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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MAY 28, 1997 (MAY 22, 1997)
OUTDOOR SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-28256 86-0736400
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2502 NORTH BLACK CANYON HIGHWAY, PHOENIX, ARIZONA 85009
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 246-9569
NOT APPLICABLE
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
Pursuant to the Stock Purchase Agreement dated April 11, 1997 among the
Registrant, Van Wagner Communications, Inc. ("Van Wagner"), Richard M. Schaps
and Jason Perline, on May 22, 1997, the Registrant completed the acquisition of
all of the issued and outstanding stock of Van Wagner for approximately $170
million in cash, subject to certain adjustments. Van Wagner operates display
faces in New York City, Los Angeles and San Francisco. The Van Wagner operations
include approximately 50 "Spectacular" signs in Time 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 along with
transit agreements in New York and sales representation arrangements
for bus shelters in California. The Registrant financed the purchase
price of Van Wagner, and the fees and expenses associated therewith, through
borrowings under its senior credit facility.
Also on May 22, 1997, the Registrant, and certain selling stockholders
entered into an Underwriting Agreement with Alex. Brown & Sons Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation, CIBC Wood Gundy Securities
Corp., Montgomery Securities and Prudential Securities Incorporated in
connection with an offering of 13 million shares of Common Stock, of which 12
million were offered by the Registrant and 1 million by the selling
stockholders.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
99.1. Amendment No. 1 dated as of May 22, 1997 to Stock
Purchase Agreement dated April 11, 1997 by and among
Richard M. Schaps, Jason Perline, Van Wagner
Communications, Inc. and the Registrant.
99.2. Underwriting Agreement dated May 22, 1997 by and
among the Registrant, the selling stockholders named
therein, Alex. Brown & Sons Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation, CIBC Wood
Gundy Securities Corp., Montgomery Securities and
Prudential Securities Corporation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
May 28, 1997 OUTDOOR SYSTEMS, INC.
By: /s/ BILL M. BEVERAGE
-----------------------------
Bill M. Beverage
Chief Financial Officer,
Treasurer and Secretary
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EXHIBIT 99.1
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
Amendment No. 1 (this "Amendment"), dated as of May 22, 1997, to the
Stock Purchase Agreement (the "Agreement") dated April 11, 1997 by and among
Richard M. Schaps, a resident of the state of New York ("Schaps"), Jason
Perline, a resident of the state of New York ("Perline"), Van Wagner
Communications, Inc., a New York corporation (the "Company") and Outdoor
Systems, Inc., a Delaware corporation ("Buyer").
RECITALS
WHEREAS, the parties have entered into the Agreement and desire to
amend certain of the provisions contained therein; and
AGREEMENT
The parties hereto, for and in consideration of the covenants and
agreements set forth herein and in the Agreement, and intending to be legally
bound, agree as follows:
Capitalized terms used herein but not defined herein shall have the
meaning given to them in the Agreement.
ARTICLE I
AMENDMENTS RELATING TO PROFIT SHARING AND WELFARE PLANS
1.1 Section 5.16 of the Agreement is hereby amended to delete in its
entirety therefrom the parenthetical clause appearing therein.
1.2 Section 5.18 of the Agreement is hereby deleted in its entirety.
1.3 Section 7.7 of the Agreement is hereby amended to delete in its
entirety therefrom the parenthetical clause appearing therein.
1.4 Item 5 of Part 5.3(g) of the Disclosure Schedule to the Agreement
is hereby amended to read in its entirety as follows:
"5. The Group Major Medical, Dental, and Life Insurance, the
Vision Service Plan and the Group Long Term Disability Plan
discussed in Part 3.22 of the Disclosure Schedule (the
"Scheduled Plans") will be amended as of the Closing Date to
the extent necessary to exclude from participation therein (i)
individuals who are employees of the Company as of the Closing
Date, (ii) individuals whose employment by the Company
terminated as of the Closing Date and who are not, as of such
date, employed by Porsche Outdoor Advertising Co., Inc. or its
affiliates, and (iii) the dependents of the individuals
described in (i) and (ii) above. Individuals who, immediately
prior
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to the Closing Date, are covered under the Scheduled Plans
pursuant to COBRA shall continue to be offered such COBRA
coverage under the Scheduled Plans after the Closing Date."
1.5 Part 5.3(g) of the Disclosure Schedule to the Agreement is hereby
amended to add a new item 6 to the end thereof which shall read in its entirety
as follows:
"6. Prior to the Closing Date, the Van Wagner Communications, Inc.
Profit Sharing Plan will be terminated, and the
responsibilities of the "Employer" thereunder in respect of
such termination will be assigned to and assumed by Porsche
Outdoor Advertising Co., Inc. Prior to the Closing Date, such
plan will be amended to reflect the foregoing."
1.6 Part 5.16 of the Disclosure Schedule to the Agreement is hereby
amended to add a new item 11 to the end thereof which shall read in its entirety
as follows:
"11. The Van Wagner Communications, Inc. Profit Sharing Plan will
be terminated effective prior to the Closing Date and the
responsibilities of the "Employer" thereunder will be assigned
to Porsche Outdoor Advertising Co., Inc."
1.7 Section 2.5(b)(iii) of the Agreement is hereby amended to delete
the phrase "and each of the trustees and fiduciaries of each pension and other
plan of the Company."
1.8 The Agreement is hereby amended to add thereto a new Section 5.21
to read in its entirety as follows:
"5.21 WELFARE BENEFIT COVERAGE. Effective immediately
following the Closing Date, (i) all employees of the Company, and their
eligible dependents, shall participate in all employee welfare benefit
plans (as defined in Section 3(1) of ERISA) of Buyer, and (ii)
individuals who were employees of the Company immediately prior to the
Closing Date and who were covered under the Company's group health and
dental plan immediately prior to the Closing Date (and the eligible
covered dependents of such individuals) who are terminated by the
Company immediately following the Closing Date shall be offered COBRA
continuation coverage under Buyer's group health and dental plans."
1.9 Section 5.13 of the Agreement and Part 5.13 of the Disclosure
Schedule are hereby amended to include in the definition of the Retained
Businesses, the (i) Scheduled Plans and (ii) telephone lease between Northern
Telecom Finance Corporation and the Company dated May 13, 1994.
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ARTICLE II
AMENDMENTS RELATING TO BONUS ACCOUNT
2.1 The Agreement shall be amended by adding a new Section 5.18 which
shall read as follows:
"5.18 PAYROLL ACCOUNT. (a) Buyer acknowledges and agrees that the
Company maintains a bank account at The Chase Manhattan Bank (the
"Bank"), account number __________ (the "Payroll Account"), and the
Company has informed Buyer that the Bonus Payments shall be paid from
such account. Buyer acknowledges and agrees that, after the Closing
Date, (i) Richard Schaps, William Beattie, Jason Perline and Dirk Gould
shall remain the sole authorized signatories on the Payroll Account,
and (ii) Buyer shall not take any actions whatsoever with respect to
the Payroll Account without the prior written approval of Schaps
including, without limitation, closing such account, changing or adding
authorized signatories thereto, authorizing or ordering stop transfer
payments or other stop orders with respect to any check or other
payment made or to be made on such account and writing checks or
otherwise withdrawing funds from such account.
(b) Schaps acknowledges and agrees that (i) the Payroll Account shall
be used solely for the purpose of making payroll and accrued vacation
payments and the Bonus Payments contemplated by this Agreement, and
(ii) that all such payments, including without limitation, the
applicable tax withholding for such payments (both employer and
employee portion) shall be made from the Payroll Account on behalf of
the Company. The Sellers acknowledge and agree that (i) the arrangement
described in this Section 5.18 has been agreed to as an accommodation
to Sellers; (ii) neither the Company nor Buyer makes any representation
to Sellers as to the adequacy of the Payroll Account for the
fulfillment of the foregoing obligations; and (iii) neither Buyer nor
the Company shall have any obligations with respect to the obligations
to be satisfied from the Payroll Account or the funding of or otherwise
in connection with such Payroll Account after the Closing Date. Within
sixty (60) days after the Closing Date, Schaps shall take or cause to
be taken all such actions as are necessary to terminate the Payroll
Account, and shall provide evidence thereof to Buyer."
ARTICLE III
AMENDMENTS RELATING TO PURCHASE PRICE
3.1 The following definitions shall be added to Article I: "Escrow
Agent" shall mean Baer Marks & Upham LLP. "Escrow Agreement" shall mean that
certain Escrow Agreement among Buyer, Sellers, and Escrow Agent dated the date
hereof.
3.2 The Agreement is hereby amended by deleting Sections 2.4(a)(i) and
2.4(a)(ii).
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3.3 The Agreement is hereby amended by deleting the first two sentences
of Section 2.4(d) and replacing such language with the following:
"The Purchase Price adjustments in (a) and (b) above shall be made
post-Closing in accordance with this Section 2.4(d). Within ninety (90)
days after the Closing, the Buyer will prepare and provide to Sellers a
Closing Date Balance Sheet and calculations of adjustments to the
Purchase Price reviewed by Buyer's outside certified public
accountants."
and by adding the following language to the end of Section 2.4(d):
"Buyer agrees to deposit $1,500,000 into escrow at the Closing, which
amounts shall be used to pay Sellers any positive Purchase Price
adjustment (as finally determined), or shall be returned to Buyer in
the event such Purchase Price adjustment is negative, in accordance
with the Escrow Agreement."
3.4 The Agreement is hereby amended by deleting the first sentence and
paragraph (a) of Section 2.5 and replacing such language with the following:
"(a) At the Closing, Buyer shall (i) deliver $1,500,000 to the
Escrow Agent to be held in escrow pursuant to the Escrow Agreement and
(ii) make certain payments on behalf of Sellers from the Purchase Price
in accordance with instructions provided by Sellers to Buyer, which
payments shall not aggregate more than the Purchase Price. All of the
payments pursuant to clause (a)(ii) shall reduce the total amount of
the Purchase Price payable to the Sellers."
3.5 The Agreement is hereby amended by deleting the first sentence of
Section 5.9. and replacing it with the following:
"Sellers shall cause all Indebtedness for Borrowed Money to
have been satisfied in full on or before the Closing."
3.6 The Agreement shall be amended by adding the following sentence to
the end of Section 2.5(d):
"The parties acknowledge and agree that the proceeds of the repayment
of the Loan Amount by Adtime to the Company shall be used by the
Company to make the Bank Payment and the cash received from payment of
the Loan Amount shall not be included in current assets for purposes of
the Closing Date Net Working Capital adjustment."
3.7 Section 2.5(e) shall be amended by adding the following phrase to
the end thereof:
"including, without limitation, the Escrow Agreement."
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ARTICLE IV
AMENDMENTS RELATING TO INDEMNIFICATION
4.1 Section 10.1(e) of the Agreement is hereby amended by deleting
clause (i) and substituting in lieu thereof the following:
"(i) the Bonus Plan, the Profit Sharing Plan and the Phantom Stock Plan
of the Company,"
and by adding the following additional clause at the end thereof:
"including, without limitation, all applicable withholding Taxes (both
employer and employee portions) with respect to payments under or in
respect of the plans or agreements described in this Section 10.1(e)."
4.2 Section 10.3 of the Agreement is hereby amended by adding the
following:
"(d) if a claim is made by Metro Display Advertising Inc.
("MDA") alleging that Sellers do not have title to or other ownership
interest in the Shares ("Title Claim"), Sellers shall assume the
defense of such claims at their cost and expense. If such Title Claim
is included among other claims, one or more of which Sellers is not
otherwise required to defend hereunder, Sellers shall only be obligated
to defend the Title Claim (and such other claims which they otherwise
would be required to defend hereunder) and shall not be required to
defend any such claims which it would not otherwise be required to
defend hereunder.
4.3 Section 5.20 is hereby amended by adding the following language to
the end of such section:
"For so long as the claim is an obligation of Sellers under this
Section 5.20, Sellers agree (i) to keep Company appraised of the status
of the claim and to consult with Company in its handling of the claim;
and (ii) the provisions of Sections 10.3(b) and (c) hereof shall apply
to such claim as if such claim were a third-party claim whose defense
has been assumed by Sellers."
ARTICLE V
AMENDMENTS RELATING TO BILLBOARDS
5.1 Schaps shall cause Porsche Outdoor Advertising Co., Inc.
("Porsche") to transfer to the Company as soon as practical after the Closing
the permit issued to Porsche and the lease related thereto with respect to the
billboard located at the corner of Pico Blvd. and Beverly Drive in West Los
Angeles, California.
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ARTICLE VI
MISCELLANEOUS
6.1 As amended by this Amendment, the Agreement shall remain in full
force and effect.
6.2 If any provision of this Amendment is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Amendment
will remain in full force and effect. Any provision of this Amendment held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
6.3 This Amendment 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
Amendment.
6.4 This Amendment may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Amendment 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
Amendment as of the date first written above.
BUYER:
Outdoor Systems, Inc.
By: /s/ William S. Levine
________________________________
Name: William S. Levine
Title: President
SELLERS:
/s/ Richard M. Schaps
______________________________________
Richard M. Schaps
/s/ Jason Perline
______________________________________
Jason Perline
COMPANY:
Van Wagner Communications, Inc.
By: /s/ Richard M. Schaps
________________________________
Name: Richard M. Schaps
Title: President
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EXHIBIT 99.2
13,000,000 Shares
OUTDOOR SYSTEMS, INC.
Common Stock
(Par Value $.01 per share)
UNDERWRITING AGREEMENT
May 22, 1997
ALEX. BROWN & SONS INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CIBC WOOD GUNDY SECURITIES CORP.
MONTGOMERY SECURITIES
PRUDENTIAL SECURITIES INCORPORATED
c/o ALEX. BROWN & SONS INCORPORATED
1 South Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
Outdoor Systems, Inc., a Delaware corporation (the "Company"), and the
Selling Shareholders listed on Schedule II, propose to sell to the several
underwriters (the "Underwriters") named in Schedule I hereto for whom you are
acting as representatives (the "Representatives") an aggregate of 13,000,000
shares of the Company's Common Stock, par value $.01 per share (the "Firm
Shares"), of which 12,000,000 shares will be sold by the Company and 1,000,000
will be sold by the Selling Shareholders. The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company and certain Selling Shareholders
also propose to sell at the Underwriters' option an aggregate of up to 1,950,000
additional shares of the Company's Common Stock (the "Option Shares") as set
forth below.
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several
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Underwriters are willing, acting severally and not jointly, to purchase the
numbers of Firm Shares set forth opposite their respective names in Schedule I,
plus their pro rata portion of the Option Shares if you elect to exercise the
over-allotment option in whole or in part for the accounts of the several
Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the "Shares."
Capitalized terms not otherwise defined herein are used as defined in the
Registration Statement (as hereinafter defined). If the Underwriters listed on
Schedule I only include the Representatives, then references herein to the
Representatives shall mean the Underwriters.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company.
(a) The Company represents and warrants as follows:
(i) A registration statement on Form S-3 (File No. 333-26407)
with respect to the Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission under the Act. The Company has complied with the conditions for the
use of Form S-3. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses contained therein and the exhibits,
financial statements and schedules, as finally amended and revised, have
heretofore been delivered by the Company to you. Such registration statement,
together with any registration statement filed pursuant to Rule 462(b), herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has been declared effective by the Commission
under the Act and no post-effective amendment to the Registration Statement has
been filed as of the date of this Agreement. The form of prospectus first filed
by the Company with the Commission pursuant to its Rule 424(b) is herein
referred to as the "Prospectus." Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective is herein referred
to as a "Preliminary Prospectus." Any reference herein to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein, as of the date
of such Registration Statement, Preliminary Prospectus or Prospectus, as the
case may be, and, in the case of any reference herein to any Prospectus, also
shall be deemed to include any documents incorporated by reference therein, and
any supplements or amendments relating to the Shares being issued and sold
pursuant hereto, filed with the Commission after the date of filing of the
Prospectus under Rules 424(b) or 430A, and prior to the termination of the
offering of the Shares by the Underwriters.
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; the
subsidiaries listed on Schedule IV hereto (the "Subsidiaries") are the only
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subsidiaries of the Company; the Subsidiaries have been duly organized and are
validly existing as corporations in good standing under the laws of their
jurisdiction of organization, with corporate power and authority to own or lease
their properties and conduct their business as described in the Registration
Statement. The Company and the Subsidiaries are duly qualified to transact
business in all jurisdictions in which the conduct of their business requires
such qualification; the outstanding shares of capital stock of the Subsidiaries
have been duly authorized and validly issued, are fully paid and non-assessable;
and all of the shares of capital stock of the Subsidiaries are owned by the
Company (or will be so owned after the Acquisition, free and clear of all liens,
encumbrances and security interests (other than as described in the Registration
Statement), and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests of the Subsidiaries are
outstanding. Except for the Subsidiaries and investments in securities as
described in the Registration Statement, the Company has no equity or other
interest in, or right to acquire an equity or other interest in, any
corporation, partnership, trust or other entity.
(iii) The outstanding shares of Common Stock of the Company,
including the Shares to be sold by the Selling Shareholders, have been duly
authorized and validly issued and are fully paid and non-assessable; the Shares
to be issued and sold by the Company have been duly authorized and when issued
and paid for as contemplated herein will be validly issued, fully-paid and
non-assessable; and no preemptive rights of stockholders exist with respect to
any of the Shares or the issue and sale thereof.
(iv) The Shares conform with the statements concerning them in
the Registration Statement.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus or Preliminary Prospectus relating to the
proposed offering of the Shares nor instituted proceedings for that purpose. The
Registration Statement contains and the Prospectus and any amendments or
supplements thereto will contain all statements which are required to be stated
therein by, and in all respects conform or will conform, as the case may be, to
the requirements of, the Act and the Rules and Regulations. The documents
incorporated by reference in the Prospectus, at the time they were filed or will
be filed with the Commission, conformed or will conform at the time of filing,
in all respects to the requirements of the Securities Exchange Act of 1934 or
the Act, as applicable, and the Rules and Regulations of the Commission
thereunder. Neither the Registration Statement nor any amendment thereto, and
neither the Prospectus nor any supplement thereto, including any documents
incorporated by reference therein, contains or will contain, as the case may be,
any untrue statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from the Registration
Statement or the Prospectus, or incorporated by reference or any such amendment
or supplement or any documents incorporated by reference therein, in reliance
upon, and in conformity with, written information furnished to
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the Company by or on behalf of the Selling Shareholders or any Underwriter
through the Representatives, specifically for use in the preparation thereof.
(vi) The consolidated financial statements of the Company and
its subsidiaries, together with related notes and schedules, as set forth or
incorporated by reference in the Registration Statement, present fairly the
consolidated financial position and the consolidated results of operations of
the Company and its subsidiaries at the indicated dates and for the indicated
periods. The financial statements of National Advertising Company ("NAC"),
together with related notes and schedules, as set forth or incorporated by
reference in the Registration Statement, present fairly the financial position
and results of operations of NAC at the indicated dates and for the indicated
periods. The combined financial statements of Gannett Outdoor, together with
related notes and schedules, as set forth or incorporated by reference in the
Registration Statement, present fairly the combined statements of net assets to
be acquired and the combined statements of revenue and direct expenses of net
assets of Gannett Outdoor at the indicated dates and for the indicated periods.
All such financial statements have been prepared in accordance with generally
accepted principles of accounting, consistently applied throughout the periods
involved, and all adjustments necessary for a fair presentation of results for
such periods have been made. The summary and selected financial and statistical
data included or incorporated by reference in the Registration Statement present
fairly the information shown therein and have been compiled on a basis
consistent with the financial statements presented therein.
(vii) The Pro Forma Financial Statements and other pro forma
financial information of the Company included in the Prospectus and incorporated
by reference in the Registration Statement have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma basis described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(viii) The documents filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), at the time filed with the Commission, conformed in all material respects
to the requirements of the Exchange Act, and such documents at the time of such
filing did not, and as of the date hereof do not, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary or make the statements therein not misleading.
(ix) There is no action or proceeding pending or, to the
knowledge of the Company, threatened against the Company or the Subsidiaries
before any court or administrative agency or by any regulatory authority which
might result in any material adverse change in the business or condition of the
Company and the Subsidiaries taken as a whole, except as set forth in the
Registration Statement.
(x) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets reflected in the financial statements
(or as described in the Registration
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Statement) hereinabove described, subject to no lien, mortgage, pledge, charge
or encumbrance of any kind except those reflected in such financial statements
(or as described in the Registration Statement) or which are not material in
amount. The Company and the Subsidiaries occupy their leased properties under
valid and binding leases conforming to the description thereof set forth in the
Registration Statement.
(xi) The Company and the Subsidiaries have filed all Federal,
State and foreign income tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due and are not
being contested in good faith.
(xii) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, of the Company and the Subsidiaries taken as a whole or the earnings,
business affairs, management, or business prospects of the Company and the
Subsidiaries taken as a whole, whether or not occurring in the ordinary course
of business, and there has not been any material transaction entered into by the
Company or any of the Subsidiaries other than transactions in the ordinary
course of business and changes and transactions contemplated by the Registration
Statement, as it may be amended or supplemented. The Company and the
Subsidiaries have no material contingent obligations which are not disclosed in
the Registration Statement, as it may be amended or supplemented.
(xiii) Neither the Company nor any of the Subsidiaries is, nor
with the giving of notice, lapse of time or both, will be, in default under its
Certificate of Incorporation or By-Laws or any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by which
it or any of its properties is bound and which default is of material
significance in respect of the business or financial condition of the Company
and the Subsidiaries taken as a whole. The consummation of the transactions
contemplated by this Agreement and the Pending Acquisition Agreements (as
hereinafter defined) and the fulfillment of the terms hereof and thereof will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which they will become a patty as a result of the Acquisition and
the financing thereof, or of the Charter or By-Laws of the Company or the
Subsidiaries or any order, rule or regulation applicable to the Company or any
of the Subsidiaries of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction which conflict, breach or
default would be of material significance in respect of the business or
financial condition of the Company and the Subsidiaries, taken as a whole.
(xiv) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be
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required by the National Association of Securities Dealers, Inc. (the "NASD") or
may be necessary to qualify the Shares for public offering by the Underwriters
under State securities or Blue Sky laws) has been obtained or made and is in
full force and effect.
(xv) The Company and each of the Subsidiaries hold all
material licenses, consents, authorizations, approvals, orders, certificates and
permits (collectively, "Licenses") of and from, and has made all declarations
and filings with and satisfied all eligibility and other similar requirements
imposed by, all federal, state, local, foreign and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, in each case as required for the conduct of the business in which it
is engaged, and each such License is in full force and effect, except to the
extent that the failure to obtain any such License or to make any such
declaration or filing or satisfy any such requirement would not have a material
adverse effect on the business, prospects, financial condition or results of
operations of the Company and the Subsidiaries, taken as a whole.
(xvi) The Company and the Subsidiaries are in compliance with
all applicable federal, state, foreign and local laws and regulations relating
to (i) zoning, land use, protection of the environment, human health and safety
or hazardous or toxic substances, wastes, pollutants or contaminants and (ii)
employee or occupational safety, discrimination in hiring, promotion or pay of
employees, employee hours and wages or employee benefits, except where such
noncompliance would not, singly or in the aggregate, have a material adverse
effect upon the Company and the Subsidiaries taken as a whole.
(xvii) Deloitte & Touche LLP, who have certified the financial
statements of the Company and Gannett Outdoor filed with the Commission as part
of, or incorporated by reference in, the Registration Statement, are independent
public accountants as required by the Act and the Rules and Regulations.
(xviii) Coopers & Lybrand L.L.P., who have certified the
financial statements of NAC filed with the Commission as part of, or
incorporated by reference in, the Registration Statement, are independent public
accountants as required by the Act and the Rules and Regulations.
(xix) The Company has never been, is not now, and immediately
after the sale of the Shares under this Agreement will not be, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(xx) The Shares of the Company to be sold under this Agreement
(subject to the additional approval of the shares, if any, being registered
pursuant to Rule 462(b)) have been approved for listing on the Nasdaq National
Market subject to official notice of issuance.
(xxi) Each of (i) the Agreement of Purchase and Sale (the "3M
Media Purchase Agreement") between the Company and Minnesota Mining and
Manufacturing Company and (ii) the Stock Purchase Agreement among the Company,
Van Wagner Communications, Inc., Richard M. Schaps and Jason Porline (the "Van
Wagner Stock Purchase Agreement" and
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<PAGE> 7
together with the 3M Media Purchase Agreement, the Pending Acquisition
Agreements") has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms.
(xxii) The Company has no reason to believe that any of the
representations and warranties made to the Company in the Pending Acquisition
Agreements was untrue in any material respect as of the date given or as of the
date hereof or the Closing Date, and the Company reaffirms for the benefit of
the Underwriters the representations and warranties made by the Company in the
Pending Acquisition Agreements.
(xxiii) The Company reaffirms all of the representations and
warranties set forth in subparagraphs (ix) through (xvi) above assuming and
giving effect to the consummation of the transactions (the "Pending
Acquisitions") contemplated in the Pending Acquisition Agreements and assuming
for purposes of such representations and warranties that references to the
Company and the Subsidiaries would include the Company as it will exist after
consummation of the transactions contemplated in the Pending Acquisitions.
(b) Each of the Selling Shareholders severally represents and warrants
as follows:
(i) Such Selling Shareholder now has and at the Closing Date
or the Option Closing Date, as the case may be, will have good and marketable
title to the Shares to be sold by such Selling Shareholder, free of any liens,
encumbrances, equities and claims, and full right, power and authority to effect
the sale and delivery of such Shares; and upon the delivery of and payment for
such Shares pursuant to this Agreement, the Underwriters will acquire good and
marketable title thereto, free of any liens, encumbrances, equities and claims.
(ii) Such Selling Shareholder has full right, power and
authority to execute and deliver this Agreement, the Power of Attorney and the
Custodian Agreement referred to below and to perform his or its obligations
under such Agreements. The execution and delivery of this Agreement and the
consummation by such Selling Shareholder of the transactions contemplated herein
will not result in a breach of any of the terms and provisions of, or constitute
a default under, any indenture, mortgage, deed of trust or other agreement or
instrument to which such Selling Shareholder is a party, or of any order, rule
or regulation applicable to such Selling Shareholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
(iii) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to result in, or which has
constituted, or which might reasonably be expected to cause or result in,
stabilization or manipulation of the price of the Common Stock of the Company.
(iv) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of the
Company contained herein or the information contained in the Registration
Statement and documents incorporated by reference therein, such Selling
Shareholder has no reason to believe that the representations and warranties
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<PAGE> 8
of the Company contained in this Section 1 are not true and correct, is familiar
with the Registration Statement and has no knowledge of any material fact,
condition or information not disclosed in the Registration Statement or the
documents incorporated by reference therein which has adversely affected or may
adversely affect the business of the Company, the Subsidiaries or Gannett
Outdoor; and the sale of the Shares by such Selling Shareholder pursuant hereto
is not prompted by any information concerning the Company or the Subsidiaries
which is not set forth in the Registration Statement or the documents
incorporated by reference therein. The information pertaining to such Selling
Shareholder under the caption "Principal and Selling Stockholders" in the
Prospectus is complete and accurate in all material respects.
(v) No offering, sale or other disposition of any Common Stock
of the Company will be made for a period of 180 days after the date of this
Agreement, directly or indirectly, by such Selling Shareholder otherwise than
hereunder or with the prior written consent of Alex. Brown & Sons Incorporated.
(vi) The Power of Attorney appointing certain individuals as
such Selling Shareholder's attorney-in-fact to the extent set forth therein and
the Custodian Agreement (as defined in Section 2) have been duly executed and
delivered by such Selling Shareholder and are the valid and binding agreements
of such Selling Shareholder.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 and the Interest and Dividend Tax Compliance Act of 1983 with respect to
the transactions herein contemplated, each of the Selling Shareholders agrees to
deliver to you prior to or at the Closing Date a properly completed and executed
United States Treasury Department Form W-9 or Form 8709 (or other applicable
from or statement specified by Treasury Department regulations in lieu thereof).
2. Purchase, Sale and Delivery of the Firm Shares.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Underwriters 12,000,000 of the Firm Shares and the Selling
Shareholders agree to sell to the Underwriters 1,000,000 of the Firm Shares and
each Underwriter agrees, severally and not jointly, to purchase, at a price of
$_____ per share, the number of Firm Shares set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 9 hereof. The number of Shares to be purchased by each Underwriter from
the Company and each Selling Shareholder shall be as nearly as practicable in
the same proportion to the total number of Shares being sold by each of the
Company and the Selling Shareholders as the number of Shares being purchased by
each Underwriter bears to the total number of Shares to be sold hereunder.
(b) Certificates in negotiable form for the total number of the Shares
to be sold hereunder by the Selling Shareholders have been placed in custody
with First Union National Bank of North Carolina as custodian (the "Custodian")
pursuant to the Custodian Agreement executed by each Selling Shareholder for
delivery of all Shares to be sold hereunder by the Selling Shareholders. Each of
the Selling Shareholders specifically agrees that the Shares
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<PAGE> 9
represented by the certificates held in custody for the Selling Shareholder
under the Custodian Agreement are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Shareholders for such
custody are to that extent irrevocable, and that the obligations of the Selling
Shareholders hereunder shall not be terminable by any act or deed of the Selling
Shareholder (or by any other person, firm or corporation including the Company,
the Custodian or the Underwriters) or by operation of law (including the death
of a Selling Shareholder) or by the occurrence of any other event or events,
except as set forth in the Custodian Agreement. If any such event should occur
prior to the delivery to the Underwriters of the Shares hereunder, certificates
for the Shares, shall be delivered by the Custodian in accordance with the terms
and conditions of this Agreement as if such event has not occurred. The
Custodian is authorized to receive and acknowledge receipt of the proceeds of
sale of the Shares held by it against delivery of such Shares.
(c) Payment for the Firm Shares to be sold hereunder is to be made in
immediately available funds by wire transfer to the order of the Company for the
Shares to be sold by it and to the order of First Union National Bank of North
Carolina, as Custodian, for the Shares to be sold by the Selling Shareholders,
in each case, against delivery of certificates therefor to the Representatives
for the several accounts of the Underwriters. Such payment and delivery are to
be made at the offices of Alex. Brown & Sons Incorporated, 1 South Street,
Baltimore, Maryland 21202, at 10:00 A.M., Baltimore time, on the third business
day after the date of this Agreement or at such other time and date not later
than three business days thereafter as you and the Company shall agree upon,
such time and date being herein referred to as the "Closing Date." (As used
herein, "business day" means a day on which the New York Stock Exchange is open
for trading and on which banks in New York are open for business and are not
permitted by law or executive order to be closed.) The certificates for the Firm
Shares will be delivered in such denominations and in such registrations as the
Representatives request in writing not later than the third full business day
prior to the Closing Date, and will be made available for inspection by the
Representatives at least one business day prior to the Closing Date.
(d) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and the Selling Shareholders listed in Schedule III hereto hereby grant
an option to the several Underwriters to purchase the Option Shares at the price
per share as set forth in the first paragraph of this Section 2. The maximum
number of Option Shares to be sold by the Company and each of the Selling
Shareholders is set forth opposite their respective names on Schedule III
hereto. The option granted hereby may be exercised in whole or in part but only
once and at any time upon written notice given within 30 days after the date of
this Agreement, by you, as Representatives of the several Underwriters, to the
Company setting forth the number of Option Shares as to which the several
Underwriters are exercising the option, the names and denominations in which the
Option Shares are to be registered and the time and date at which such
certificates are to be delivered. If the option granted hereby is exercised in
part, the respective number of Option Shares to be sold by the Company and each
of the Selling Shareholders listed in Schedule III shall be determined on a pro
rata basis in accordance with the percentages set forth opposite their names on
Schedule III hereto, adjusted by you in such manner as to avoid fractional
shares. The time and date at
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<PAGE> 10
which certificates for Option Shares are to be delivered shall be determined by
the Representatives but shall not be earlier than three nor later than 10 full
business days after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days before the
Closing Date, the notice of exercise shall set the Closing Date as the Option
Closing Date. The number of Option Shares to be purchased by each Underwriter
shall be in the same proportion to the total number of Option Shares being
purchased as the number of Firm Shares being purchased by such Underwriter bears
to 13,000,000, adjusted by you in such manner as to avoid fractional shares. The
option with respect to the Option Shares granted hereunder may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters.
You, as Representatives of the several Underwriters, may cancel such option at
any time prior to its expiration by giving written notice of such cancellation
to the Company and the Selling Shareholders listed in Schedule III. To the
extent, if any, that the option is exercised, payment for the Option Shares
shall be made on the Option Closing Date in immediately available funds by wire
transfer to the order of the Company for the Option Shares to be sold by it and
to the order of First Union National Bank of North Carolina, as Custodian, for
the Option Shares to be sold by the Selling Shareholders against delivery of
certificates therefor at the offices of Alex. Brown & Sons Incorporated, 1 South
Street, Baltimore, Maryland 21202.
3. Offering by the Underwriters.
(a) It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. Covenants of the Company.
(a) The Company covenants and agrees with the several Underwriters and
the Selling Shareholders that:
(i) The Company will (A) prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus
containing information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules and Regulations,
(B) not file any amendment to the Registration Statement or supplement to the
Prospectus or document incorporated by reference therein of which the
Representatives shall not previously have been advised and furnished with a copy
or to which the Representatives shall have reasonably objected in writing or
which is not in compliance with the Rules and Regulations and (C) file on a
timely basis all reports and any definitive proxy or information
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<PAGE> 11
statements required to be filed by the Company with the Commission subsequent to
the date of the Prospectus and prior to the termination of the offering of the
Shares by the Underwriters.
(ii) The Company will advise the Representatives and the
Selling Shareholders promptly of any request of the Commission for amendment of
the Registration Statement or for supplement to the Prospectus or for any
additional information, or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose, and the
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(iii) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement,
including documents incorporated by reference therein, and of all amendments
thereto, as the Representatives may reasonably request.
(iv) If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event shall occur as a
result of which, in the judgment of the Company or in the opinion of counsel for
the Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will either (A) prepare and file with the
Commission an appropriate amendment to the Registration Statement or supplement
to the Prospectus or (B) prepare and file with the Commission an appropriate
filing under the Exchange Act which shall be incorporated by reference in the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with law.
(v) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
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<PAGE> 12
(vi) The Company will, for a period of five years from the
Closing Date, deliver to the Representatives copies of annual reports and copies
of all other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the requirements
of such exchange or with the Commission pursuant to the Act or the Exchange Act.
The Company will deliver to the Representatives similar reports with respect to
significant subsidiaries, as that term is defined in the Rules and Regulations,
which are not consolidated in the Company's financial statements.
(vii) No offering, sale or other disposition of any Common
Stock of the Company or any other securities convertible or exchangeable or
exercisable for Common Stock or derivatives of Common Stock, will be made for a
period of 180 days after the date of this Agreement, directly or indirectly, by
the Company otherwise than hereunder or with the prior written consent of the
Representatives except that the Company may, without such consent, issue shares
upon the exercise of options or the settlement of incentive units outstanding on
the date of this Agreement.
(viii) The Company will use its best efforts to cause the
Pending Acquisitions and the financings related thereto to close in accordance
with the terms described in the Prospectus and to satisfy any and all conditions
required to be satisfied in connection therewith.
(b) Each Selling Shareholder, severally and not jointly, covenants and
agrees with the several Underwriters that:
(i) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
(ii) Such Selling Shareholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
5. Costs and Expenses. The Company will pay all costs, expenses and
fees incident to the performance of the obligations of the Company and the
Selling Shareholders under this Agreement, including, without limiting the
generality of the foregoing, the following: accounting fees of the Company; the
fees and disbursements of counsel for the Company; the cost of printing and
delivering to, or as requested by, the Underwriters copies of the Registration
Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the
Agreement Among Underwriters, the Underwriters' Selling Memorandum, the
Underwriters' Questionnaire, the Invitation Letter; the filing fees of the
Commission; the filing fees and expenses incident to securing any required
review by the NASD of the terms of the sale of the Shares; and the fees and
expenses incurred with respect to the listing of the Shares on the Nasdaq
National Market. The Company shall not, however, be required to pay for any of
the Underwriters' expenses except that, if this Agreement
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<PAGE> 13
shall not be consummated because the conditions in Section 7 hereof are not
satisfied, or because this Agreement is terminated by the Representatives
pursuant to Section 6 hereof, or by reason of any failure, refusal or inability
on the part of the Company to perform any undertaking or satisfy any condition
of this Agreement or to comply with any of the terms hereof on its part to be
performed, unless such failure to satisfy said condition or to comply with said
terms be due to the default or omission of any Underwriter, then the Company
shall reimburse the several Underwriters for reasonable out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred in connection
with investigating, marketing and proposing to market the Shares or in
contemplation of performing their obligations hereunder; but neither the Company
nor the Selling Shareholders shall in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by them of the Shares.
6. Conditions of Obligations of the Underwriters. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing Date
and the Option Shares, if any, on the Option Closing Date are subject to the
accuracy, as of the Closing Date or the Option Closing Date, as the case may be,
of the representations and warranties of the Company contained herein, and to
the performance by the Company of its covenants and obligations hereunder and to
the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission.
(b) (1) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Powell, Goldstein,
Frazer & Murphy LLP, counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters to the
effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own, and hold under lease, its
properties and conduct its business as described in the Prospectus. Based upon
appropriate certificates of public officials (which shall be furnished to the
Representatives with the opinion), each of the Subsidiaries listed on Schedule
IV, other than Mediacom Inc. and its subsidiaries (the "U.S. Subsidiaries"), has
been duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation with corporate power and
authority to own, and hold under lease, its properties and conduct its business
as described in the Prospectus.
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<PAGE> 14
(ii) Based upon appropriate certificates of public officials
(which shall be furnished to the Representatives with the opinion), each of the
Company and the U.S. Subsidiaries is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of each of the
jurisdictions in which the conduct of its business requires such qualification,
except to the extent that the failure to qualify would not, in the aggregate,
reasonably be expected to have a material adverse effect on the business or
financial condition of the Company and the Subsidiaries, taken as a whole (a
"Material Adverse Effect").
(iii) The outstanding shares of capital stock of the U.S.
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable, except that such counsel need not express an opinion with
respect to the shares of Decade Communications Group, Inc. and Bench Advertising
Company of Colorado, Inc.. To the best knowledge of such counsel, the shares of
capital stock of the U.S. Subsidiaries are owned by the Company or one of the
other U.S. Subsidiaries free and clear of all liens, encumbrances and security
interests (other than liens granted by the Company in connection with the Senior
Credit Facility). No options, warrants or other rights to purchase, agreements
or other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests of the U.S. Subsidiaries are
outstanding.
(iv) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of its Common Stock have been duly authorized; the outstanding
shares of its Common Stock, including the Shares to be sold by the Selling
Shareholders, have been duly authorized and validly issued and are fully paid
and non-assessable; all of the Shares conform in all material respects to the
description thereof contained in the Prospectus; and the certificates for the
Shares conform to the requirements of the Delaware General Corporation Law.
(v) The Shares, including the Option Shares, if any, to be
sold by the Company pursuant to this Agreement have been duly authorized and
will be validly issued, fully paid and non-assessable when issued and paid for
as contemplated by this Agreement; and no statutory preemptive rights of
stockholders or, to the best of such counsel's knowledge, any other preemptive
rights exist with respect to any of the Shares or the issue and sale thereof.
(vi) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the Act.
(vii) The Registration Statement, all Preliminary
Prospectuses, the Prospectus and each amendment or supplement thereto filed with
the Commission on or prior to the date of such opinion comply as to form in all
material respects with the requirements of the Act and the applicable rules and
regulations thereunder in effect as of the time of such filing (except that such
counsel need express no opinion as to the financial statements, schedules and
other financial information included therein).
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<PAGE> 15
(viii) Each document incorporated by reference in the
Registration Statement, all Preliminary Prospectuses, the Prospectus and each
amendment or supplement thereto filed with the Commission on or prior to the
date of such opinion complied as to form at the time of such filing in all
material respects with the applicable requirements (if any) of the Exchange Act
and the applicable rules and regulations thereunder in effect as of the date of
such filing (except that such counsel need express no opinion as to the
financial statements, schedules and other financial information included
therein).
(ix) The conditions for the use of Form S-3 as the proper form
for the Registration Statement have been satisfied.
(x) The statements under the captions "Prospectus Summary --
Recent Developments," "Risk Factors -- Restrictions on Tobacco Advertising,"
"Risk Factors -- Regulation of Outdoor Advertising," "Management's Discussion
and Analysis of Results of Operations and Financial Condition -- Liquidity and
Capital Resources," "Description of Capital Stock" and "Description of
Indebtedness and Other Commitments" in the Prospectus insofar as such statements
are descriptions of documents referred to therein are fair summaries of the
documents so summarized, and insofar as such statements are summaries of matters
of law, such summaries present accurately in all material respects the
information called for with respect to such matters of law.
(xi) Such counsel does not know of any contracts or documents
required to be filed as exhibits to or incorporated by reference in the
Registration Statement or described in the Registration Statement or the
Prospectus which are not so filed, incorporated by reference or described as
required.
(xii) Such counsel knows of no material legal proceedings or
regulatory or other claims pending or threatened against the Company, the U.S.
Subsidiaries Van Wagner or NAC of a character required to be reflected in the
Prospectus that are not set forth in the Prospectus.
(xiii) The Pending Acquisition Agreements have been duly
authorized, executed and delivered by the Company.
(xiv) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated, and the execution and
delivery of the Pending Acquisition Agreements and the consummation of the
transaction therein contemplated, do not and will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation or By-Laws of the Company, or any agreement or
instrument filed as an exhibit to the Registration Statement or otherwise
identified to such counsel as being material to the Company and the Subsidiaries
in an appropriate certificate of the Company, to which the Company or any of the
U.S. Subsidiaries is a party or by which the Company or any of the U.S.
Subsidiaries may be bound
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<PAGE> 16
(which shall include agreements and instruments by which the Company or any of
the U.S. Subsidiaries may continue to be bound following the consummation of the
Pending Acquisitions) (each a "Contractual Obligation"), and which conflict,
breach or default could reasonably be expected to have a Material Adverse
Effect.
(xv) This Agreement has been duly authorized, executed and
delivered by the Company.
(xvi) Except for approvals, consents, orders, authorizations,
designations, declarations or filings which have been waived, or which have been
obtained or made, no approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery by
the Company of this Agreement and the consummation by the Company of the
transactions herein contemplated (other than as may be required by the NASD or
as required by State securities and Blue Sky laws as to which such counsel need
express no opinion).
(xvii) The Company is not, and will not become as a result of
the consummation of the transactions contemplated by this Agreement, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and has not been an "investment company" at any time since 1988.
In rendering such opinion, Powell, Goldstein, Frazer & Murphy LLP may
rely as to matters governed by the laws of states other than Georgia or Federal
laws on local counsel in such jurisdictions provided that in each case Powell,
Goldstein, Frazer & Murphy LLP shall state that they believe that they and the
Underwriters are justified in relying on such other counsel and such other
counsel's opinion is also delivered to the Underwriters. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which causes them
to believe that (A) the Registration Statement, as of the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the Closing
Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(B) the Prospectus or any supplement thereto, on the date it was filed pursuant
to Rules and Regulations and as of the Closing Date or the Option Closing Date,
as the case may be, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading (except that such counsel need express no view
as to financial statements, schedules and other financial information included
or incorporated by reference therein). With respect to such statement, Powell,
Goldstein, Frazer & Murphy LLP may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(b) (2) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Blake Cassels &
Graydon, Ontario counsel to Mediacom Inc., limited to matters of Canadian law,
dated the Closing Date or the Option Closing Date, as the case may be, addressed
to the Underwriters to the effect that:
- 16 -
<PAGE> 17
(i) Mediacom Inc. is an amalgamated corporation validly
existing under the Canadian Business Corporations Act with all necessary
corporate power and authority to own its property and assets and to carry on its
business now conducted by it. Mediacom Inc. is duly qualified as an extra-
provincial corporation in all those provinces where it owns, leases or
operates property or conducts business, except to the extent that the failure
to qualify could not, in the aggregate, reasonably be expected to have a
material adverse effect on the business or financial condition of the Company
and its Subsidiaries, taken as a whole.
(ii) The outstanding shares of capital stock of Mediacom Inc.
have been duly authorized and validly issued and are fully paid. The registered
holders of the outstanding shares of capital stock of Mediacom Inc. are Canadian
Imperial Bank of Commerce (as to 65 common shares, which we understand are
pledged as security for the Senior Credit Facility) and the Company (as to 35
common shares).
(c) The Representatives shall have received on the Closing Date the
opinion of Powell, Goldstein, Frazer & Murphy LLP, counsel for the Selling
Shareholders, dated the Closing Date or the Option Closing Date, as the case may
be, addressed to the Underwriters to the effect that:
(i) The execution and delivery of this Agreement and the
consummation of the sale of Firm Shares by each Selling Shareholder as herein
contemplated do not conflict with or result in a breach of any terms or
provisions of, or constitute a default under any agreement or instrument
identified to such counsel in an appropriate certificate of such Selling
Shareholder, to which such Selling Shareholder is a party or by which such
Selling Shareholder may be bound, which breach could reasonably be expected to
have a materially adverse effect on the ability of such Selling Shareholder to
perform his or its obligations under this Agreement.
(ii) Each Selling Shareholder has full legal right, power and
authority, and any approval required by law (other than as may be required by
State securities and Blue Sky laws or for clearance of the offering with the
NASD, as to which counsel need express no opinion) to sell, assign, transfer and
deliver the Shares to be sold by such Selling Shareholder pursuant to this
Agreement.
(iii) The Custodian Agreement, the Power of Attorney and this
Agreement have been executed and delivered by the Selling Shareholders and the
Custodian Agreement and the Power of Attorney are valid and binding obligations
of such Selling Shareholders enforceable in accordance with their respective
terms, except as enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, moratorium or similar laws affecting
creditors' rights generally and by general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
- 17 -
<PAGE> 18
(iv) Upon payment for the Firm Shares to be sold by the
Selling Shareholders, and delivery of the stock certificates evidencing such
Firm Shares in accordance with the Underwriting Agreement, the Underwriters
(assuming that they are purchasing the Firm Shares being sold by the Selling
Shareholders in good faith and without actual notice of any adverse claim) will
have acquired valid title to the Shares being sold by each Selling Shareholder
on the Closing Date, free and clear of any adverse claims, any lien in favor of
the Company, and any restrictions on transfer imposed by the Company.
(d) The Representatives shall have received from Piper & Marbury
L.L.P., counsel for the Underwriters, an opinion dated the Closing Date or the
Option Closing Date, as the case may be, substantially to the effect specified
in subparagraphs (iv), (v), (vi), (vii) and (xv) of Paragraph (b)(1) of this
Section 6, and that the Company is a validly organized and existing corporation
under the laws of the State of Delaware. In rendering such opinion Piper &
Marbury L.L.P. may rely as to all matters governed other than by the laws of the
State of Maryland or Federal laws on the opinion of counsel referred to in
paragraph (b) of this Section 6. In addition to the matters set forth above,
such opinion shall also include a statement to the effect that nothing has come
to the attention of such counsel which leads them to believe that (A) the
Registration Statement, as of the time it became effective under the Act (but
after giving effect to any modifications incorporated therein pursuant to Rule
430A under the Act) and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) the Prospectus or any supplement
thereto, on the date it was filed pursuant to Rules and Regulations and as of
the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(except that such counsel need express no view as to financial statements,
schedules and other financial information included or incorporated by reference
therein). With respect to such statement, Piper & Marbury L.L.P. may state that
their belief is based upon the procedures set forth therein, but is without
independent check and verification.
(e) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a signed letter from each of Deloitte &
Touche LLP and Coopers & Lybrand L.L.P., dated the Closing Date or the Option
Closing Date, as the case may be, which shall confirm, on the basis of a review
in accordance with the procedures set forth in the letter signed by such firm
and dated and delivered to the Representatives on the date hereof, that nothing
has come to their attention during the period from the date five days prior to
the date hereof, to a date not more than three days prior to the Closing Date or
the Option Closing Date, as the case may be, which would require any change in
their letter dated the date hereof if it were required to be dated and delivered
on the Closing Date or the Option Closing Date, as the case may be. All such
letters shall be in form and substance satisfactory to the Representatives.
(f) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company to the
effect that, as of the Closing Date or the
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<PAGE> 19
Option Closing Date, as the case may be, each of them severally represents in
such capacity as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for such purpose have been taken or are, to
his knowledge, contemplated by the Commission.
(ii) He does not know of any litigation instituted or
threatened against the Company, any of the Subsidiaries or Van Wagner or NAC of
a character required to be disclosed in the Registration Statement which is not
so disclosed; he does not know of any material contract required to be filed as
an exhibit to the Registration Statement which is not so filed; and the
representations and warranties of the Company contained in Section 1 hereof are
true and correct as of the Closing Date or the Option Closing Date, as the case
may be.
(iii) He has carefully examined the Registration Statement and
the Prospectus and, in his opinion, as of the effective date of the Registration
Statement, the statements contained in the Registration Statement, including any
documents incorporated by reference therein, were true and correct, and such
Registration Statement and Prospectus or any document incorporated by reference
therein did not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading and, in his
opinion, since the effective date of the Registration Statement, no event has
occurred which should have been set forth in a supplement to or an amendment of
the Prospectus which has not been so set forth in such supplement or amendment.
(g) The Company and the Selling Shareholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and warranties contained herein and related matters as the
Representatives may reasonably have requested.
(h) The Firm Shares, and Option Shares, if any (including any
additional shares registered pursuant to Rule 462(b)) have been approved for
listing upon official notice of issuance on the Nasdaq National Market.
(i) The Representatives shall have received from each officer and
director of the Company a letter or letters, in form and substance satisfactory
to the Underwriters, pursuant to which such person shall agree not to offer,
sell, sell short or otherwise dispose of any shares of Common Stock of the
Company or other capital stock of the Company, or any other securities
convertible, exchangeable or exercisable for Common Stock or derivative of
Common Stock owned by such person (or as to which such person has the right to
direct the disposition of) for a period of 180 days after the date of this
Agreement, except with the prior written consent of Alex. Brown & Sons
Incorporated.
- 19 -
<PAGE> 20
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Piper & Marbury
L.L.P., counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
In such event, the Company, the Selling Shareholders and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7. Conditions of the Obligations of the Company and the Selling
Shareholders. The obligations of the Company and the Selling Shareholders to
sell and deliver the portion of the Shares required to be delivered as and when
specified in this Agreement are subject to the conditions that at the Closing
Date or the Option Closing Date, as the case may be, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and in
effect or proceedings therefor initiated or threatened.
8. Indemnification
(a) The Company and the Selling Shareholders jointly and severally
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the Act against any losses,
claims, damages or liabilities to which such Underwriter or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated or incorporated therein or
necessary to make the statements therein not misleading, and will reimburse each
Underwriter and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage, liability, action
or proceeding; provided, however, that the Company will not be liable in any
such case to the extent that (i) any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement,
or omission or alleged omission made or incorporated by reference in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives or the
Selling Shareholders specifically for use in the preparation thereof; or (ii)
such statement or omission was contained or made in any Preliminary Prospectus
and corrected in the Prospectus and (A) any such loss, claim, damage or
liability suffered or incurred by any Underwriter (or any person who controls
any Underwriter) resulted from an action, claim or suit by any person who
purchased Shares which are the subject thereof from such
- 20 -
<PAGE> 21
Underwriter in the offering and (B) such Underwriter failed to deliver or
provide a copy of the Prospectus to such person at or prior to the confirmation
of the sale of such Shares in any case where such delivery is required by the
Act. In no event, however, shall the aggregate liability of any Selling
Shareholder for indemnification under this Section 8(a) exceed the lesser of (i)
that proportion of the total of such losses, claims, damages or liabilities
indemnified against equal to the proportion of the total Shares sold hereunder
which is being sold by such Selling Shareholder, or (ii) the net proceeds after
underwriters discounts and commissions received by such Selling Shareholder from
the Underwriters in the offering. In addition, the Selling Shareholders will not
be obligated to make a payment under this subparagraph (a) for any
indemnification claims if and to the extent that payment of such claim is made
by the Company within sixty (60) days after written demand by the Underwriters.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the Registration
Statement, the Selling Shareholders, their respective partners and each person,
if any, who controls the Company within the meaning of the Act, against any
losses, claims, damages or liabilities to which any Selling Shareholder, the
Company or any such director, officer, or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained or incorporated by reference in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, Selling Shareholder,
partner or controlling person in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; provided, however,
that each Underwriter will be liable in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but the failure to give such
notice shall not relieve the indemnifying party or parties
- 21 -
<PAGE> 22
from any liability which it or they may have to the indemnified party for
contribution or otherwise than on account of the provisions of Section 8(a) or
(b). In case any such proceeding shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party and shall pay as incurred the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them, or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel reasonably acceptable to the indemnified party within a reasonable
period of time after notice of commencement of the action. It is understood that
the indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) and by the Company and the Selling Shareholders in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company, the Selling Shareholders and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Selling Shareholders and the
Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the Selling Shareholders bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the
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<PAGE> 23
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Shareholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
8(d) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to above in this Section 8(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation and (iii) no Selling Shareholder
shall be required to contribute any amount in excess of (a) the proceeds
received by such Selling Shareholder from the Underwriters in the offering after
deducting underwriting discounts and commissions plus (b) any damages previously
paid by such Selling Shareholder. The Underwriters' obligations in this Section
8(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
9. Default by Underwriters. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Shares which such Underwriter has agreed to purchase and
pay for on such date (otherwise than by reason of any default on the part of the
Company or a Selling Shareholder), you, as Representatives of the Underwriters,
shall use your best efforts to procure within 24 hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company and the
Selling Shareholders such amounts as may be agreed upon and upon the terms set
forth herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or
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<PAGE> 24
Underwriters failed to purchase. If during such 24 hours you, as such
Representatives, shall not have procured such other Underwriters, or any others,
to purchase the Firm Shares or Option Shares, as the case may be, agreed to be
purchased by the defaulting Underwriter or Underwriters, then (a) if the
aggregate number of shares with respect to which such default shall occur does
not exceed 10% of the Firm Shares or Option Shares, as the case may be, covered
hereby, the other Underwriters shall be obligated, severally, in proportion to
the respective numbers of Firm Shares or Option Shares, as the case may be,
which they are obligated to purchase hereunder, to purchase the Firm Shares or
Option Shares, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of shares of
Firm Shares or Option Shares, as the case may be, with respect to which such
default shall occur exceeds 10% of the Firm Shares or Option Shares, as the case
may be, covered hereby, the Company and the Selling Shareholders or you as the
Representatives of the Underwriters will have the right, by written notice given
within the next 24-hour period to the parties to this Agreement, to terminate
this Agreement without liability on the part of the non-defaulting Underwriters
or of the Company or of the Selling Shareholders except to the extent provided
in Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 9, the Closing Date or Option Closing
Date, as the case may be, may be postponed for such period, not exceeding seven
days, as you, as Representatives, may determine in order that the required
changes in the Registration Statement or in the Prospectus or in any other
documents or arrangements may be effected. The term "Underwriter" includes any
person substituted for a defaulting Underwriter. Any action taken under this
Section 9 shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
10. Notices. All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered or telegraphed
and confirmed as follows: if to the Underwriters, to Alex. Brown & Sons
Incorporated, 1 South Street, Baltimore, Maryland 21202, Attention: Jeff Amling,
Managing Director; if to the Company, to Outdoor Systems, Inc., 2502 North Black
Canyon Highway, Phoenix, Arizona 85009, Attention: William S. Levine, Chairman
of the Board; and if to the Selling Shareholders, First Union National Bank of
North Carolina, 2 First Union Center, Charlotte, North Carolina 28288-1154, as
Custodian, with a copy to Powell, Goldstein, Frazer & Murphy LLP, 191 Peachtree
Street, N.E., Atlanta, Georgia 30303 Attention: William Shearer, Jr.
11. Termination. This Agreement may be terminated by you by notice to
the Company and the Selling Shareholders as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 A.M. on
the first business day following the date of this Agreement;
(b) at any time after the date hereof and prior to the Closing if any
of the following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and the Subsidiaries taken as a whole or the earnings, business affairs,
management or business prospects of the Company and the Subsidiaries taken as a
whole, whether or not arising
- 24 -
<PAGE> 25
in the ordinary course of business, (ii) any outbreak or escalation of
hostilities or declaration of war or national emergency after the date hereof or
other national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the United
States would, in your reasonable judgment, make the offering or delivery of the
Shares impracticable or inadvisable, (iii) trading in securities on the New York
Stock Exchange or the American Stock Exchange shall have been suspended or
materially limited (other than limitations on hours or numbers of days of
trading) or minimum prices shall have been established for securities on either
such Exchange, (iv) the enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of any court or other
governmental authority which in your reasonable opinion materially and adversely
affects or will materially or adversely affect the business or operations of the
Company and the Subsidiaries taken as a whole, (v) declaration of a banking
moratorium by either federal or New York State authorities, (vi) any downgrading
in the rating of the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Exchange Act of 1934, as amended); (vii) the taking of any action
by any governmental body or agency in respect of its monetary or fiscal affairs
which in your reasonable opinion has a material adverse effect on the securities
markets in the United States or elsewhere; or (viii) any litigation or
proceeding is pending or threatened against the Underwriters which seeks to
enjoin or otherwise restrain, or seeks damages in connection with, or questions
the legality or validity of this Agreement or the transactions contemplated
hereby; or
(c) as provided in Sections 6 and 9 of this Agreement.
This Agreement also may be terminated by you, by notice to the Company
and the Selling Shareholders, as to any obligation of the Underwriters to
purchase the Option Shares, upon the occurrence at any time prior to the Option
Closing Date of any of the events described in subparagraph (b) above or as
provided in Sections 6 and 9 of this Agreement.
13. Successors. This Agreement has been and is made solely for the
benefit of the Underwriters, the Company and the Selling Shareholders and their
respective successors, executors, administrators, heirs and assigns, and the
officers, directors and controlling persons referred to herein, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Shares merely because of such purchase.
14. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, by or on behalf of the
Company or its directors or officers or by or on behalf of a Selling Shareholder
and (c) delivery of and payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
- 25 -
<PAGE> 26
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
- 26 -
<PAGE> 27
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Shareholders and the several Underwriters in accordance with its terms.
Very truly yours,
Outdoor Systems, Inc.
By: /s/ WILLIAM S. LEVINE
-----------------------------------
William S. Levine
Chairman
Selling Shareholders
Levine Investments Limited Partnership
By: /s/ WILLIAM S. LEVINE
-----------------------------------
William S. Levine
*
----------------------------------------
Arthur R. and Carole D. Moreno,
as joint tenants
M-K Link Investments Limited
Partnership
*
----------------------------------------
By: Stephen J. Haberkorn
*
----------------------------------------
Wally C. Kelly
* By: /s/ WILLIAM S. LEVINE
----------------------------------------
William S. Levine, as Attorney-in-Fact
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<PAGE> 28
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
ALEX. BROWN & SONS INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CIBC WOOD GUNDY SECURITIES, CORP.
MONTGOMERY SECURITIES
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the
several Underwriters listed
on Schedule I
By ALEX. BROWN & SONS INCORPORATED
By /s/
-----------------------------
Authorized Officer
- 28 -
<PAGE> 29
SCHEDULE I
Schedule of Underwriters
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------
Alex. Brown & Sons Incorporate....................................2,600,000
Donaldson, Lufkin & Jenrette Securities Corporation...............2,600,000
CIBC Wood Gundy Securities, Inc...................................2,600,000
Montgomery Securities.............................................2,600,000
Prudential Securities Incorporated................................2,600,000
Total............................13,000,000
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<PAGE> 30
SCHEDULE II
Schedule of Selling Shareholders
Number of Firm Shares
Selling Shareholder to be Sold
- ------------------- ----------
Levine Investments Limited Partnership...........................262,500
Arthur R. and Carole D. Moreno, as joint tenants.................262,500
M-K Link Investments Limited Partnership.........................300,000
Wally C. Kelly...................................................175,000
Total........................1,000,000
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<PAGE> 31
SCHEDULE III
SCHEDULE OF OPTION SHARES
<TABLE>
<CAPTION>
Maximum Number of Percentage of Total
Name of Seller Option Shares to be Sold Number of Option Shares
-------------- ------------------------ -----------------------
<S> <C> <C>
Outdoor Systems, Inc. 975,000 50%
Levine Investments Limited 487,500 25%
Partnership
BRN Properties Limited 487,500 25%
Partnership
</TABLE>
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<PAGE> 32
SCHEDULE IV
Subsidiaries
OS Baseline, Inc., an Arizona corporation
Outdoor Systems Painting, Inc., an Arizona corporation
OS Advertising of Texas Painting, Inc., a Texas corporation
Bench Advertising Company of Colorado, Inc. *
Decade Communications Group, Inc.
Mediacom Inc., a Canadian corporation
C.D. Maintenance Services Limited **
Outdoor Advertising Sales Limited **
Transtop Manufacturing Limited **
E.L. Ruddy Company (Ontario) Limited **
Ad Outdoor Signs Limited **
New York Subways Advertising Co., Inc.
OS Bus, Inc.
- ----------------------
* Subsidiary of Decade Communications Group, Inc.
** Subsidiary of Mediacom Inc.
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