:______________________________________
Title:
THE FUJI BANK LIMITED, LOS ANGELES
AGENCY
By:______________________________________
Title:
GOLDMAN SACHS CREDIT PARTNERS L.P.
By:______________________________________
Title:
THE LONG TERM CREDIT BANK OF JAPAN,
LTD. LOS ANGELES AGENCY
By:______________________________________
Title:
MELLON BANK, N.A.
By:______________________________________
Title:
<PAGE> 9
MELLON BANK CANADA
By:______________________________________
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY
By:______________________________________
Title:
NORWEST BANK ARIZONA, N.A.
By:______________________________________
Title:
CAPTIVA FINANCE LTD.
By:______________________________________
Title:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By:______________________________________
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:______________________________________
Title:
<PAGE> 10
SENIOR HIGH INCOME PORTFOLIO, INC.
By:______________________________________
Title:
MD CBO IV (CAYMAN) LTD
BY: PROTECTIVE ASSET MANAGEMENT,
L.L.C. AS COLLATERAL MANAGER
By:______________________________________
Title:
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (A UNIT OF THE CHASE
MANHATTAN BANK)
By:______________________________________
Title:
RESTRUCTURED OBLIGATIONS
BACKED BY SENIOR ASSETS B.V.,
AS ASSIGNEE
BY ITS MANAGING DIRECTOR
ABN TRUST COMPANY (NETHERLAND)
By:______________________________________
Title:
PILGRIM AMERICA PRIME RATE TRUST
By:______________________________________
Title:
PRIME INCOME TRUST
By:______________________________________
Title:
THE TRAVELERS INSURANCE COMPANY
<PAGE> 11
By:______________________________________
Title:
PUTNAM HIGH YIELD TRUST
By:______________________________________
Title:
CRESCENT/MACH I PARTNERS, L.P.
BY: TCW ASSET MANAGEMENT, ITS
INVESTMENT MANAGER
By:______________________________________
Title:
INTEGON LIFE INSURANCE CORPORATION
BY: TCW ASSET MANAGEMENT COMPANY,
ITS ATTORNEY IN FACT
By:______________________________________
Title:
OCCIDENTAL LIFE INSURANCE COMPANY
OF NORTH CAROLINA
BY: TCW ASSET MANAGEMENT COMPANY,
ITS ATTORNEY IN FACT
By:______________________________________
Title:
CONTINENTAL CASUALTY COMPANY
By:______________________________________
Title:
UNION BANK OF CALIFORNIA NA
By:______________________________________
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
<PAGE> 12
By:______________________________________
Title:
MERRILL LYNCH PRIME RATE PORTFOLIO
BY: MERRILL LYNCH ASSET
MANAGEMENT, L.P., AS INVESTMENT ADVISOR
By:______________________________________
Title:
INDOSUEZ CAPITAL FUNDING II, LIMITED
BY: INDOSUEZ CAPITAL, AS PORTFOLIO
ADVISOR
By:______________________________________
Title:
