<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1996
REGISTRATION NO. 333-14789
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
LAMAR ADVERTISING COMPANY
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 7312 72-1205791
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
5551 CORPORATE BLVD.
BATON ROUGE, LOUISIANA 70808
(504) 926-1000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
KEVIN P. REILLY, JR.
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
LAMAR ADVERTISING COMPANY
5551 CORPORATE BLVD.
BATON ROUGE, LOUISIANA 70808
(504) 926-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
STANLEY KELLER, ESQ. DENNIS J. FRIEDMAN, ESQ.
PALMER & DODGE LLP CHADBOURNE & PARKE LLP
ONE BEACON STREET 30 ROCKEFELLER PLAZA
BOSTON, MASSACHUSETTS 02108 NEW YORK, NEW YORK 10112
(617) 573-0100 (212) 408-5100
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
---------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR OTHER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER
REGISTRANT AS INCORPORATION IDENTIFICATION
SPECIFIED IN ITS CHARTER OR ORGANIZATION NUMBER
- ---------------------------------------------------------- --------------- ---------------
<S> <C> <C>
The Lamar Corporation Louisiana 72-0690208
Interstate Logos, Inc. Delaware 72-1230862
Lamar Advertising of Colorado Springs, Inc. Colorado 72-0931093
Lamar Advertising of Jackson, Inc. Mississippi 72-1085074
Lamar Advertising of Mobile, Inc. Alabama 63-0576601
Lamar Advertising of South Georgia, Inc. Georgia 72-1113924
Lamar Advertising of South Mississippi, Inc. Mississippi 72-1085105
Lamar Advertising of Tallahassee, Inc. Florida 59-0968965
Lamar Advertising of Youngstown, Inc. Ohio 23-2669670
TLC Properties, Inc. Louisiana 72-0640751
Missouri Logos, Inc. Missouri 72-1181668
Nebraska Logos, Inc. Nebraska 72-1137877
Oklahoma Logo Signs, Inc. Oklahoma 72-1141447
Utah Logos, Inc. Utah 72-1148211
Ohio Logos, Inc. Ohio 72-1148212
Georgia Logos, Inc. Georgia 72-1289331
Kansas Logos, Inc. Kansas 48-1187701
Lamar Air, LLC Louisiana 72-1277136
Lamar Pensacola Transit, Inc. Florida 59-3391978
Lamar Tennessee Limited Partner, Inc. Tennessee 72-1309006
Lamar Tennessee Limited Partnership Tennessee 72-1309007
Lamar Tennessee Limited Partnership II Tennessee 72-1309008
Lamar Texas General Partner, Inc. Texas 72-1309003
Lamar Texas Limited Partnership Texas 72-1309005
Michigan Logos, Inc. Michigan 38-3071362
Minnesota Logos, Inc. Minnesota 41-1800355
Minnesota Logos, a Partnership Minnesota 41-1804634
Mississippi Logos, Inc. Mississippi 64-0828364
New Jersey Logos, Inc. New Jersey 22-3380044
South Carolina Logos, Inc. South Carolina 52-2152628
Tennessee Logos, Inc. Tennessee 62-1649765
Texas Logos, Inc. Texas 76-0381679
Has been
TLC Properties II, Inc. Louisiana applied for
Virginia Logos, Inc. Virginia 54-1763912
</TABLE>
<PAGE> 3
*******************************************************************************
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE *
* SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR *
* MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT *
* BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR *
* THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE *
* SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE *
* UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS *
* OF ANY SUCH STATE. *
*******************************************************************************
SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1996
PROSPECTUS
$225,000,000
[LAMAR LOGO]
% SENIOR SUBORDINATED NOTES DUE 2006
------------------
The % Senior Subordinated Notes due 2006 (the "Notes") are being
offered hereby (this "Offering") by Lamar Advertising Company (the "Company").
Interest on the Notes will be payable semi-annually on and
of each year, commencing , 1997. The Notes will be
redeemable at the option of the Company, in whole or in part, on or after
, 2001, at the redemption prices set forth herein plus accrued and
unpaid interest, if any, to the date of redemption. Upon a Change of Control (as
defined herein), each holder of the Notes will have the right to require the
repurchase of such holder's Notes by the Company in cash at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of purchase. In addition, at any time on or prior to
, 1999, the Company may redeem up to $75 million aggregate principal
amount of the Notes with the net proceeds of one or more Public Equity Offerings
(as defined herein) at a redemption price equal to % of the aggregate
principal of each Note so redeemed, plus accrued and unpaid interest, if any, to
the date of redemption; provided however, that immediately after giving effect
to any such redemption, not less than $150 million aggregate principal amount of
the Notes remains outstanding.
The Notes will be senior subordinated unsecured obligations of the Company
and will be subordinated in right of payment to all present and future Senior
Indebtedness (as defined herein) of the Company, pari passu in right of payment
with any future senior subordinated indebtedness of the Company and senior in
right of payment to all existing and any future subordinated indebtedness of the
Company. The amount of Senior Indebtedness outstanding as of July 31, 1996,
after giving effect to the Transactions (as defined herein) and the sale by the
Company in August 1996 of 4,294,041 shares of Class A Common Stock (the "IPO")
and the application of the net proceeds therefrom, would have been approximately
$7.9 million. Pursuant to the New Credit Agreement (as defined herein), the
Company will have the ability to incur additional Senior Indebtedness.
The Notes will be guaranteed (the "Guarantees"), on a joint and several
basis, by all of the Company's significant subsidiaries existing on the closing
date of the Offering (collectively, the "Guarantors"). The Guarantees will be
general unsecured obligations of the Guarantors and will be subordinated in
right of payment to all present and future Senior Indebtedness of the
Guarantors, pari passu in right of payment with any future senior subordinated
indebtedness of the Guarantors and senior in right of payment to any future
subordinated indebtedness of the Guarantors.
Ownership of the Notes will be maintained in book-entry form by or through
the Depository (as defined herein). Interests in the Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depository and its participants. Beneficial owners of the Notes will not have
the right to receive physical certificates evidencing their ownership of the
Notes except under the limited circumstances described herein. Settlement for
the Notes will be made in immediately available funds. The Notes will trade in
the Depository's Same-Day Funds Settlement System and secondary market trading
activity for the Notes will therefore settle in immediately available funds. All
payments of principal of, premium, if any, and interest on the Notes will be
made by the Company in immediately available funds so long as the Notes are
maintained in book-entry form. Beneficial interests in the Notes may be
acquired, or subsequently transferred, only in denominations of $1,000 and
integral multiples thereof.
Concurrently with this Offering, the Company is publicly offering pursuant
to a separate prospectus shares of its Class A Common Stock which are expected
to generate net cash proceeds to the Company (assuming the underwriters'
overallotment option is not exercised) of approximately $58.0 million. (the
"Common Stock Offering," and together with this Offering, the "Offerings"). The
consummation of this Offering is conditioned upon consummation of the Common
Stock Offering with net cash proceeds to the Company of at least $40 million.
The Notes have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE
NOTES.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNTS(2) COMPANY(3)
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<S> <C> <C> <C>
Per Note % % %
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Total $ $ $
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</TABLE>
(1) Plus accrued interest, if any, from the date of issuance.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .
------------------
The Notes are being offered by the several Underwriters named herein,
subject to prior sale, when, as and if delivered to and accepted by the
Underwriters and subject to certain conditions. It is expected that delivery of
the Notes will be made through the book-entry facilities of the Depository Trust
Company ("DTC") on or about November , 1996.
------------------
SMITH BARNEY INC.
CHASE SECURITIES INC.
CIBC WOOD GUNDY SECURITIES CORP.
, 1996
<PAGE> 4
[COMPANY MAP -- OUTDOOR MARKETS AND LOGO STATES]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this prospectus. Separate financial
statements of the Guarantors are not included herein because the Guarantors are
jointly and severally liable under the Guarantees, and the aggregate assets,
liabilities, earnings and equity of the Guarantors are substantially equivalent
to the assets, liabilities, earnings and equity of the Company on a consolidated
basis. Unless otherwise indicated, as used herein, the "Company" refers to Lamar
Advertising Company together with its consolidated subsidiaries.
THE COMPANY
Lamar Advertising Company is one of the largest and most experienced owners
and operators of outdoor advertising structures in the United States. It
conducts a business that has operated under the Lamar name since 1902. As of
September 30, 1996, the Company operated approximately 24,000 outdoor
advertising displays in 13 southeastern, midwestern and mid-Atlantic states.
After giving effect to the acquisition of FKM Advertising Co., Inc. ("FKM") and
assuming consummation of the proposed acquisition of Outdoor East, L.P.
("Outdoor East") described below (collectively, the "Acquisitions"), the Company
will operate approximately 29,000 outdoor advertising displays in 14 states. In
each of the Company's existing 36 primary markets, the Company believes that it
is the only full-service outdoor advertising company serving such markets. The
Company also operates the largest logo sign business in the United States. Logo
signs are erected pursuant to state-awarded franchises on public rights-of-way
near highway exits and deliver brand name information on available gas, food,
lodging and camping services. The Company currently operates logo sign
franchises in 15 of the 21 states which have a privatized logo sign program. In
addition, the Company has recently entered into an agreement to acquire the
existing logo sign franchises for the states of Kentucky and Nevada, has been
awarded the logo sign franchise for the state of Florida and was selected to
operate the tourism signing franchise for the province of Ontario, Canada. As of
September 30, 1996, the Company maintained over 22,000 logo sign structures
containing over 51,000 logo advertising displays under these franchises. The
Company has recently expanded into the transit advertising business through the
operation of displays on bus shelters, benches and buses in 8 of its 36 existing
primary markets and several other markets in the state of South Carolina. For
the fiscal year ended October 31, 1995, the Company reported net revenues and
EBITDA (as defined herein) of $102.4 million and $41.0 million, respectively.
Assuming all of the Transactions (as defined herein) were consummated, the
Company's net revenues and EBITDA for the twelve months ended July 31, 1996,
would have been $133.4 million and $54.1 million, respectively.
The Company's strategy is to be the leading provider of outdoor advertising
in each of the markets it serves, with an emphasis on markets with a media
industry ranking based on population between 50 and 250. Important elements of
this strategy are the Company's decentralized management structure and its focus
on providing high quality local sales and service. In order to be more
responsive to local market demands, the Company offers a full complement of
outdoor advertising services coupled with local production facilities,
management and account executives through its local offices. While maintaining
its local focus, the Company seeks to expand its operations within existing and
contiguous markets. The Company also pursues expansion opportunities, including
acquisitions, in additional markets. In this regard and as described more fully
below, the Company has acquired or has agreed to acquire several outdoor
advertising companies and is in preliminary negotiations to acquire another such
company. In the logo sign business, the Company's strategy is to maintain its
position as the largest operator of logo signs in the U.S. by expanding through
the addition of state logo franchises as they are awarded and through possible
acquisitions. The Company may also pursue expansion opportunities in transit and
other out-of-home media which the Company believes will enable it to leverage
its management skills and market position.
Management believes that operating in small to medium-sized markets
provides the Company with certain advantages, including a diverse and reliable
mix of local advertisers, geographic diversification and an ability to package
inventory effectively. Local advertising constituted over 81% of the Company's
outdoor advertising net revenues in fiscal 1995, which management believes is
higher than the industry average.
3
<PAGE> 6
The Company believes that the experience of its senior and local managers
has contributed greatly to its success. Its regional managers have been with the
Company, on average, for 25 years. The average tenure of the Company's 36 local
managers is 11 years. In addition, each of the five regional managers and 32 of
the 36 local managers began their careers with the Company as local sales
executives. The Company emphasizes decentralized local management of operations
with centralized support and financial and accounting controls. As a result of
this local focus, the Company maintains an extensive local operating presence
within its markets and employed a total of 110 local account executives at
September 30, 1996. Local account executives are typically supported by
additional local staff and have the ability to draw upon the resources of the
central office and offices in other markets in the event that business
opportunities or customers' needs support such allocation of resources.
The outdoor advertising industry generated total revenues of approximately
$1.8 billion in 1995, or approximately 1.1% of the total advertising
expenditures in the United States, according to recent estimates by the Outdoor
Advertising Association of America (the "OAAA"), the trade association for the
outdoor advertising industry. This represents growth of approximately 8.2% over
estimated total 1994 revenues and compares favorably to the growth of total U.S.
advertising expenditures of approximately 7.7% during the same period. Outdoor
advertising offers repetitive impact and a relatively low cost-per-thousand
impressions compared to broadcast media, newspapers, magazines and direct mail
marketing, making it attractive to both local businesses targeting a specific
geographic area or set of demographic characteristics and national advertisers
seeking mass market support. Over the past 25 years, outdoor advertising
industry revenues have grown from $0.3 billion in 1971 to $1.83 billion in 1995,
representing a compound annual growth rate of 8.0%. According to the OAAA, in
eleven of the last twenty years, outdoor advertising revenue growth exceeded
total advertising revenue growth. The Company believes that this revenue growth
is primarily the result of long term contracts that are generally renewable, a
broadening client mix, the increased use of vinyl and computer printing and
acquisition opportunities. Outdoor advertising services have recently expanded
beyond billboards to include a wide variety of out-of-home advertising media,
including advertising displays in shopping centers, malls, airports, stadiums,
movie theaters and supermarkets, as well as on taxis, trains, buses and subways.
The OAAA estimates that total out-of-home advertising revenues, including
traditional billboard advertising, exceeded $3.0 billion in 1995.
RECENT ACQUISITION ACTIVITY
The Company has recently entered into agreements to acquire, or has
acquired, the assets or capital stock of several complementary businesses. The
Company believes that these acquisitions will allow the Company to capitalize on
the operating efficiencies and cross-market sales opportunities associated with
operating in or near markets currently served by the Company.
PENDING ACQUISITIONS
The Outdoor East Acquisition
The Company has agreed to acquire substantially all of the assets of
Outdoor East for a cash purchase price of approximately $60 million. Upon
completion of the acquisition of Outdoor East, the Company will operate an
additional 1,780 posters and 2,070 bulletins in seven markets in the states of
Virginia, West Virginia, North Carolina, South Carolina, Georgia and Florida.
The acquisition of Outdoor East would add advertising displays positioned
along heavily travelled highways serving the eastern U.S. The largest market
included in this acquisition is Columbia, SC, which is the state capital, home
to the University of South Carolina and the 88th largest market in the U.S. The
Outdoor East acquisition would give the Company a presence in additional small
to medium-sized markets, including Harrisonburg, VA, Dublin, VA, Hopewell, VA,
Bluefield, WV, Valdosta, GA and Lumberton, NC. Outdoor East had approximately
$12.2 million in net revenues for the twelve months ended September 30, 1996.
The consummation of the Outdoor East acquisition, which is expected to
occur on or before December 15, 1996, is subject to customary closing
conditions, including the expiration or early termination of the
4
<PAGE> 7
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act").
Logo Signs
The Company has agreed to acquire the logo sign franchises for the states
of Kentucky and Nevada from Logo Signs of America, Inc. ("LSA") for $3.8 million
in cash. Upon consummation of the acquisition, the Company will operate 1,984
logo sign displays in Kentucky and 292 logo sign displays in Nevada.
The acquisition of LSA, which is expected to take place on December 2,
1996, is subject to customary closing conditions, including required regulatory
approvals.
Transit
The Company has agreed to acquire 450 transit advertising displays located
in Augusta, GA and Greenville, North Charleston, Spartanburg and Columbia, SC
from Shelter Ad Systems, Inc. for $1.1 million in cash. This acquisition is
expected to close on December 2, 1996.
COMPLETED ACQUISITIONS
The FKM Acquisition
On November 1, 1996, the Company acquired all of the outstanding capital
stock of FKM for a cash purchase price of $40 million. Upon completion of the
FKM acquisition, the Company acquired a total of 122 bulletins and 537 posters
in Youngstown, OH and 553 bulletins located across the state of Pennsylvania on
interstate highways and other primary roads. FKM had approximately $7.5 million
of net revenues for the twelve months ended September 30, 1996. The Company
financed the FKM acquisition with borrowings of $40 million under the Company's
current bank credit facility (the "Existing Credit Agreement").
The acquisition of FKM expands the Company's operations in Ohio and gives
the Company an entry into Pennsylvania. As a result of the FKM acquisition, the
Company will operate bulletin structures on non-metropolitan Pennsylvania
interstate and state highways.
Other Outdoor Advertising Acquisitions
Since July 31, 1996, the Company has also acquired for cash certain assets
of (i) Revere Outdoor Advertising in Corpus Christi, TX and Laredo, TX for $9.3
million, (ii) Southworth Advertising, Inc. in Panama City, FL, Fort Walton, FL
and Albany, GA for $1.8 million, (iii) Colonial Outdoor Advertising, Inc. in
Roanoke, VA for $1.1 million, and (iv) Walz Marketing, Inc. in Lakeland, FL for
$0.8 million. As a result of these additional acquisitions, the Company has
acquired approximately 1,686 outdoor advertising displays consisting of 195
bulletins and 519 posters in Corpus Christi, TX; 87 bulletins and 373 posters in
Laredo, TX; 45 bulletins and 164 posters in Panama City, FL; six bulletins in
Fort Walton, FL; 14 bulletins and 112 posters in Albany, GA; 50 bulletins in
Roanoke, VA and 121 bulletins in Lakeland, FL. Net revenues relating to these
acquired assets totalled approximately $3.5 million based on the most recently
completed fiscal years of the acquired businesses.
OTHER ACQUISITION
The Company has entered into a letter of intent with Headrick Outdoor, Inc.
("Headrick"), pursuant to which the Company intends to acquire the assets of
Headrick for a cash purchase price of approximately $75 million. Upon completion
of the Headrick acquisition, the Company will operate an additional 3,577
bulletins in ten southeastern and midwestern states. A definitive acquisition
agreement has not yet been executed, and there can be no assurance that such an
agreement will be executed or, if executed, that the acquisition will be
consummated.
The Headrick acquisition will be subject to customary closing conditions,
including the expiration or early termination of the waiting period under the
HSR Act.
FINANCING PLAN
The Company intends to finance its acquisition activity from external
sources. In this regard, the Company is negotiating the terms of a new bank
credit facility (the "New Credit Agreement") which would
5
<PAGE> 8
increase its loan commitment to $225 million and would provide for additional
borrowing of up to $75 million at the discretion of the lenders. In addition,
prior to or concurrently with this Offering, the Company is offering pursuant to
the Common Stock Offering shares of its Class A Common Stock which are expected
to generate net cash proceeds to the Company of approximately $58.0 million. As
part of this financing plan, the Company has commenced a tender offer (the
"Tender Offer" which, together with the Offerings and the Acquisitions, are
collectively referred to herein as the "Transactions") to purchase for cash all
of its 11% Senior Secured Notes due May 15, 2003 (the "Existing Notes"), of
which $100 million are currently outstanding, and is soliciting consents to
amend the indenture (the "Existing Note Indenture") and pledge agreement
relating to the Existing Notes. As of November 19, 1996, holders representing
over a majority in principal amount of the Existing Notes have validly tendered
their Existing Notes and delivered their consents. The acquisition of FKM was
funded from borrowings under the Existing Credit Agreement and the Outdoor East
acquisition and the Tender Offer will be financed with a portion of the net
proceeds of the Offerings. This Offering is conditioned upon the successful
completion of the Common Stock Offering with net cash proceeds to the Company of
at least $40 million, but is not conditioned upon the execution of the New
Credit Agreement.
As used in this Prospectus, the term "market" refers to the geographic area
represented by the Spring 1996 Arbitron Radio Metro Market ranking, as
determined by The Arbitron Company, which ranks, according to population of
persons 12 years or older, the largest 263 markets in the U.S. -- from New York,
NY (1) to Casper, WY (263). The Company believes that the Metro Market ranking
is a standard measure of market size used by the media industry.
OUTDOOR ADVERTISING
The following table sets forth certain information regarding the Company's
existing primary outdoor advertising markets and the assets proposed to be
acquired in the acquisition of Outdoor East.
EXISTING OUTDOOR ADVERTISING MARKETS(1)
<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4) NET
--------------------- REVENUES(5)
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS --------------
- ------------------------------------------------------- -------------- --------- ------- (IN THOUSANDS)
<S> <C> <C> <C> <C>
LOUISIANA
Baton Rouge.......................................... 81 419 684 $ 7,280
Shreveport........................................... 126 268 730 3,389
Lafayette............................................ 97 154 353 2,035
Lake Charles......................................... 202 189 285 1,915
Monroe............................................... 226 123 508 1,534
Alexandria........................................... 198 49 224 757
Houma(2)............................................. -- 40 164 --
----- ------ --------
Total.......................................... 1,242 2,948 16,910
TENNESSEE
Nashville............................................ 44 326 1,174 7,488
Knoxville............................................ 69 694 896 7,171
Clarksville.......................................... -- 98 357 1,533
----- ------ --------
Total.......................................... 1,118 2,427 16,192
FLORIDA
Pensacola............................................ 125 250 662 3,113
Lakeland............................................. 104 554 372 2,875(6)
Panama City.......................................... 225 268 470 2,262(6)
Fort Myers........................................... 77 133 297 2,153
Tallahassee.......................................... 167 121 302 1,908
Fort Walton.......................................... 207 157 220 1,643(6)
Daytona Beach........................................ 93 54 339 1,456
----- ------ --------
Total.......................................... 1,537 2,662 15,410
ALABAMA
Mobile............................................... 84 381 630 4,755
Montgomery........................................... 142 248 499 3,598
----- ------ --------
Total.......................................... 629 1,129 8,353
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4) NET
--------------------- REVENUES(5)
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS --------------
- ------------------------------------------------------- -------------- --------- ------- (IN THOUSANDS)
<S> <C> <C> <C> <C>
TEXAS
Brownsville.......................................... 63 204 873 2,577
Beaumont............................................. 127 204 308 2,165
Corpus Christi....................................... 128 195 519 1,707(6)
Wichita Falls........................................ 235 89 165 902
Laredo............................................... 216 87 373 868(6)
----- ------ --------
Total.......................................... 779 2,238 8,219
MISSISSIPPI
Jackson.............................................. 118 268 698 4,420
Gulfport............................................. 134 207 559 2,953
----- ------ --------
Total.......................................... 475 1,257 7,373
GEORGIA
Savannah............................................. 154 344 604 3,307
Augusta.............................................. 107 163 471 2,482
Albany............................................... 243 106 383 1,109(6)
----- ------ --------
Total.......................................... 613 1,458 6,898
VIRGINIA
Richmond............................................. 56 309 616 4,288
Roanoke.............................................. 101 262 450 1,958(6)
----- ------ --------
Total.......................................... 571 1,066 6,246
PENNSYLVANIA
Statewide Highways................................... N/A 553 0 4,713(6)
KENTUCKY
Lexington............................................ 105 117 507 3,127
WEST VIRGINIA
Wheeling............................................. 213 261 551 2,626
COLORADO
Colorado Springs..................................... 98 141 355 2,486
OHIO
Dayton............................................... 52 3 529 1,960
Youngstown........................................... 90 122 537 243(6)
----- ------ --------
Total.......................................... 125 1,066 2,203
----- ------ --------
Subtotal....................................... 8,161 17,664 $ 100,756
----- ------ --------
</TABLE>
THE OUTDOOR EAST ACQUISITION (PENDING)
<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4) NET
--------------------- REVENUES(5)
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS --------------
- ------------------------------------------------------- -------------- --------- ------- (IN THOUSANDS)
<S> <C> <C> <C> <C>
SOUTH CAROLINA
Columbia............................................. 88 338 571 3,725(7)
NORTH CAROLINA
Statewide Highways................................... N/A 924 112 2,472(7)
WEST VIRGINIA
Bluefield............................................ -- 306 281 1,863(7)
VIRGINIA
Dublin............................................... -- 99 221 --(8)
Harrisonburg......................................... 253 9 123 --(8)
Hopewell............................................. -- 56 291 --(8)
----- ------ --------
Total.......................................... 164 635 1,632(7)(8)
GEORGIA
Valdosta............................................. -- 338 181 1,289(7)
----- ------ --------
Subtotal....................................... 2,070 1,780 $ 10,981
----- ------ --------
TOTAL.................................................. 10,231 19,444 $ 111,737
===== ====== ========
</TABLE>
7
<PAGE> 10
LOGO SIGN FRANCHISES
The following table sets forth certain information regarding the Company's
logo business operations. As of September 30, 1996, the Company operated 51,140
logo advertising displays.
<TABLE>
<CAPTION>
# LOGO
YEAR ADVERTISING
AWARDED FRANCHISE DISPLAYS
- ------- ------------------------ -----------
<S> <C> <C>
1989 Nebraska................ 788
1989 Oklahoma................ 1,120
1990 Utah.................... 1,494
1991 Missouri(9)............. 8,254
1992 Ohio.................... 5,686
1993 Texas................... 2,177
1993 Mississippi............. 2,866
1995 Georgia................. 9,240
<CAPTION>
# LOGO
YEAR ADVERTISING
AWARDED FRANCHISE DISPLAYS
- ------- ------------------------ -----------
<S> <C> <C>
1995 Minnesota(10)........... 2,491
1995 South Carolina.......... 1,982
1996 Virginia................ 7,658
1996 Michigan................ 1,376
1996 Tennessee............... 4,216
1996 Kansas.................. 1,792
1996 New Jersey(11).......... --
</TABLE>
- ---------------
(1) Includes additional or outlying markets served by the office in the
applicable market.
(2) Houma was established as a separate primary market in fiscal 1995, and,
therefore, net revenues are not included.
(3) Indicates the Spring 1996 Arbitron Radio Metro Market ranking within which
the office is located, as determined by The Arbitron Company. The Company
believes that Metro Market ranking, which ranks, according to population of
persons 12 years or older, the largest 263 markets in the U.S., is a
standard measure of market size used by the media industry. Where no market
ranking is shown, such market is not ranked by Arbitron.
(4) The two standardized types of industry displays are bulletins and posters.
See "Business -- Company Operations." The display count is as of October
31, 1995, pro forma for acquisitions completed within the last twelve
months.
(5) Except as otherwise noted, represents net revenues for fiscal year ended
October 31, 1995 attributable to each outdoor advertising market. These
revenues, together with logo sign and transit advertising revenues and
production revenue, comprise outdoor advertising net revenues shown in the
Company's consolidated statements of earnings (loss).
(6) Reflects net revenues for the most recently completed applicable fiscal
year with respect to acquisitions completed by the Company since July 31,
1996. See "The Transactions -- Recent Acquisition Activity -- Completed
Acquisitions."
(7) Represents net revenues for the most recently completed applicable fiscal
year attributable to the outdoor advertising market proposed to be acquired
by the Company. See "The Transactions -- Recent Acquisition
Activity -- Pending Acquisitions."
(8) Net revenues for specific markets proposed to be acquired in the state of
Virginia are not available.
(9) Franchise operated by a 66.7% owned partnership.
(10) Franchise operated by a 95.0% owned partnership.
(11) The Company was recently awarded the New Jersey franchise, and,
accordingly, no logo signs had been erected as of September 30, 1996.
The Company's address is 5551 Corporate Boulevard, Baton Rouge, Louisiana
70808. Its telephone number is (504) 926-1000.
8
<PAGE> 11
THE OFFERING
Securities Offered............ $225,000,000 aggregate principal amount of
% Senior Subordinated Notes due
, 2006.
Maturity Date................. , 2006.
Interest Payment Dates........ and , commencing
, 1997.
Optional Redemption........... The Notes will be redeemable at the Company's
option, in whole or in part, at any time on or
after , 2001 at the redemption
prices set forth herein plus accrued and unpaid
interest, if any, to the date of redemption. In
addition, at any time on or prior to
1999, the Company may redeem up to $75 million
aggregate principal amount of the Notes with
the net proceeds of one or more Public Equity
Offerings at a redemption price equal to %
of the aggregate principal of each Note so
redeemed, plus accrued and unpaid interest, if
any, to the date of redemption; provided,
however, that immediately after giving effect
to any such redemption, not less than $150
million aggregate principal amount of the Notes
remains outstanding. See "Description of
Notes -- Optional Redemption."
Ranking....................... The Notes will be senior subordinated unsecured
obligations of the Company and will be
subordinated in right of payment to all
existing and future Senior Indebtedness of the
Company, including indebtedness under the New
Credit Agreement, pari passu in right of
payment with any future senior subordinated
indebtedness of the Company and senior in right
of payment to all existing and any future
subordinated indebtedness of the Company. As of
July 31, 1996, on a pro forma basis after
giving effect to the Transactions and the IPO
and the application of the net proceeds
therefrom, the aggregate amount of Senior
Indebtedness of the Company on a consolidated
basis that would have ranked senior to the
Notes was approximately $7.9 million. Pursuant
to the New Credit Agreement, the Company will
have the ability to incur additional Senior
Indebtedness.
Guarantees.................... The Notes will be guaranteed, on a joint and
several basis, by the Guarantors. The
Guarantees will be general unsecured senior
subordinated obligations of the Guarantors and
will be subordinated in right of payment to all
existing and future Senior Indebtedness of the
Guarantors including guarantees of indebtedness
outstanding under the New Credit Agreement,
pari passu in right of payment with any future
senior subordinated indebtedness of the
Guarantors and senior in right of payment to
any future subordinated indebtedness of the
Guarantors.
Change of Control............. In the event of a Change of Control, the
Company will be obligated to make an offer to
purchase all outstanding Notes at a purchase
price of 101% of the principal amount thereof
plus accrued interest, if any. See "Description
of Notes -- Change of Control."
Asset Sale Proceeds........... The Company will be obligated in certain
instances to offer to purchase Notes at a
purchase price of 100% of the principal
9
<PAGE> 12
amount thereof plus accrued interest, if any,
with the net cash proceeds of certain sales or
other dispositions of assets.
Certain Covenants............. The indenture governing the Notes (the
"Indenture") will impose certain other
limitations on the ability of the Company and
certain of its subsidiaries to, among other
things, incur additional indebtedness, pay
dividends or make certain other restricted
payments and investments, consummate certain
transactions with affiliates, incur liens,
merge or consolidate with any other person or
sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all
of the Company's assets. The Indenture will
also impose limitations on the Company's
ability to restrict the ability of subsidiaries
to pay dividends or make certain payments to
the Company or its subsidiaries.
Concurrent Common Stock
Offering...................... Concurrently with this Offering, the Company is
publicly offering shares of its Class A Common
Stock pursuant to the Common Stock Offering
which are expected to generate net cash
proceeds to the Company of approximately $58.0
million. The consummation of the Common Stock
Offering, with net cash proceeds to the Company
of at least $40 million, is a condition
precedent to this Offering.
Listing....................... The Notes have been approved for listing on the
New York Stock Exchange, subject to official
notice of issuance.
Use of Proceeds............... The net proceeds from this Offering, together
with the net proceeds
of the Common Stock Offering, will be used to
repay existing indebtedness and for general
corporate purposes, including acquisitions. See
"Use of Proceeds."
10
<PAGE> 13
SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
PRO FORMA
NINE MONTHS ENDED TWELVE
YEAR ENDED PRO FORMA MONTHS
OCTOBER 31, YEAR ENDED JULY 31, ENDED
-------------------------------------------------- OCTOBER 31, ------------------- JULY 31,
1991 1992 1993 1994 1995 1995(1) 1995 1996 1996(1)
------- ------- -------- -------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS
DATA:
Net revenues................ $62,262 $61,955 $ 66,524 $ 84,473 $102,408 $ 118,872 $ 76,726 $ 88,165 $ 133,365
Operating expenses:
Direct advertising
expenses................. 22,143 22,783 23,830 28,959 34,386 39,783 26,564 30,969 44,947
General and administrative
expenses................. 17,703 18,225 19,504 24,239 27,057 31,679 20,636 22,842 34,320
Depreciation and
amortization............. 8,826 8,881 8,924 11,352 14,090 21,241 9,954 10,568 21,855
------- -------- -------- -------- -------- -------- -------- -------- --------
Total operating
expenses............... 48,672 49,889 52,258 64,550 75,533 92,703 57,154 64,379 101,122
------- -------- -------- -------- -------- -------- -------- -------- --------
Operating income............ 13,590 12,066 14,266 19,923 26,875 26,169 19,572 23,786 32,243
------- -------- -------- -------- -------- -------- -------- -------- --------
Interest expense............ 11,650 10,454 11,502 13,599 15,783 24,398 11,948 11,957 24,367
Earnings before income taxes
and extraordinary item..... 936 2,625 1,677 5,227 8,308 (1,584) 6,069 10,897 5,456
Income tax expense
(benefit)(2)............... 207 270 476 (2,072) (2,390) (5,893) (2,480) 4,420 1,891
Net earnings (loss)(3)(4)... 729 2,355 (653) 7,299 10,698 4,309 8,549 6,477 3,565
Net earnings (loss)
applicable to common
stock...................... 729 2,355 (653) 7,299 10,698 4,309 8,549 6,203 3,291
Earnings per common share
before extraordinary
item(5).................... $ .02 $ .07 $ .03 $ .21 $ .32 $ .11 $ .26 $ .23 $ .09
======= ======== ======== ======== ======== ======== ======== ======== ========
Net earnings (loss) per
common share(5)............ $ .02 $ .07 $ (.02) $ .21 $ .32 $ .11 $ .26 $ .23 $ .09
======= ======== ======== ======== ======== ======== ======== ======== ========
OTHER DATA:
EBITDA(6)................... 22,416 20,947 23,190 31,275 40,965 47,410 29,526 34,354 54,098
EBITDA margin............... 36% 34% 35% 37% 40% 40% 39% 39% 41%
Ratio of EBITDA to interest
expense.................... 1.9x 2.0x 2.0x 2.3x 2.6x 1.9x 2.5x 2.9x 2.2x
Ratio of net debt to
EBITDA(7).................. 4.9x 5.0x 4.6x 4.7x 3.4x 3.5 -- -- 3.4x
Ratio of total debt to
EBITDA..................... 4.9x 5.0x 5.0x 4.9x 3.6x 5.3 -- -- 4.7x
Ratio of earnings to fixed
charges(8)................. 1.1x 1.2x 1.0x 1.3x 1.4x 0.9x 1.4x 1.7x 1.2x
Capital expenditures:
Outdoor advertising........ 1,847 1,695 2,374 4,997 6,643 10,251 4,786 4,922 10,359
Logos...................... 629 3,056 2,009 2,761 1,567 1,567 1,390 7,989 8,096
Cash flows from operating
activities(9).............. 10,328 12,930 12,411 15,214 25,065 -- 10,752 15,595 --
Cash flows from investing
activities(9).............. (4,236) (7,273) (10,064) (53,569) (17,817) -- (11,049) (28,798) --
Cash flows from financing
activities(9).............. (5,133) (6,734) 6,802 37,147 (9,378) -- (5,751) 9,287 --
Number of outdoor
advertising displays(10)... 18,829 17,835 17,659 22,369 22,547 27,605 22,512 23,089 28,147
Number of logo advertising
displays(10)............... 5,027 11,371 13,820 18,266 24,219 24,219 22,431 48,362 48,362
Cumulative logo sign
franchises(10)............. 4 5 7 7 11 11 8 15 15
</TABLE>
<TABLE>
<CAPTION>
AS OF JULY 31, 1996
--------------------------
PRO FORMA
FOR THE IPO
AND THE
ACTUAL TRANSACTIONS
-------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................................................ $ 1,965 $ 70,512
Working capital.......................................................................... 1,479 72,251
Total assets............................................................................. 150,267 329,789
Total debt (including current maturities)................................................ 160,007 252,910
Total long-term obligations.............................................................. 156,674 250,800
Stockholders' equity (deficit)........................................................... (25,289) 61,118
</TABLE>
11
<PAGE> 14
- ---------------
(1) For purposes of the pro forma adjusted financial information (i) the
statement of earnings of the Company for its fiscal year ended October 31,
1995 has been combined with the statements of earnings of Outdoor East and
FKM for their fiscal year ended December 31, 1995, (ii) the statement of
earnings of the Company for the twelve month period ended July 31, 1996 has
been combined with the statements of earnings of Outdoor East and FKM for
the twelve months ended September 30, 1996 and (iii) effect has been given
to the IPO and the Transactions. For a more complete description of the pro
forma impact on the Company's results of operations see "Unaudited Pro
Forma Condensed Consolidated Financial Statements." To the extent the net
proceeds to the Company of the Common Stock Offering do not equal $58.0
million, cash will be adjusted accordingly.
(2) The benefit of the Company's net operating loss carryforward was fully
recognized as of October 31, 1995, resulting in the income tax expense
shown for the nine months ended July 31, 1996, compared to the income tax
benefit for the same period in the prior year.
(3) Includes, in 1993, an extraordinary loss on debt extinguishment, net of an
income tax benefit, of $1.9 million.
(4) Pro forma financial information for the year ended October 31, 1995 and the
twelve months ended July 31, 1996 does not give effect to extraordinary
loss from the extinguishment of debt of $9,235 and $9,470, respectively.
(5) After giving effect to the approximately 778.9 for 1 split of the Company's
then-existing common stock and the recapitalization effected after July 31,
1996.
(6) "EBITDA" is defined as operating income before depreciation and
amortization. EBITDA represents a measure which management believes is
customarily used to evaluate the financial performance of companies in the
media industry. However, EBITDA is not a measure of financial performance
under generally accepted accounting principles and should not be considered
an alternative to operating income or net earnings as an indicator of the
Company's operating performance or to net cash provided by operating
activities as a measure of its liquidity.
(7) "Net debt" consists of debt less cash and cash equivalents.
(8) The ratio of earnings to fixed charges was computed by dividing earnings by
fixed charges. For this purpose, earnings consist of income from continuing
operations, before income taxes and fixed charges of the Company and its
subsidiaries plus the Company's share of the distributed income of less
than 50% owned persons. Fixed charges consist of the Company's and its
subsidiaries' interest expense (including interest costs capitalized) and
the portion of rent expense representative of an interest factor.
(9) Cash flows from operating, investing and financing activities are obtained
from the Company's consolidated statements of cash flows prepared in
accordance with generally accepted accounting principles.
(10) As of the end of the period.
12
<PAGE> 15
RISK FACTORS
In addition to the other information contained and incorporated by
reference in this Prospectus, the following factors should be considered
carefully in evaluating an investment in the Notes offered hereby.
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in such forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed below. Such
forward looking statements include those assuming the completion of this
Offering, the Common Stock Offering, the Acquisitions, the Tender Offer and the
New Credit Agreement, certain of which have yet to be completed and any of which
may not be completed. The failure of the Company to complete any of these
transactions will impact the Company's capital structure and could have certain
other effects, many of which are more fully described herein.
SUBSTANTIAL INDEBTEDNESS OF THE COMPANY
The Company presently has substantial indebtedness ($160.0 million at July
31, 1996) and contemplates increasing its indebtedness in connection with the
Acquisitions. In addition, the Company is offering $225 million aggregate
principal amount of Notes pursuant to this Offering and is currently negotiating
the terms of the New Credit Agreement, which would increase the Company's loan
commitment to $225 million and would provide for possible additional borrowing
of up to $75 million at the discretion of the lenders. The execution of the New
Credit Agreement is not a condition precedent to the consummation of this
Offering and there can be no assurance that the New Credit Agreement will be
entered into. Additionally, as of July 31, 1996, the Company had $3.6 million of
Class A Preferred Stock, $638 par value per share (the "Class A Preferred
Stock"), outstanding which is entitled to a cumulative preferential dividend of
$364,903 annually. At July 31, 1996, after giving effect to the Transactions and
the IPO and the application of the net proceeds therefrom, the Company's
indebtedness would have been approximately $252.9 million. The Company's ratio
of total debt to EBITDA for the twelve months ended July 31, 1996 (on a pro
forma basis after giving effect to the Transactions and the IPO and the
application of the net proceeds therefrom) was 4.7x. A substantial part of the
Company's cash flow from operations will be dedicated to debt service and will
not be available for other purposes. Further, if the Company's net cash provided
by operating activities were to decrease from present levels, the Company could
experience difficulty in meeting its debt service obligations without additional
financing. There can be no assurance that, in the event the Company were to
require additional financing, such additional financing would be available or,
if available, would be available on favorable terms. In addition, any such
additional financing may require the consent of lenders under the Existing
Credit Agreement or the New Credit Agreement, as the case may be, or holders of
other debt of the Company. Certain of the Company's competitors operate on a
less leveraged basis and may have greater operating and financial flexibility
than the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources,"
"Description of Indebtedness" and "Description of Notes."
SUBORDINATION OF THE NOTES
The Notes are subordinated to all existing and future Senior Indebtedness
of the Company and the Guarantors. Subject to certain limitations, the Indenture
will permit the Company and the Guarantors to incur additional indebtedness,
including Senior Indebtedness. In addition, the indebtedness to be outstanding
under the New Credit Agreement will be secured by liens on the stock of all of
its subsidiaries. In a liquidation, bankruptcy, reorganization or similar
proceeding involving the Company, its assets would be available to pay
obligations on the Notes only after all Senior Indebtedness has been paid in
full, and, in such event, there may not be sufficient assets to pay in full
amounts due on the Notes. After giving effect to the Transactions and the IPO
and the application of the net proceeds therefrom, the amount of Senior
Indebtedness outstanding as of July 31, 1996 would have been approximately $7.9
million. The Company will be able to incur additional Senior Indebtedness under
either the Existing Credit Agreement or the New Credit Agreement and will be
permitted to incur additional Senior Indebtedness under the Indenture. See
"Description of Notes" and "Description of Other Indebtedness."
13
<PAGE> 16
DEPENDENCE ON CASH FLOW FROM SUBSIDIARIES; FRAUDULENT CONVEYANCE CONCERNS
The Company is a holding company which derives all of its operating income
from its subsidiaries. The Company must rely on dividends and other
distributions from its subsidiaries to generate the funds necessary to meet its
obligations, including the payment of principal and interest on the Notes. The
ability of the Company's subsidiaries to pay such dividends or make such
distributions will be subject to, among other things, applicable state laws and
restrictions contained in its existing and future debt instruments. There can be
no assurance that the Company's subsidiaries will be in a position to make such
dividend or distributions.
While the Notes will be guaranteed on a senior subordinated basis by the
Guarantors, the Guarantees may be subject to limitation under federal and state
fraudulent conveyance law. To the extent that a court were to find that (x) a
Guarantee was incurred by a Guarantor with intent to hinder, delay, or defraud
any present or future creditor, or the Guarantor contemplated insolvency with a
design to prefer one or more creditors to the exclusion in whole or in part of
others, or (y) such Guarantor did not receive fair consideration or reasonable
equivalent value for issuing its Guarantee and such Guarantor (i) was insolvent,
(ii) was rendered insolvent by reason of the issuance of such Guarantee, (iii)
was engaged or about to engage in a business or transaction for which the
remaining assets of such Guarantor constituted unreasonably small capital to
carry on its business, or (iv) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured, a court could
avoid or subordinate such Guarantee in favor of the Guarantor's other creditors.
Among other things, a legal challenge of a Guarantee on fraudulent conveyance
grounds may focus on the benefits, if any, realized by each Guarantor as a
result of the issuance by the Company of the Notes. The measure of insolvency
for purposes of the foregoing will vary depending on the law of the jurisdiction
being applied. Generally, however, an entity would be considered insolvent if
the sum of its debts (including contingent or unliquidated debts) is greater
than all its property at a fair valuation or if the present fair saleable value
of its assets is less than the amount that will be required to pay its probable
liability on its existing debts as they become absolute and matured. The
obligations of each Guarantor will be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor (including, without limitation, any guarantees of Senior Indebtedness)
and after giving effect to any collections from or payments made by or on behalf
of any other Guarantor in respect of the obligations of such other Guarantor
under its Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law.
To the extent any Guarantee is avoided or subordinated as a fraudulent
conveyance, limited as described above, or held unenforceable for any other
reason, holders of the Notes would, to such extent, cease to have a claim in
respect of such Guarantee and, to such extent, would be creditors solely of the
Company and any Guarantor whose Guarantee was not avoided, subordinated,
limited, or held unenforceable. In such event, the claims of the holders of the
Notes against the issuer of an avoided, subordinated, limited or unenforceable
Guarantee wold be subject to the prior payment of all liabilities of such
Guarantor. There can be no assurance that, after providing for all prior claims,
there would be sufficient assets to satisfy the claims of the holders of the
Notes.
Based upon the financial and other information currently available to it,
management of the Company and the Company's subsidiaries believe that the Notes
and the Guarantees are being incurred for proper purposes and in good faith and
that the Company and each of the Guarantors is solvent and will, after issuing
the Notes or its Guarantee, as the case may be, have sufficient capital for
carrying on its business and be able to pay its debts as they mature. In
rendering their opinions on the validity of the Notes and the Guarantees,
counsel for the Company and the Underwriters will express no opinion as to
federal or state laws relating to fraudulent transfers.
RESTRICTIONS IMPOSED BY NEW CREDIT AGREEMENT; NONCOMPLIANCE WITH COVENANTS
The Existing Credit Agreement and the Existing Note Indenture contain, and
the New Credit Agreement and the Indenture will contain, covenants which will
restrict, among other things, the ability of the Company to dispose of assets,
incur or repay debt, create liens, and make certain investments. In addition,
the
14
<PAGE> 17
Existing Credit Agreement requires, and the New Credit Agreement is expected to
require, the Company to maintain specified financial ratios and levels including
cash interest coverage, fixed charge coverage and total debt ratios. The ability
of the Company to comply with the foregoing restrictive covenants will depend on
its future performance, which is subject to prevailing economic, financial and
business conditions and other factors beyond the Company's control. See
"Description of Other Indebtedness."
FLUCTUATIONS IN ECONOMIC AND ADVERTISING TRENDS
The Company relies on sales of advertising space for its revenues, and its
operating results are therefore affected by general economic conditions, as well
as trends in the advertising industry. A reduction in advertising expenditures
available for the Company's displays could result from a general decline in
economic conditions, a decline in economic conditions in particular markets
where the Company conducts business or a reallocation of advertising
expenditures to other available media by significant users of the Company's
displays. Although the Company believes that in recent years outdoor advertising
expenditures have increased more rapidly than total U.S. advertising
expenditures, there can be no assurance that this trend will continue or that in
the future outdoor advertising expenditures will not grow more slowly than the
advertising industry as a whole.
REGULATION OF OUTDOOR ADVERTISING
The outdoor advertising business is subject to regulation by federal, state
and local governments. Federal law requires states, as a condition to federal
highway assistance, to restrict billboards on federally-aided primary and
interstate highways to commercial and industrial areas and imposes certain
additional size, spacing and other limitations on billboards. Some states have
adopted standards more restrictive than the federal requirements. Local
governments generally control billboards as part of their zoning regulations,
and some local governments prohibit construction of new billboards and
reconstruction of substantially damaged billboards or allow new construction
only to replace existing structures. In addition, some jurisdictions (including
certain of those within the Company's markets) have adopted amortization
ordinances under which owners and operators of outdoor advertising displays are
required to remove existing structures at some future date, often without
condemnation proceeds being available. Federal and corresponding state outdoor
advertising statutes require payment of compensation for removal by governmental
order in some circumstances. Ordinances requiring the removal of a billboard
without compensation, whether through amortization or otherwise, have been
challenged in various state and federal courts on both statutory and
constitutional grounds, with conflicting results. Although the Company has been
successful in the past in negotiating acceptable arrangements in circumstances
in which its displays have been subject to removal or amortization, there can be
no assurance that the Company will be successful in the future and what effect,
if any, such regulations may have on the Company's operations. In addition, the
Company is unable to predict what additional regulation may be imposed on
outdoor advertising in the future. Legislation regulating the content of
billboard advertisements has been introduced in Congress from time to time in
the past, although no laws which, in the opinion of management, would materially
and adversely affect the Company's business have been enacted to date. Changes
in laws and regulations affecting outdoor advertising at any level of government
may have a material adverse effect on the Company's results of operations. See
"-- Declining Tobacco Advertising" for a discussion of recent federal executive
action concerning tobacco advertising.
ACQUISITION AND GROWTH STRATEGY RISKS
The Company's growth has been enhanced materially by strategic acquisitions
that have substantially increased the Company's inventory of advertising
displays. One element of the Company's operating strategy is to make strategic
acquisitions in markets in which it currently competes as well as in new
markets. While the Company believes that the outdoor advertising industry is
highly fragmented and that significant acquisition opportunities are available,
there can be no assurance that suitable acquisition candidates can be found, and
the Company is likely to face competition from other outdoor advertising
companies for available acquisition opportunities. In addition, if the prices
sought by sellers of outdoor advertising displays continue to rise, as
management believes may happen, the Company may find fewer acceptable
acquisition opportunities.
15
<PAGE> 18
There can be no assurance that the Company will have sufficient capital
resources to complete acquisitions or be able to obtain any required consents of
its bank lenders or that acquisitions can be completed on terms acceptable to
the Company. In addition, the Company recently has entered into the transit
advertising business and, while the Company believes that it will be able to
utilize its expertise in outdoor advertising to operate this business, it has
had limited experience in transit advertising and there is no assurance that it
will be successful.
Since July 31, 1996, the Company has completed the acquisition of, and has
entered into agreements to acquire, eight complementary businesses. The process
of integrating these businesses into the Company's operations may result in
unforeseen operating difficulties and could require significant management
attention that would otherwise be available for the development of the Company's
existing business. Moreover, there can be no assurance that the Company will
realize anticipated benefits and cost savings or that the Outdoor East
acquisition or any future acquisitions will be consummated. See "The
Transactions -- Recent Acquisition Activity" for a description of the Company's
recent acquisition activity and a discussion of certain pending transactions.
DECLINING TOBACCO ADVERTISING
Approximately 9% of the Company's outdoor advertising net revenues in
fiscal 1995 came from the tobacco products industry, compared to 7% for fiscal
1994 and 1993, 12% for fiscal 1992 and 17% for fiscal 1991. The percentage for
the nine months ended July 31, 1996, on a historical basis and on a pro forma
basis giving effect to the Pending Acquisitions, was approximately 9%.
Manufacturers of tobacco products, principally cigarettes, were historically
major users of outdoor advertising displays. Beginning in 1992, the leading
tobacco companies substantially reduced their domestic advertising expenditures
in response to societal and governmental pressures and other factors. There can
be no assurance that the tobacco industry will not further reduce advertising
expenditures in the future either voluntarily or as a result of governmental
regulation or as to what affect any such reduction may have on the Company. See
"Business -- Company Operations -- Categories of Business." Tobacco advertising
is currently subject to regulation and legislation has been introduced from time
to time in Congress that would further regulate advertising of tobacco products.
In August 1996, President Clinton signed an executive order adopting rules
proposed by the United States Food and Drug Administration which would prohibit
the use of pictures and color in tobacco advertising and restrict the proximity
of outdoor tobacco advertising to schools and playgrounds. Although certain
advertising industry and tobacco industry organizations have filed lawsuits
challenging these rules and certain members of Congress have indicated that they
may sponsor legislation to prevent these rules from going into effect, there can
be no assurance that such lawsuits will be successful or that such legislation,
if proposed, will be adopted. Subject to the outcome of litigation or
legislative action, these rules would become effective in August 1997. Further,
there can be no assurance that national or local legislation or regulations
restricting tobacco advertising will not be adopted in the future, or as to the
effect any such legislation or the voluntarily curtailment of advertising by
tobacco companies would have on the Company. See "Business -- Regulation."
COMPETITION
In addition to competition from other forms of media, including television,
radio, newspapers and direct mail advertising, the Company faces competition in
its markets from other outdoor advertising companies, some of which may be
larger and better capitalized than the Company. The Company also competes with a
wide variety of other out-of-home advertising media, the range and diversity of
which have increased substantially over the past several years to include
advertising displays in shopping centers, malls, airports, stadiums, movie
theaters and supermarkets, and on taxis, trains and buses. The Company believes
that its local orientation, including the maintenance of local offices, has
enabled it to compete successfully in its markets to date. However, there can be
no assurance that the Company will be able to continue to compete successfully
against current and future sources of outdoor advertising competition and
competition from other media or that the competitive pressures faced by the
Company will not adversely affect its profitability or financial performance. In
its logo sign business, the Company currently faces competition for state
franchises
16
<PAGE> 19
from four other national logo sign providers as well as local companies.
Competition from these sources is encountered both when a franchise is first
privatized and upon renewal thereafter. See "Business -- Competition."
POTENTIAL LOSSES FROM HURRICANES
A significant portion of the Company's structures are located in the
mid-Atlantic and Gulf Coast regions of the United States. These areas are highly
susceptible to hurricanes during the late summer and early fall. In the past,
severe storms have caused the Company to incur material losses resulting from
structural damage, overtime compensation, loss of billboards that could not
legally be replaced and reduced occupancy because billboards are out of service.
The Company has determined that it is not economical to obtain insurance against
losses from hurricanes and other storms. The Company has developed contingency
plans to deal with the threat of hurricanes, including plans for early removal
of advertising faces to permit the structures to better withstand high winds and
the replacement of such faces after storms have passed. As a result of these
contingency plans, the Company has experienced lower levels of losses from
recent storms and hurricanes. Structural damage attributable to Hurricane Andrew
in 1992 was less than $500,000, and three hurricanes caused aggregate structural
damage of less than $1,000,000 in 1995. There can be no assurance, however, that
the Company's contingency plans will continue to be effective.
RISKS IN OBTAINING AND RETAINING LOGO SIGN FRANCHISES
Logo sign franchises represent a growing portion of the Company's revenues
and operating income. The Company cannot predict the number of remaining states,
if any, that will initiate logo sign programs or convert state-run logo sign
programs to privately operated programs. Competition for new state logo sign
franchises is intense and, even after a favorable award, franchises may be
subject to challenge under state contract bidding requirements, resulting in
delays and litigation costs. In addition, state logo sign franchises are
generally, with renewal options, ten to twenty-year franchises subject to
earlier termination by the state, in most cases upon payment of compensation.
Typically, at the end of the term of the franchise, ownership of the structures
is transferred to the state without compensation to the Company. None of the
Company's logo sign franchises are due to terminate in the next two years; only
two are subject to renewal during that period and, in one case, the state
authority has verbally agreed to renew the franchise for five years. There can
be no assurance that the Company will be successful in obtaining new logo sign
franchises or renewing existing franchises. Furthermore, following the receipt
by the Company of a new state logo sign franchise, the Company generally incurs
significant start-up capital expenditures and there can be no assurance that the
Company will continue to have access to capital to fund such expenditures.
RELIANCE ON KEY EXECUTIVES
The Company's success depends to a significant extent upon the continued
services of its executive officers and other key management and sales personnel,
in particular Kevin P. Reilly, Jr., the Company's Chief Executive Officer, the
Company's five regional managers and the manager of its logo sign business.
Although the Company believes it has incentive and compensation programs
designed to retain key employees, the Company has no employment contracts with
any of its employees, and none of its executive officers are bound by
non-compete agreements. The Company does not maintain key man insurance on its
executives. The unavailability of the continuing services of any of its
executive officers and other key management and sales personnel could have an
adverse effect on the Company's business. See "Management."
MANAGEMENT DISCRETION OVER USE OF NET PROCEEDS
A portion of the net proceeds of the Offerings will be available for
general corporate purposes. Accordingly, management will have considerable
discretion over the use of such proceeds and may use them without stockholder
approval. See "Use of Proceeds."
17
<PAGE> 20
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The Notes are a new issue of securities for which there is currently no
public market. Although the Notes have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, there is no assurance as
to the liquidity of any market that may develop for the Notes, the ability of
holders of the Notes to sell the Notes or the prices at which holders of the
Notes may be able to sell their Notes. If such a market were to develop, the
Notes could trade at prices higher or lower than the public offering price
depending on many factors, including prevailing interest rates, the Company's
operating results and the market for similar securities. The Underwriters have
informed the Company that, subject to applicable laws and regulations, they
currently intend to make a market in the Notes. However, the Underwriters are
not obligated to do so, and any such market making may be discontinued at any
time without notice. Therefore, no assurance can be given as to whether an
active trading market will develop for the Notes. See "Underwriting."
18
<PAGE> 21
THE TRANSACTIONS
RECENT ACQUISITION ACTIVITY
The Company has recently entered into agreements to acquire, or has
acquired, the assets or capital stock of several complementary businesses. The
Company believes that these acquisitions will allow the Company to capitalize on
the operating efficiencies and cross-market sales opportunities associated with
operating in or near markets currently served by the Company.
PENDING ACQUISITIONS
The Outdoor East Acquisition
On October 9, 1996, the Company entered into a Contract to Sell and
Purchase with Outdoor East pursuant to which the Company agreed to acquire
substantially all of the assets of Outdoor East for a cash purchase price of
approximately $60 million. Upon completion of the acquisition of Outdoor East,
the Company will operate an additional 1,780 posters and 2,070 bulletins in
seven markets in the states of Virginia, West Virginia, North Carolina, South
Carolina, Georgia and Florida.
The acquisition of Outdoor East would add advertising displays positioned
along heavily travelled highways serving the eastern U.S. The largest market
included in this acquisition is Columbia, SC, which is the state capital, home
to the University of South Carolina and the 88th largest market in the U.S. The
Outdoor East acquisition would give the Company a presence in additional small
to medium-sized markets, including Harrisonburg, VA, Dublin, VA, Hopewell, VA,
Bluefield, WV, Valdosta, GA and Lumberton, NC. Outdoor East had approximately
$12.2 million in net revenues for the twelve months ended September 30, 1996.
The consummation of the Outdoor East acquisition, which is expected to
occur on or before December 15, 1996, is subject to customary closing
conditions, including the expiration or early termination of the waiting period
under the HSR Act.
Logo Signs
In November 1996, the Company entered into an agreement with LSA pursuant
to which the Company agreed to acquire the logo sign franchises for the states
of Kentucky and Nevada for $3.8 million in cash. Upon consummation of the
acquisition, the Company will operate 1,984 logo sign displays in Kentucky and
292 logo sign displays in Nevada.
The acquisition of LSA, which is expected to take place on December 2,
1996, is subject to customary closing conditions, including required regulatory
approvals.
Transit
The Company has entered into an agreement to acquire 450 transit
advertising displays located in Augusta, GA and Greenville, North Charleston,
Spartanburg and Columbia, SC from Shelter Ad Systems, Inc. for $1.1 million in
cash. This acquisition is expected to close on December 2, 1996.
COMPLETED ACQUISITIONS
The FKM Acquisition
On November 1, 1996, the Company acquired all of the outstanding capital
stock of FKM for a cash purchase price of $40 million. Upon completion of the
FKM acquisition, the Company acquired a total of 122 bulletins and 537 posters
in Youngstown, OH and 553 bulletins located across the state of Pennsylvania on
interstate highways and other primary roads. FKM had approximately $7.5 million
of net revenues for the twelve months ended September 30, 1996. The Company
financed the FKM acquisition with borrowings of $40 million under the Existing
Credit Agreement.
19
<PAGE> 22
The acquisition of FKM expands the Company's operations in Ohio and gives
the Company an entry into Pennsylvania. As a result of the FKM acquisition, the
Company will operate bulletin structures on non-metropolitan Pennsylvania
interstate and state highways.
Other Outdoor Advertising Acquisitions
Since July 31, 1996, the Company has also acquired for cash certain assets
of (i) Revere Outdoor Advertising in Corpus Christi, TX and Laredo, TX for $9.3
million, (ii) Southworth Advertising, Inc. in Panama City, FL, Fort Walton, FL
and Albany, GA for $1.8 million, (iii) Colonial Outdoor Advertising, Inc. in
Roanoke, VA for $1.1 million, and (iv) Walz Marketing, Inc. in Lakeland, FL for
$0.8 million. As a result of these additional acquisitions, the Company has
acquired approximately 1,686 outdoor advertising displays consisting of 195
bulletins and 519 posters in Corpus Christi, TX; 87 bulletins and 373 posters in
Laredo, TX; 45 bulletins and 164 posters in Panama City, FL; six bulletins in
Fort Walton, FL; 14 bulletins and 112 posters in Albany, GA; 50 bulletins in
Roanoke, VA and 121 bulletins in Lakeland, FL. Net revenues relating to these
acquired assets totalled approximately $3.5 million based upon the most recently
completed fiscal years of each of the acquired businesses.
OTHER ACQUISITION
The Company has entered into a letter of intent with Headrick, pursuant to
which the Company intends to acquire the assets of Headrick for a cash purchase
price of approximately $75 million. Upon completion of the Headrick acquisition,
the Company will operate an additional 3,577 bulletins in ten southeastern and
midwestern states. A definitive acquisition agreement has not yet been executed,
and there can be no assurance that such an agreement will be executed or, if
executed, that the acquisition will be consummated.
The Headrick acquisition will be subject to customary closing conditions,
including the expiration or early termination of the waiting period under the
HSR Act.
THE TENDER OFFER
On October 17, 1996, the Company commenced a tender offer for all of the
Existing Notes and a solicitation of consents from the holders of the Existing
Notes to (i) eliminate or modify certain covenants and other provisions
contained in the Existing Note Indenture in order to improve the financial
flexibility of the Company, (ii) amend the Pledge Agreement to release the
collateral securing the Existing Notes, thereby making the Existing Notes
unsecured obligations of the Company and (iii) release the Subsidiary Guarantors
(as defined in the Existing Note Indenture) from their obligations as guarantors
under the Existing Note Indenture. The consummation of the Tender Offer is
conditioned on the valid tender of a majority of the outstanding Existing Notes
and the Company having obtained the requisite financing for payment of the
tendered Existing Notes. As of November 19, 1996, the holders representing over
a majority in principal amount of the Existing Notes had validly tendered their
Existing Notes and delivered their consents. The Tender Offer will expire on
November 25, 1996, unless further extended, at which time the Company expects to
purchase all of the Existing Notes validly tendered with a portion of the net
proceeds of the Offerings.
THE NEW CREDIT AGREEMENT
The Company is currently negotiating a New Credit Agreement which is
expected to be executed after the closing of this Offering. The New Credit
Agreement is expected to contain a $225 million commitment and provide for
additional borrowing of up to $75 million at the discretion of the lenders.
There can be no assurance that the New Credit Agreement will be entered into.
See "Description of Other Indebtedness -- New Credit Agreement" for a discussion
of the terms of the agreement.
20
<PAGE> 23
THE COMMON STOCK OFFERING
Concurrently with this Offering, the Company is publicly offering pursuant
to the Common Stock Offering shares of its Class A Common Stock which are
expected to generate net cash proceeds to the Company (assuming the
underwriters' overallotment option is not exercised) of approximately $58.0
million. The consummation of the Common Stock Offering with net cash proceeds to
the Company of at least $40 million is a condition precedent to this Offering.
21
<PAGE> 24
USE OF PROCEEDS
The net proceeds to the Company from this Offering are estimated to be
approximately $218.5 million after deducting estimated underwriting discounts
and commissions and offering expenses. The net proceeds of this Offering,
together with the net proceeds of the Common Stock Offering, will be used as
follows:
<TABLE>
<CAPTION>
(DOLLARS
IN
THOUSANDS)
----------
<S> <C>
Sources of Funds:
Gross Proceeds of this Offering......................................... $225,000
Gross Proceeds of the Common Stock Offering(1).......................... 61,325
--------
Total sources................................................... $286,325
========
Uses of Funds:
Repay Existing Credit Agreement......................................... $ 9,500(2)
Repurchase Existing Notes............................................... 111,500(3)
Purchase Price of the Acquisitions(4)................................... 100,500
Financing Fees and Expenses............................................. 9,878
Cash(1)(5).............................................................. 54,947
--------
Total uses...................................................... $286,325
========
</TABLE>
- ---------------
(1) The consummation of the Common Stock Offering with net cash proceeds to the
Company of at least $40 million is a condition precedent to this Offering.
To the extent the Common Stock Offering yields gross proceeds less than
$61.3 million ($58.0 million net proceeds), cash will be reduced by the
difference in net proceeds.
(2) Represents amounts outstanding at July 31, 1996 under the Existing Credit
Agreement, as adjusted to give effect to the IPO, and does not reflect $40.0
million in borrowings to finance the FKM acquisition, all of which will be
repaid with a portion of the net proceeds from the Offerings. The Existing
Credit Agreement bears interest computed as a margin over either the
lender's base rate or the London Interbank Offered Rate. See "Description of
Other Indebtedness -- Existing Credit Agreement."
(3) Does not reflect the payment of $5.5 million of interest paid on November
15, 1996. Assumes the tender of all of the Existing Notes. The Existing
Notes mature on May 15, 2003 and were issued in May 1993 in an aggregate
principal amount of $100 million, all of which are currently outstanding.
The Existing Notes bear interest at the rate of 11% per annum. See
"Description of Other Indebtedness -- Existing Notes."
(4) The Company has borrowed $40.0 million under the Existing Credit Agreement
to finance the FKM acquisition, all of which will be repaid with a portion
of the net proceeds from the Offerings.
(5) This amount, together with the $225 million commitment under the New Credit
Agreement, will be available for general corporate purposes, including
future acquisitions and working capital. This amount does not reflect the
remaining $14.4 million of net proceeds from the IPO and ($0.8) million net
adjustments related to the Acquisitions.
22
<PAGE> 25
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as of
July 31, 1996 and (ii) such pro forma capitalization of the Company adjusted for
the IPO and the Transactions.
<TABLE>
<CAPTION>
AS OF JULY 31, 1996
------------------------
PRO FORMA
AS ADJUSTED
FOR THE
IPO AND THE
ACTUAL TRANSACTIONS
-------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................................. $ 1,965 $ 70,512
======== ========
Current maturities of long-term debt.................................. $ 5,326 $ 4,103
Long-term debt, less current maturities
11% Senior Secured Notes............................................ $100,000 $ --
% Senior Subordinated Notes....................................... -- 225,000
Notes payable to bank group......................................... 34,250 --
Revolving credit facility........................................... 15,500 --
Other long-term debt................................................ 4,931 5,807
Ten-year subordinated notes......................................... -- 18,000
-------- --------
Total long-term debt, less current maturities............... 154,681 248,807
Stockholders' equity (deficit)
Class A Preferred Stock, $638 par value, 10,000 shares authorized,
5,719.49 issued and outstanding.................................. 3,649 3,649
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no
shares issued and outstanding.................................... -- --
Class A Common Stock, $0.001 par value, 50,000,000 shares
authorized, 10,180,483 actual shares issued and outstanding,
17,539,031 issued and outstanding, pro forma, as adjusted........ 10(1) 18
Class B Common Stock, $0.001 par value, 25,000,000 shares
authorized, 14,301,537 actual shares issued and outstanding,
13,455,548 issued and outstanding, pro forma, as adjusted........ 14(1) 13
Additional paid-in capital.......................................... -- 95,825
Accumulated deficit................................................. (28,962) (38,387)
-------- --------
Total stockholders' equity (deficit)........................ (25,289) 61,118
-------- --------
Total capitalization........................................ $134,718 $314,028
======== ========
</TABLE>
- ---------------
(1) Gives effect to the approximate 778.9 for 1 stock split and recapitalization
effected after July 31, 1996.
23
<PAGE> 26
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
The selected consolidated statement of operations and balance sheet data
presented below are derived from the consolidated financial statements of the
Company. The financial statements of the Company for the three years ended
October 31, 1995 and as of October 31, 1994 and 1995 were audited by KPMG Peat
Marwick LLP, independent auditors, as indicated in their report included
elsewhere in this Prospectus. The consolidated statement of operations and
balance sheet data as of and for the nine months ended July 31, 1995 and 1996
are derived from unaudited financial statements. The unaudited financial
statements include all adjustments, consisting of normal recurring adjustments,
which management considers necessary for a fair presentation of the financial
position and the results of operations for these periods. The results of
operations for any such period are not necessarily indicative of the results of
operations for a full year. The data presented below should be read in
conjunction with the audited consolidated financial statements, related notes,
Management's Discussion and Analysis of Financial Condition and Results of
Operations and other financial information included herein.
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA NINE MONTHS ENDED TWELVE
YEAR ENDED OCTOBER 31, YEAR ENDED JULY 31, MONTHS ENDED
------------------------------------------------------- OCTOBER 31, -------------------- JULY 31,
1991 1992 1993 1994 1995 1995(1) 1995 1996 1996(1)
-------- ------- -------- -------- -------- ----------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF
OPERATIONS DATA:
Revenues:
Net advertising
revenues....... $ 60,834 $60,760 $ 65,365 $ 83,627 $101,871 $ 118,335 $ 76,295 $ 87,647 $132,741
Management
fees........... 827 623 595 334 31 31 23 45 53
Rental income.... 601 572 564 512 506 506 408 473 571
-------- ------- -------- -------- -------- -------- -------- -------- --------
Total net
revenues... 62,262 61,955 66,524 84,473 102,408 118,872 76,726 88,165 133,365
-------- ------- -------- -------- -------- -------- -------- -------- --------
Operating
expenses:
Direct
advertising
expenses....... 22,143 22,783 23,830 28,959 34,386 39,783 26,564 30,969 44,947
General and
administrative
expenses....... 17,703 18,225 19,504 24,239 27,057 31,679 20,636 22,842 34,320
Depreciation and
amortization... 8,826 8,881 8,924 11,352 14,090 21,241 9,954 10,568 21,855
-------- ------- -------- -------- -------- -------- -------- -------- --------
Total
operating
expenses... 48,672 49,889 52,258 64,550 75,533 92,703 57,154 64,379 101,122
-------- ------- -------- -------- -------- -------- -------- -------- --------
Operating
income........... 13,590 12,066 14,266 19,923 26,875 26,169 19,572 23,786 32,243
-------- ------- -------- -------- -------- -------- -------- -------- --------
Non-operating
expense (income):
Interest
income......... (213) (96) (218) (194) (199) (211) (133) (140) (230)
Interest
expense........ 11,650 10,454 11,502 13,599 15,783 24,398 11,948 11,957 24,367
Loss (gain) on
disposition of
assets......... 216 (1,309) 729 675 2,328 2,560 1,004 818 2,146
Other expense.... 1,001 392 576 616 655 1,006 684 254 504
-------- ------- -------- -------- -------- -------- -------- -------- --------
Total
non-operating
expense... 12,654 9,441 12,589 14,696 18,567 27,753 13,503 12,889 26,787
-------- ------- -------- -------- -------- -------- -------- -------- --------
Earnings (loss)
before income
taxes and
extraordinary
item............. 936 2,625 1,677 5,227 8,308 (1,584) 6,069 10,897 5,456
Income tax expense
(benefit)(2)..... 207 270 476 (2,072) (2,390) (5,893) (2,480) 4,420 1,891
-------- ------- -------- -------- -------- -------- -------- -------- --------
Extraordinary loss
on debt
extinguishment,
net of income tax
benefit of $98... -- -- (1,854) -- -- -- -- -- --
-------- ------- -------- -------- -------- -------- -------- -------- --------
Net earnings
(loss)(3)........ 729 2,355 (653) 7,299 10,698 4,309 8,549 6,477 3,565
Preferred stock
dividends........ -- -- -- -- -- -- -- 274 274
-------- ------- -------- -------- -------- -------- -------- -------- --------
Net earnings
(loss) applicable
to
common stock..... 729 2,355 (653) 7,299 10,698 4,309 8,549 6,203 3,291
======== ======= ======== ======== ======== ======== ======== ======== ========
Earnings per
common share
before
extraordinary
item(4).......... $ .02 $ .07 $ .03 $ .21 $ .32 $ .11 $ .26 $ .23 $ .09
======== ======= ======== ======== ======== ======== ======== ======== ========
Net earnings
(loss) per common
share(4)......... $ .02 $ .07 $ (.02) $ .21 $ .32 $ .11 $ .26 $ .23 $ .09
======== ======= ======== ======== ======== ======== ======== ======== ========
OTHER DATA:
EBITDA(5)......... 22,416 20,947 23,190 31,275 40,965 47,410 29,526 34,354 54,098
EBITDA margin..... 36% 34% 35% 37% 40% 40% 39% 39% 41%
Ratio of EBITDA to
interest
expense.......... 1.9x 2.0x 2.0x 2.3x 2.6x 1.9x 2.5x 2.9x 2.2x
Ratio of net debt
to EBITDA(6)..... 4.9x 5.0x 4.6x 4.7x 3.4x 3.5x -- -- 3.4x
Ratio of total
debt to EBITDA... 4.9x 5.0x 5.0x 4.9x 3.6x 5.3x -- -- 4.7x
Ratio of earnings
to fixed
charges(7)....... 1.1x 1.2x 1.0x 1.3x 1.4x 0.9x 1.4x 1.7x 1.2x
Capital
expenditures:
Outdoor
advertising.... 1,847 1,695 2,374 4,997 6,643 10,251 4,786 4,922 10,359
Logos............ 629 3,056 2,009 2,761 1,567 1,567 1,390 7,989 8,096
Cash flows from
operating
activities(8).... 10,328 12,930 12,411 15,214 25,065 -- 10,752 15,595 --
Cash flows from
investing
activities(8).... (4,236) (7,273) (10,064) (53,569) (17,817) -- (11,049) (28,798) --
Cash flows from
financing
activities(8).... (5,133) (6,734) 6,802 37,147 (9,378) -- (5,751) 9,287 --
Number of outdoor
advertising
displays(9)...... 18,829 17,835 17,659 22,369 22,547 27,605 22,512 23,089 28,147
Number of logo
advertising
displays(9)...... 5,027 11,371 13,820 18,266 24,219 24,219 22,431 48,362 48,362
Cumulative logo
sign
franchises(9).... 4 5 7 7 11 11 8 15 15
BALANCE SHEET
DATA(9):
Cash and cash
equivalents...... 1,152 75 9,224 8,016 5,886 -- 1,968 1,965 70,512
Working capital... (2,876) (7,557) 7,274 1,691 1,737 -- 178 1,479 72,251
Total assets...... 81,737 78,649 92,041 130,008 133,885 -- 130,119 150,267 329,789
Total debt
(including
current
maturities)...... 110,350 104,222 115,380 153,929 146,051 -- 148,552 160,007 252,910
Total long-term
obligations...... 111,267 103,567 122,774 147,957 143,944 -- 142,433 156,674 250,800
Stockholders'
equity
(deficit)........ (43,787) (41,870) (43,249) (37,352) (28,154) -- (29,178) (25,289) 61,118
</TABLE>
24
<PAGE> 27
- ---------------
(1) For purposes of the pro forma adjusted financial information (i) the
statement of earnings of the Company for its fiscal year ended October 31,
1995 has been combined with the statements of earnings of Outdoor East and
FKM for their fiscal year ended December 31, 1995, (ii) the statement of
earnings of the Company for the twelve month period ended July 31, 1996 has
been combined with the statements of earnings of Outdoor East and FKM for
the twelve months ended September 30, 1996 and (iii) effect has been given
to the IPO and the Transactions. For a more complete description of the pro
forma impact on the Company's results of operations see "Unaudited Pro Forma
Condensed Consolidated Financial Statements." To the extent the net proceeds
to the Company from the Common Stock Offering do not equal $58.0 million,
cash will be adjusted accordingly.
(2) The benefit of the Company's net operating loss carryforward was fully
recognized as of October 31, 1995, resulting in the income tax expense shown
for the nine months ended July 31, 1996, compared to the income tax benefit
for the same period in the prior year.
(3) Pro forma financial information for the year ended October 31, 1995 and the
twelve months ended July 31, 1996 does not give effect to extraordinary loss
from extinguishment of debt net of tax of $9,235 and $9,470, respectively.
(4) After giving effect to the approximately 778.9 for 1 split of the Company's
then-existing common stock and the recapitalization effected after July 31,
1996.
(5) "EBITDA" is defined as operating income before depreciation and
amortization. It represents a measure which management believes is
customarily used to evaluate the financial performance of companies in the
media industry. However, EBITDA is not a measure of financial performance
under generally accepted accounting principles and should not be considered
an alternative to operating income or net earnings as an indicator of the
Company's operating performance or to net cash provided by operating
activities as a measure of its liquidity.
(6) "Net debt" consists of debt less cash and cash equivalents.
(7) The ratio of earnings to fixed charges was computed by dividing earnings by
fixed charges. For this purpose, earnings consist of income from continuing
operations, before income taxes and fixed charges of the Company and its
subsidiaries plus the Company's share of the distributed income of less than
50% owned persons. Fixed charges consist of the Company's and its
subsidiaries' interest expense (including interest costs capitalized) and
the portion of rent expense representative of an interest factor.
(8) Cash flows from operating, investing and financing activities are obtained
from the Company's consolidated statements of cash flows prepared in
accordance with generally accepted accounting principles.
(9) As of the end of the period.
25
<PAGE> 28
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following sets forth unaudited pro forma condensed consolidated
financial information for the Company. The unaudited pro forma condensed
consolidated statements of earnings for the year ended October 31, 1995, the
nine month period ended July 31, 1996 and for the twelve month period ended July
31, 1996 give effect to (i) the consummation of the IPO and the application of
the net proceeds therefrom, (ii) the Acquisitions, (iii) the Offerings and the
application of the estimated net proceeds therefrom, and (iv) the Tender Offer,
as if each had occurred on the first date of each such period. The unaudited pro
forma condensed consolidated balance sheet as of July 31, 1996 has been prepared
as if the IPO, the Acquisitions, the Offerings and the Tender Offer had occurred
on July 31, 1996. To the extent the net proceeds to the Company from the Common
Stock Offering do not equal $58.0 million, cash would be adjusted accordingly.
For purposes of the pro forma financial information (i) the statement of
earnings of the Company for its fiscal year ended October 31, 1995 has been
combined with the statements of earnings of Outdoor East and FKM for their
fiscal year ended December 31, 1995, (ii) the statement of earnings of the
Company for the nine months ended July 31, 1996 has been combined with the
statements of earnings of Outdoor East and FKM for the nine months ended
September 30, 1996, (iii) the statement of earnings of the Company for the
twelve month period ended July 31, 1996 has been combined with the statements of
earnings of Outdoor East and FKM for the twelve months ended September 30, 1996
and (iv) the balance sheet of the Company as of July 31, 1996 has been combined
with the balance sheets of Outdoor East and FKM as of September 30, 1996.
The unaudited pro forma condensed consolidated financial statements give
effect to the Acquisitions under the purchase method of accounting.
The unaudited pro forma condensed consolidated financial statements have
been prepared by the Company's management. The unaudited pro forma data are not
designed to represent and do not represent what the Company's results of
operations or financial position would have been had the aforementioned
transactions been completed on or as of the dates assumed, and are not intended
to project the Company's results of operations for any future period or as of
any future date. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the audited and unaudited
consolidated financial statements and notes of the Company and certain acquired
businesses included elsewhere or incorporated by reference herein.
26
<PAGE> 29
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
YEAR ENDED OCTOBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INITIAL EQUITY
OFFERING OUTDOOR ACQUISITION
LAMAR ADJUSTMENTS FKM EAST ADJUSTMENTS
---------- -------------- ------ ------- -----------
<S> <C> <C> <C> <C> <C>
Revenues
Outdoor advertising, net................................ $ 101,871 $4,956 $11,508
Rental income........................................... 506 --
Management fees from related and affiliated parties..... 31 --
Other income............................................ -- 45 -- (45)(8)
Interest income......................................... -- 12 -- (12)(7)
---------- --------- ------ ------- -------
102,408 5,013 11,508 (57)
---------- --------- ------ ------- -------
Direct expenses
Direct advertising expenses............................. 34,386 1,513 3,884
General and administrative expenses..................... 27,057 1,119 3,548 (45)(8)
Depreciation and amortization........................... 14,090 1,823 2,675 2,565(2)
---------- --------- ------ ------- -------
75,533 4,455 10,107 2,520
---------- --------- ------ ------- -------
Operating income.......................................... 26,875 558 1,401 (2,577)
---------- --------- ------ ------- -------
Other expense (income)
Interest income......................................... (199) 0 (12)(7)
Interest expense........................................ 15,783 (2,337)(1)(6) 1,039 2,060 (3,085)(3)
Loss on disposition of assets........................... 2,328 232 --
Other expenses.......................................... 655 7 344
---------- --------- ------ ------- -------
18,567 (2,337) 1,278 2,404 (3,097)
---------- --------- ------ ------- -------
Earnings (loss) before income taxes....................... 8,308 2,337 (720) (1,003) 520
Income tax expense (benefit)............................ (2,390) 935(11) (192) 165(11)
---------- --------- ------ ------- -------
Net earnings (loss)....................................... $ 10,698 $ 1,402 $ (528) $(1,003) $ 355
========== ========= ====== ======= =======
Net earnings per common share............................. $ 0.32
==========
Weighted average number of shares outstanding............. 33,772,107 4,294,041
========== =========
<CAPTION>
ADJUSTMENTS
FOR THE
ADJUSTMENTS TENDER
FOR THE OFFER AND PRO FORMA
COMMON STOCK THIS COMBINED AS
OFFERING OFFERING ADJUSTED
------------ ----------- -----------
<S> <<C> <C> <C>
Revenues
Outdoor advertising, net................................ $ 118,335
Rental income........................................... 506
Management fees from related and affiliated parties..... 31
Other income............................................ 0
Interest income......................................... 0
---------- --------- ----------
118,872
---------- --------- ----------
Direct expenses
Direct advertising expenses............................. 39,783
General and administrative expenses..................... 31,679
Depreciation and amortization........................... 88(5) 21,241
---------- --------- ----------
88 92,703
---------- --------- ----------
Operating income.......................................... (88) 26,169
---------- --------- ----------
Other expense (income)
Interest income......................................... (211)
Interest expense........................................ 10,938(4) 24,398
Loss on disposition of assets........................... 2,560
Other expenses.......................................... 1,006
---------- --------- ----------
10,938 27,753
---------- --------- ----------
Earnings (loss) before income taxes....................... (11,026) (1,584)
Income tax expense (benefit)............................ (4,410)(11) (5,893)
---------- --------- ----------
Net earnings (loss)....................................... $ $ (6,616) $ 4,309
========== ========= ==========
Net earnings per common share............................. $ 0.11
========== ==========
Weighted average number of shares outstanding............. 2,200,000 40,266,148
========== ==========
</TABLE>
27
<PAGE> 30
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
NINE MONTHS ENDED JULY 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INITIAL EQUITY
OFFERING OUTDOOR ACQUISITION
LAMAR ADJUSTMENTS FKM EAST ADJUSTMENTS
---------- -------------- ------ ------- -----------
<S> <C> <C> <C> <C> <C>
Revenues
Outdoor advertising, net................................ $ 87,647 $ $5,924 $ 9,130 $
Rental income........................................... 473
Management fees from related and affiliated parties..... 45 100 (100)(9)
Other income............................................ 80 -- (80)(8)
Interest income......................................... 20 -- (20)(7)
---------- ---------- ------ ------- -------
88,165 6,024 9,230 (200)
---------- ---------- ------ ------- -------
Direct expenses
Direct advertising expenses............................. 30,969 1,744 3,004
General and administrative expenses..................... 22,842 1,352 2,699 (80)(8)
Depreciation and amortization........................... 10,568 1,975 2,192 1,129(2)
---------- ---------- ------ ------- -------
64,379 5,071 7,895 1,049
---------- ---------- ------ ------- -------
Operating income.......................................... 23,786 953 1,335 (1,249)
---------- ---------- ------ ------- -------
Other expense (income)
Interest income......................................... (140) (20)(7)
Interest expense........................................ 11,957 (1,871)(1)(6) 1,589 2,160 (3,738)(3)
Loss on disposition of assets........................... 818
Other expenses.......................................... 254 6 790 (716)(10)
---------- ---------- ------ ------- -------
12,889 (1,871) 1,595 2,950 (4,474)
---------- ---------- ------ ------- -------
Earnings (loss) before income taxes....................... 10,897 1,871 (642) (1,615) 3,225
Income tax expense (benefit)............................ 4,420 748(11) (120) -- 847(11)
---------- ---------- ------ ------- -------
Net earnings (loss)....................................... $ 6,477 $ 1,123 $ (522) $(1,615) $ 2,378
========== ====== ======= =======
Preferred stock dividends................................. 274
Net earnings (loss) applicable to common stock............ 6,203
==========
Net earnings per common share............................. $ 0.23
==========
Weighted average number of shares outstanding............. 27,068,544 4,294,041
========== ==========
<CAPTION>
ADJUSTMENTS
FOR THE
ADJUSTMENTS TENDER
FOR THE OFFER AND PRO FORMA
COMMON STOCK THIS COMBINED AS
OFFERING OFFERING ADJUSTED
------------ ----------- -----------
<S> <C> <C> <C>
Revenues
Outdoor advertising, net................................ $ $ $ 102,701
Rental income........................................... 473
Management fees from related and affiliated parties..... 45
Other income............................................ --
Interest income......................................... --
---------- ------- ----------
103,219
---------- ------- ----------
Direct expenses
Direct advertising expenses............................. 35,717
General and administrative expenses..................... 26,813
Depreciation and amortization........................... --(5) 15,864
---------- ------- ----------
-- 78,394
---------- ------- ----------
Operating income.......................................... -- 24,825
---------- ------- ----------
Other expense (income)
Interest income......................................... (160)
Interest expense........................................ 8,203(4) 18,300
Loss on disposition of assets........................... 818
Other expenses.......................................... 334
---------- ------- ----------
8,203 19,292
---------- ------- ----------
Earnings (loss) before income taxes....................... (8,203) 5,533
Income tax expense (benefit)............................ (3,281)(11) 2,614
---------- ------- ----------
Net earnings (loss)....................................... $ $(4,922) $ 2,919
=======
Preferred stock dividends................................. 274
----------
Net earnings (loss) applicable to common stock............ 2,645
========== ==========
Net earnings per common share............................. $ 0.08
========== ==========
Weighted average number of shares outstanding............. 2,200,000 33,562,585
========== ==========
</TABLE>
28
<PAGE> 31
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
TWELVE MONTHS ENDED JULY 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INITIAL EQUITY
OFFERING OUTDOOR ACQUISITION
LAMAR ADJUSTMENTS FKM EAST ADJUSTMENTS
----------- -------------- ------ ------- -----------
<S> <C> <C> <C> <C> <C>
Revenues
Outdoor advertising, net.............................. 113,223 7,376 12,142
Rental income......................................... 571 -- --
Management fees from related and affiliated parties... 53 -- 100 (100)(9)
Other income.......................................... -- 85 -- (85)(8)
Interest income....................................... -- 24 -- (24)(7)
---------- --------- ----- ------ ------
113,847 7,485 12,242 (209)
---------- --------- ----- ------ ------
Direct expenses
Direct advertising expenses........................... 38,791 2,214 3,942
General and administrative expenses................... 29,263 1,632 3,510 (85)(8)
Depreciation and amortization......................... 14,704 2,453 2,941 1,669(2)
---------- --------- ----- ------ ------
82,758 6,299 10,393 1,584
---------- --------- ----- ------ ------
Operating income........................................ 31,089 1,186 1,849 (1,793)
---------- --------- ----- ------ ------
Other expense (income)
Interest income....................................... (206) (24)(7)
Interest expense...................................... 15,792 (2,377)(1)(6) 1,965 2,672 (4,623)(3)
Loss on disposition of assets......................... 2,142 4 0
Other expenses........................................ 225 10 985 (716)(10)
---------- --------- ----- ------ ------
17,953 (2,377) 1,979 3,657 (5,363)
---------- --------- ----- ------ ------
Earnings (loss) before income taxes..................... 13,136 2,377 (793) (1,808) 3,570
Income tax expense (benefit).......................... 4,510 951(11) (157) 998(11)
---------- --------- ----- ------ ------
Net earnings (loss)..................................... 8,626 1,426 (636) (1,808) 2,572
========= ===== ====== ======
Preferred stock dividends............................... 274
----------
Net earnings (loss) applicable to common
stock................................................. 8,352
==========
Net earnings per common share........................... $0.29
==========
Weighted average number of shares
outstanding........................................... 28,778,075 4,294,041
========== =========
<CAPTION>
ADJUSTMENTS
FOR THE
ADJUSTMENTS TENDER
FOR THE OFFER AND PRO FORMA
COMMON STOCK THIS COMBINED
OFFERING OFFERING AS ADJUSTED
------------ ----------- -----------
<S> <C> <C> <C>
Revenues
Outdoor advertising, net.............................. 132,741
Rental income......................................... 571
Management fees from related and affiliated parties... 53
Other income.......................................... 0
Interest income....................................... 0
--------- ------- ----------
133,365
--------- ------- ----------
Direct expenses
Direct advertising expenses........................... 44,947
General and administrative expenses................... 34,320
Depreciation and amortization......................... 88(5) 21,855
--------- ------- ----------
88 101,122
--------- ------- ----------
Operating income........................................ (88) 32,243
--------- ------- ----------
Other expense (income)
Interest income....................................... (230)
Interest expense...................................... 10,938(4) 24,367
Loss on disposition of assets......................... 2,146
Other expenses........................................ 504
--------- ------- ----------
10,938 26,787
--------- ------- ----------
Earnings (loss) before income taxes..................... (11,026) 5,456
Income tax expense (benefit).......................... (4,410)(11) 1,891
--------- ------- ----------
Net earnings (loss)..................................... (6,616) 3,565
=======
Preferred stock dividends............................... 274
--------- ----------
Net earnings (loss) applicable to common
stock................................................. 3,291
========= ==========
Net earnings per common share........................... $ 0.09
========= ==========
Weighted average number of shares
outstanding........................................... 2,200,000 35,272,116
========= ==========
</TABLE>
29
<PAGE> 32
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JULY 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INITIAL EQUITY
OFFERING OUTDOOR ACQUISITION
LAMAR ADJUSTMENTS FKM EAST ADJUSTMENTS
-------- -------------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents............................... $ 1,965 $ 14,396(13) $ 80 $ 1,026 $(102,402)(13)
Net receivables......................................... 15,491 668 1,951 (2,025)(14)
Other current assets.................................... 2,905 620 853 (853)(15)
-------- -------- ------- ------- ---------
Total current assets.............................. 20,361 14,396 1,368 3,830 (105,280)
-------- -------- ------- ------- ---------
Property, plant & equipment
Property, plant and equipment,
net................................................... 105,185 7,209 15,566 25,275(16)
-------- -------- ------- ------- ---------
Other assets
Intangibles............................................. 16,891 (299)(17) 8,676 4,219 40,656(17)
Other assets............................................ 7,830 1,689 775 (2,618)(18)
-------- -------- ------- ------- ---------
Total assets...................................... $150,267 $ 14,097 $18,942 $24,390 $ (41,967)
======== ======== ======= ======= =========
Current liabilities
Current maturities of long-term debt.................... 5,326 (1,500)(19) 1,490 867 (2,080)(19)
Other current liabilities............................... 13,556 386 1,157 (1,331)(20)
-------- -------- ------- ------- ---------
18,882 (1,500) 1,876 2,024 (3,411)
-------- -------- ------- ------- ---------
Long-term liabilities
Long-term debt.......................................... 154,681 (22,250)(21) 15,748 22,943 (37,815)(21)
Deferred income......................................... 779 -- --
Other liabilities....................................... 1,214 -- --
-------- -------- ------- ------- ---------
Total liabilities................................. 175,556 (23,750) 17,624 24,967 (41,226)
-------- -------- ------- ------- ---------
Stockholders' equity (deficit)............................ (25,289) 37,847(22) 1,318 (577) (741)(22)
-------- -------- ------- ------- ---------
Total liabilities and stockholders' deficit....... $150,267 $ 14,097 $18,942 $24,390 $ (41,967)
======== ======== ======= ======= =========
<CAPTION>
ADJUSTMENTS
FOR THE
ADJUSTMENTS TENDER
FOR THE OFFER AND PRO FORMA
COMMON STOCK THIS COMBINED AS
OFFERING OFFERING ADJUSTED
------------ ----------- -----------
<S> <<C> <C> <C>
Current assets
Cash and cash equivalents............................... $ 57,985(13) $ 97,462(13) $ 70,512
Net receivables......................................... 16,085
Other current assets.................................... 3,525
-------- --------- ---------
Total current assets.............................. 57,985 97,462 90,122
-------- --------- ---------
Property, plant & equipment
Property, plant and equipment,
net................................................... 153,235
-------- --------- ---------
Other assets
Intangibles............................................. 2,330(17) 72,473
Other assets............................................ 6,283(18) 13,959
-------- --------- ---------
Total assets...................................... $ 57,985 $ 106,075 $ 329,789
======== ========= =========
Current liabilities
Current maturities of long-term debt.................... 4,103
Other current liabilities............................... 13,768
-------- --------- ---------
17,871
-------- --------- ---------
Long-term liabilities
Long-term debt.......................................... 115,500(21) 248,807
Deferred income......................................... 779
Other liabilities....................................... 1,214
-------- --------- ---------
Total liabilities................................. 115,500 268,671
-------- --------- ---------
Stockholders' equity (deficit)............................ 57,985(22) (9,425)(22) 61,118
-------- --------- ---------
Total liabilities and stockholders' deficit....... $ 57,985 $ 106,075 $ 329,789
======== ========= =========
</TABLE>
30
<PAGE> 33
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
For purposes of determining the pro forma effect of the IPO and the
Transactions on the Company's unaudited Condensed Consolidated Statements of
Earnings for the year ended October 31, 1995, the nine months ended July 31,
1996, and the twelve months ended July 31, 1996, the following adjustments have
been made:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED TWELVE MONTHS
YEAR ENDED JULY 31, ENDED
OCTOBER 31, 1995 1996 JULY 31, 1996
---------------- ----------- -------------
<S> <C> <C> <C>
(1) Represents the elimination of interest
expense on bank loans under the Existing
Credit Agreement as a result of the
application of the net proceeds from the
IPO.......................................... $ (3,864) $(3,031) $(3,904)
(2) Represents incremental amortization and
depreciation due to the application of
purchase accounting. Depreciation and
amortization are calculated using accelerated
and straight line methods over the estimated
useful lives of the
assets...................................... 2,565 1,129 1,669
(3) Represents the net effect on interest expense
resulting from (i) additional borrowings
assumed in the acquisitions and (ii) the
elimination of interest expense on debt not
assumed in the acquisitions.................. (3,085) (3,738) (4,623)
(4) To eliminate historical interest expense on
the Existing Notes and to record interest
expense on the Notes at an assumed rate of
9.75%. (A difference of .125% in the assumed
rate of interest would have changed income by
$281, $211 and $281 for the year ended
October 31, 1995, the nine months ended July
31, 1996 and the twelve months ended July 31,
1996, respectively.)
Interest expense on
this Offering....... 21,938 16,453 21,938
Interest expense on
the Existing
Notes............... (11,000) (8,250) (11,000) 10,938 8,203 10,938
------- ------- -------
(5) The increase in amortizing debt issuance costs
associated with this Offering over the Existing
Notes amortization...............................
Amortization under
this Offering....... 653 490 653
Amortization on
Existing Notes...... (565) (490) (565) 88 -- 88
------- ------- -------
(6) Interest expense on the $20 million ten year
subordinated notes issued to existing
shareholders at the time of the IPO.......... 1,527 1,160 1,527
</TABLE>
31
<PAGE> 34
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED TWELVE MONTHS
YEAR ENDED JULY 31, ENDED
OCTOBER 31, 1995 1996 JULY 31, 1996
---------------- ----------- -------------
<S> <C> <C> <C>
(7) To reclassify interest income in order to
conform to the Company's presentation........ (12) (20) (24)
(8) To reclassify other income in order to
conform to the Company's presentation........ (45) (80) (85)
(9) To eliminate management fee income on Outdoor
East historical financial statements, which
would not have been earned had the
Acquisitions been consummated on November 1,
1994......................................... -- (100) (100)
(10) To eliminate costs associated with the sale
and reorganization of Outdoor East which
would not have been incurred had the
Acquisitions been consummated on November 1,
1994......................................... -- (716) (716)
(11) To record the tax effect on pro forma
statements for:
IPO....................................... 935 748 951
Acquisitions.............................. 165 847 998
Tender Offer and this Offering............ (4,410) (3,281) (4,410)
(12) The accompanying pro forma results of
operation do not give effect to the
extraordinary loss on the extinguishment of
debt of $9,235, $9,425 and $9,470 for the
year ended October 31, 1995, for the nine
months ended July 31, 1996 and for the twelve
months ended July 31, 1996; respectively,
however, such amounts have been reflected as
an adjustment to pro forma retained earnings.
</TABLE>
For purposes of determining the pro forma effect of the IPO and the
Transactions on the Company's unaudited Condensed Consolidated Balance Sheet as
of July 31, 1996, the following adjustments have been made:
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
ADJUSTMENTS TENDER
FOR THE OFFER AND
IPO ACQUISITION COMMON STOCK THIS
ADJUSTMENTS ADJUSTMENTS OFFERING OFFERING
----------- ----------- ------------ -----------
<C> <S> <C> <C> <C> <C>
(13) Cash:
Net proceeds of the IPO and the
Transactions.............................. $ 63,146 $ 57,985 $ 218,462
Use of proceeds of the IPO and the
Transactions.............................. (48,750) (121,000)
Represents purchase of FKM.................. $ (40,000)
Payoff of receivable from
shareholder -- FKM........................ 74
Represents purchase of Outdoor East......... (60,500)
To record payoff of note assumed -- Outdoor
East...................................... (950)
To remove cash not purchased from Outdoor
East...................................... (1,026)
-------- --------- -------- ---------
$ 14,396 $(102,402) $ 57,985 $ 97,462
======== ========= ======== =========
</TABLE>
32
<PAGE> 35
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
ADJUSTMENTS TENDER
FOR THE OFFER AND
IPO ACQUISITION COMMON STOCK THIS
ADJUSTMENTS ADJUSTMENTS OFFERING OFFERING
----------- ----------- ------------ -----------
<C> <S> <C> <C> <C> <C>
(14) Net receivables:
Payoff of receivable from
shareholder -- FKM........................ $ (74)
To remove net receivables not purchased from
Outdoor East.............................. (1,951)
-----------
$ (2,025)
=========
(15) Other current assets:
To remove net receivables not purchased from
Outdoor East.............................. $ (853)
=========
(16) Property, plant and equipment:
To record the net increase in property,
plant and equipment from the allocation of
the purchase price of the FKM
acquisition............................... $ 5,421
To record the net increase in structures
from the allocation of the purchase price
of the Outdoor East acquisition........... 19,854
-----------
$ 25,275
=========
(17) Intangibles:
To reclassify additional offering fees...... $ (299)
To record net intangible assets from
purchase of FKM........................... $ 17,730
To record net intangible assets from
purchase of Outdoor East assets........... 22,926
To record capitalized fees of this
Offering.................................. $ 6,538
To remove issuance costs of Existing
Notes..................................... (4,208)
----------- ----------- -----------
$ (299) $ 40,656 $ 2,330
========= ========= =========
(18) Other assets:
To eliminate other assets not purchased from
Outdoor East.............................. $ (775)
To record reduction of deferred tax asset
after giving effect to FKM acquisition.... (1,843)
To record tax effect of loss on early
extinguishment of debt.................... 6,283
----------- -----------
$ (2,618) $ 6,283
========= =========
</TABLE>
33
<PAGE> 36
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
ADJUSTMENTS TENDER
FOR THE OFFER AND
IPO ACQUISITION COMMON STOCK THIS
ADJUSTMENTS ADJUSTMENTS OFFERING OFFERING
-------- --------- -------- ---------
<C> <S> <C> <C> <C> <C>
(19) Current maturities of long-term debt:
To record payoff of borrowings under the
Existing Credit Agreement................. $ (3,500)
To record ten year subordinated note
payable, current portion.................. 2,000
To remove liabilities not assumed in FKM
acquisition............................... $ (1,467)
To record net current maturities of
long-term debt related to Outdoor East
acquisition............................... (613)
-------- ---------
$ (1,500) $ (2,080)
======== =========
(20) Other current liabilities:
To remove liabilities not assumed from
Outdoor East.............................. $ (1,157)
To remove liabilities not assumed from
FKM....................................... (174)
---------
$ (1,331)
=========
(21) Long-term debt:
To record payoff of loans under the Existing
Credit Agreement.......................... $ (40,250) $ (9,500)
To record ten year subordinated note
payable, long-term portion................ 18,000
To remove net liabilities not assumed from
FKM....................................... $ (15,733)
To remove net liabilities not assumed from
Outdoor East.............................. (22,082)
To record effect of Tender Offer............ (100,000)
To record effect of the issuance of the
Notes..................................... 225,000
-------- --------- -------- ---------
$ (22,250) $ (37,815) $ 115,500
======== ========= ======== =========
(22) Stockholders' deficit:
Net proceeds of the IPO and the Common Stock
Offering assuming the sale of 2,200 shares
at a price of $27.875 per share........... $ 62,847 $ 57,985
Consideration related to previous stock
redemptions............................... (25,000)
To reverse historical equity in connection
with the
Acquisitions.............................. (741)
To record effect on equity due to loss on
early extinguishment of debt.............. $ (9,425)
-------- --------- -------- ---------
$ 37,847 $ (741) $ 57,985 $ (9,425)
======== ========= ======== =========
</TABLE>
34
<PAGE> 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of the Company for the three fiscal years ended October
31, 1995, and for the nine months ended July 31, 1996 compared to the same
period for the prior year. This discussion should be read in conjunction with
the consolidated financial statements of the Company and the related notes, and
the pro forma condensed consolidated statements of the Company and the related
notes, included in and incorporated by reference to this Prospectus. References
herein to specific years refer to the Company's fiscal year ending on October 31
of such years.
OVERVIEW
The Company's net revenues, which represent gross revenues less commissions
paid to advertising agencies that contract for the use of advertising displays
on behalf of advertisers, are derived primarily from the sale of advertising on
outdoor advertising displays owned and operated by the Company. In recent years,
the Company's logo sign business has expanded rapidly and may in the future have
an increasing impact on the Company's revenues and operating income.
The Company has grown significantly during the last three years, primarily
as the result of (i) internal growth in its existing outdoor advertising
business resulting from construction of additional outdoor advertising displays,
general improvements in occupancy and operating efficiency and increases in
advertising rates, (ii) acquisitions of outdoor advertising businesses and
structures, the most significant of which was the Company's acquisition of the
50.6% interest that it did not already own in Lamar Holding Corporation ("LHC")
in 1994, and (iii) the rapid expansion of the Company's logo sign business. The
Company's net advertising revenues increased by $36.4 million, representing a
compound annual growth rate of 24.8%, from $65.4 million for the fiscal year
ended October 31, 1993 to $101.9 million for the fiscal year ended October 31,
1995. During the same period, EBITDA increased $17.8 million, representing a
compound annual growth rate of 32.9%, from $23.2 million for the fiscal year
ended October 31, 1993 to $41.0 million for the fiscal year ended October 31,
1995.
The Company plans to continue a strategy of expanding through both internal
growth and acquisitions. As a result of acquisitions, principally the LHC
acquisition, the operating performance of certain markets and of the Company as
a whole are not necessarily comparable on a year-to-year basis. All recent
acquisitions have been accounted for using the purchase method of accounting
and, consequently, operating results from acquired operations are included from
the respective dates of those acquisitions. The Company has recently acquired
FKM for an aggregate cash purchase price of $40 million, acquired logo sign
franchises in Kansas and Tennessee for an aggregate cash purchase price of $1.4
million and has acquired certain outdoor advertising properties for an aggregate
cash cost of approximately $12.2 million. In addition, the Company has executed
agreements to purchase Outdoor East for an aggregate cash purchase price of
approximately $60 million and the logo sign franchises for Kentucky and Nevada
for $3.8 million in cash, certain transit advertising displays for approximately
$1.1 million in cash and has executed a letter of intent to acquire the assets
of an additional outdoor advertising company at a cash purchase price of
approximately $75 million. The Company intends to finance its acquisition
activities from external sources, including the proceeds of the Common Stock
Offering, the proceeds of this Offering and borrowings under the New Credit
Agreement. See "The Transactions."
The Company relies on sales of advertising space for its revenues, and its
operating results are therefore affected by general economic conditions, as well
as trends in the advertising industry. The Company believes that in recent years
outdoor advertising expenditures have increased more rapidly than total U.S.
advertising expenditures, but there can be no assurance that this trend will
continue or that in the future outdoor advertising will not grow more slowly
than the advertising industry as a whole.
Manufacturers of tobacco products, primarily cigarettes, were historically
major users of outdoor advertising displays. Due to societal and governmental
pressures and other factors, in the early 1990's, leading tobacco manufacturers
substantially reduced their domestic advertising expenditures. The Company's
tobacco revenues, as a percentage of total net revenues, declined from 17% in
fiscal 1991 to 12% in fiscal 1992, 7% in
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<PAGE> 38
fiscal 1993 and 1994 and 9% in fiscal 1995. During this period, the Company has
replaced the reduced tobacco advertising by diversifying its customer base and
increasing sales to local advertisers.
Growth of the Company's business requires significant capital expenditures
to finance internal growth, acquisitions and the up-front costs associated with
new logo sign franchises. The Company expended $7.6 million on capital
expenditures in fiscal 1993, $13.4 million in fiscal 1994 and $14.0 million in
fiscal 1995. Of these amounts, $2.0 million, $2.8 million and $1.6 million,
respectively, were attributable to the logo sign business. See "-- Liquidity and
Capital Resources."
In the fiscal years ended October 31, 1994 and 1995, the Company recognized
an income tax benefit from a net operating loss carryforward. The benefit of the
Company's net operating loss carryforward was fully recognized as of October 31,
1995, resulting in the recognition of income tax expense for the nine months
ended July 31, 1996.
The following table presents certain items in the Consolidated Statements
of Earnings (Loss) as a percentage of net revenues for the years ended October
31, 1993, 1994 and 1995 and for the nine months ended July 31, 1995 and 1996:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED OCTOBER 31, ENDED JULY 31,
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net revenues............................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses
Direct advertising expenses.............. 35.8 34.3 33.6 34.6 35.1
General & administrative expenses........ 29.3 28.7 26.4 26.9 25.9
Operating cash flow........................ 34.9 37.0 40.0 38.5 39.0
Depreciation and amortization.............. 13.4 13.4 13.8 13.0 12.0
Operating income........................... 21.4 23.6 26.2 25.5 27.0
Interest expense........................... 17.3 16.1 15.4 15.6 13.6
Other expense.............................. 18.9 17.4 18.1 17.6 14.6
Net earnings (loss)........................ (1.0) 8.6 10.4 11.1 7.3
</TABLE>
EFFECTS OF THE ACQUISITIONS
The Acquisitions will result in the addition of 2,745 bulletins and 2,317
posters, or a total of 5,062 outdoor advertising displays, to the Company's
inventory, which represents a 21% increase in its outdoor advertising displays.
The Company has also acquired an additional 1,686 outdoor advertising displays
since July 31, 1996.
The FKM acquisition expands the Company's operations in Ohio through the
addition of the Youngstown market and gives the Company a presence in
Pennsylvania through the operation of FKM's inventory of bulletins located on
interstate highways and other primary roads in that state. The Outdoor East
acquisition will add a billboard operation with structures positioned along
heavily travelled highways serving the Eastern U.S. It will also add the
Columbia, SC market, which is ranked as the 88th largest market in the U.S., as
well as several smaller markets and displays located along North Carolina
interstate highways and primary roads.
On a pro forma basis for the twelve months ending July 31, 1996, the
Acquisitions add $19.5 million in net outdoor advertising revenues to the
Company's $113.2 net outdoor advertising revenues for the period, which
constitutes an increase of 17%. The Company expects to be able to achieve
certain operating efficiencies through the addition of outdoor advertising
businesses operating in or near markets currently served by the Company.
RECENT RESULTS
Based upon preliminary information, the Company estimates that its net
revenue and EBITDA for the fiscal year ended October 31, 1996 will be in the
approximate range of $119.0 million and $48.5 million, respectively. The
Company's net revenue and EBITDA for the fiscal year ended October 31, 1995 were
$102.4 million and $41.0 million, respectively. This subsection contains forward
looking statements and
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<PAGE> 39
estimates which could prove inaccurate. The Company's fiscal year has just ended
and its results have not yet been determined, nor has the year-end audit taken
place. Consequently, the estimates contained in this subsection are subject to
change depending on the finalization of actual results, potential year-end
adjustments and completion of the audit. In addition, the Company's results
could be affected by the factors identified in "Risk Factors."
NINE MONTHS ENDED JULY 31, 1996 COMPARED TO NINE MONTHS ENDED JULY 31, 1995
Net revenues increased $11.4 million or 14.9% to $88.2 million for the nine
months ended July 31, 1996 compared to $76.8 million for the same period in
1995. This increase was primarily a result of the $6.8 million increase in
outdoor advertising net revenues, principally attributable to increases in
number of displays of approximately 600 and advertising rates at an average of
6%, with occupancy rates remaining relatively steady, and a $4.3 million
increase in logo sign revenue due to the continued development of that program.
Net outdoor advertising revenue for the period was $77.5 million and logo sign
revenue was $9.0 million.
Operating expenses, exclusive of depreciation and amortization, increased
$6.6 million or 14.0% for the nine months ended July 31, 1996 as compared to the
same period in 1995. This increase was the result of an increase in health
insurance rates, increases in personnel costs, sign site rent, graphics expense,
other costs related to the increase in revenue and additional operating expenses
related to outdoor asset acquisitions and the continued development of the logo
sign business.
Depreciation and amortization expense increased $0.6 million or 6.2% from
$10.0 million for the nine months ended July 31, 1995 to $10.6 million for nine
months ended July 31, 1996.
Due to the above factors, operating income increased $4.2 million or 21.5%
to $23.8 million for the nine months ended July 31, 1996 from $19.6 million for
the same period in 1995.
Interest expense remained relatively constant for both periods.
Income tax expense for the nine months ended July 31, 1996 increased $6.9
million over the same period in 1995. For the past several years the Company has
had a substantial net operating loss carryforward. The benefit of the Company's
net operating loss carryforward was fully recognized as of October 31, 1995.
As a result of the foregoing factors, net earnings for the nine months
ended July 31, 1996 decreased $2.1 million as compared to the same period in
1995.
YEAR ENDED OCTOBER 31, 1995 COMPARED TO YEAR ENDED OCTOBER 31, 1994
Net revenues increased $17.9 million or 21.2% to $102.4 million for the
twelve months ended October 31, 1995 from $84.5 million for the same period in
1994. This increase was predominantly attributable to higher outdoor advertising
net revenues, which rose $17.9 million or 23.0% during this period. The increase
in outdoor advertising net revenues was principally attributable to increases in
number of displays and advertising rates, with occupancy rates remaining
relatively steady. Operations acquired subsequent to fiscal 1993 generated $9.1
million of this increase in outdoor advertising net revenues. This increase in
net revenues was partially offset by a decrease in management fees resulting
from the LHC acquisition. Continued development of the logo sign business
resulted in logo advertising revenue increasing $0.3 million or 5.5% for the
twelve months ended October 31, 1995 as compared to the prior fiscal year.
Operating expenses, exclusive of depreciation and amortization, increased
$8.2 million or 15.5% to $61.4 million for the twelve months ended October 31,
1995 from $53.2 million for the same period in 1994. The LHC operations acquired
in May 1994 generated $5.5 million of this increase in operating expenses; the
remaining $2.7 million of the increase was generated by previously existing
operations. This $2.7 million increase was primarily the result of acquisitions
which caused an expansion of the Company's work force, which required higher
aggregate commissions, workers' compensation costs and employee benefit
expenses.
Depreciation and amortization expense increased $2.7 million or 24% from
$11.4 million for the year ended October 31, 1994 to $14.1 million for the year
ended October 31, 1995. This increase in depreciation and amortization was
generated by the assets purchased during fiscal years 1994 and 1995.
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<PAGE> 40
Because the Company's operating expenses declined as a percentage of net
revenues to 73.8% for fiscal 1995 from 76.4% for fiscal 1994, operating income
increased $7.0 million or 34.9% from $19.9 million for the twelve months ended
October 31, 1994 to $26.9 million for the twelve months ended October 31, 1995.
Interest expense increased $2.2 million or 16.1% to $15.8 million for the
twelve months ended October 31, 1995 from $13.6 million for the same period in
1994. Approximately $1.8 million of the increase in interest expense reflected
an additional $35.0 million in debt incurred in May 1994 to finance the LHC
acquisition. The remaining $0.4 million increase in interest expense was due to
increased working capital borrowings throughout fiscal 1995.
The Company had a significant net operating loss carryforward and,
therefore, income tax expense for this period reflected the alternative minimum
tax, state income tax and the recognition in the current year of the deferred
tax benefit generated by the net operating loss carryforward.
As a result of the foregoing factors, net earnings increased $3.4 million
or 46.6% to $10.7 million for the twelve months ended October 31, 1995 from $7.3
million for the same period in 1994.
YEAR ENDED OCTOBER 31, 1994 COMPARED TO YEAR ENDED OCTOBER 31, 1993
Net revenues increased $18.0 million or 27.0% to $84.5 million for the
twelve months ended October 31, 1994 from $66.5 million for the same period in
1993. Higher outdoor advertising net revenues contributed $16.6 million of this
increase, resulting from increases in number of displays, occupancy rates and
advertising rates. Logo advertising revenues increased $1.4 million or 34% from
$4.3 million for the twelve months ended October 31, 1993 to $5.7 million for
the twelve months ended October 31, 1994. The increase in revenues from logo
advertising was generated by the build-out of logos in Texas and Mississippi and
the continued expansion of the existing systems.
Operating expenses, exclusive of depreciation and amortization, increased
$9.9 million or 22.8% to $53.2 million for the twelve months ended October 31,
1994 from $43.3 million for the same period in 1993. This increase was
approximately evenly split between existing operations and those acquired after
fiscal 1993.
Depreciation and amortization expense increased $2.4 million or 27.2% to
$11.4 million for the twelve months ended October 31, 1994 from $8.9 million for
the twelve months ended October 31, 1993. $1.8 million of such increase was
attributable to operations acquired after fiscal 1993, with $1.2 million
representing depreciation of newly acquired boards and $0.6 million representing
amortization related to intangibles capitalized as part of such acquisitions.
Because revenue growth outpaced increases in expenses, operating income
increased $5.7 million or 39.7% to $19.9 million for the twelve months ended
October 31, 1994 from $14.3 million for the same period in 1993.
Interest expense increased $2.1 million or 18.2% to $13.6 million for the
twelve months ended October 31, 1994 from $11.5 million for the twelve months
ended October 31, 1993. Approximately $1.4 million of such increase reflects an
additional $35.0 million of debt incurred in connection with the May 1994 LHC
acquisition. The remaining $0.7 million of the increase in interest expense was
due to the issuance in May 1993 of $100 million in aggregate principal amount of
Existing Notes with a fixed interest rate of 11.0%. Prior to the issuance of the
Existing Notes, the Company's debt consisted primarily of variable rate bank
financing with a lower net interest cost.
As a result of the foregoing factors, net earnings increased $8.0 million
to $7.3 million for the twelve months ended October 31, 1994 from a net loss of
$0.7 million for the same period in 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements
with cash from operations and revolving credit borrowings. Its acquisitions have
been financed primarily with borrowed funds.
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<PAGE> 41
On August 7, 1996, the Company sold pursuant to the IPO 4,000,000 shares of
its Class A Common Stock and selling stockholders sold 735,000 shares at a price
of $16.00 per share. The net proceeds to the Company from the sale of the
4,000,000 shares were approximately $58.8 million after deducting expenses and
underwriting discounts.
The Company used a portion of the net proceeds from the IPO to repay
existing indebtedness in the aggregate principal amount of approximately $43.8
million, consisting of (i) bank term loans of $37.8 million and (ii) $6.0
million of outstanding loans under a revolving credit facility. The Company used
approximately $5.0 million of the net proceeds from the IPO to pay a portion of
the contingent consideration payable to stockholders whose shares of common
stock were repurchased by the Company in October 1995 and March 1996. The
Company issued to such stockholders $20.0 million aggregate principal amount of
ten-year subordinated notes as the balance of the contingent consideration.
In addition, on August 15, 1996, the Underwriters' over-allotment option to
purchase an additional 294,041 shares from the Company was exercised, yielding
net proceeds to the Company of approximately $4.4 million.
The remaining net proceeds from the IPO are available for general corporate
purposes, including possible acquisitions and repayment of indebtedness. In
August 1996, the Company used net proceeds from the IPO to purchase certain
outdoor advertising properties for an aggregate cash price of $12.2 million.
The Company's net cash provided by operating activities increased to $15.2
million in fiscal 1994 from $12.4 million in fiscal 1993 due primarily to the
increase in net earnings. Net cash used in investing activities increased from
$10.1 million in fiscal 1993 to $53.6 million in fiscal 1994, due primarily to
the LHC acquisition. Net cash used in financing activities increased from $6.8
million in fiscal 1993 to $37.1 million in fiscal 1994 due primarily to the
incurrence of indebtedness pursuant to a new $35.0 million bank term loan used
to complete the LHC acquisition.
The Company's net cash provided by operating activities increased to $25.1
million in fiscal 1995 due primarily to a $3.4 million increase in net earnings
and the addition of non-cash items, including a $2.7 million increase in
depreciation and amortization. Net cash used in investing activities decreased
from $53.6 million in fiscal 1994 to $17.8 million in fiscal 1995 due primarily
to a $37.6 million decrease in purchase of new markets attributable to the
inclusion of the LHC acquisition in fiscal 1994, offset by a $1.8 million
increase in capital expenditures and purchases of intangibles. Net cash used in
financing activities decreased $46.5 million in fiscal 1995 due to a $44.5
million decrease in proceeds from issuance of long term debt compared to fiscal
1994.
For the nine months ended July 31, 1996, net cash provided by operating
activities was $15.6 million, a $4.8 million increase from $10.8 million in the
corresponding period of 1995. The increase occurred, despite a $2.1 million
decrease in net earnings, due primarily to a $5.6 million increase in deferred
taxes due to the benefit of the Company's net operating loss carryforward having
been fully recognized at year end October 31, 1995, and a $1.9 million increase
in deferred income generated by the additional logo sign franchises offset by a
$1.9 million increase in receivables. Net cash used in investing activities
increased $17.7 million for the nine months ended July 31, 1996 as compared to
the same period in 1995 due to a $8.9 million increase in capital expenditures
primarily due to the build-out of the Company's new logo sign franchises, a $7.1
million increase in purchase of new markets, a $1.0 million increase in purchase
of intangible assets and a $0.7 increase in notes receivable. Net cash provided
by financing activities increased $15.0 million for the nine months ended July
31, 1996 as compared to the same period in 1995. The increase was due to the
increase in borrowings of $15.5 million under revolving credit facilities to
finance capital expenditures, purchase new markets and meet seasonal operating
requirements. A $2.8 million decrease in principal payments on long-term debt
was partially offset by the $3.0 million stock redemption in March 1996.
During the three fiscal years ended October 31, 1995, the Company's
aggregate capital expenditures, as shown in the Consolidated Statements of Cash
Flows, were $35.0 million. Of this amount, the Company spent in the fiscal years
1993, 1994 and 1995 approximately $2.4 million, $5.0 million and $6.6 million,
respectively,
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to build and maintain structures within its existing markets and $2.0 million,
$2.8 million and $1.6 million, respectively, to meet the capital expenditure
requirements of state logo sign franchise operations.
During fiscal 1995, the Company was awarded new state logo sign franchises
in the following four states: Georgia, Minnesota, South Carolina and Virginia.
During fiscal 1996, the Company was awarded new contracts in New Jersey and
Michigan as well as the expansion of the existing Texas program which it
currently operates. It also acquired the Kansas and Tennessee franchises from
one of its competitors. Due to the capital needed to fund these new franchises,
the Company amended its existing bank credit agreement effective October 1995,
partially deferring short-term principal payments. In December 1995, the Company
entered into a $15 million reducing credit line with its bank group. This line
may only be used to finance the cost of logo sign franchises awarded to the
Company after October 31, 1995. As of July 31, 1996, the Company had borrowed
approximately $9.5 million to finance the cost of these logo sign franchises. In
addition, the Company is currently negotiating with its existing lenders the
terms of the New Credit Agreement, which would increase the amount of the bank
loan commitment to the Company to $225 million and would replace the Existing
Credit Agreement.
Effective May 1, 1994, the Company completed the LHC acquisition in a
transaction accounted for as a purchase for a price of $43.5 million, which was
financed with the proceeds of a bank term loan in the amount of $35.0 million,
with the remainder financed from the Company's revolving credit facilities.
On May 19, 1993, the Company issued $100 million in aggregate principal
amount of Existing Notes. Simultaneously with the sale of the Existing Notes,
the Company entered into a new bank credit agreement which provided an $8
million term loan and a $20 million working capital line of credit. The line of
credit has recently been amended to provide for borrowings of up to $50 million.
The majority of the net proceeds from the issuance of Existing Notes was
utilized to extinguish existing variable rate debt prior to maturity and pay
related expenses. See "Description of Other Indebtedness -- Existing Notes." On
October 17, 1996, the Company commenced a cash Tender Offer for all of the
Existing Notes. See "The Transactions -- The Tender Offer."
The Company expects to pursue a policy of continued growth through
acquisitions. In this regard, the Company recently acquired FKM for an aggregate
cash purchase price of $40 million with borrowings under the Existing Credit
Agreement and acquired logo sign franchises in Kansas and Tennessee for an
aggregate cash purchase price of $1.4 million. Since July 31, 1996, the Company
has also acquired outdoor advertising properties for an aggregate cash cost of
approximately $12.2 million. Furthermore, the Company has executed agreements to
purchase an additional outdoor advertising company for an aggregate cash
purchase price of approximately $60 million, two additional logo sign franchises
for approximately $3.8 million in cash and certain transit advertising displays
for approximately $1.1 million in cash. In addition, the Company has executed a
letter of intent to acquire the assets of an additional outdoor advertising
company at a cash purchase price of approximately $75 million. The Company
intends to finance its acquisition activities from external sources, including
the proceeds of the Common Stock Offering, the proceeds of this Offering and
borrowings under the New Credit Agreement. There can be no assurance, however,
that the Company will enter into the New Credit Agreement. See "The
Transactions."
The Company believes that internally generated funds and funds available
for borrowing under its bank credit facilities will be sufficient for the
foreseeable future to satisfy all debt service obligations and to finance its
current operations.
INFLATION
In the last three years, inflation has not had a significant impact on the
Company.
SEASONALITY
The Company's revenues and operating results have exhibited some degree of
seasonality in past periods. Typically, the Company experiences its strongest
financial performance in the fourth fiscal quarter and its lowest revenues in
the first fiscal quarter. The Company expects this trend to continue in the
future. Because a
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significant portion of the Company's expenses are fixed, a reduction in revenues
in any quarter is likely to result in a period to period decline in operating
performance and net earnings.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which established a new accounting principle for accounting for
the impairment of certain loans, certain investments in debt and equity
securities, long-lived assets that will be held and used including certain
identifiable intangibles and goodwill related to those assets and long-lived
assets and certain identifiable intangibles to be disposed of. This statement is
effective for fiscal years beginning after December 15, 1995. While the Company
has not completed its evaluation of the impact that will result from adopting
this statement, it does not believe that adoption of the statement will have a
significant impact on the Company's financial position and results of
operations.
The Financial Accounting Standards Board also issued SFAS No. 123,
"Accounting for Stock Based Compensation," effective also for fiscal years
beginning after December 15, 1995. The new statement encourages, but does not
require, companies to measure stock-based compensation cost using a fair value
method, rather than the intrinsic value method prescribed by the Accounting
Principles Board (APB) Opinion No. 25. Companies choosing to continue to measure
stock-based compensation using the intrinsic value method must disclose on a pro
forma basis net earnings per share as if the fair value method were used.
Management is currently evaluating the requirements of SFAS No. 123. Management
does not believe that SFAS No. 123 will have a material impact on operating
income.
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BUSINESS
GENERAL
Lamar Advertising Company is one of the largest and most experienced owners
and operators of outdoor advertising structures in the United States. It
conducts a business that has operated under the Lamar name since 1902. As of
September 30, 1996, the Company operated approximately 24,000 outdoor
advertising displays in 13 southeastern, midwestern and mid-Atlantic states.
After giving effect to the acquisition of FKM and assuming consummation of the
acquisition of Outdoor East, the Company will operate approximately 29,000
outdoor advertising displays in 14 states. In each of the Company's existing 36
primary markets, the Company believes that it is the only full-service outdoor
advertising company serving such markets. The Company also operates the largest
logo sign business in the United States. Logo signs are erected pursuant to
state-awarded franchises on public rights-of-way near highway exits and deliver
brand name information on available gas, food, lodging and camping services. The
Company currently operates logo sign franchises in 15 of the 21 states which
have a privatized logo sign program, was awarded the logo sign franchise for the
state of Florida in November 1996, and in October 1996 was selected to operate a
tourism signing franchise for the province of Ontario, Canada. In addition, the
Company has recently entered into an agreement to acquire the existing logo sign
franchises for the states of Kentucky and Nevada. As of September 30, 1996, the
Company maintained over 22,000 logo sign structures containing over 51,000 logo
advertising displays under these franchises. The Company has recently expanded
into the transit advertising business through the operation of displays on bus
shelters, benches and buses in 8 of its 36 primary markets and several other
markets in the state of South Carolina. For the fiscal year ended October 31,
1995, the Company reported net revenues and EBITDA of $102.4 million and $41.0
million, respectively. Assuming all of the Transactions were consummated, the
Company's net revenues and EBITDA for the twelve months ended July 31, 1996,
would have been $133.4 million and $54.1 million, respectively.
The Company's strategy is to be the leading provider of outdoor advertising
in each of the markets it serves, with an emphasis on markets with a media
industry ranking based on population between 50 and 250. Important elements of
this strategy are the Company's decentralized management structure and its focus
on providing high quality local sales and service. In order to be more
responsive to local market demands, the Company offers a full complement of
outdoor advertising services coupled with local production facilities,
management and account executives through its local offices. While maintaining
its local focus, the Company seeks to expand its operations within existing and
contiguous markets. The Company also pursues expansion opportunities, including
acquisitions, in additional markets. In this regard and as described more fully
below, the Company has acquired or has agreed to acquire several outdoor
advertising companies and is in preliminary negotiations to acquire another such
company. In the logo sign business, the Company's strategy is to maintain its
position as the largest operator of logo signs in the U.S. by expanding through
the addition of state logo franchises as they are awarded and through possible
acquisitions. The Company may also pursue expansion opportunities in transit and
other out-of-home media which the Company believes will enable it to leverage
its management skills and market position.
Management believes that operating in small to medium-sized markets
provides the Company with certain advantages, including a diverse and reliable
mix of local advertisers, geographic diversification and an ability to package
inventory effectively. Local advertising constituted over 81% of the Company's
outdoor advertising net revenues in fiscal 1995, which management believes is
higher than the industry average.
INDUSTRY OVERVIEW
Outdoor Advertising
The outdoor advertising industry generated total revenues of approximately
$1.8 billion in 1995, or approximately 1.1% of the total advertising
expenditures in the United States, according to recent estimates by the OAAA.
This represents growth of approximately 8.2% over estimated total 1994 revenues
and compares favorably to the growth of total U.S. advertising expenditures of
approximately 7.7% during the same period. Outdoor advertising offers repetitive
impact and a relatively low cost-per-thousand impressions (a standard
measurement of the cost-effectiveness of an advertising medium) compared to
broadcast media, newspapers,
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magazines and direct mail marketing, making it attractive to both local
businesses targeting a specific geographic area or set of demographic
characteristics and national advertisers seeking mass market support. Over the
past 25 years, outdoor advertising industry revenues have grown from $0.3
billion in 1971 to $1.83 billion in 1995, representing a compound annual growth
rate of 8.0%. According to OAAA, in eleven of the last twenty years, outdoor
advertising revenue growth exceeded total advertising revenue growth. The
Company believes that this revenue growth is primarily the result of long term
contracts that are generally renewable, a broadening client mix, the increased
use of vinyl and computer printing and acquisition opportunities.
Advertisers purchase outdoor advertising for a variety of reasons. Outdoor
advertising is a highly targeted medium that can be used to concentrate on a
particular geographic location or demographic group. In the case of local
businesses such as hotels, restaurants, service stations and other roadside
businesses, the use of outdoor advertising generates a message that reaches
potential customers close to the point of sale and provides ready directional
information. Similarly, national advertisers often use outdoor advertising when
test marketing a product because of the medium's ability to reach a broad
audience in a specific market. In addition, outdoor advertising is attractive
because of its constant repetition and comparatively low cost-per-thousand
impressions as compared to broadcast media, magazines, newspapers and direct
mail marketing. As a result, advertisers desiring to build brand awareness and
develop mass-market support often find outdoor advertising effective in
generating high visibility in a cost-effective manner. Outdoor advertising is
also often combined with other media to reinforce messages being provided to
consumers.
Outdoor advertising, which began in the late 19th century when advertising
"bills" were pasted or "posted" on rented wooden boards, has evolved over the
years to its present form with two types of standardized displays -- posters in
standard and junior sizes and more permanent fixed and rotary bulletins. The
outdoor advertising industry continues to evolve as a result of a number of
factors. The category of out-of-home advertising (advertising transmitted other
than through the print and broadcast media) now includes more than just
traditional billboard and roadside displays. The use of displays in shopping
centers, malls, airports, stadiums, movie theaters and supermarkets has
expanded, and the presence of advertising on subways, buses, taxicabs and
transit shelters is now commonplace. In addition, while tobacco product
companies, historically the largest users of outdoor advertising, have reduced
their reliance on the medium, the outdoor advertising industry has continued to
grow through increasing visibility and attractiveness to local advertisers and
national retail and consumer products companies. Also, advances in production
technology, such as computer printing, vinyl advertising copy and improved
lighting techniques, have facilitated a more creative and effective use of the
medium and a more durable product. These technological improvements also permit
outdoor advertising companies to respond more promptly to customer needs,
operate more efficiently and make greater use of advertising copy used in other
print media, thus providing advertisers the opportunity to present a unified
campaign. Finally, the outdoor advertising industry has benefitted from the
increase in automobile travel time for business and leisure due to increased
highway congestion and the movement of businesses and residences from cities to
outlying suburbs. A study recently published by the Office of Highway
Information Management of the Federal Highway Administration indicated that,
during the period from 1983 to 1990, licensed drivers in the United States
increased by 11%, vehicles owned increased by 15%, the number of vehicle trips
increased by 25% and vehicle miles increased by 40%. The Company believes that
these trends demonstrate that consumer exposure to existing billboard structures
also increased during this period.
According to media publications, the top ten categories of business ranked
by outdoor advertising expenditures for 1995 were entertainment and amusements,
tobacco products, retail establishments, business and consumer services,
automotive, travel and hotels, publishing and media, beer and wine, insurance
and real estate, and drugs and remedies. The Company's sales by category of
business is described under "Company Operations" below.
The outdoor advertising industry is comprised of several large outdoor
advertising and media companies with operations in multiple markets, as well as
many smaller and local companies operating a limited number of displays in a
single or a few local markets. The OAAA estimates that there are approximately
1,000 companies in the industry operating a total of approximately 396,000
displays. There has been a trend toward
43
<PAGE> 46
consolidation in the outdoor advertising industry in recent years and the
Company expects this trend to continue.
Logo Signs
Throughout the 1970's and 1980's many states developed logo sign programs
using state and federal highway matching dollars. Logo signs provide brand name
information on available gas, food, lodging and camping services near highway
exits. Brand name advertising display plates are posted on logo sign structures
to provide this information to highway travellers. In 1985, Minnesota became the
first state to privatize its logo sign program by contracting with a private
firm for the construction, marketing, administration and maintenance of logo
signs in lieu of using government resources. Since then 21 other states have
awarded contracts for privatized logo sign programs, and several others are
considering such privatization programs.
Conversion of state-run logo sign programs to privately owned and operated
programs is attractive to state governments, in part because of the efficiencies
offered by private contractors.
Transit
A relatively new opportunity within the out-of-home advertising industry is
transit advertising. Increasing numbers of local governments are providing
transit shelters and benches to enhance the service and image of local transit
systems. New government regulations pertaining to the Americans with
Disabilities Act, as well as demands by the public, are creating a need for bus
shelter locations which are practical and accessible by handicapped individuals.
These locations, as well as buses, are increasingly being used for out-of-home
advertising.
As with state-awarded logo sign franchises, municipalities have begun to
issue contracts for transit displays on bus shelters, benches and buses to
private enterprises. Under these contracts, the private party constructs the
shelters or benches, which it can use for advertising displays. In some cases,
the rights for bus displays are also included under the contract. The primary
benefits of privatizing transit advertising are the avoidance of capital
expenditures by the municipality, the prospect of additional revenue for the
municipality, the consistent quality that a coordinated transit program can
provide and the benefits of regular cleaning and maintenance undertaken by
private enterprises.
44
<PAGE> 47
MARKETS
The following table sets forth certain information regarding the Company's
existing primary outdoor advertising markets and the assets proposed to be
acquired in the acquisition of Outdoor East.
OUTDOOR ADVERTISING
EXISTING OUTDOOR ADVERTISING MARKETS(1)
<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4) NET
--------------------- REVENUES(5)
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS --------------
- ---------------------------------------------------------- -------------- --------- ------- (IN THOUSANDS)
<S> <C> <C> <C> <C>
LOUISIANA
Baton Rouge............................................. 81 419 684 $ 7,280
Shreveport.............................................. 126 268 730 3,389
Lafayette............................................... 97 154 353 2,035
Lake Charles............................................ 202 189 285 1,915
Monroe.................................................. 226 123 508 1,534
Alexandria.............................................. 198 49 224 757
Houma(2)................................................ -- 40 164 --
----- ------ --------
Total............................................. 1,242 2,948 16,910
TENNESSEE
Nashville............................................... 44 326 1,174 7,488
Knoxville............................................... 69 694 896 7,171
Clarksville............................................. -- 98 357 1,533
----- ------ --------
Total............................................. 1,118 2,427 16,192
FLORIDA
Pensacola............................................... 125 250 662 $ 3,113
Lakeland................................................ 104 554 372 2,875(6)
Panama City............................................. 225 268 470 2,262(6)
Fort Myers.............................................. 77 133 297 2,153
Tallahassee............................................. 167 121 302 1,908
Fort Walton............................................. 207 157 220 1,643(6)
Daytona Beach........................................... 93 54 339 1,456
----- ------ --------
Total............................................. 1,537 2,662 15,410
ALABAMA
Mobile.................................................. 84 381 630 4,755
Montgomery.............................................. 142 248 499 3,598
----- ------ --------
Total............................................. 629 1,129 8,353
TEXAS
Brownsville............................................. 63 204 873 2,577
Beaumont................................................ 127 204 308 2,165
Corpus Christi.......................................... 128 195 519 1,707(6)
Wichita Falls........................................... 235 89 165 902
Laredo.................................................. 216 87 373 868(6)
----- ------ --------
Total............................................. 779 2,238 8,219
MISSISSIPPI
Jackson................................................. 118 268 698 4,420
Gulfport................................................ 134 207 559 2,953
----- ------ --------
Total........................................... 475 1,257 7,373
GEORGIA
Savannah................................................ 154 344 604 3,307
Augusta................................................. 107 163 471 2,482
Albany.................................................. 243 106 383 1,109(6)
----- ------ --------
Total............................................. 613 1,458 6,898
</TABLE>
45
<PAGE> 48
<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4)
--------------------- NET
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS REVENUES(5)
- ---------------------------------------------------------- -------------- --------- ------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
VIRGINIA
Richmond................................................ 56 309 616 4,288
Roanoke................................................. 101 262 450 1,958(6)
------ ------ --------
Total............................................. 571 1,066 6,246
PENNSYLVANIA
Statewide Highways...................................... N/A 553 0 4,713(6)
KENTUCKY
Lexington............................................... 105 117 507 3,127
WEST VIRGINIA
Wheeling................................................ 213 261 551 2,626
COLORADO
Colorado Springs........................................ 98 141 355 2,486
OHIO
Dayton.................................................. 52 3 529 1,960
Youngstown.............................................. 90 122 537 243(6)
------ ------ --------
Total............................................. 125 1,066 2,203
------ ------ --------
Subtotal.......................................... 8,161 17,664 $100,756
------ ------ --------
THE OUTDOOR EAST ACQUISITION (PENDING)
SOUTH CAROLINA
Columbia................................................ 88 338 571 3,725(7)
NORTH CAROLINA
Statewide Highways...................................... N/A 924 112 2,472(7)
WEST VIRGINIA
Bluefield............................................... -- 306 281 1,863(7)
VIRGINIA
Dublin.................................................. -- 99 221 --(8)
Harrisonburg............................................ 253 9 123 --(8)
Hopewell................................................ -- 56 291 --(8)
------ ------ --------
Total............................................. 164 635 1,632(7)(8)
GEORGIA
Valdosta................................................ -- 338 181 1,289(7)
------ ------ --------
Subtotal.......................................... 2,070 1,780 $ 10,981
------ ------ --------
TOTAL..................................................... 10,231 19,444 $111,737
====== ====== ========
</TABLE>
LOGO SIGN FRANCHISES
The following table sets forth certain information regarding the Company's
logo business operations. As of September 30, 1996, the Company operated 51,140
logo advertising displays.
<TABLE>
<CAPTION>
# LOGO
YEAR ADVERTISING
AWARDED FRANCHISE DISPLAYS
- ------- ------------------------ -----------
<C> <S> <C>
1989 Nebraska................ 788
1989 Oklahoma................ 1,120
1990 Utah.................... 1,494
1991 Missouri(9)............. 8,254
1992 Ohio.................... 5,686
1993 Texas................... 2,177
1993 Mississippi............. 2,866
1995 Georgia................. 9,240
<CAPTION>
# LOGO
YEAR ADVERTISING
AWARDED FRANCHISE DISPLAYS
- ------- ------------------------ -----------
<C> <S> <C>
1995 Minnesota(10)........... 2,491
1995 South Carolina.......... 1,982
1996 Virginia................ 7,658
1996 Michigan................ 1,376
1996 Tennessee............... 4,216
1996 Kansas.................. 1,792
1996 New Jersey(11).......... --
</TABLE>
- ---------------
(1) Includes additional or outlying markets served by the office in the
applicable market.
(2) Houma was established as a separate primary market in fiscal 1995, and,
therefore, net revenues are not included.
46
<PAGE> 49
(3) Indicates the Spring 1996 Arbitron Radio Metro Market ranking within which
the office is located, as determined by The Arbitron Company. The Company
believes that Metro Market ranking, which ranks, according to population of
persons 12 years or older, the largest 263 markets in the U.S., is a
standard measure of market size used by the media industry. Where no market
ranking is shown, such market is not ranked by Arbitron.
(4) The two standardized types of industry displays are bulletins and posters.
See "Business -- Company Operations." The display count is as of October
31, 1995 pro forma for acquisitions completed within the last twelve
months.
(5) Except as otherwise noted, represents net revenues for fiscal year ended
October 31, 1995 attributable to each outdoor advertising market. These
revenues, together with logo sign and transit advertising revenues and
production revenue, comprise outdoor advertising net revenues shown in the
Company's consolidated statements of earnings (loss).
(6) Reflects net revenues for the most recently completed applicable fiscal
year with respect to acquisitions completed by the Company since July 31,
1996. See "The Transactions -- Recent Acquisition Activity -- Completed
Acquisitions."
(7) Represents net revenues for the most recently completed applicable fiscal
year attributable to the outdoor advertising market proposed to be acquired
by the Company. See "The Transactions -- Recent Acquisition Activity."
(8) Net revenues for specific markets proposed to be acquired in the state of
Virginia are not available.
(9) Franchise operated by a 66.7% owned partnership.
(10) Franchise operated by a 95.0% owned partnership.
(11) The Company was recently awarded the New Jersey franchise, and,
accordingly, no logo signs had been erected as of September 30, 1996.
BUSINESS STRATEGY
OUTDOOR ADVERTISING
The Company's overall business strategy is to be the leading provider of
outdoor advertising in each of the markets it serves, with an emphasis on
markets with a population ranking between 50 and 250. This strategy includes the
following elements:
Operating Strategy
Small and Medium-Sized Market Focus. The Company's leading position in each
of its 36 primary outdoor advertising markets is a result of a successful
operating strategy dedicated to growth and acquisitions primarily within the
target range of markets having a population ranking between 50 and 250.
Management believes that operating in these markets provides certain advantages,
including the benefits of a diverse and reliable mix of local advertisers,
geographic diversification and an ability to package inventory effectively.
High Quality Local Sales and Service. The Company identifies and closely
monitors the needs of its customers and seeks to provide them with quality
advertising products at a lower cost than competitive media. The Company
believes it has a reputation for providing excellent customer service and
quality outdoor advertising space and displays.
The Company's 118-person sales force is supported by 36 full-service
offices. In each primary market, the Company has recruited and trained a skilled
sales force, placing an emphasis on market research and use of artistic
creativity. Each salesperson is compensated under a performance-based
compensation system and supervised by a local sales manager executing a
coordinated marketing plan. Art departments assist local customers in the
development and production of creative, effective advertisements. The Company
believes repeat sales are evidence that the Company delivers quality products
and services.
Centralized Control/Decentralized Management. Management believes that, in
its existing 36 primary markets, the Company is the only full-service outdoor
advertising company offering a full complement of outdoor advertising services
coupled with local production facilities, management and account executives.
Local offices operate in defined geographic areas and function essentially as
independent business units, consistent with senior management's philosophy that
a decentralized organization is more responsive to particular local market
demands.
The Company maintains centralized accounting and financial control over its
local operations, but local managers are responsible for the day-to-day
operations in each local market and are compensated according to that market's
financial performance. Each local manager reports to one of five regional
managers who in turn report to the Company's Chief Executive Officer. Management
believes empowering local management and sales personnel to respond to market
conditions has been a major factor in the Company's success.
47
<PAGE> 50
Effective Inventory Management. The Company believes that the local
presence of sales personnel contributes to the Company's ability to increase
occupancy rates by attracting and servicing local customers. Additionally, a
national sales office at corporate headquarters allows the Company to package
inventory effectively to take advantage of national advertising campaigns in the
Company's markets. The Company's inventory is managed by state-of-the-art
mapping, charting and accounting software.
GROWTH STRATEGY
Internal Growth. Within its existing markets, the Company enhances revenue
and cash flow growth by employing highly targeted local marketing efforts to
improve display occupancy rates and by selectively increasing advertising rates.
This strategy is facilitated through its local sales and service offices which
allow management to respond quickly to the demands of its local customer base.
In addition, the Company routinely invests in upgrading its existing structures
and constructing new display faces in order to provide quality service to its
current customers and to attract new advertisers.
Acquisitions. Aggressive internal growth is enhanced by focused
acquisitions in small to medium-sized markets, resulting in increased operating
efficiencies, greater geographic diversification and increased market
penetration. The Company has demonstrated its ability to grow successfully
through acquisitions, having completed over 80 acquisitions since 1983. In
addition to acquiring positions in new markets, the Company purchases smaller
outdoor advertising properties within existing or contiguous markets.
Acquisitions offer opportunities for inter-market cross-selling and the
opportunity to centralize and combine accounting and administrative functions,
thereby achieving economies of scale.
The table below sets forth certain information regarding acquisitions which
the Company has made or has agreed to make subsequent to the fiscal year ended
October 31, 1993:
<TABLE>
<CAPTION>
YEAR MARKET BULLETINS POSTERS
- ---- -------------------- --------- -------
<C> <S> <C> <C>
1994 Panama City, FL 214 317
1994 Daytona Beach, FL(1) 56 349
1994 Shreveport, LA(1) 271 760
1994 Savannah, GA(1) 357 621
1994 Beaumont, TX(1) 202 302
1994 Fort Myers, FL(1) 122 289
1994 Clarksville, TN(1) 112 325
1994 Lakeland, FL(1) 214 357
1994 Augusta, GA 8 69
1994 Pensacola, FL 49 218
1994 Montgomery, AL 76 33
1994 Beaumont, TX 40 0
1995 Richmond, VA 184 0
1995 Nashville, TN 0 254
1995 Nashville, TN 317 0
1995 Roanoke, VA 129 0
1995 Augusta, GA 98 0
<CAPTION>
YEAR MARKET BULLETINS POSTERS
- ---- -------------------- --------- -------
<C> <S> <C> <C>
1996 Lakeland, FL 249 0
1996 Corpus Christi, TX 195 519
1996 Laredo, TX 87 373
1996 Panama City, FL 45 164
1996 Fort Walton, FL 6 0
1996 Albany, GA 14 112
1996 Lakeland, FL 121 0
1996 Roanoke, VA 50 0
1996 Youngstown, OH(2) 125 534
1996 PA highways(2)(4) 553 0
1996 Valdosta, GA(3) 338 181
1996 Columbia, SC(3) 338 571
1996 Dublin, VA(3) 99 221
1996 Hopewell, VA(3) 56 291
1996 Harrisonburg, VA(3) 9 123
1996 Bluefield, WV(3) 306 281
1996 NC highways(3)(4) 924 112
</TABLE>
- ---------------
(1) Acquired on May 1, 1994 from LHC, which prior to such date was a 49% owned
and managed subsidiary of the Company.
(2) Acquired from FKM on November 1, 1996. See "The Transactions -- Completed
Acquisitions -- The FKM Acquisition."
(3) Proposed to be acquired from Outdoor East. See "The Transactions -- Recent
Acquisition Activity -- The Outdoor East Acquisition."
(4) These acquisitions relate to displays located along interstate highways and
other primary roads throughout the states of Pennsylvania and North Carolina
and which are not located within one of the Company's existing markets.
The Company believes that there will be future opportunities for
implementing the Company's acquisition strategy given the industry's
fragmentation and current consolidation trends. Additionally, the small to
medium-sized markets which fit the Company's growth strategy offer a large
number of potential acquisition opportunities.
48
<PAGE> 51
Logo Signs
The Company entered the business of logo sign advertising in 1988. The
Company is now the largest provider of logo sign services in the United States,
having been awarded 16 of the 22 privatized state logo sign franchises awarded
to date and having entered into an agreement to acquire two additional
franchises. The Company's strategy is to be the leading logo sign provider in
the country. The Company was also selected to operate the tourism signing
franchise for the province of Ontario, Canada in October 1996. The Company is
currently negotiating a definitive agreement with the province with respect to
the franchise, which the Company expects will be executed by December 31, 1996.
Adopting many of the decentralized operational strategies of the outdoor
advertising division, the Company's logo sign division maintains contacts and
local sales offices in each of the states in which it operates. Relationships
with customers are developed and maintained at the state level; accounting, MIS
and certain administrative functions are centralized at the Company's
headquarters.
In competing for state-awarded logo sign franchises, the Company seeks to
form strategic alliances with premier signing contractors in order to present to
state highway departments the combined benefits of entities with substantial
local presence and national resources. As the industry leader, the Company has
gained significant operating experience and compiled a database of information
it believes is unequalled in this industry. The Company shares its knowledge and
database information with state highway departments initiating new logo sign
programs, and believes this interaction provides significant advantages when
seeking new logo sign franchises.
After securing a franchise, the Company generally contracts with an
independent construction firm for the erection and maintenance of the logo sign
structures in order to avoid the expense of staffing and maintaining a
construction presence. The Company then processes orders for logo sign services
through its corporate staff and a small sales force in the state.
The Company maximizes participation and customer satisfaction through the
use of market surveys, coupled with a customer focused sales program to
potential logo sign advertisers. Employing these methods, in Mississippi, for
example, the revenue from logo sign advertising displays increased from $263,100
for the twelve months prior to the Company receiving the state's logo sign
franchise to $621,000 for the twelve months following the Company being awarded
such franchise. This revenue increase was the result of a 57% increase in the
number of logo advertising displays and an increase in advertising rates during
the twelve months following receipt of the franchise.
The Company believes its market-leading position in the logo sign industry
will continue to increase as additional states privatize their logo sign
programs and recognize the track record and core competency of the Company in
building and servicing logo sign programs. The Company anticipates bidding on
the logo sign franchise in an additional state during 1996. The Company plans to
pursue additional logo sign franchises, through both new franchise awards and,
possibly, the acquisition of other logo sign franchise operators. Logo sign
opportunities arise periodically, both from states initiating new logo sign
programs and states converting from government owned and operated programs to
privately owned and operated programs. Furthermore, the Company plans to pursue
tourism signing programs in Canada and is seeking to expand into other state-
authorized signage programs, such as those involving directional signs providing
tourist information.
Transit and Other
The Company has recently expanded into the transit advertising business
through the operation of displays on bus shelters, benches and buses in eight of
its 36 primary markets and other markets throughout the state of South Carolina.
The Company plans to continue pursuing transit advertising opportunities that
arise in its primary markets and to expand into other markets.
With the growth in wireless communication, particularly the buildout of
personal communications services systems following the recent FCC allocation of
radio spectrum, the Company is exploring ways to realize additional revenue by
contracting with communications providers for use of the Company's billboard
49
<PAGE> 52
structures to attach transmission and reception devices. The Company has
agreements with two of the largest potential wireless communication service
providers regarding possible future use of its billboards.
COMPANY OPERATIONS
OUTDOOR ADVERTISING
Sales and Service
The Company conducts its outdoor advertising operations through its 36
local offices. Local offices operate in defined geographic areas and function
essentially as independent business units, consistent with senior management's
philosophy that a decentralized organization is more responsive to particular
local market demands and provides greater incentives to employees. The Company's
management policy is one of centralized accounting and financial control coupled
with decentralized sales and production. Local managers in each of the Company's
primary markets are responsible for the day-to-day operations of their outdoor
office and are compensated according to the Company's financial performance in
that market. Each local manager reports to one of five regional managers who in
turn report to the Company's Chief Executive Officer.
The following is a list of the Company's regional managers and their
experience with the Company and in the outdoor advertising industry as of
September 30, 1996:
<TABLE>
<CAPTION>
YEARS YEARS
WITH IN
NAME REGION COMPANY INDUSTRY
---------------------------------------- ------------------- ------- --------
<S> <C> <C> <C>
Gerald H. Marchand...................... Baton Rouge Region 38 38
Robert E. Campbell...................... Central Region 24 24
Phillip C. Durant....................... Eastern Region 19 21
Thomas F. Sirmon........................ Mobile Region 17 17
Myron A. LaBorde........................ Florida Region 25 25
</TABLE>
The Company's regional managers have been with the Company, on average, for
25 years. The Company's local managers have been with the Company, on average,
for 11 years and have worked in the industry, on average, for 14 years.
Inventory
The Company operates the following types of outdoor advertising displays:
Bulletins generally are 14 feet high and 48 feet wide (672 square
feet) and consist of panels on which advertising copy is displayed. The
advertising copy is either handpainted onto the panels at the Company's
facilities in accordance with design specifications supplied by the
advertiser and attached to the outdoor advertising structure, or printed
with computer-generated graphics on a single sheet of vinyl that is
"wrapped" around the structure. On occasion, to attract more attention,
some of the panels may extend beyond the linear edges of the display face
and may include three-dimensional embellishments. Because of their greater
impact and higher cost, bulletins are usually located on major highways.
Standardized posters generally are 12 feet high by 25 feet wide (300
square feet) and are the most common type of billboard. Advertising copy
for these posters consists of lithographed or silk-screened paper sheets
supplied by the advertiser that are pasted and applied like wallpaper to
the face of the display, or single sheets of vinyl with computer-generated
advertising copy that are wrapped around the structure. Standardized
posters are concentrated on major traffic arteries.
Junior posters usually are 6 feet high by 12 feet wide (72 square
feet). Displays are prepared and mounted in the same manner as standardized
posters, except that vinyl sheets are not typically used on junior posters.
Most junior posters, because of their smaller size, are concentrated on
city streets and target pedestrian traffic.
50
<PAGE> 53
For the Company's fiscal year ended October 31, 1995, approximately 55% of
the Company's outdoor advertising net revenues were derived from bulletin sales
and 45% from poster sales. Over the same period, bulletin and poster occupancy
averaged approximately 82% and 77%, respectively. The Company regularly donates
unoccupied display space for use by charitable and civic organizations.
The physical structures are typically owned by the Company and are built on
locations the Company either owns or leases. In each local office one employee
typically performs site leasing activities for the markets served by that
office. See "-- Company Operations -- Facilities."
Bulletin space is generally sold as individually selected displays which
remain in one location, usually an interstate highway or other main road, for
the duration of the advertising contract. Bulletins may also be sold as part of
a rotary plan where advertising copy is periodically rotated from one location
to another within a particular market. Poster space is generally sold in
packages called "showings," which comprise a given number of displays in a
market area. Posters provide advertisers with access either to a specified
percentage of the general population or to a specific targeted audience.
Displays making up a showing are placed in well-traveled areas and are
distributed so as to reach a wide audience in a particular market.
Production
The Company's production staff in each of its existing 35 primary markets
performs the full range of activities required to create and install outdoor
advertising in all of its markets. Production work includes creating the
advertising copy design and layout, painting the design or coordinating its
printing and installing the designs on displays. The Company provides its
production services to local advertisers and to advertisers that are not
represented by advertising agencies, since national advertisers represented by
advertising agencies often use preprinted designs that require only
installation. The Company's creative and production personnel typically develop
new designs or adopt copy from other media for use on billboards. The Company's
artists also often assist in the development of marketing presentations,
demonstrations and strategies to attract new advertisers.
With the increased use of vinyl and pre-printed advertising copy furnished
to the outdoor advertising company by the advertiser or its agency, outdoor
advertising companies require less labor-intensive production work. In addition,
increased use of vinyl and preprinted copy is also attracting more customers to
the outdoor advertising medium. The Company believes that this trend over time
will reduce operating expenses associated with production activities.
51
<PAGE> 54
Categories of Business
The following table sets forth the top ten categories of business from
which the Company derived its outdoor advertising revenues for fiscal 1995 and
the respective percentages of such revenue. These business categories accounted
for approximately 73.6% of the Company's total outdoor advertising net revenues
in the fiscal year ended October 31, 1995. No one advertiser accounted for more
than 3.0% of the Company's total outdoor advertising net revenues in that
period.
<TABLE>
<CAPTION>
PERCENTAGE
NET ADVERTISING
CATEGORY REVENUES
--------------------------------------------------------------- ---------------
<S> <C>
Restaurants.................................................... 14.9%
Retail establishments.......................................... 11.4
Tobacco products............................................... 9.2
Hotels and motels.............................................. 7.3
Entertainment and sports....................................... 5.9
Automotive..................................................... 5.9
Hospitals and medical care..................................... 5.1
Services....................................................... 4.8
Media.......................................................... 4.6
Financial institutions......................................... 4.5
----
Total................................................ 73.6%
====
</TABLE>
Beginning in 1992, the leading tobacco companies substantially reduced
their domestic advertising expenditures in response to societal and governmental
pressure and other factors. Because tobacco advertisers tend to occupy displays
in highly desirable locations, the Company historically has been able to attract
substitute advertising for space which has become unoccupied as a result of
reduced tobacco product advertisements, and management believes that the Company
will continue to be able to attract such substitute advertising should tobacco
advertisers further reduce their spending in the future.
Logo Signs
The Company is the largest provider of logo sign services in the United
States and operates over 22,000 logo sign structures containing over 51,000 logo
advertising displays. The Company has been awarded exclusive franchises to erect
and operate logo signs in the states of Florida, Georgia, Michigan, Mississippi,
Nebraska, New Jersey, Ohio, Oklahoma, South Carolina, Texas, Utah, Virginia,
through a 66.7% owned partnership in the state of Missouri and through a 95.0%
owned partnership in the state of Minnesota. In addition, the Company has
recently acquired the logo sign franchises in Tennessee and Kansas and has
entered into an agreement to acquire the logo sign franchises in Kentucky and
Nevada. In addition, in October 1996, the Company was also selected to operate
the tourism signing franchise for the province of Ontario, Canada.
State logo sign franchises represent the exclusive contract right to erect
and operate logo signs within a state. The term of the contracts vary, but
generally range from ten to twenty years, including renewal terms. The logo sign
contracts generally provide for termination by the state prior to the end of the
term of the franchise, in most cases with compensation to be paid to the
Company. Typically, at the end of the term of the franchise, ownership of the
structures is transferred to the state without compensation to the Company. None
of the Company's logo sign franchises terminates in the next two years and only
two are subject to renewal during that period. In one of those cases, the state
authority has verbally agreed to the renewal of the term for five years. The
Company expects to be able to compete effectively for retention of franchises
when their terms expire.
The Company also designs and produces logo sign plates for customers
throughout the country, including for use in states which have not yet
privatized their logo sign programs.
52
<PAGE> 55
EMPLOYEES
The Company employed approximately 815 persons at September 30, 1996. Of
these, 44 were engaged in overall management and general administration at the
Company's management headquarters and the remainder were employed in the
Company's operating offices. Of these, approximately 110 were direct sales and
marketing personnel.
The Company has three local offices covered by collective bargaining
agreements, consisting of painters, billposters and construction personnel. A
union is organized in one other local office, but this union is currently
operating without a collective bargaining agreement. The Company believes that
its relations with its employees, including its 26 unionized employees, are
good, and the Company has never experienced a strike or other labor dispute.
The Company believes its employee retention record evidences its good
employee relations. The average tenure for the Company's employees is six years.
The Company offers most employees a range of benefits including a profit
sharing/401(k) plan and life, health and dental insurance.
FACILITIES
The Company's 53,500 square foot management headquarters is located in
suburban Baton Rouge, Louisiana. The Company occupies approximately 30% of the
space in this facility and leases the remaining space. The Company owns 26 local
operating facilities with front office administration and sales office space
connected to back-shop poster and bulletin production space, and leases an
additional 24 operating facilities at an aggregate lease expense in 1995 of
approximately $775,000.
The Company owns approximately 450 parcels of property beneath outdoor
structures. As of October 31, 1995, the Company had approximately 12,000 active
outdoor site leases accounting for a total annual lease expense of $14.2
million. This amount represented 15.4% of total net outdoor advertising revenues
for that period, which is consistent with the Company's historical lease expense
experience. The Company's leases are for varying terms ranging from
month-to-month to in some cases a term of over ten years, and many provide the
Company with renewal options. There is no significant concentration of displays
under any one lease or subject to negotiation with any one landlord. The Company
believes that an important part of its management activity is to manage its
lease portfolio and negotiate suitable lease renewals and extensions.
COMPETITION
Outdoor Advertising
The Company competes in each of its markets with other outdoor advertisers
as well as other media, including broadcast and cable television, radio, print
media and direct mail marketers. In addition, the Company also competes with a
wide variety of out-of-home media, including advertising in shopping centers,
malls, airports, stadiums, movie theaters and supermarkets, as well as on taxis,
trains and buses. Advertisers compare relative costs of available media and
cost-per-thousand impressions, particularly when delivering a message to
customers with distinct demographic characteristics. In competing with other
media, outdoor advertising relies on its relative cost efficiency and its
ability to reach a broad segment of the population in a specific market or to
target a particular geographic area or population with a particular set of
demographic characteristics within that market.
The outdoor advertising industry is highly fragmented, consisting of
several large outdoor advertising and media companies with operations in
multiple markets as well as smaller and local companies operating a limited
number of structures in single or a few local markets. Although some
consolidation has occurred over the past few years, according to the OAAA there
are approximately 1,000 companies in the outdoor advertising industry operating
approximately 396,000 billboard displays. In several of its markets, the Company
encounters direct competition from other major outdoor media companies,
including Outdoor Systems, Inc., Eller Media, Inc. (formerly Patrick Media
Group) and 3M National Advertising Co. (a division of Minnesota Mining and
Manufacturing Company), each of which has a larger national network and greater
total resources than the Company. The Company believes that its strong emphasis
on sales and customer service and its position as a major provider of
advertising services in each of its primary markets
53
<PAGE> 56
enables it to compete effectively with the other outdoor advertising companies,
as well as other media, within those markets. See "Risk Factors -- Competition."
Logo Signs
The Company faces competition in obtaining new logo sign franchises and in
bidding for renewals of expiring franchises. The Company faces competition from
four other national providers of logo signs in seeking logo franchises. In
addition, local companies within each of the states which solicit bids will
compete against the Company in the open-bid process. Competition from these
sources is also encountered at the end of each contract period. The Company
believes its operations model, which includes local sales offices, comprehensive
databases of information and strategic alliances and its knowledge of the
industry, should provide a competitive advantage in pursuing future franchises.
In marketing logo signs to advertisers, the Company competes with other
forms of out-of-home advertising. The Company believes, however, that logo sign
advertising offers an effective, low-cost directional advertising service, which
makes it attractive to potential advertisers.
REGULATION
Outdoor advertising is subject to governmental regulation at the federal,
state and local levels. Federal law, principally the Highway Beautification Act
of 1965 (the "HBA") regulates outdoor advertising on federally aided primary and
interstate highways. The HBA requires, as a condition to federal highway
assistance, states to restrict billboards on such highways to commercial and
industrial areas, and requires certain additional size, spacing and other
limitations. All states have passed state billboard control statutes and
regulations at least as restrictive as the federal requirements, including
removal at the owner's expense and without compensation of any illegal signs on
such highways. The Company believes that the number of its billboards that may
be subject to removal as illegal is immaterial. No state in which the Company
operates has banned billboards, but some have adopted standards more restrictive
than the federal requirements. Municipal and county governments generally also
have sign controls as part of their zoning laws. Some local governments prohibit
construction of new billboards and some allow new construction only to replace
existing structures, although most allow construction of billboards subject to
restrictions on zones, size, spacing and height.
Federal law does not require removal of existing lawful billboards, but
does require payment of compensation if a state or political subdivision compels
the removal of a lawful billboard along a federally aided primary or interstate
highway. State governments have purchased and removed legal billboards for
beautification in the past, using federal funding for transportation enhancement
programs, and may do so in the future. Governmental authorities from time to
time use the power of eminent domain to remove billboards. Thus far, the Company
has been able to obtain satisfactory compensation for any of its billboards
purchased or removed as a result of governmental action, although there is no
assurance that this will continue to be the case in the future. Local
governments do not generally purchase billboards for beautification, but some
have attempted to force removal of legal but nonconforming billboards
(billboards which conformed with applicable zoning regulations when built but
which do not conform to current zoning regulations) after a period of years
under a concept called "amortization," by which the governmental body asserts
that just compensation is earned by continued operation over time. Although
there is some question as to the legality of amortization under federal and many
state laws, amortization has been upheld in some instances. The Company
generally has been successful in negotiating settlements with applicable
localities for billboards required to be removed. Restrictive regulations also
limit the Company's ability to rebuild or replace nonconforming billboards.
In recent years, bills have been introduced in Congress that would affect
billboard advertising of tobacco or alcohol products. No bills have become law
except those requiring the familiar health hazard warnings appearing on
cigarette packages and advertisements. It is uncertain whether such regulation
will be enacted in the future, what such regulation might provide or what impact
such regulation might have on the Company's business. Federal law generally
prevents state or local restrictions on the content of billboard advertisements.
54
<PAGE> 57
In August 1996, President Clinton signed an executive order adopting rules
proposed by the U.S. Food and Drug Administration regulating the advertising of
certain tobacco products. These rules, which will become effective on August 22,
1997, prohibit the placement of tobacco products advertising within 1,000 feet
of playgrounds and primary and secondary schools and limit such advertising to a
format consisting of black text on a white background. Certain advertising
industry and tobacco industry organizations have filed lawsuits challenging
these regulations, seeking an injunction to keep them from going into effect. In
addition, some members of Congress have indicated that they may sponsor
legislation to prevent the regulations from going into effect. If these
regulations are not modified or nullified by legislative or judicial action, the
Company's outdoor advertising revenues could be adversely affected.
To date, however, regulations in the Company's markets have not materially
adversely affected its operations. However, the outdoor advertising industry is
heavily regulated and at various times and in various markets can be expected to
be subject to varying degrees of regulatory pressure affecting the operation of
advertising displays. Accordingly, although the Company's experience to date is
that the regulatory environment can be managed, no assurance can be given that
existing or future laws or regulations will not materially and adversely affect
the Company.
LITIGATION
The Company from time to time is involved in litigation in the ordinary
course of business, including disputes involving advertising contracts, site
leases, employment claims and construction matters. The Company is also involved
in routine administrative and judicial proceedings regarding billboard permits,
fees and compensation for condemnations. The Company is not a party to any
lawsuit or proceeding which, in the opinion of management, is likely to have a
material adverse effect on the Company.
55
<PAGE> 58
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company as of October 1, 1996
were as follows:
<TABLE>
<CAPTION>
YEARS WITH
NAME AGE TITLE THE COMPANY
- ------------------------------ --- ------------------------------------- -----------
<S> <C> <C> <C>
Kevin P. Reilly, Jr........... 42 Chairman, President, Chief Executive 18
Officer and Director
Keith A. Istre................ 44 Chief Financial Officer, Treasurer 18
and Director
Charles W. Lamar, III......... 48 General Counsel, Secretary and 20
Director
Gerald H. Marchand............ 65 Vice President, Regional Manager of 38
Baton Rouge Region, and Director
T. Everett Stewart, Jr........ 42 President of Interstate Logos, Inc., 16
a subsidiary of the Company, and
Director
Robert E. Campbell............ 48 Vice President, Regional Manager of 24
Central Region
Phillip C. Durant............. 50 Vice President, Regional Manager of 19
Eastern Region
Myron A. LaBorde.............. 47 Vice President, Regional Manager of 25
Florida Region
Thomas F. Sirmon.............. 41 Vice President, Regional Manager of 17
Mobile Region
Robert B. Switzer............. 43 Vice President of Operations 20
Dudley W. Coates*............. 65 Director --
Jack S. Rome, Jr.*............ 48 Director --
William R. Schmidt*........... 45 Director --
</TABLE>
- ---------------
* Outside directors
Kevin P. Reilly, Jr. has served as the Company's President and Chief
Executive Officer since February 1989 and as a director of the Company since
February 1984. Mr. Reilly served as President of the Company's Outdoor Division
from 1984 to 1989. Mr. Reilly, an employee of the Company since 1978, has also
served as Assistant and General Manager of the Company's Baton Rouge Region and
Vice President and General Manager of the Louisiana Region. Mr. Reilly received
a B.A. from Harvard University in 1977.
Keith A. Istre has been Chief Financial Officer of the Company since
February 1989 and a director of the Company since February 1991. Mr. Istre
joined the Company as Controller in 1978 and became Treasurer in 1985. Prior to
joining the Company, Mr. Istre was employed by a public accounting firm in Baton
Rouge from 1975 to 1978. Mr. Istre graduated from the University of Southwestern
Louisiana in 1974 with a degree in accounting.
Charles W. Lamar, III joined the Company in 1982 as General Counsel and has
been a director of the Company since June 1973. Prior to joining the Company,
Mr. Lamar maintained his own law practice and was employed by a law firm in
Baton Rouge. Mr. Lamar received a B.A. in Philosophy from Harvard University in
1971, a M.A. in Economics from Tufts University in 1972 and a J.D. from Boston
University in 1975.
Gerald H. Marchand has been Regional Manager of the Baton Rouge Region,
which encompasses operations in Louisiana, Mississippi and Texas, since 1988 and
a director of the Company since 1978. He
56
<PAGE> 59
began his career with the Company in leasing and went on to become President of
the Outdoor Division. He has served as General Manager of the Lake Charles and
Mobile operations. Mr. Marchand received a Masters in Education from Louisiana
State University in 1955.
T. Everett Stewart, Jr. has been President of Interstate Logos, Inc. since
1988, and has recently been named a director. He served as Regional Manager of
the Company's Baton Rouge Region from 1984 to 1988. Previously, he served the
Company as Sales Manager in Montgomery and General Manager of the Monroe and
Alexandria operations. Before joining the Company in 1979, Mr. Stewart was
employed by the Lieutenant Governor of the State of Alabama and by a United
States Senator from the State of Alabama. Mr. Stewart received a B.S. in Finance
from Auburn University in 1976.
Robert E. Campbell has been Regional Manager of the Central Region, which
encompasses operations in Alabama, Colorado, Kentucky, Ohio, Texas and Virginia,
since 1983. Mr. Campbell served from 1972 to 1983 as Sales Manager of the
Company's Mobile operation and as General Manager of the Company's Midland and
Mobile operations. Mr. Campbell received a B.A. in Political Science and History
from the University of South Alabama in 1971.
Phillip C. Durant joined the Company in 1974 in Pensacola, Florida and is
currently the Regional Manager of the Eastern Region, which encompasses
operations in Tennessee and West Virginia. Previously he served as Sales Manager
in Pensacola and General Manager of Monroe, Alexandria, Lake Charles and
Lafayette, Louisiana and Nashville.
Myron A. LaBorde joined the Company in 1972 as an account executive in
Baton Rouge and is currently the Regional Manager of the Florida Region and
General Manager of the Shreveport, Louisiana operation. Previously he served as
General Manager of the Company's Lake Charles, Louisiana and Tallahassee,
Florida operations. Mr. LaBorde received a degree in Marketing from the
University of Southwestern Louisiana.
Thomas F. Sirmon has served the Company as Regional Manager of the Mobile
Region, which encompasses operations in Alabama, Florida and Georgia, since
1990. He began his career with the Company as an Account Executive in the Mobile
operation in 1979. In 1981, he was appointed General Manager in Augusta; in
1984, General Manager in Nashville; and in 1988, General Manager in Mobile. Mr.
Sirmon received a degree in Marketing from the University of South Alabama in
1978.
Robert B. Switzer has been Vice President of Operations of the Company
since 1984. In 1976, he joined the Company as Posting Superintendent in Mobile
and became Operations Manager in Pensacola. Since 1991, he has also served as
General Manager of the Pensacola operation and, since 1993, as General Manager
of the Fort Walton operation. Mr. Switzer received a B.S. in Zoology from the
University of South Florida in 1975.
Dudley W. Coates has been a director of the Company since 1973. Mr. Coates
received a Liberal Arts degree from Yale University in 1953, and, since that
time, has been an investment broker with the firm of Legg Mason, Inc.
Jack S. Rome, Jr. has been a director of the Company since 1974. Since
1988, Mr. Rome has been President of No Fault Industries, Inc., a construction
company specializing in outdoor recreational facilities. Mr. Rome has also
served as President of Jack Rome, Jr. & Associates, Inc., a management
consulting company, since October 1987. Mr. Rome served the Company in various
capacities from 1975 to 1986. Mr. Rome received his B.S. in accounting from
Southeastern Louisiana University in 1971.
William R. Schmidt became a director of the Company in 1994. He is an
Assistant Vice President for Pacific Mutual Life Insurance Company in its
Securities Department, where he has been employed since 1990. He has a B.S. in
Finance from Pennsylvania State University and an MBA from the Amos Tuck School
of Business at Dartmouth College.
Kevin P. Reilly, Jr., Charles W. Lamar, III and Robert B. Switzer are
cousins.
57
<PAGE> 60
BOARD COMMITTEES
The Board of Directors has a Compensation Committee, which makes
recommendations concerning salaries for employees and consultants to the
Company, and an Audit Committee, which reviews the results of the Company's
audit and other services provided by the Company's independent auditors. The
Compensation Committee and the Audit Committee currently consist of Dudley
Coates, Jack S. Rome, Jr. and William R. Schmidt. During fiscal year 1995, the
Compensation Committee consisted of Jack S. Rome, Jr., Mary Lee Lamar Dixon and
Carolyn Sample Abshire, who were directors. Mr. Rome was employed by the Company
from 1975 to 1985.
The Executive Committee, which has authority to operate the affairs of the
Company between Board meetings, currently consists of Kevin P. Reilly, Jr.,
Gerald H. Marchand, Keith A. Istre and Charles W. Lamar, III.
BOARD COMPENSATION
All directors of the Company hold office until the next annual meeting of
stockholders of the Company or until their successors are duly elected and
qualified. Directors who are not employed by the Company receive a fee of $2,500
for each Board meeting attended and are reimbursed for travel expenses incurred
to attend Board meetings. Executive officers of the Company are elected by the
Board of Directors on an annual basis and serve at the discretion of the Board
of Directors.
EXECUTIVE COMPENSATION
The following table sets forth certain compensation information for the
Chief Executive Officer and each of the four most highly compensated executive
officers of the Company for the fiscal year ended October 31, 1995.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1)
-------------------------------------- ---- --------- -------- ------------------
<S> <C> <C> <C> <C>
Kevin P. Reilly, Jr................... 1995 120,000 200,000 5,500
President and Chief 1994 120,000 150,000 5,000
Executive Officer 1993 120,000 100,000
Gerald H. Marchand.................... 1995 106,000 156,543 50,000
Vice President, Regional 1994 106,000 197,443 50,000
Manager of Baton Rouge Region 1993 106,000 75,000
Robert E. Campbell.................... 1995 90,000 96,984 7,500
Vice President, Regional 1994 90,000 73,208 7,500
Manager of Central Region 1993 84,000 61,000
T. Everett Stewart.................... 1995 80,000 116,500 4,500
President of Interstate Logos, Inc. 1994 80,000 65,000 4,000
1993 80,000 50,000
Hollis T. Wood(2)..................... 1995 90,000 93,862 6,500
Vice President, Regional 1994 90,000 89,638 6,000
Manager of Knoxville Region 1993 90,000 40,000
</TABLE>
- ---------------
(1) The reported amounts consist of employer contributions under the Company's
deferred compensation plan.
(2) Mr. Wood is no longer employed by the Company.
58
<PAGE> 61
EMPLOYMENT AGREEMENTS
The Company does not have employment contracts with any of its officers or
employees.
The Company had a consulting agreement with Kevin P. Reilly, Sr., its
former Chairman, which expired on January 15, 1996. Under that agreement, Mr.
Reilly, Sr. received $120,000 in annual consulting fees and was eligible for a
$100,000 annual bonus, which was paid for the fiscal year ended October 31,
1995. The Company continued to pay Mr. Reilly, Sr. his consulting fee on a
month-to-month basis until July 1, 1996. Effective July 1, 1996, the Lamar Texas
Limited Partnership, a subsidiary of the Company, and Reilly Consulting Company,
L.L.C., of which Mr. Reilly, Sr. is the manager and, with his wife, the sole
members, entered into a replacement consulting agreement. This new consulting
agreement has a ten year term and provides for a $120,000 annual consulting fee.
The agreement contains a non-disclosure provision and a noncompetition
restriction which extends for two years beyond the termination of the agreement.
STOCK OPTION PLANS
The Company's 1996 Equity Incentive Plan (the "1996 Plan") was adopted by
the Board of Directors in July 1996. The purpose of the 1996 Plan is to attract
and retain key employees and consultants of the Company, to provide an incentive
for them to achieve long-range performance goals, and to enable them to
participate in the long-term growth of the Company.
The 1996 Plan authorizes the grant of stock options (incentive and
nonstatutory), stock appreciation rights ("SARs") and restricted stock to
employees and consultants of the Company capable of contributing to the
Company's performance. The Company has reserved an aggregate of 2.0 million
shares (subject to adjustment for stock splits and similar capital changes) of
Class A Common Stock for awards under the 1996 Plan. Stock options and SARs may
not be granted at less than fair market value of the Class A Common Stock and
not more than 200,000 shares may be granted in any calendar year to any
participant. Incentive stock options may be granted only to persons eligible to
receive them under the Internal Revenue Code of 1996, as amended. The Company
has granted options to purchase approximately 1.2 million shares of Class A
Common Stock since the IPO.
The Board of Directors has appointed the Compensation Committee (the
"Committee") to administer the 1996 Plan. Awards under the 1996 Plan contain
such terms and conditions not inconsistent with the 1996 Plan as the Committee
in its discretion approves. The Committee has discretion to administer the 1996
Plan in the manner which it determines, from time to time, is in the best
interest of the Company. For example, the Committee will fix the terms of stock
options, SARs and restricted stock grants and determine whether, in the case of
options and SARs, they may be exercised immediately or at a later date or dates.
Awards may be granted subject to conditions relating to continued employment and
restrictions on transfer. The Committee may provide, at the time an award is
made or at any time thereafter, for the acceleration of a participant's rights
or cash settlement upon a change in control of the Company. The terms and
conditions of awards need not be the same for each participant. The foregoing
examples illustrate, but do not limit, the manner in which the Committee may
exercise its authority in administering the 1996 Plan. In addition, all
questions of interpretation of the 1996 Plan are determined by the Committee.
59
<PAGE> 62
CERTAIN TRANSACTIONS
The Company has from time to time made various personal loans to the
persons listed below. The loans bear interest at a rate equal to 100 basis
points above the rate applicable to United States Treasury six-month bills.
<TABLE>
<CAPTION>
LARGEST OUTSTANDING
BALANCE SINCE APPROXIMATE
BEGINNING OF LAST BALANCE OUTSTANDING AS OF
NAME FISCAL YEAR OCTOBER 31, 1996
------------------------------------------- ------------------- -------------------------
<S> <C> <C>
Jack S. Rome(1)............................ $ 147,230 $ 123,314
Robert B. Switzer(2)....................... 80,592 50,592
Kevin P. Reilly, Sr.(3)(4)................. 154,586 34,030
T. Everett Stewart, Jr.(1)(2).............. 75,000 24,638
Wendell S. Reilly(3)....................... 500,000 0
Anna Reilly Cullinan(3).................... 80,000 0
Gerald H. Marchand(2)...................... 175,000 0
Kevin P. Reilly, Jr.(1)(2)(3).............. 135,000 0
Sean E. Reilly(2).......................... 73,945 0
</TABLE>
- ---------------
(1) The named individual is a director of the Company.
(2) The named individual is an executive officer of the Company.
(3) Member of the Reilly family.
(4) Kevin P. Reilly, Sr. was President and Chairman of the Board of the Company
until January 1992.
In October 1995 and in March 1996, the Company repurchased 3.6% and 12.9%,
respectively, of its then outstanding common stock (1,220,500 and 3,617,884
shares, respectively, after giving effect to the 778.9 for 1 split of the
Company's then-existing common stock and recapitalization occurring after such
dates) from certain of its existing stockholders for an aggregate purchase price
of approximately $4.0 million. The terms of the March 1996 repurchase entitled
the selling stockholders to receive additional consideration from the Company in
the event that the Company consummated a public offering of its common stock at
a higher price within 24 months of the repurchase. In satisfaction of that
obligation, upon completion of the IPO in August 1996, the Company paid the
selling stockholders an aggregate of $5.0 million in cash from the proceeds of
the IPO and issued to them $20.0 million aggregate principal amount of ten-year
subordinated notes. Of the total $25.0 million paid on account of the common
stock repurchased, $6.3 million was paid to the Company's executive officers,
directors, beneficial owners of 5% or more of the Company's common stock and
their respective affiliates.
On December 31, 1995, the Company issued 5,719.49 shares of its Class A
Preferred Stock with an aggregate liquidation preference of $3.6 million to
certain of its stockholders in exchange for an equal number of shares of its
then outstanding common stock. See "Description of Capital Stock -- Class A
Preferred Stock." Of the Class A Preferred Stock so issued, 3,134.80 shares were
issued to the Reilly Family Limited Partnership, 1,500 shares to Charles W.
Lamar, III and 1,084.69 shares to Mary Lee Lamar Dixon and trusts for her
children. See "Description of Capital Stock -- Class A Preferred Stock."
In 1993, the Company acquired LHC shares from certain members of the Reilly
family, Charles W. Lamar, III, Mary Lee Lamar Dixon and Robert B. Switzer in
exchange for 8.0% of the then outstanding shares of common stock of the Company.
In 1994, in connection with the Company's acquisition of the interest in LHC
which it did not already own, certain officers and directors of the Company who
were stockholders of LHC received approximately $226,000 from the proceeds of
the transaction.
In May 1993, the Company purchased the outstanding stock of Lamar
Advertising of Wichita Falls, Inc., which was substantially owned by Kevin P.
Reilly, Sr., Kevin P. Reilly, Jr., Charles W. Lamar, III, Gerald H. Marchand and
certain of their relatives. The total consideration for the stock purchase was
approximately $1.2 million, which approximated the book value of the underlying
assets.
In 1993, the Company purchased a building from a joint venture whose
principals included Kevin P. Reilly, Sr., Kevin P. Reilly, Jr., and Charles W.
Lamar, III for $740,000.
The Company has made investments totalling $1.25 million in Wireless One,
Inc., a publicly-held company in the wireless cable business, of which Sean E.
Reilly, a member of the Reilly family and a former director, is Chief Executive
Officer. The current market value of these investments, which are restricted
from sale by the Company until October 1997, exceeds the Company's cost.
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<PAGE> 63
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of the Company's capital stock as of October 1, 1996 (i) by each person known by
the Company to own beneficially five percent or more of any class of the
Company's capital stock, (ii) by each director of the Company, (iii) by each
executive officer of the Company and (iv) by all directors and executive
officers as a group. The capital stock of the Company is owned substantially by
members of four related families.
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF BENEFICIAL
BENEFICIAL OWNERSHIP OWNERSHIP AFTER THE
PRIOR TO THE COMMON SHARES COMMON STOCK
STOCK OFFERING(1) BEING OFFERING(1)
-------------------- OFFERED IN ---------------------
PERCENT THE COMMON PERCENT
DIRECTORS, EXECUTIVE OFFICERS NUMBER OF OF STOCK NUMBER OF OF
AND 5% STOCKHOLDERS CLASS(2) SHARES CLASS OFFERING(2) SHARES CLASS
- --------------------------------- ---------- ----------- ------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
The Reilly Family Limited Common 13,791,389 47.90% 335,841 13,455,548 43.41%
Partnership(3) Preferred 3,134.80 54.81% 0 3,134.80 54.81%
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Charles W. Lamar, III(4) Common 4,470,782 15.53% 109,347 4,361,435 14.07%
c/o The Lamar Corporation Preferred 1,500.00 26.23% 0 1,500.00 26.23%
5551 Corporate Blvd.
Baton Rouge, LA 70808
Mary Lee Lamar Dixon(5) Common 2,087,444 7.25% 51,055 2,036,389 6.57%
c/o the Lamar Corporation Preferred 1,084.69 18.96% 0 1,084.69 18.96%
5551 Corporate Blvd.
Baton Rouge, LA 70808
Dudley W. Coates(6) Common 163,564 * 0 163,564 *
Phillip C. Durant(7) Common 10,000 * 0 10,000 *
Keith A. Istre(6) Common 20,625 * 0 20,625 *
Myron LaBorde(7) Common 11,000 * 0 11,000 *
Gerald H. Marchand Common 155,775 * 0 155,775 *
Jack S. Rome, Jr. Common 1,500 * 0 1,500 *
William R. Schmidt Common 500 * 0 500 *
Robert S. Switzer(9) Common 743,635 2.58% 18,188 725,447 2.34%
Robert E. Campbell(8) Common 21,250 * 0 21,250 *
Thomas F. Sirmon(8) Common 21,875 * 0 21,875 *
T. Everett Stewart(10) Common 25,851 * 0 25,851 *
All Directors and Executive Common 19,437,746 67.27% 463,376 18,974,370 61.02%
Officers
as a Group (13 Persons)(11) Preferred 4,634.80 81.04% 0 4,634.80 81.04%
</TABLE>
- ---------------
* Less than 1%
(1) The persons and entities named in the table have sole voting and investment
power with respect to all shares beneficially owned by them, except as
noted below.
(2) Common shares refer to Class A Common Stock, except with respect to shares
of the Reilly Family Limited Partnership, which refer to shares of Class B
Common Stock. Preferred shares refer to Class A Preferred Stock. Upon the
sale of any shares of Class B Common Stock to a person other than to a
Permitted Transferee (as defined herein), such shares will automatically
convert into shares of Class A Common Stock. See "Description of Capital
Stock." "Shares Being Offered in the Common Stock Offering" does not
include shares that may be sold pursuant to the underwriters' overallotment
option.
(3) These shares are owned by the Reilly Family Limited Partnership. Kevin P.
Reilly, Jr. is the managing general partner of the Reilly Family Limited
Partnership; Wendell S. Reilly, Sean E. Reilly and Anna R. Cullinan are
each general partners; and Kevin P. Reilly, Sr. holds all of the
outstanding preferred interests in the partnership.
(4) Includes shares of Class A Common Stock held in trust for Mr. Lamar's three
children, of which Mr. Lamar is considered the beneficial owner. 1,335,775
shares are currently held by such trusts and 17,483 of such shares are
being offered in the Common Stock Offering.
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<PAGE> 64
(5) Includes 545,214 shares of Class A Common Stock and 700 shares of Class A
Preferred Stock held in a trust, of which LaBanc & Co. is the nominee of
the trustee, for the benefit of Mrs. Dixon.
(6) Consists of shares which are held in trust for Mr. Coates' three children,
as to which he disclaims beneficial ownership.
(7) Includes 10,000 shares of Class A Common Stock subject to stock options
exercisable within 60 days of October 1, 1996.
(8) Includes 20,000 shares of Class A Common Stock subject to stock options
exercisable within 60 days of October 1, 1996.
(9) Includes 76,336 shares of Class A Common Stock held by Mr. Switzer's wife,
as to which he disclaims beneficial ownership, and 257,028 shares of Class
A Common Stock currently held by Mr. Switzer as custodian for his three
children. 2,797 shares of Class A Common Stock held for each child (8,392
shares in the aggregate) are being offered in the Common Stock Offering.
(10) Includes 19,600 shares of Class A Common Stock subject to stock options
exercisable within 60 days of October 1, 1996.
(11) Includes 99,600 shares of Class A Common Stock subject to stock options
exercisable within 60 days of October 1, 1996. Also includes 1,499,339
shares of Class A Common Stock held in trust for the benefit of the
children of directors and officers of the Company, 76,336 shares of Class A
Common Stock held by the wife of an officer of the Company, and 257,028
shares of Class A Common Stock held by an officer of the Company as
custodian for his three children.
Kevin P. Reilly, Jr. is the Managing General Partner of the Reilly Family
Limited Partnership, owner of all of the issued and outstanding Class B Common
Stock of the Company. The other general partners of the partnership, Mr.
Reilly's three siblings, may by unanimous vote, remove Mr. Reilly and replace
him with one of his siblings.
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DESCRIPTION OF NOTES
The Notes will be issued under an Indenture, dated as of , 1996
(the "Indenture") among the Company, the Guarantors and State Street Bank and
Trust Company, as trustee (the "Trustee"). The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as in
effect on the date of the Indenture. The Notes are subject to all such terms,
and holders of the Notes are referred to the Indenture and the Trust Indenture
Act for a statement of the terms therein. The following is a summary of the
material terms and provisions of the Notes. This summary does not purport to be
a complete description of the Notes and is subject to the detailed provisions
of, and qualified in its entirety by reference to, the Notes and the Indenture
(including the definitions contained therein). A copy of the form of Indenture
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The definitions of certain capitalized terms are set forth
under "-- Certain Definitions" or as otherwise defined throughout this
description. For purposes of this description, references to the "Company"
include only the Company and not its Subsidiaries.
GENERAL
The Notes will be limited in aggregate principal amount to $225 million.
The Notes will be general unsecured obligations of the Company, subordinated in
right of payment to Senior Indebtedness of the Company, pari passu in right of
payment with all future senior subordinated indebtedness of the Company and
senior in right of payment to any existing or future subordinated indebtedness
of the Company.
The Notes will be unconditionally guaranteed, on a senior subordinated
basis, as to payment of principal, premium, if any, and interest, jointly and
severally, by the Guarantors.
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on , 2006. The Notes will bear interest
at a rate of % per annum from the date of original issuance until maturity.
Interest is payable semi-annually in arrears on and
commencing , 1997, to holders of record of the Notes at the close of
business on the immediately preceding , and , respectively.
The Notes will not be entitled to the benefit of any mandatory sinking
fund.
OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Company, in whole or in
part, at any time on or after , 2001 at the following redemption
prices (expressed as a percentage of principal amount), together, in each case,
with accrued and unpaid interest to the redemption date, if redeemed during the
twelve-month period beginning on , of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.............................................. %
2002.............................................. %
2003.............................................. %
2004 and thereafter............................... %
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the aggregate up
to $75 million aggregate principal amount of Notes at any time and from time to
time prior to , 1999 at a redemption price equal to % of the
aggregate principal amount so redeemed, plus accrued interest to the redemption
date out of the Net Proceeds of one or more Public Equity Offerings; provided
that at least $150 million aggregate principal amount of Notes originally issued
remain outstanding immediately after the occurrence of any such redemption and
that any such redemption occurs within 120 days following the closing of any
such Public Equity Offering.
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In the event of redemption of fewer than all of the Notes, the Trustee
shall select by lot or in such other manner as it shall deem fair and equitable
the Notes to be redeemed; provided, however, that if a partial redemption is
made with the proceeds of a Public Equity Offering, selection of the Notes for
redemption shall be made by the Trustee only on a pro rata basis, unless such
method is otherwise prohibited. The Notes will be redeemable in whole or in part
upon not less than 30 nor more than 60 days' prior written notice, mailed by
first class mail to a holder's last address as it shall appear on the register
maintained by the Registrar of the Notes. On and after any redemption date,
interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Company shall fail to redeem any such Note.
SUBORDINATION
The indebtedness represented by the Notes, including principal, premium, if
any, and interest, will be, to the extent and in the manner provided in the
Indenture, subordinated in right of payment to the prior payment and
satisfaction in full in cash of all existing and future Senior Indebtedness of
the Company. As of July 31, 1996, after giving pro forma effect to the
Transactions and the IPO and the application of the net proceeds therefrom, the
principal amount of outstanding Senior Indebtedness of the Company, on a
consolidated basis, would have been approximately $7.9 million. The Company will
have the ability to incur additional Senior Indebtedness under either the
Existing Credit Agreement or the New Credit Agreement and will be permitted to
incur additional Senior Indebtedness under the Indenture.
The Indenture provides that no payment (by set-off or otherwise) may be
made by or on behalf of the Company on account of the principal of, premium, if
any, or interest on the Notes, or on account of the redemption provisions of the
Notes, for cash or property (other than Junior Securities), (i) upon the
maturity of any Senior Indebtedness of the Company by lapse of time,
acceleration (unless waived) or otherwise, unless and until all principal of,
premium, if any, and the interest on such Senior Indebtedness are first paid in
full in cash or (ii) in the event of default in the payment of any Senior
Indebtedness of the Company when it becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration or otherwise (a "Payment
Default"), unless and until such Payment Default has been cured or waived or
otherwise has ceased to exist.
Upon (i) the happening of an event of default (other than a Payment
Default) that permits the holders of Designated Senior Indebtedness to declare
such Designated Senior Indebtedness to be due and payable and (ii) written
notice of such event of default given to the Company and the Trustee by the
representative of the holders of such Designated Senior Indebtedness (a "Payment
Notice"), then, unless and until such event of default has been cured or waived
or otherwise has ceased to exist, no payment (by set-off or otherwise) may be
made by or on behalf of the Company on account of the principal of, premium, if
any, or interest on the Notes, or on account of the redemption provisions of the
Notes, in any such case, other than payments made with Junior Securities.
Notwithstanding the foregoing, unless the Designated Senior Indebtedness in
respect of which such event of default exists has been declared due and payable
in its entirety within 179 days after the Payment Notice is delivered as set
forth above (the "Payment Blockage Period") (and such declaration has not been
rescinded or waived), at the end of the Payment Blockage Period, the Company
shall, unless a Payment Default exists, be required to pay all sums not paid to
the Holders of the Notes during the Payment Blockage Period due to the foregoing
prohibitions and to resume all other payments as and when due on the Notes. Any
number of Payment Notices may be given; provided, however, that (i) not more
than one Payment Notice shall be given within a period of any 360 consecutive
days, and (ii) no default that existed upon the date of such Payment Notice, if
the representative of the holders of Designated Senior Indebtedness that gave
such Payment Notice knew of such default on such date (whether or not such event
of default is on the same issue of Designated Senior Indebtedness), shall be
made the basis for the commencement of any other Payment Blockage Period unless
such default has been cured or waived for a period of at least 90 consecutive
days.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities, (i) the holders of all Senior Indebtedness
of the Company will first be entitled to receive payment in full in cash before
the holders of Notes are entitled to receive any payment on account of principal
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of, premium, if any, and interest on the Notes (other than Junior Securities)
and (ii) any payment or distribution of assets of the Company of any kind or
character from any source, whether in cash, property or securities (other than
Junior Securities) to which the holders of Notes or the Trustee on behalf of the
holders of Notes would be entitled (by set-off or otherwise), except for the
subordination provisions contained in the Indenture, will be paid by the
liquidating trustee or agent or other person making such a payment or
distribution directly to the holders of such Senior Indebtedness or their
representative to the extent necessary to make payment in full in cash on all
such Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee at a time when such payment or distribution is
prohibited by the foregoing provisions, such payment or distribution shall be
held in trust for the benefit of the holders of such Senior Indebtedness, and
shall be paid or delivered by the Trustee to the holders of such Senior
Indebtedness remaining unpaid or unprovided for or to their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate principal amounts remaining unpaid on
account of such Senior Indebtedness held or represented by each, for application
to the payment of all such Senior Indebtedness remaining unpaid, to the extent
necessary to pay or to provide for the payment of all such Senior Indebtedness
in full in cash after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes, funds which would be otherwise
payable to the holders of the Notes will be paid to the holders of the Senior
Indebtedness to the extent necessary to pay the Senior Indebtedness in full, and
the Company may be unable to meet its obligations fully with respect to the
Notes.
Each Guarantee will, to the extent set forth in the Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness of the respective Guarantor, including obligations of such
Guarantor with respect to the Senior Credit Facility (including any guarantee
thereof), and will be subject to the rights of holders of Designated Senior
Indebtedness of such Guarantor to initiate blockage periods, upon terms
substantially comparable to the subordination of the Notes to all Senior
Indebtedness of the Company.
If the Company or any Guarantor fails to make any payment on the Notes or
any Guarantee, as the case may be, when due or within any applicable grace
period, whether or not on account of payment blockage provisions, such failure
would constitute an Event of Default under the Indenture and would enable the
holders of the Notes to accelerate the maturity thereof. See "-- Events of
Default."
A holder of Notes by his acceptance of Notes agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purpose.
GUARANTEES
The Notes are guaranteed on a senior subordinated basis by the Guarantors.
All payments pursuant to the Guarantees by the Guarantors are subordinated in
right of payment to the prior payment in full of all Senior Indebtedness of the
Guarantors, to the same extent and in the same manner that all payments pursuant
to the Notes are subordinated in right of payment to the prior payment in full
of all Senior Indebtedness of the Company.
The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor (including, without limitation, any guarantees of Senior Indebtedness)
and after giving effect to any collections from or payments made by or on behalf
of any other Guarantor in respect of the obligations of such other Guarantor
under its Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Guarantor under the Guarantee
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not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. In making any calculation relevant to determining such maximum
amount, all Senior Indebtedness shall be deemed to have been incurred prior to
the Issue Date. Each Guarantor that makes a payment or distribution under a
Guarantee shall be entitled to a contribution from each other Guarantor in a pro
rata amount based on the Adjusted Net Assets of each Guarantor. See "Risk
Factors -- Dependence on Cash Flow from Subsidiaries; Fraudulent Conveyance
Concerns."
Upon (i) the release or payment in full of any Indebtedness of such
Guarantor representing a guarantee of Indebtedness of the Company and the
release of all Liens on the property and assets of such Guarantor relating to
any such Indebtedness or (ii) the sale or disposition (whether by merger, sale
of stock or otherwise) of a Guarantor (or substantially all of its assets) to an
entity which is not a Subsidiary of the Company which is otherwise in compliance
with the Indenture (and providing that the guarantee and Liens referred to in
the foregoing clause (i) are also released at such time), such Guarantor shall
be deemed released from all its obligations under the Indenture and its
Guarantee.
CERTAIN COVENANTS
The Indenture will contain, among others, the following covenants.
Limitation on Additional Indebtedness and Preferred Stock of Restricted
Subsidiaries
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, incur (as defined) any Indebtedness (including Acquired
Indebtedness) other than Permitted Indebtedness, and will not permit any
Restricted Subsidiary to issue any Preferred Stock, unless (a) after giving
effect to the incurrence of such Indebtedness and the issuance of any such
Preferred Stock and the receipt and application of the proceeds thereof, the
Company's Leverage Ratio is less than (i) 6.50 to 1 if such Indebtedness is
incurred or Preferred Stock is issued, as the case may be, on or prior to
, 1999, (ii) 6.25 to 1 if such Indebtedness is incurred or Preferred
Stock is issued, as the case may be, after , 1999 and on or prior to
, 2001 and (iii) 6.00 to 1 if such Indebtedness is incurred or
Preferred Stock is issued, as the case may be, thereafter, and (b) no Default or
Event of Default shall have occurred and be continuing at the time or as a
consequence of the incurrence of such Indebtedness. Notwithstanding the
foregoing, Preferred Stock may only be issued by a Restricted Subsidiary of the
Company pursuant to the preceding sentence to the extent such Restricted
Subsidiary is a Guarantor.
Notwithstanding the foregoing, the Company and the Restricted Subsidiaries
may incur Permitted Indebtedness; provided that the Company will not incur any
Permitted Indebtedness that ranks junior in right of payment to the Notes that
has a maturity or mandatory sinking fund payment prior to the maturity of the
Notes.
Limitation on Restricted Payments
The Company will not make, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving pro forma effect to such Restricted
Payment, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the covenant set forth under "Limitation
on Additional Indebtedness"; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
does not exceed the sum of (1) 100% of the Company's Cumulative EBITDA
minus 1.4 times the Company's Cumulative Consolidated Interest Expense,
plus (2) 100% of the aggregate Net Proceeds and the fair market value of
securities or other property received by the Company from the issue or
sale, after the Issue Date, of Capital Stock (other than Disqualified
Capital Stock or Capital Stock of the Company issued to any Subsidiary of
the Company) of the
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Company or any Indebtedness or other securities of the Company convertible
into or exercisable or exchangeable for Capital Stock (other than
Disqualified Capital Stock) of the Company which has been so converted or
exercised or exchanged, as the case may be, plus (3) $25 million plus (4)
the net reductions in Investments (other than reductions in Permitted
Investments) in any Person resulting from payments of interest on
indebtedness, dividends, repayments of loans, partial or total releases or
discharges of Guaranteed Permitted Unrestricted Subsidiary Obligations, or
from designations of Unrestricted Subsidiaries as Restricted Subsidiaries,
valued in each case at the fair market value thereof, not to exceed the
amount of Investments previously made by the Company and its Restricted
Subsidiaries in such Person. For purposes of determining under this clause
(c) the amount expended for Restricted Payments, cash distributed shall be
valued at the face amount thereof and property other than cash shall be
valued at its fair market value as determined by the Board of Directors
reasonably and in good faith.
The provisions of this covenant shall not prohibit (i) the payment of any
distribution within 60 days after the date of declaration thereof, if at such
date of declaration such payment would comply with the provisions of the
Indenture, (ii) the retirement of any shares of Capital Stock of the Company or
subordinated or pari passu Indebtedness by conversion into, or by or in exchange
for, shares of Capital Stock (other than Disqualified Capital Stock), or out of,
the Net Proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of other shares of Capital Stock of the Company
(other than Disqualified Capital Stock; provided, however, that the amount of
any such Net Proceeds that are utilized for any such retirement shall be
excluded from clause (c)(2) of the preceding paragraph, (iii) the redemption or
retirement of Indebtedness of the Company subordinated or pari passu in right of
payment to the Notes in exchange for, by conversion into, or out of the Net
Proceeds of, a substantially concurrent sale or incurrence of Indebtedness of
the Company (other than any Indebtedness owed to a Subsidiary of the Company)
that is, with respect to any such subordinated Indebtedness, contractually
subordinated in right of payment to the Notes to at least the same extent as the
subordinated Indebtedness being redeemed or retired, with respect to any such
pari passu Indebtedness, pari passu or subordinated in right of payment to the
Notes and, with respect to any such subordinated or pari passu Indebtedness, (x)
has no Stated Maturity earlier than the 91st day after the Final Maturity Date
or the final maturity date of the Indebtedness being redeemed or retired,
whichever is earlier and (y) has an Average Life to Stated Maturity equal to or
greater than the remaining Average Life to Stated Maturity of the Indebtedness
being redeemed or retired; provided, however, that the amount of any such Net
Proceeds that are utilized for any such redemption or retirement shall be
excluded from clause (c)(2) of the preceding paragraph, (iv) the funding of
loans (but not including the forgiveness of any such loan) to executive
officers, directors and shareholders for relocation loans, bonus advances and
other purposes consistent with past practices or the purchase, redemption or
other acquisition for value of shares of Capital Stock of the Company (other
than Disqualified Capital Stock) or options on such shares held by the Company's
or the Restricted Subsidiaries' officers or employees or former officers or
employees (or their estates or trusts or beneficiaries under their estates or
trusts for the benefit of such beneficiaries) upon the death, disability,
retirement or termination of employment of such current or former officers or
employees pursuant to the terms of an employee benefit plan or any other
agreement pursuant to which such shares of Capital Stock or options were issued
or pursuant to a severance, buy-sell or right of first refusal agreement with
such current or former officer or employee; provided that the aggregate amount
of any such loans funded and cash consideration paid, or distributions made,
pursuant to this clause (iv) do not in any one fiscal year exceed $1 million,
and (v) the making of Investments in Unrestricted Subsidiaries and joint
ventures in an aggregate amount not to exceed $20 million; provided, however,
that the Company or the Restricted Subsidiaries may make additional Investments
pursuant to this clause (v) up to an aggregate amount not to exceed $10 million
if the Company is able, at the time of any such Investment and immediately after
giving effect thereto, to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the "Limitation on Additional
Indebtedness" covenant; provided, further, that in calculating the aggregate
amount of Restricted Payments made subsequent to the Issue Date for purposes of
clause (c) of the immediately preceding paragraph, amounts expended pursuant to
clause (i) and (v) shall be included in the calculation.
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Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "Limitation on Restricted Payments" were computed,
which calculations may be based upon the Company's latest available financial
statements, and that no Default or Event of Default exists and is continuing and
no Default or Event of Default will occur immediately after giving effect to any
Restricted Payments.
Limitation on Other Senior Subordinated Debt
The Company will not, and will not permit any of the Restricted
Subsidiaries to directly or indirectly incur, contingently or otherwise, any
Indebtedness that is both (i) subordinate in right of payment to any Senior
Indebtedness of the Company or any of the Subsidiary Guarantors, as the case may
be, and (ii) senior in right of payment to the Notes or any of the Guarantees,
as the case may be.
Limitations on Liens
The Company will not, and will not permit any of the Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any Property,
assets, income or profit of the Company or any Restricted Subsidiary or any
shares of stock or debt of any Restricted Subsidiary (whether or not any of the
foregoing is now owned or hereafter acquired) unless (i) if such Lien secures
Indebtedness which is pari passu in right of payment with the Notes, then the
Notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligation is no longer secured by a Lien or (ii) if
such Lien secures Indebtedness which is subordinated in right of payment to the
Notes, any such Lien shall be subordinated to a Lien granted to the Holders of
the Notes in the same collateral as that securing such Lien to the same extent
as such subordinated Indebtedness is subordinated to the Notes.
Limitation on Transactions with Affiliates
The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate (including entities in which the Company or any of the Restricted
Subsidiaries own a minority interest) or holder of 5% or more of the Company's
Common Stock (each of the foregoing, an "Affiliate Transaction") or extend,
renew, waive or otherwise modify the terms of any Affiliate Transaction entered
into prior to the Issue Date unless the terms of such Affiliate Transaction are
fair and reasonable to the Company or such Restricted Subsidiary, as the case
may be, and the terms of such Affiliate Transaction are at least as favorable as
the terms which could be obtained by the Company or such Restricted Subsidiary,
as the case may be, in a comparable transaction made on an arm's-length basis
between unaffiliated parties. In any Affiliate Transaction involving an amount
or having a value in excess of $1 million the Company must obtain a resolution
of the board of directors approved by a majority of the members of the board of
directors (and a majority of the disinterested members of the board of
directors) certifying that such Affiliate Transaction complies with this
"Limitation on Transactions with Affiliates" covenant. In any Affiliate
Transaction with a value in excess of $5 million the Company must obtain a
written opinion that such Affiliate Transaction complies with this "Limitation
on Transactions with Affiliates" from an independent investment banking firm of
nationally recognized standing.
The foregoing provisions will not apply to (i) any Restricted Payment that
is not prohibited by the provisions described under "Limitations on Restricted
Payments", (ii) any transaction between the Company and any of its Restricted
Subsidiaries or between Restricted Subsidiaries or (iii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company and any employment and consulting arrangements entered
into by the Company or any Restricted Subsidiary with their executives or
consultants in the ordinary course of business.
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Guarantees of Certain Indebtedness
The Company will not permit any of the Restricted Subsidiaries (other than
the Guarantors) to (a) incur, guarantee or secure through the granting of Liens
the payment of any Indebtedness of the Company or any other Restricted
Subsidiary or (b) pledge any intercompany notes representing obligations of any
of the Restricted Subsidiaries to secure the payment of any Indebtedness of the
Company, in each case unless such Restricted Subsidiary, the Company and the
Trustee execute and deliver a supplemental indenture evidencing such Restricted
Subsidiary's Guarantee under the Indenture. Thereafter, such Restricted
Subsidiary shall be a Guarantor for all purposes of the Indenture.
Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to the Company or any Restricted Subsidiary on its Capital Stock,
(b) pay any Indebtedness owed to the Company or any Restricted Subsidiary, (c)
make loans or advances to the Company or any Restricted Subsidiary, (d) transfer
any of its properties or assets to the Company or any Restricted Subsidiary, (e)
grant liens or security interests on the assets of the Company or the Restricted
Subsidiaries in favor of the holders of the Notes, or (f) guarantee the Notes or
any renewals or refinancings thereof, except for Permitted Dividend
Encumbrances.
Limitation on Certain Asset Sales
The Company will not, and will not permit any of the Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such sale or other disposition at least equal to the fair market value thereof
(as determined in good faith by the Company's board of directors, and evidenced
by a board resolution); (ii) not less than 75% of the consideration received by
the Company or such Restricted Subsidiary, as the case may be, is in the form of
cash or cash equivalents (those equivalents allowed under "Temporary Cash
Investments"), provided, however, that the amount of (x) any liabilities of the
Company or any Restricted Subsidiaries that are assumed by the transferee of
such assets and for which the Company and its Restricted Subsidiaries are
released, including any such Indebtedness of a Restricted Subsidiary whose stock
is purchased by the transferee and (y) any notes or other securities received by
the Company or any such Restricted Subsidiary which are converted into cash
within 180 days of such Asset Sale (to the extent of cash received) shall be
deemed to be cash for purposes of this provision; provided, further, that the
Company or such Restricted Subsidiary will not be required to comply with this
clause (ii) with respect to a Permitted Asset Swap; and (iii) the Asset Sale
Proceeds received by the Company or such Restricted Subsidiary are applied (a)
first, to the extent the Company elects, or is required, to permanently prepay,
repay or purchase existing Senior Indebtedness (or Purchase Money Indebtedness
that ranks pari passu in right of payment with the Notes solely to the extent
that such Asset Sale involves property or assets securing such Purchase Money
Indebtedness pursuant to a lien granted pursuant to clause (v) of the definition
of Permitted Liens) within 270 days following the receipt of the Asset Sale
Proceeds from any Asset Sale; provided that any such repayment shall result in a
permanent reduction of the commitments thereunder in an amount equal to the
principal amount so repaid; (b) second, to the extent of the balance of Asset
Sale Proceeds after application as described above, to the extent the Company
elects, to an investment in assets (including Capital Stock or other securities
purchased in connection with the acquisition of Capital Stock or property of
another Person) used or useful in businesses similar or ancillary to the
business of the Company and the Restricted Subsidiaries as conducted at the time
of such Asset Sale, provided that such investment occurs and such Asset Sale
Proceeds are so applied within 270 days following the receipt of such Asset Sale
Proceeds (the "Reinvestment Date"); and (c) third, if on the Reinvestment Date
with respect to any Asset Sale, the Available Asset Sale Proceeds exceed $10
million, the Company shall apply an amount equal to such Available Asset Sale
Proceeds to an offer to repurchase the Notes, at a purchase price in cash equal
to 100% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of repurchase (an "Excess
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Proceeds Offer"); provided, however, that the Company may, at the time that it
makes any such Excess Proceeds Offer, also offer to purchase, at a price in cash
equal to 100% of the outstanding principal amount thereof plus accrued and
unpaid interest, if any, to the purchase date, any Indebtedness which ranks pari
passu in right of payment to the Notes (a "Pari Passu Excess Proceeds Offer")
and to the extent the Company so elects to make a Pari Passu Excess Proceeds
Offer, Notes and such pari passu Indebtedness shall be purchased pursuant to
such Excess Proceeds Offer and Pari Passu Excess Proceeds Offer, respectively,
on a pro rata basis based on the aggregate principal amount of such Notes and
pari passu Indebtedness then outstanding. To the extent that the aggregate
principal amount of Notes tendered pursuant to an Excess Proceeds Offer is less
than the Available Asset Sale Proceeds, the Company may use such deficiency for
general corporate purposes. To the extent that the aggregate principal amount of
pari passu Indebtedness tendered pursuant to a Pari Passu Excess Proceeds Offer
is less than such pari passu Indebtedness pro rata share of such Available Asset
Sale Proceeds, the Company shall use such remaining Available Asset Sale
Proceeds to purchase any Notes validly tendered and not withdrawn pursuant to
such Excess Proceeds Offer. If the aggregate principal amount of Notes validly
tendered and not withdrawn by holders thereof exceeds the Available Asset Sale
Proceeds or to the extent the Company elects to make a Pari Passu Excess
Proceeds Offer, exceeds the Notes' pro rata share of such Available Asset Sale
Proceeds, then Notes to be purchased will be selected on a pro rata basis. Upon
completion of such Excess Proceeds Offer, the amount of Available Asset Sale
Proceeds shall be reset to zero.
If the Company is required to make an Excess Proceeds Offer, the Company
shall mail, within 30 days following the Reinvestment Date, a notice to the
Holders stating, among other things: (1) that such Holders have the right to
require the Company to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (2)
the purchase date, which shall be no earlier than 30 days and not later than 60
days from the date such notice is mailed; (3) the instructions, determined by
the Company, that each Holder must follow in order to have such Notes
repurchased; and (4) the calculations used in determining the amount of
Available Asset Sale Proceeds to be applied to the repurchase of such Notes.
Limitation on Issuances and Sales of Preferred Stock by Restricted
Subsidiaries
The Company (a) will not permit any of its Restricted Subsidiaries to issue
any Preferred Stock (other than to the Company or a Wholly-Owned Restricted
Subsidiary of the Company or as permitted by the first paragraph of "Limitation
on Additional Indebtedness and Preferred Stock of Restricted Subsidiaries") and
(b) will not permit any Person (other than the Company or a Wholly-Owned
Restricted Subsidiary of the Company) to own any Preferred Stock of any
Restricted Subsidiary of the Company; provided, however, that this covenant
shall not prohibit the issuance and sale of (x) all, but not less than all, of
the issued and outstanding Capital Stock of any Restricted Subsidiary of the
Company owned by the Company or any of its Restricted Subsidiaries in compliance
with the other provisions of the Indenture or (y) to the extent mandated by
applicable law, directors' qualifying shares or investments by foreign
nationals.
Line of Business
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, engage to any
substantial extent in any line or lines of business activity other than that
which, in the reasonable good faith judgment of the Board of Directors of the
Company, is a Related Business.
Payments for Consent
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all holders of the Notes which so consent, waive or agree to amend
in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
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Reports to Holders
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it will continue to furnish the information required thereby
to the Commission and to the holders of the Notes. The Indenture provides that
even if the Company is entitled under the Exchange Act not to furnish such
information to the Commission or to the holders of the Notes, they will
nonetheless continue to furnish such information to the Commission, holders of
the Notes and prospective holders of the Notes.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company shall be obligated
to make an offer to purchase (a "Change of Control Offer"), and shall purchase,
on a business day (the "Change of Control Purchase Date") not more than 60 nor
less than 30 days following the occurrence of the Change of Control, all of the
then outstanding Notes at a purchase price (the "Change of Control Purchase
Price") equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the Change of Control Purchase Date. The Company shall be
required to purchase all Notes properly tendered into the Change of Control
Offer and not withdrawn. The Change of Control Offer is required to remain open
for at least 20 business days and until the close of business on the Change of
Control Purchase Date.
In order to effect such Change of Control Offer, the Company shall, not
later than the 30th day after the occurrence of the Change of Control, mail to
each holder of Notes notice of the Change of Control Offer, which notice shall
govern the terms of the Change of Control Offer and shall state, among other
things, the procedures that holders of Notes must follow to accept the Change of
Control Offer.
The occurrence of the events constituting a Change of Control under the
Indenture will result in an event of default under the Senior Credit Facility
and, thereafter, the lenders will have the right to require repayment of the
borrowings thereunder in full. The Company's obligations under the Senior Credit
Facility will constitute Designated Senior Indebtedness and will represent
obligations senior in right of payment to the Notes. Consequently, the
subordination provisions of the Indenture will have the effect of precluding the
purchase of the Notes by the Company in the event of a Change of Control, absent
consent of the lenders under the Senior Credit Facility or repayment of all
amounts outstanding thereunder (although the failure by the Company to comply
with its obligations in the event of a Change of Control will constitute a
default under the Notes). There can be no assurance that the Company will have
adequate resources to repay or refinance all Indebtedness owing under the Senior
Credit Facility or to fund the purchase of any Notes upon a Change of Control.
The Indenture will provide that, (A) if the Company or any Restricted
Subsidiary has issued any outstanding Indebtedness that is subordinated in right
of payment to the Notes or the Guarantee of such Restricted Subsidiary, as the
case may be, or the Company or any Restricted Subsidiary has issued any
Preferred Stock, and the Company or such Restricted Subsidiary is required to
make a change of control offer or to make a distribution with respect to such
subordinated Indebtedness or Preferred Stock in the event of a change of
control, the Company or such Restricted Subsidiary shall not consummate any such
offer or distribution with respect to such subordinated Indebtedness or
Preferred Stock until such time as the Company shall have paid the Change of
Control Purchase Price in full to the Holders of Notes that have accepted the
Company's Change of Control Offer and shall otherwise have consummated the
Change of Control Offer made to holders of the Notes and (B) the Company or any
Restricted Subsidiary will not issue Indebtedness that is subordinated in right
of payment to the Notes or the Guarantee of such Restricted Subsidiary and the
Company will not issue Preferred Stock with change of control provisions
requiring the payment of such Indebtedness or Preferred Stock prior to the
payment of the Notes in the event of a Change of Control under the Indenture.
In the event that a Change of Control occurs and the holders of Notes
exercise their right to require the Company to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Company will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.
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MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company will not, in any transaction or series of transactions, merge
or consolidate with or into, or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets as an
entirety to, any person or persons, and the Company will not permit any of its
Restricted Subsidiaries to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in a sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company or the Company and its Restricted Subsidiaries, taken as a whole, to any
other person or persons, unless at the time of and after giving effect thereto
(a) either (i) if the transaction or series of transactions is a merger or
consolidation, the Company shall be the surviving person of such merger or
consolidation, or (ii) the person formed by such consolidation or into which the
Company or such Restricted Subsidiary is merged or to which the properties and
assets of the Company or such Restricted Subsidiary, as the case may be, are
transferred (any such surviving person or transferee person being the "Surviving
Entity") shall be a corporation organized and existing under the laws of the
United States of America, any state thereof or the District of Columbia and
shall expressly assume by a supplemental indenture executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, all the obligations of
the Company under the Notes and the Indenture, and in each case, the Indenture
shall remain in full force and effect and (b) immediately before and immediately
after giving effect to such transaction or series of transactions on a pro forma
basis (including, without limitation, any Indebtedness incurred or anticipated
to be incurred in connection with or in respect of such transaction or series of
transactions), no Default or Event of Default shall have occurred and be
continuing and the Company or the Surviving Entity, as the case may be, after
giving effect to such transaction or series of transactions on a pro forma basis
(including, without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions), could incur $1.00 of additional Indebtedness pursuant to the
first paragraph of the covenant described under "-- Certain
Covenants -- Limitation on Indebtedness" above (assuming a market rate of
interest with respect to such additional Indebtedness).
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(a) default in payment of any principal of, or premium, if any, on the
Notes;
(b) default for 30 days in payment of any interest on the Notes;
(c) default by the Company or any Guarantor in the observance or
performance of any other covenant in the Notes or the Indenture for 45 days
after written notice from the Trustee or the holders of not less than 25%
in aggregate principal amount of the Notes then outstanding;
(d) default or defaults under one or more agreements, instruments,
mortgages, bonds, debentures or other evidences of Indebtedness under which
the Company or any Restricted Subsidiary of the Company then has
outstanding Indebtedness in excess of $10 million, individually or in the
aggregate, and either (a) such Indebtedness is already due and payable in
full or (b) such default or defaults have resulted in the acceleration of
the maturity of such Indebtedness;
(e) any final judgment or judgments which can no longer be appealed
for the payment of money in excess of $10 million (not covered by
insurance) shall be rendered against the Company or any Restricted
Subsidiary and shall not be discharged for any period of 60 consecutive
days during which a stay of enforcement shall not be in effect; and
(f) certain events involving bankruptcy, insolvency or reorganization
of the Company or any Restricted Subsidiary.
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The Indenture provides that the Trustee may withhold notice to the holders
of the Notes of any default (except in payment of principal or premium, if any,
or interest on the Notes) if the Trustee considers it to be in the best interest
of the holders of the Notes to do so.
The Indenture will provide that if an Event of Default (other than an Event
of Default resulting from certain events of bankruptcy, insolvency or
reorganization) shall have occurred and be continuing, then the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may declare to be immediately due and payable the entire principal
amount of all the Notes then outstanding plus accrued interest to the date of
acceleration and such amounts shall become immediately due and payable;
provided, however, that after such acceleration but before a judgment or decree
based on acceleration is obtained by the Trustee, the holders of a majority in
aggregate principal amount of outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than nonpayment of accelerated principal, premium or interest, have been
cured or waived as provided in the Indenture, provided, however, that so long as
the Senior Credit Facility shall be in full force and effect, if any Event of
Default shall have occurred and be continuing (other than as specified in clause
(f)), the Notes shall not become due and payable until the earlier to occur of
(x) five business days following the delivery of a written notice of such
acceleration of the Notes to the agent under the Senior Credit Facility and (y)
the acceleration of any Indebtedness under the Senior Credit Facility. In case
an Event of Default resulting from certain events of bankruptcy, insolvency or
reorganization shall occur, the principal, premium and interest amount with
respect to all of the Notes shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the holders of the Notes.
The holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or compliance with any
provision of the Indenture or the Notes and to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, subject to
certain limitations specified in the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless the holders of at least 25% in aggregate principal amount of
the outstanding Notes shall have made written request and offered reasonable
indemnity to the Trustee to institute such proceeding as a trustee, and unless
the Trustee shall not have received from the holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted for payment on such
Note on or after the respective due dates expressed in such Note.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to the Notes (except for
the obligations to register the transfer or exchange of such Notes, to replace
temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office
or agency in respect of the Notes and to hold monies for payment in trust)
("defeasance") or (b) to be released from their obligations with respect to the
Notes under certain covenants contained in the Indenture some of which are
described above under "Covenants" ("covenant defeasance"), upon the deposit with
the Trustee (or other qualifying trustee), in trust for such purpose, of money
and/or U.S. Government Obligations (as defined in the Indenture) which through
the payment of principal and interest in accordance with their terms will
provide money, in an amount sufficient to pay the principal of, premium, if any,
and interest on the Notes, on the scheduled due dates therefor or on a selected
date of redemption in accordance with the terms of the Indenture. Such a trust
may only be established if, among other things, the Company has delivered to the
Trustee an opinion of counsel (as specified in the Indenture) (i) to the effect
that neither the trust nor the Trustee will be required to register as an
investment company under the Investment Company Act of 1940, as amended, and
(ii) describing either a private ruling concerning the Notes or a published
ruling of the Internal Revenue Service, to the effect that holders of the Notes
or persons in their positions will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be
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subject to federal income tax on the same amount and in the same manner and at
the same times, as would have been the case if such deposit, defeasance and
discharge had not occurred.
MODIFICATION OF INDENTURE
From time to time, the Company, the Guarantors and the Trustee may, without
the consent of holders of the Notes, amend the Indenture or the Notes or
supplement the Indenture for certain specified purposes, including providing for
uncertificated Notes in addition to certificated Notes, and curing any
ambiguity, defect or inconsistency, or making any other change that does not
adversely affect the rights of any holder. The Indenture contains provisions
permitting the Company, the Guarantors and the Trustee, with the consent of
holders of at least a majority in principal amount of the outstanding Notes, to
modify or supplement the Indenture or the Notes, except that no such
modification shall, without the consent of each holder affected thereby, (i)
reduce the amount of Notes whose holders must consent to an amendment,
supplement, or waiver to the Indenture or the Notes, (ii) reduce the rate of or
change the time for payment of interest on any Note, (iii) reduce the principal
of or premium on or change the stated maturity of any Note, (iv) make any Note
payable in money other than that stated in the Note, (v) change the amount or
time of any payment required by the Notes or reduce the premium payable upon any
redemption of Notes, or change the time before which no such redemption may be
made, (vi) waive a default on the payment of the principal of, interest on, or
redemption payment with respect to any Note, (vii) amend, alter, change or
modify the obligation of the Company to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate an Excess
Proceeds Offer or waive any Default in the performance of any such offers or
modify any of the provisions or definitions with respect to any such offers or
(viii) take any other action otherwise prohibited by the Indenture to be taken
without the consent of each holder affected thereby.
COMPLIANCE CERTIFICATE
The Company will deliver to the Trustee on or before 90 days after the end
of the Company's fiscal year and on or before 45 days after the end of each of
the first, second and third fiscal quarters in each year an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that has occurred. If they do, the certificate will describe the Default
or Event of Default and its status.
THE TRUSTEE
The Trustee under the Indenture will be the Registrar and Paying Agent with
regard to the Notes. The Indenture provides that, except during the continuance
of an Event of Default, the Trustee will perform only such duties as are
specifically set forth in the Indenture. During the existence of an Event of
Default, the Trustee will exercise such rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
DEPOSITORY
Upon issuance, all Notes will be represented by one or more fully
registered Global Notes. Each such Global Note will be deposited with, or on
behalf of, The Depository Trust Company, as depository (the "Depository"), and
registered in the name of the Depository or a nominee thereof. Unless and until
it is exchanged in whole or in part for Notes in definitive form, no Global Note
may be transferred except as a whole by the Depository to a nominee of such
Depository or by a nominee of such Depository to such Depository or to another
nominee of such Depository or by such Depository or any such nominee to a
successor of such Depository or a nominee of such successor.
The Depository has advised the Company as follows: the Depository is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depository was created to hold securities of its participants
("Participants") and to facilitate the clearance and settlement of
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securities transactions among its Participants in such securities through
electronic book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. The
Depository is owned by a number of Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depository's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").
Purchases of Notes must be made by or through Participants, which will
receive a credit on the records of the Depository. The ownership interest of
each actual purchaser of a Note (the "Beneficial Owner") is in turn to be
recorded on the Participants' or Indirect Participants' records. Beneficial
Owners will not receive written confirmation from the Depository of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Participant or Indirect Participant through which the
Beneficial Owner entered into the transaction. Ownership of beneficial interests
in Global Notes will be shown on, and the transfer of such ownership interests
will be effected only through, records maintained by the Depository (with
respect to interests of Participants) and on the records of Participants (with
respect to interests of persons held through Participants). The laws of some
states may require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and such laws may impair the
ability to own, transfer or pledge beneficial interests in Global Notes.
So long as the Depository, or its nominee, is the registered owner of a
Global Note, the Depository or its nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Global Note
for all purposes under the Indenture. Except as provided below, Beneficial
Owners of a Global Note will not be entitled to have the Notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of the Notes in definitive form and will not be
considered the owners or holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the procedures
of the Depository and, if such person is not a Participant, on the procedures of
the Participant through which such person owns its interest, to exercise any
rights of a holder under the Indenture. The Company understands that under
existing industry practices, in the event that the Company requests any action
of holders of Notes or an owner of a beneficial interest in a Global Note
desires to give or take any action which the holder of a Note is entitled to
give or take under the Indenture, the Depository would authorize the
Participants holding the relevant beneficial interests to give or take such
action, and such Participants would authorize Beneficial Owners owning through
such Participants to give or take such action or would otherwise act upon the
instructions of Beneficial Owners. Conveyance of notices and other
communications by the Depository to Participants, by Participants to Indirect
Participants, and by Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payment of the principal of, premium, if any, and interest on Notes
registered in the name of the Depository or its nominee will be made to the
Depository or its nominee, as the case may be, as the holder of the Global Note
or Global Notes representing such Notes. None of the Company, the Trustee or any
other agent of the Company or agent of the Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests or for supervising or reviewing any
records relating to such beneficial ownership interests. The Company expects
that the Depository, upon receipt of any payment of principal, premium, if any,
or interest in respect of a Global Note will credit the accounts of the
Participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interest in such Global Note as shown on the
records of the Depository. The Company also expects that payments by
Participants to Beneficial Owners will be governed by standing customer
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participants.
If (x) the Depository is at any time unwilling, unable or ineligible to
continue as Depository and a successor depository is not appointed by the
Company within 60 days after the Company is so informed in
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writing or becomes aware of the same, or (y) an Event of Default has occurred
and is continuing, the Global Notes will be exchanged for Notes in definitive
form of like tenor and of an equal aggregate principal amount, in denominations
of $1,000 and integral multiples thereof. Such definitive Notes shall be
registered in such name or names as the Depository shall instruct the Trustee.
It is expected that such instructions may be based upon directions received by
the Depository from Participants with respect to ownership of beneficial
interests in Global Notes.
No service charge will be made for the registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Principal of,
premium, if any, and interest on definitive Notes (if issued) will be payable
and such Notes may be surrendered for registration of transfer or exchange at
the office or agency of the Company maintained for such purpose in The City of
New York, located initially at the corporate trust office of the Trustee. At the
option of the Company, payment of interest on definitive Notes (if issued) may
be made by check mailed to the addresses of the persons entitled thereto as they
appear on the securities register.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal of, premium, if any and interest on
the Notes will be made by the Company in immediately available funds, so long as
the Notes are maintained in book-entry form and the procedures of the Depository
permit such payments to be made in immediately available funds.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture. Reference is made to the Indenture for the
full definition of all such terms as well as any other capitalized terms used
herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
(x) the amount by which the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities),
but excluding liabilities under the Guarantee of such Guarantor at such date and
(y) the amount by which the present fair salable value of the assets of such
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities and after giving effect to any collection
from any Subsidiary of such Guarantor in respect of the obligations of such
Subsidiary under the Guarantee), excluding Indebtedness in respect of the
Guarantee, as they become absolute and matured.
"Advertising Displays" mean all posters, signs (including logo sign
structures), billboards and other outdoor advertising displays and related
contracts and sites therefor owned or leased (as lessee) by the Company and the
Restricted Subsidiaries.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Asset Acquisition" means (i) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be consolidated or merged with the
Company or any Restricted Subsidiary or (ii) the acquisition by the Company or
any Restricted Subsidiary of assets of any Person.
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"Asset Sale" means the sale, transfer or other disposition (other than to
the Company or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions having a fair market value in excess of
$1,000,000 of (a) any Capital Stock of or other equity interest in any
Restricted Subsidiary, (b) all or substantially all of the assets of any
business owned by the Company or any Restricted Subsidiary or a division, line
of business or comparable business segment of the Company or any Restricted
Subsidiary thereof or (c) any other assets or property of the Company or of any
Restricted Subsidiary, (whether real or personal property). For purposes of this
definition, the term "Asset Sale" shall not include any sale, transfer or other
disposition that is governed by and made in accordance with the provisions
described under "Merger, Consolidation or Sale of Assets" or any sale, transfer
or other disposition to the Company or a Wholly-Owned Restricted Subsidiary that
is a Guarantor.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale, (b) payment of all brokerage commissions, underwriting and other fees and
expenses related to such Asset Sale, and (c) deduction of appropriate amounts to
be provided by the Company or such Restricted Subsidiary as a reserve, in
accordance with GAAP, against any liabilities associated with the assets sold or
disposed of in such Asset Sale and retained by the Company or such Restricted
Subsidiary after such Asset Sale, including, without limitation, pension and
other post employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the assets sold or disposed of in such Asset Sale, and (ii) promissory notes and
other noncash consideration received by the Company or any Restricted Subsidiary
from such Asset Sale or other disposition upon the liquidation or conversion of
such notes or noncash consideration into cash.
"Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sale that have not been applied in
accordance with clauses (iii)(a) or (iii)(b), and which have not yet been the
basis for an Excess Proceeds Offer in accordance with clause (iii)(c) of the
first paragraph of "Certain Covenants -- Limitation on Certain Asset Sales."
"Average Life to Stated Maturity" means, with respect to any Indebtedness,
as at any date of determination, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years (or any fraction thereof) from such
date to the date or dates of each successive scheduled principal payment
(including, without limitation, any sinking fund requirements) of such
Indebtedness multiplied by (b) the amount of each such principal payment by (ii)
the sum of all such principal payments.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), excluding Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time, upon the happening of an event or
otherwise), directly or indirectly, of more than 35% of the total voting power
with respect to the total Voting Stock of the Company; provided, however, that
the Permitted Holders (i) "beneficially own" (as so defined) a lower percentage
of such total voting power with respect to the Voting Stock than such other
person or "group" and (ii) do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the Board
of Directors of the Company; (b) the Company consolidates with, or merges with
or into, another person or sells, assigns, conveys, transfers, leases or
otherwise disposes of
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all or substantially all of its assets to any person, or any person consolidates
with, or merges with or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is converted
into or exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is converted
into or exchanged for (1) Voting Stock (other than Disqualified Capital Stock)
of the surviving or transferee corporation or (2) cash, securities and other
property in an amount which could then be paid by the Company as a Restricted
Payment under the Indenture, or a combination thereof, and (ii) immediately
after such transaction no "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act), excluding Permitted Holders, is the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the happening of
an event or otherwise), directly or indirectly, of more than 50% of the total
voting power with respect to the total Voting Stock of the surviving or
transferee corporation; (c) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office;
or (d) the Company is liquidated or dissolved or adopts a plan of liquidation.
"Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest which, in conformity with GAAP, would be set forth opposite the
caption "interest expense" or any like caption on an income statement for the
Company and its Restricted Subsidiaries on a consolidated basis (including, but
not limited to, imputed interest included in Capitalized Lease Obligations, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, the net costs associated with
hedging obligations, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other non-cash interest
expense (other than interest amortized to cost of sales)) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, plus an amount
equal to the product of (a) the aggregate dividends paid on Disqualified Capital
Stock during such period and (b) a fraction, the numerator of which is one and
the denominator of which is one minus the Company's then effective combined tax
rate, to the extent paid; provided, however, that "Consolidated Interest
Expense" shall exclude the amortization of deferred financing fees.
"Consolidated Net Income" means, for any period, the aggregate of the Net
Income of the Company and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP; provided, however, that
(a) the Net Income of any Person (the "other Person") in which the Company or
any of its Restricted Subsidiaries has less than a 100% interest (which interest
does not cause the net income of such other Person to be consolidated into the
net income of the Company in accordance with GAAP) shall be included only to the
extent of the amount of dividends or distributions paid to the Company or such
Restricted Subsidiary, (b) the Net Income of any Restricted Subsidiary that is
subject to any restriction or limitation on the payment of dividends or the
making of other distributions (other than pursuant to the Notes or the
Indenture) shall be excluded to the extent of such restriction or limitation,
except that to the extent that any such restriction or limitation results solely
from covenant limitations under any SBA Indebtedness, there shall not be
deducted that portion of such Restricted Subsidiary's Net Income which exceeds
the outstanding aggregate principal amount of such SBA Indebtedness, (c)(i) the
Net Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition and (ii) any net gain (but not
loss) resulting from an Asset Sale by the Company or any of its Restricted
Subsidiaries other than in the ordinary course of business shall be excluded,
and (d) extraordinary gains and losses shall be excluded.
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"Consolidated Net Tangible Assets" means the book value of the assets of
the Company and its Restricted Subsidiaries (other than patents, patent rights,
trademarks, trade names, franchises, copyrights, licenses, permits, goodwill and
other intangible assets classified as such in accordance with GAAP) after all
applicable deductions in accordance with GAAP (including, without limitation,
reserves for doubtful receivables, obsolescence, depreciation and amortization)
less all liabilities of the Company and its Restricted Subsidiaries determined
in accordance with GAAP.
"Cumulative Consolidated Interest Expense" means, as of any date of
determination, Consolidated Interest Expense of the Company from the Issue Date
to the end of the Company's most recently ended full fiscal quarter prior to
such date, taken as a single accounting period.
"Cumulative EBITDA" means, as of any date of determination, EBITDA of the
Company from the Issue Date to the end of the Company's most recently ended full
fiscal quarter prior to such date, taken as a single accounting period.
"Default" means any event that is, or with the passing of time or giving of
notice or both would be, an Event of Default.
"Designated Senior Indebtedness," as to the Company or any Guarantor, as
the case may be, means any Senior Indebtedness (a) under or in respect of the
Senior Credit Facility, or (b) which at the time of determination exceeds $10
million in aggregate principal amount (or accreted value in the case of
Indebtedness issued at a discount) outstanding or available under a committed
facility, and (i) which is specifically designated in the instrument evidencing
such Senior Indebtedness as "Designated Senior Indebtedness" and (ii) as to
which the Trustee has been given written notice of such designation.
"Disqualified Capital Stock" means any Capital Stock of the Company or any
Restricted Subsidiary which, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable at the option of the
holder), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
maturity date of the Notes, for cash or securities constituting Indebtedness.
"EBITDA" means, for any Person, for any period, an amount equal to (a) the
sum of, without duplication, (i) Consolidated Net Income for such period, plus
(ii) the provision for taxes for such period based on income or profits to the
extent such income or profits were included in computing Consolidated Net Income
and any provision for taxes utilized in computing net loss under clause (i)
hereof, plus (iii) to the extent it reduces Consolidated Net Income during such
period, Consolidated Interest Expense for such period, plus (iv) depreciation
for such period on a consolidated basis, plus (v) amortization of intangibles
for such period on a consolidated basis, plus (vi) any other non-cash items
reducing Consolidated Net Income for such period, minus (b) all non-cash items
increasing Consolidated Net Income for such period, all for the Company and its
Restricted Subsidiaries determined in accordance with GAAP.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Maturity Date" shall be the date fixed in the Indenture for the
final payment of principal on the Notes.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"Guarantee" means each guarantee of the Notes by each Guarantor.
"Guaranteed Permitted Unrestricted Subsidiary Obligations" shall have the
meaning set forth in the definition of "Investments."
"Guarantor" means each Subsidiary of the Company in existence on the Issue
Date (other than Missouri Logos, a partnership) and each Restricted Subsidiary
which thereafter guarantees payment of the Notes pursuant to the covenant
described under "Guarantees of Certain Indebtedness".
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"incur" means, with respect to any Indebtedness or other obligation of any
Person, to directly or indirectly create, issue, incur (by conversion, exchange
or otherwise), assume, guarantee or otherwise become directly or indirectly
liable with respect to (including as a result of an Asset Acquisition), or
otherwise become responsible for, contingently or otherwise, any Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "incurrence," "incurred," "incurable," and "incurring" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding any balances that constitute accounts payable or trade
payables, and other accrued liabilities arising in the ordinary course of
business) if and to the extent any of the foregoing indebtedness would appear as
a liability upon a balance sheet of such Person prepared in accordance with
GAAP, and shall also include, to the extent not otherwise included (i) any
Capitalized Lease Obligations of such Person, (ii) obligations secured by a lien
to which the property or assets owned or held by such Person is subject, whether
or not the obligation or obligations secured thereby shall have been assumed
(the amount of such obligation being deemed to be the lesser of the value of
such property or asset or the amount of the obligation so secured), (iii)
guarantees of items of other Persons which would be included within this
definition for such other Persons (whether or not such items would appear upon
the balance sheet of the guarantor), (iv) all obligations for the reimbursement
of any obligor on any banker's acceptance or for reimbursement of any obligor on
any letter of credit with respect to drawings made thereunder and not yet
reimbursed, (v) in the case of the Company, Disqualified Capital Stock of the
Company or any Restricted Subsidiary, and (vi) obligations of any such Person
under any Interest Rate Agreement applicable to any of the foregoing (if and to
the extent such Interest Rate Agreement obligations would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP) and (vii)
the outstanding amount of any Guaranteed Permitted Unrestricted Subsidiary
Obligations; provided, however, that, except for purposes of this clause (vii),
obligations in respect of performance and surety bonds and in respect of
reimbursement obligations for undrawn letters of credit (whether or not secured
by a lien) supporting insurance arrangements and performance and surety bonds,
each incurred in the ordinary course of business and not as a part of a
financing transaction, for the benefit of the Company or any Restricted
Subsidiary, shall not be considered Indebtedness for purposes of the Indenture.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above,
provided (i) that the amount outstanding at any time of any Indebtedness issued
with original issue discount is the principal amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP and (ii) that
Indebtedness shall not include any liability for federal, state, local or other
taxes.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Investments" means, (x) directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business), loan or capital contribution to (by means of transfers of property to
others, payments for property or services for the account or use of others or
otherwise), the purchase of any stock, bonds, notes, debentures, partnership or
joint venture interests or other securities of, the acquisition, by purchase or
otherwise, of all or substantially all of the business or assets or stock or
other evidence of beneficial ownership of, any Person and (y) any Permitted
Unrestricted Subsidiary Obligation to the extent it is guaranteed by the Company
or a Restricted Subsidiary or otherwise is recourse to or obligates the Company
or any Restricted Subsidiary, directly or indirectly, contingently or otherwise,
to the satisfaction thereof ("Guaranteed Permitted Unrestricted Subsidiary
Obligations"). Investments shall exclude extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices.
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"Issue Date" means the date the Notes are first issued by the Company and
authenticated by the Trustee under the Indenture.
"Junior Security" means any securities of the Company or any other Person
that are (i) equity securities without special covenants or (ii) subordinated in
right of payment to all Senior Indebtedness of the Company or any Guarantor, as
the case may be, to substantially the same extent as, or to a greater extent
than, the Notes are subordinated as provided in the Indenture, in any event
issued pursuant to a court order so providing and as to which (a) the rate of
interest on such securities shall not exceed the effective rate of interest on
the Notes on the date of the Indenture, (b) such securities shall not be
entitled to the benefits of covenants or defaults materially more beneficial to
the holders of such securities than those in effect with respect to the Notes on
the date of the Indenture and (c) such securities shall not provide for
amortization (including sinking fund and mandatory prepayment provisions)
commencing prior to the date six months following the final scheduled maturity
date of the Senior Indebtedness of the Company or Guarantor, as the case may be
(as modified by the plan of reorganization or readjustment pursuant to which
such securities are issued).
"Leverage Ratio" means the ratio of (i) the sum of the aggregate
outstanding amount of (x) Indebtedness of the Company and the Restricted
Subsidiaries and (y) except to the extent included in the previous clause (x),
Preferred Stock of the Company's Restricted Subsidiaries as of the date of
calculation on a consolidated basis in accordance with GAAP to (ii) the
Company's EBITDA for the four full fiscal quarters (the "Four Quarter Period")
ending on or prior to the date of determination for which financial statements
are available. For purposes of this definition, the Company's "EBITDA" shall be
calculated on a pro forma basis after giving effect to any Asset Sales or Asset
Acquisitions (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of the Company or one of the
Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of such Asset Acquisition) incurring, assuming or
otherwise becoming liable for Indebtedness) at any time on or subsequent to the
first day of the Four Quarter Period and on or prior to the date of
determination, as if such Asset Sale or Asset Acquisition (including any EBITDA
associated with such Asset Acquisition and including any pro forma expense and
cost reductions determined in accordance with Article 11 of Regulation S-X
relating to such Asset Acquisition) occurred on the first day of the Four
Quarter Period.
"Lien" means with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock or
Indebtedness by the Company, the aggregate net cash proceeds received by the
Company, after payment of expenses, commissions and the like incurred in
connection therewith and (b) in the case of any exchange, exercise, conversion
or surrender of outstanding securities of any kind for or into shares of Capital
Stock of the Company which is not Disqualified Capital Stock, the net book value
of such outstanding securities on the date of such exchange, exercise,
conversion or surrender (plus any additional amount required to be paid by the
holder to the Company upon such exchange, exercise, conversion or surrender,
less any and all payments made to the holders, e.g., on account of fractional
shares and less all expenses incurred by the Company in connection therewith).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer or any Treasurer of such Person that shall comply
with applicable provisions of the Indenture.
"Permitted Asset Swap" means the exchange, in the ordinary course of the
outdoor advertising business, of any interest of the Company or any of the
Restricted Subsidiaries in any Advertising Display or Displays for a similar
interest in an Advertising Display or Displays of a Person other than the
Company or such Restricted
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Subsidiary; provided that the aggregate fair market value (as determined in good
faith by the board of directors of the Company) of the Advertising Display or
Displays being transferred by the Company or such Restricted Subsidiary is not
greater than the aggregate fair market value (as determined in good faith by the
board of directors of the Company) of the Advertising Display or Displays
received by the Company or such Restricted Subsidiary in such exchange.
"Permitted Dividend Encumbrances" means encumbrances or restrictions (a)
existing on the Issue Date, (b) arising by reason of Acquired Indebtedness of
any Restricted Subsidiary existing at the time such Person became a Restricted
Subsidiary; provided that such encumbrances or restrictions were not created in
anticipation of such Person becoming a Restricted Subsidiary and are not
applicable to the Company or any of the other Restricted Subsidiaries, (c)
arising under Indebtedness incurred pursuant to clause (i) of the definition of
Permitted Indebtedness, (d) arising under Refinancing Indebtedness; provided
that the terms and conditions of any such restrictions are no less favorable to
the Holders of Notes than those under the Indebtedness being refinanced, (e)
customary provisions restricting the assignment of any contract or interest of
the Company or any Restricted Subsidiary, (f) existing under an agreement
relating to SBA Indebtedness, (g) existing under an agreement relating to any
Permitted Lien referred to in clause (v) of the definition of Permitted Liens
provided that such encumbrance or restriction only relates to the assets or
property subject to such Permitted Lien and having an aggregate fair market
value equal to the Indebtedness secured thereby, (h) imposed by applicable law
and (i) imposed pursuant to a binding agreement which has been entered into for
the sale or disposition of all or substantially all of the Capital Stock or of
any assets of such Restricted Subsidiary, provided such encumbrances and
restrictions apply solely to such Capital Stock or assets of such Restricted
Subsidiary which are the subject of such binding agreement.
"Permitted Holders" means (x) any of Charles Switzer, Charles W. Lamar,
III, Kevin P. Reilly, Sr., members of their immediate families or any lineal
descendant of any of the foregoing and the immediate families of any such lineal
descendant, (y) any trust, to the extent it is for the benefit of any of the
foregoing or (z) any Person, entity or group of Persons controlled by any of the
foregoing.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company and Restricted Subsidiaries which are
Guarantors pursuant to the Senior Credit Facility in an aggregate principal
amount not to exceed $400 million less the aggregate amount of all
permanent repayments thereunder made in accordance with "Limitation on
Certain Asset Sales" and guarantees of such Indebtedness by Restricted
Subsidiaries that are Guarantors;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of the Indenture;
(iv) Indebtedness of the Company to any Wholly-Owned Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary to the Company or
another Restricted Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred by the Company or any Restricted Subsidiary to acquire or lease
property in the ordinary course of business, provided that (a) the
aggregate amount of such Purchase Money Indebtedness and Capital Lease
Obligations outstanding at any time shall not exceed the greater of (x) 5%
of the Company's Consolidated Net Tangible Assets at the time of the
incurrence of any such Purchase Money Indebtedness or Capitalized Lease
Obligation or (x) $10 million, and (b) in each case, such Purchase Money
Indebtedness or Capitalized Lease Obligation, as the case may be, would not
constitute more than 100% of the cost (determined in accordance with GAAP)
of the property so purchased or leased plus reasonable fees and expenses
incurred in connection therewith;
(vi) Interest Rate Protection Agreements and any guarantees thereof;
(vii) additional Indebtedness of the Company or any Restricted
Subsidiary that is a Guarantor not to exceed $25 million in principal
amount outstanding at any time; and
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(viii) Refinancing Indebtedness.
"Permitted Investments" means, for any Person, Investments made on or after
the date of the Indenture consisting of:
(a) Investments by the Company or by a Restricted Subsidiary in the
Company or a Restricted Subsidiary which is a Guarantor;
(b) Temporary Cash Investments;
(c) Investments by the Company or by a Restricted Subsidiary in a
Person, if as a result of such Investment (i) such Person becomes a
Restricted Subsidiary which is a Guarantor or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary which is a Guarantor; and
(d) an Investment that is made by the Company or a Restricted
Subsidiary in the form of any stock, bonds, notes, debentures, partnership
or joint venture interests or other securities that are issued by a third
party to the Company or such Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale that is otherwise
permitted under the covenant described under "Limitation on Certain Asset
Sales."
"Permitted Liens" means (i) Liens existing on the Issue Date, (ii) Liens on
property or assets of, or any shares of stock of or secured debt of, any
corporation existing at the time such corporation becomes a Restricted
Subsidiary or at the time such corporation is merged into the Company or any of
the Restricted Subsidiaries; provided that such Liens are not incurred in
connection with, or in contemplation of, such corporation becoming a Restricted
Subsidiary or merging into the Company or any of the Restricted Subsidiaries,
(iii) Liens securing Refinancing Indebtedness; provided that any such Lien does
not extend to or cover any Property, shares or debt other than the Property,
shares or debt securing the Indebtedness so refunded, refinanced or extended,
(iv) Liens in favor of the Company or any of the Restricted Subsidiaries, (v)
Liens to secure Purchase Money Indebtedness that is otherwise permitted under
the Indenture; provided that any such Lien is created solely for the purpose of
securing such Purchase Money Indebtedness and does not extend to or cover any
property other than such item of property and any improvements on such item,
(vi) statutory liens or landlords', carriers', warehouseman's, mechanics',
suppliers', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which do not secure any Indebtedness and secure
obligations with respect to amounts not yet delinquent or being contested in
good faith by appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor, (vii) Liens for taxes, assessments or governmental charges that
are being contested in good faith by appropriate proceedings, (viii) Liens
securing Capitalized Lease Obligations permitted to be incurred under clause (v)
of the definition of "Permitted Indebtedness," provided that any such Lien does
not extend to any property other than that subject to the underlying lease, (ix)
Liens securing Senior Indebtedness and Guarantor Senior Indebtedness, (x)
Permitted Dividend Encumbrances and (xi) Liens securing Indebtedness in an
aggregate principal amount not to exceed $1,000,000 outstanding at any time.
"Permitted Unrestricted Subsidiary Obligations" shall have the meaning
specified in the definition of "Unrestricted Subsidiary."
"Person" or "person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
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"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries
(Restricted Subsidiaries in the case of the Company) under GAAP.
"Public Equity Offerings" means a public offering by the Company of shares
of its common stock (however designated and whether voting or non-voting but
excluding Disqualified Capital Stock) and any and all rights, warrants or
options to acquire such common stock pursuant to a registration statement
registered pursuant to the Securities Act.
"Purchase Money Indebtedness" means any Indebtedness incurred by a Person
to finance the cost (including the cost of construction or improvement and in
the case of any Capitalized Lease Obligation, the lease) of any real or personal
property, the principal amount of which Indebtedness does not exceed the sum of
(i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company or the Restricted Subsidiaries
outstanding on the Issue Date or other Indebtedness permitted to be incurred by
the Company or the Restricted Subsidiaries pursuant to the terms of the
Indenture (other than pursuant to clauses (i), (iv), (v), (vi) and (vii) of the
definition of Permitted Indebtedness), but only to the extent that (i) the
Refinancing Indebtedness is subordinated to the Notes to at least the same
extent as the Indebtedness being refunded, refinanced or extended, (ii) the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the
Indebtedness being refunded, refinanced or extended, or (b) after the maturity
date of the Notes, (iii) the portion, if any, of the Refinancing Indebtedness
that is scheduled to mature on or prior to the maturity date of the Notes has a
weighted average life to maturity at the time such Refinancing Indebtedness is
incurred that is equal to or greater than the weighted average life to maturity
of the portion of the Indebtedness being refunded, refinanced or extended that
is scheduled to mature on or prior to the maturity date of the Notes, (iv) such
Refinancing Indebtedness is in an aggregate principal amount that is equal to or
less than the sum of (a) the aggregate principal amount then outstanding under
the Indebtedness being refunded, refinanced or extended, (b) the amount of any
premium required to be paid in connection with such refunding, refinancing or
extension pursuant to the terms of such Indebtedness or the amount of any
premium reasonably determined by the Board of Directors of the Company as
necessary to accomplish such refunding, refinancing or extension by means of a
tender offer or privately negotiated purchase and (c) the amount of customary
fees, expenses and costs related to the incurrence of such Refinancing
Indebtedness, and (v) such Refinancing Indebtedness is incurred by the same
Person that initially incurred the Indebtedness being refunded, refinanced or
extended, except that the Company may incur Refinancing Indebtedness to refund,
refinance or extend Indebtedness of any Wholly-Owned Restricted Subsidiary.
"Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock of
the Company or any Restricted Subsidiary of the Company or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Company or any Restricted Subsidiary (other than (x) dividends or
distributions payable solely in Capital Stock (other than Disqualified Stock) or
in options, warrants or other rights to purchase Capital Stock (other than
Disqualified Stock), and (y) in the case of Restricted Subsidiaries of the
Company, dividends or distributions payable to the Company or to a Wholly-Owned
Restricted Subsidiary), (ii) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company or any of the
Restricted Subsidiaries (other than Capital Stock owned by the Company or a
Wholly-Owned Restricted Subsidiary), (iii) the making of any principal payment
on, or the purchase, defeasance, repurchase, redemption or other acquisition or
retirement for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Indebtedness which is subordinated or
pari passu in right of payment to the Notes, (iv) the making of any Investment
or guarantee of any Investment in any Person other
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than a Permitted Investment, (v) any designation of a Restricted Subsidiary as
an Unrestricted Subsidiary to the extent set forth in the definition of
Unrestricted Subsidiary and (vi) forgiveness of any Indebtedness of an Affiliate
of the Company (other than a Wholly-Owned Restricted Subsidiary) to the Company
or a Restricted Subsidiary. For purposes of determining the amount expended for
Restricted Payments, cash distributed or invested shall be valued at the face
amount thereof and property other than cash shall be valued at its fair market
value.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date. The board of directors of the Company may
designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary of the Company as a Restricted Subsidiary if immediately after giving
effect to such action (and treating any Acquired Indebtedness as having been
incurred at the time of such action), the Company could have incurred at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to
the "Limitation on Additional Indebtedness" covenant and no Default or Event of
Default shall have occurred and be continuing.
"SBA Indebtedness" means Indebtedness incurred pursuant to the United
States Small Business Administration Disaster Relief Loan program or any similar
loan program, provided that such Indebtedness shall at all times be prepayable
without penalty at the option of the obligor.
"Senior Credit Facility" means the Credit Agreements dated as of May 19,
1993, as amended to date, and December 22, 1995, as amended to date,
respectively, among the Company, the guarantor parties thereto, the several
lenders from time to time parties thereto and The Chase Manhattan Bank, as
agent, together with the documents related thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including adding Subsidiaries of the Company as additional
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders and whether or not increasing the
amount of Indebtedness that may be incurred thereunder.
"Senior Indebtedness" means the principal of and premium, if any, and
interest (including, without limitation, interest accruing or that would have
accrued but for the filing of a bankruptcy, reorganization or other insolvency
proceeding whether or not such interest constitutes an allowable claim in such
proceeding) on, and any and all other fees, charges, expense reimbursement
obligations and other amounts due pursuant to the terms of all agreements,
documents and instruments providing for, creating, securing or evidencing or
otherwise entered into in connection with (a) all obligations owed to lenders
under the Senior Credit Facility, (b) all obligations with respect to any
Interest Rate Agreement, (c) all obligations to reimburse any bank or other
person in respect of amounts paid under letters of credit, acceptances or other
similar instruments, (d) all other current or future Indebtedness which does not
provide that it is to rank pari passu with or subordinate to the Notes and the
Guarantees and (e) all deferrals, renewals, extensions and refundings of, and
amendments, modifications and supplements to, any of the Senior Indebtedness
described above. Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness will not include (i) Indebtedness of the Company to any of
its Subsidiaries or Indebtedness of any Subsidiary of the Company to the Company
or any other Subsidiary of the Company, (ii) Indebtedness represented by the
Notes and the Guarantees, (iii) any Indebtedness which by the express terms of
the agreement or instrument creating, evidencing or governing the same is junior
or subordinate in right of payment to any item of Senior Indebtedness, (iv) to
the extent it constitutes Indebtedness, any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business, (v) Indebtedness represented by Disqualified Capital Stock or (vi)
that portion of any Indebtedness which is incurred in violation of the
Indenture, provided, however, that in the case of any Indebtedness (regardless
of whether or not such Indebtedness is incurred pursuant to the first or second
paragraph of "Limitation on Additional Indebtedness and Preferred Stock of
Restricted Subsidiaries"), such Indebtedness shall not be deemed to have been
incurred in violation of the Indenture if the holder(s) of such Indebtedness or
their agent or representative shall have received a representation from the
Company to the effect that the incurrence of such Indebtedness does not violate
the
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provisions of the Indenture (but nothing in this clause (vi) shall preclude the
existence of any Default or Events of Default in the event that such
Indebtedness is in fact incurred in violation of the Indenture).
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness, or any installment of interest
thereon, is due and payable.
"Subsidiary" of any specified Person means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, (i) in the case of a corporation, of which more
than 50% of the total voting power of the Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
officers or trustees thereof is held, directly or indirectly by such Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such Person or any
of its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise or if in
accordance with GAAP such entity is consolidated with such Person for financial
statement purposes.
"Temporary Cash Investments" or "cash equivalents" mean (i) Investments in
marketable, direct obligations issued or guaranteed by the United States of
America, or of any governmental agency or political subdivision thereof,
maturing within 365 days of the date of purchase; (ii) Investments in
certificates of deposit issued by a bank organized under the laws of the United
States of America or any state thereof or the District of Columbia, in each case
having capital, surplus and undivided profits totaling more than $500,000,000
and rated at least A by Standard & Poor's Corporation and A-2 by Moody's
Investors Service, Inc., maturing within 365 days of purchase; or (iii)
Investments not exceeding 365 days in duration in money market funds that invest
substantially all of such funds' assets in the Investments described in the
preceding clauses (i) and (ii).
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by the board of
directors of the Company, but only so long as (i) no portion of the Indebtedness
or any other obligation (contingent or otherwise) of such Unrestricted
Subsidiary (other than obligations in respect of performance and surety bonds
and in respect of reimbursement obligations for undrawn letters of credit
supporting insurance arrangement and performance and surety bonds, each incurred
in the ordinary course of business and not as part of a financing transaction
(collectively, "Permitted Unrestricted Subsidiary Obligations")) (A) is
guaranteed by the Company or any Restricted Subsidiary, (B) is recourse to or
obligates the Company or any Restricted Subsidiary of the Company, directly or
indirectly, contingently or otherwise, to satisfaction thereof, (ii) such
Unrestricted Subsidiary has no Indebtedness or any other obligation (other than
Permitted Unrestricted Subsidiary Obligations) that, if in default in any
respect (including a payment default), would permit (upon notice, lapse of time
or both) any holder of any other Indebtedness of the Company or its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and
(iii) no Default or Event of Default shall have occurred and be continuing. Any
designation of a Subsidiary as an Unrestricted Subsidiary shall be deemed a
Restricted Payment in an amount equal to the fair market value of such
Subsidiary (as determined in good faith by the board of directors of the
Company) and any such designation shall be permitted only if it complies with
the provisions of "Limitation on Restricted Payments". The Trustee shall be
given prompt notice by the Company of each resolution adopted by the board of
directors of the Company under this provision, together with a copy of each such
resolution adopted.
"Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock in such Person entitling the holders thereof to vote
under ordinary circumstances in the election of members of the board of
directors or other governing body of such Person.
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary, all
of the outstanding Voting Stock (other than directors' qualifying shares) of
which are owned, directly or indirectly, by the Company.
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DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 50,000,000 shares of
Class A Common Stock, $0.001 par value per share, 25,000,000 shares of Class B
Common Stock, $0.001 par value per share, 10,000 shares of Class A Preferred
Stock, $638 par value per share, and 1,000,000 additional shares of Preferred
Stock, the terms and provisions of which may be designated by the Board of
Directors in the future. The following summary of the Company's capital stock is
qualified in its entirety by reference to the Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") and By-Laws
(the "By-Laws"), each of which is incorporated by reference into the
registration statement of which this Prospectus is a part.
COMMON STOCK
Following the Common Stock Offering, 17,539,031 shares of Class A Common
Stock will be issued and outstanding and 13,455,548 shares of Class B Common
Stock will be issued and outstanding. See "Capitalization."
Except for voting rights, the rights of the holders of the Class A Common
Stock and the Class B Common Stock are substantially identical. The holders of
the Class A Common Stock and the holders of the Class B Common Stock vote
together as a single class (except as may otherwise be required by Delaware
law), with the holders of the Class A Common Stock entitled to one vote per
share and the holders of Class B Common Stock entitled to ten votes per share,
on all matters on which the holders of Common Stock are entitled to vote. Each
share of Class B Common Stock is convertible at the option of its holder into
one share of Class A Common Stock at any time. In addition, each share of Class
B Common Stock converts automatically into one share of Class A Common Stock
upon the sale or other transfer of such share of Class B Common Stock to a
person who, or entity which, is not a Permitted Transferee. Permitted
Transferees include (i) Kevin P. Reilly, Sr.; (ii) a descendant of Kevin P.
Reilly, Sr.; (iii) a spouse or surviving spouse (even if remarried) of any
individual named or described in (i) or (ii) above; (iv) any estate, trust,
guardianship, custodianship, curatorship or other fiduciary arrangement for the
primary benefit of any one or more of the individuals named or described in (i),
(ii) and (iii) above; and (v) any corporation, partnership, limited liability
company or other business organization controlled by and substantially all of
the interests in which are owned, directly or indirectly, by any one or more of
the individuals and entities named or described in (i), (ii), (iii) and (iv)
above.
All of the outstanding shares of Common Stock are, and all of the shares of
Class A Common Stock sold in the Common Stock Offering will be, when issued and
paid for, fully paid and nonassessable. In the event of the liquidation or
dissolution of the Company, following any required distribution to the holders
of outstanding shares of Preferred Stock, the holders of Common Stock are
entitled to share pro rata in any balance of the corporate assets available for
distribution to them. The Company may pay dividends if, when and as declared by
the Board of Directors from funds legally available therefor, subject to the
restrictions set forth in the Company's existing and future debt instruments.
Subject to the preferential rights of the holders of any class of preferred
stock, holders of shares of Common Stock are entitled to receive such dividends
as may be declared by the Company's Board of Directors out of funds legally
available for such purpose. No dividend may be declared or paid in cash or
property on any share of either class of Common Stock unless simultaneously the
same dividend is declared or paid on each share of the other class of Common
Stock, provided that, in the event of stock dividends, holders of a specific
class of Common Stock shall be entitled to receive only additional shares of
such class.
Under Delaware law, the affirmative vote of the holders of a majority of
the outstanding shares of any class of common stock is required to approve any
amendment to the Certificate of Incorporation that would increase or decrease
the par value of such class, or modify or change the powers, preferences or
special rights of the shares of any class so as to affect such class adversely.
The Certificate of Incorporation provides that no such separate class vote shall
be available for increases or decreases in the number of authorized shares of
Class A Common Stock.
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The Common Stock is redeemable in the manner and on the conditions
permitted under Delaware law and as may be authorized by the Board of Directors.
Holders of Common Stock have no preemptive rights.
CLASS A PREFERRED STOCK
All outstanding shares of the Company's Class A Preferred Stock are fully
paid and nonassessable. For information regarding ownership of the issued and
outstanding shares of Class A Preferred Stock, see "Principal Stockholders."
Rank. The Class A Preferred Stock, with respect to dividends and upon
liquidation, ranks senior to Class A and Class B Common Stock.
Dividends. Holders of shares of Class A Preferred Stock are entitled to
receive, when and if declared by the Board of Directors out of funds legally
available therefor, cash dividends at a rate of $15.95 per share per quarter.
Dividends accrue and are cumulative from the date of the issuance of shares. As
of the date of this Prospectus, all accrued dividends have been paid. The
Company intends to continue paying dividends on the Class A Preferred Stock.
Dissolution or Liquidation. In the case of voluntary or involuntary
dissolution or liquidation of the Company, subject to the rights of holders of
any additional Preferred Stock issued in the future, the holders of the Class A
Preferred Stock are entitled to receive out of the assets of the Company the sum
of the par value of the Class A Preferred Stock ($638 per share) and any accrued
and unpaid dividends thereon before any payment may be made or any assets
distributed to the holders of Common Stock. Upon any distribution or
liquidation, whether voluntary or involuntary, if the assets distributed among
the holders of the Class A Preferred Stock are insufficient to permit the
payment to a stockholder of the full preferential amounts, subject to the rights
of holders of any additional Preferred Stock issued in the future, the entire
assets of the Company to be distributed will be distributed ratably among the
holders of the Class A Preferred Stock and, after payment of such preferential
amounts and any preferential amounts due holders of additional Preferred Stock,
if any, the holders of Common Stock will be entitled to receive ratably all the
remaining assets. A merger or consolidation of the Company with or into any
other corporation or corporations, will not, however, be deemed to be a
dissolution or liquidation.
Voting Rights. Holders of Class A Preferred Stock have no voting rights
with respect to general corporate matters except as provided by law. Under
Delaware law, holders of the Class A Preferred Stock are entitled to vote as a
class upon any proposed amendment, whether or not entitled to vote thereon by
the Certificate of Incorporation, if such amendment would increase or decrease
the par value of the shares of such class, or alter or change the powers,
preferences, or special rights of the shares of such class so as to affect them
adversely.
ADDITIONAL PREFERRED STOCK
Additional Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of the Company's Certificate of Incorporation, including those regarding the
rights of the holders of Class A Preferred Stock, and limitations prescribed by
law, the Board of Directors is expressly authorized to adopt resolutions to
issue the shares, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences, and relative participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights, sinking fund provisions, redemption prices conversion rights and
liquidation preferences of the shares constituting any class or series of this
additional Preferred Stock, in each case without any further action or vote by
the stockholders. The Company has no current plans to issue any shares of
additional Preferred Stock of any class or series.
One of the effects of undesignated additional Preferred Stock may be to
enable the Board of Directors to render more difficult or to discourage an
attempt to obtain control of the Company by means of a tender offer, proxy
contest, merger or otherwise, and thereby to protect the continuity of the
Company's management. The issuance of shares of additional Preferred Stock
pursuant to the Board of Directors' authority described above may adversely
affect the rights of the holders of Common Stock. For example, additional
Preferred Stock
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issued by the Company may rank prior to the Common Stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
be convertible into shares of Common Stock.
DESCRIPTION OF OTHER INDEBTEDNESS
The following is a description of the principal agreements governing the
indebtedness of the Company and the terms of the principal agreements that would
be entered into in connection with the Transactions. The following summaries are
qualified in their entirety by reference to the credit and security agreements
and indenture to which each summary relates, copies of which are exhibits to the
Registration Statement of which this Prospectus is a part. Defined terms used
below and not defined in the applicable subsection have meanings set forth in
the respective agreements.
EXISTING CREDIT AGREEMENT
The Company expects to replace the Existing Credit Agreement with the New
Credit Agreement. If the New Credit Agreement is not executed, the Existing
Credit Agreement will remain in effect.
Primary Facility and New Logo Facility. The Company presently has two
syndicated bank credit facilities under the Existing Credit Agreement, both of
which are agented by The Chase Manhattan Bank: (i) a revolving credit facility
(the "Primary Facility") providing for a reducing revolving credit facility with
a maximum borrowing availability of $50 million and (ii) a revolving credit
facility (the "New Logo Facility") with a maximum borrowing availability of $15
million. The proceeds of the Primary Facility may be used for general corporate
purposes, including working capital requirements of the Company and its
subsidiaries in the outdoor advertising and logo sign business created prior to
October 31, 1995. The proceeds of the New Logo Facility may be used for start-up
and construction costs in connection with the logo sign business of subsidiaries
created after October 31, 1995 (the "New Logo Subsidiaries"). The Primary
Facility and New Logo Facility are collectively referred to herein as the
"Existing Credit Agreement."
Interest. Borrowings under the Existing Credit Agreement bear interest
computed as a margin over either Chase's "Base Rate" or the London Interbank
Offered Rate (the "LIBOR Rate"). The margins range from 0 to 75 basis points and
from 125 (100, upon execution of the Proposed Amendment) to 200 basis points
over the Base Rate and LIBOR Rate, respectively, depending on the Company's
current leverage ratio, as such ratio is defined under the subheading
"Covenants."
Reductions in Commitments; Amortization. The Primary Facility and the New
Logo Facility, both of which mature October 31, 2001 (a recent amendment
shortens the maturity of the Primary Facility to April 30, 1997), provide for
reductions in revolving credit commitments and amortization of term loans as
follows:
<TABLE>
<CAPTION>
NEW LOGO FACILITY
REVOLVING CREDIT TERM LOAN REVOLVING CREDIT
FISCAL YEAR REDUCTION AMORTIZATION(1) REDUCTION(2)
---------------------------------------- ---------------- --------------- -----------------
<S> <C> <C> <C>
1996 (after 4/30/96).................... -- $ 1,000,000 --
1997.................................... -- $ 4,000,000 $ 2,000,000
1998.................................... -- $ 8,000,000 $ 3,000,000
1999.................................... $ 3,000,000 $11,000,000 $ 4,000,000
2000.................................... $ 5,000,000 $12,000,000 $ 6,000,000
2001.................................... $ 12,000,000 $ 2,250,000 --
</TABLE>
- ---------------
(1) A recent amendment eliminates revolving credit commitment reductions for the
Primary Facility.
(2) The term loan amortizes quarterly, and the New Logo Facility revolving
credit commitment is reduced quarterly.
Guarantees; Security. The obligations of the Company under the Primary
Facility are guaranteed by all of the Company's Restricted Subsidiaries with the
exception of Missouri Logos, a partnership, and, subject to the approval of the
Primary Facility Banks, any joint ventures that may be formed hereafter between
Restricted Logo Subsidiaries and entities not affiliated or related to the
Company or any Restricted Subsidiary. The
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obligations under the Primary Facility and the guarantees in respect thereto are
secured, on an equal and ratable basis with the subsidiary guarantees and
Company obligations in respect of the Existing Notes, by a pledge of the capital
stock of all of the Company's Restricted Subsidiaries with the exception of the
New Logo Subsidiaries.
The obligations of the Company under the New Logo Facility are guaranteed
by the New Logo Subsidiaries. Such obligations and guarantees are secured by a
pledge of the capital stock, and security interest in the assets, of the New
Logo Subsidiaries.
Covenants. The Existing Credit Agreement places certain restrictions upon
the ability of the Company and its Restricted Subsidiaries that are parties
thereto to, among other things, (i) incur indebtedness, (ii) incur liens or
guarantee obligations, (iii) declare dividends and make other distributions,
(iv) make investments and enter into joint ventures, (v) make capital
expenditures, (vi) dispose of assets and (vii) engage in transactions with
affiliates except on an arms-length basis. In addition, the Existing Credit
Agreement requires the Company and its Restricted Subsidiaries which are parties
thereto to maintain (a) a minimum leverage ratio, defined as Total Debt to
Operating Cash Flow, of between 4.5 to 1 and 3.0 to 1 under the Primary Facility
and from 6.0 to 1 and 4.0 to 1 under the New Logo Facility; (b) an interest
coverage ratio, defined as pro forma Operating Cash Flow for the period of 12
months most recently ended to total accrued cash interest expense for such
period, of at least 2.0 to 1; and (c) a fixed charge coverage ratio, defined as
pro forma Operating Cash Flow for the period of 12 months most recently ended to
total projected payments of principal and interest on debt to be made in the
succeeding four fiscal quarters plus (i) capital expenditures (excluding logo
contract expenditures) and (ii) income and franchise tax payments and stock
dividends and redemptions during such period, of at least 1.1 to 1.
Change of Control. A change of control of the Company constitutes an event
of default, permitting the banks under the Existing Credit Agreement to
accelerate the indebtedness and terminate the Existing Credit Facilities. Such a
change in control would occur if Kevin P. Reilly, Sr. and his immediate family
(including grandchildren) and certain entities under their control cease to own
at least 20% of the total amount of voting stock of the Company.
NEW CREDIT AGREEMENT
The Company expects to enter into the New Credit Agreement with a syndicate
of financial institutions and the agent under the Existing Credit Agreement
providing the Company with a committed reducing revolving credit facility in the
amount of $225 million and a $75 million incremental facility funded at the
discretion of the lenders. The New Credit Agreement would replace the Existing
Credit Agreement and substantially increase the Company's borrowing
availability. There can be no assurance, however, that the New Credit Agreement
will be entered into.
The New Credit Agreement is expected to bear interest computed as a margin
over "Base Rate" or the LIBOR Rate, with the loan commitment reducing over a
period from 1999 to 2003. The obligations of the Company under the New Credit
Facility are expected to be guaranteed by its subsidiaries and secured by a
pledge of the capital stock of the Company's subsidiaries in a manner similar to
the Existing Credit Agreement. The New Credit Agreement will also have
restrictive covenants covering similar matters as the Existing Credit Agreement
and a change of control event of default comparable to that under the Existing
Credit Agreement.
EXISTING NOTES
On October 17, 1996, the Company commenced a cash tender offer for all of
the Existing Notes and a solicitation of consents to (i) eliminate substantially
all of the restrictive covenants described below (other than a less restrictive
covenant with respect to the incurrence of indebtedness) and the change of
control repurchase option described below, (ii) release the security for the
Existing Notes and (iii) release the Subsidiary Guarantors from their
obligations as guarantors of the Existing Notes. See "The Transactions -- The
Tender Offer." Consummation of the Tender Offer is subject to the valid tender
of a majority in principal amount of the outstanding Existing Notes and certain
other conditions. As of November 19, 1996, the holders
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representing over a majority in principal amount of the Existing Notes have
validly tendered their Existing Notes and delivered their consents. Any Existing
Notes not validly tendered and accepted for payment pursuant to the Tender Offer
will remain outstanding. The terms and conditions of the Existing Notes are set
forth below.
General. On May 15, 1993, the Company issued the $100 million aggregate
principal amount of 11% Senior Secured Notes due May 15, 2003 pursuant to an
indenture between the Company, as issuer, its Restricted Subsidiaries, as
"Subsidiary Guarantors," and State Street Bank and Trust Company, as Trustee.
The Existing Notes are senior secured obligations of the Company and Restricted
Subsidiaries ranking pari passu with all present and future indebtedness of the
Company and the Subsidiary Guarantors that by its terms is not subordinated to
the obligations represented by the Existing Notes. Upon consummation of the
Tender Offer, the Subsidiary Guarantors will be released from their obligations
as guarantors.
Interest. The Existing Notes bear interest at 11% per annum. Interest is
payable semi-annually on each May 15 and November 15.
Security. The Existing Notes and the Guarantees in respect thereof are
secured, on an equal and ratable basis with the Company obligations and
subsidiary guarantees in respect of the Primary Facility, by a pledge of the
capital stock of all the Company's Restricted Subsidiaries with the exception of
the New Logo Subsidiaries. Upon consummation of the Tender Offer all of the
foregoing security will be released and any remaining Existing Notes not validly
tendered and accepted for payment in the Tender Offer will be unsecured
obligations of the Company.
Redemption. The securities may be redeemed at the election of the Company,
as a whole or from time-to-time in part, at any time after May 15, 1998 at
redemption prices declining from 105.5% of the principal amount for the twelve
months after May 15, 1998 to 102.75% of such amount for the twelve months after
May 15, 1999, and thereafter at a redemption price equal to 100.0% of such
principal amount, plus in each case accrued in unpaid interest to the applicable
redemption date.
Covenants. The Existing Note Indenture places certain restrictions on the
ability of the Company and its Restricted Subsidiaries to (i) incur liens or
guaranty obligations, (ii) make restricted payments (dividends, redemptions and
certain other payments), (iii) engage in transactions with affiliates except on
an arms-length basis, (iv) dispose of assets and (v) enter into mergers,
consolidations or acquisitions. Upon consummation of the Tender Offer the
foregoing covenants will be eliminated and the existing indebtedness covenant
will be replaced with a covenant that would restrict the Company from incurring
any indebtedness unless the ratio of the Company's consolidated indebtedness to
consolidated operating cash flow would be less than 7.5 to 1.
Change of Control. Upon a Change of Control (as defined below), each holder
of an Existing Note may require the Company to repurchase all or portions of
such holder's Existing Notes at a purchase price equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase. A "Change of Control" occurs if (a) any person or group, other than
stockholders of the Company as of May 15, 1993 and related and affiliated
persons ("Permitted Holder") beneficially owns at least 30% of the aggregate
voting power of all classes of voting stock of the Company or (b) any person or
group other than Permitted Holders succeed in electing a majority of the Board
of Directors of the Company. Upon consummation of the Tender Offer the foregoing
Change of Control provision will be eliminated.
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SUBORDINATED NOTES
The Company will have outstanding three classes of subordinated notes: (i)
8% Series A Unsecured Subordinated Discount Debentures due 2001 ($2.3 million
outstanding at October 31, 1996); (ii) 10% to 12% Series A Unsecured
Subordinated Debentures due 1996 and 1997 ($0.2 million outstanding at October
31, 1996); and (iii) ten-year subordinated notes ($19.7 million outstanding at
October 31, 1996). The Series A debentures referred to in clauses (i) and (ii)
of the preceding sentence were issued in consideration of stock redemptions
occurring in 1993 and 1994. The ten-year subordinated notes referred to in
clause (iii) were issued as a portion of the consideration paid on account of
stock redemptions occurring in October 1995 and March 1996, bear interest at an
annual rate of 8% and amortize monthly until their maturity in 2006. See
"Certain Transactions."
92
<PAGE> 95
UNDERWRITING
Upon the terms and subject to the conditions stated in an underwriting
agreement dated , 1996 (the "Underwriting Agreement"), each of the
underwriters named below (the "Underwriters") has agreed to purchase, and the
Company has agreed to sell to each such Underwriter, the principal amount of
Notes set forth opposite the name of such Underwriter below.
<TABLE>
<CAPTION>
NAME PRINCIPAL AMOUNT
--------------------------------------------------------------------- ----------------
<S> <C>
Smith Barney Inc. ...................................................
Chase Securities Inc. ...............................................
CIBC Wood Gundy Securities Corp. ....................................
------------
Total...................................................... $225,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to approval
of certain legal matters by counsel and to certain other conditions. The
Underwriters are obligated to take and pay for all of the Notes offered hereby
if any are taken.
The Underwriters have advised the Company that they propose to offer part
of the Notes directly to the public at the public offering price set forth on
the cover page of this Prospectus and part to certain dealers at a price that
represents a concession not in excess of % of the public offering price of
the Notes. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of % of the public offering price of the Notes to
certain other dealers. After this Offering, the public offering price and such
concessions may be changed from time to time by the Underwriters.
The Notes are a new issue of securities with no established trading market.
Although the Notes have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, there is no assurance that an
active trading market for the Notes will develop. The Company has been advised
by the Underwriters that the Underwriters intend to make a market in the Notes,
as permitted by applicable laws and regulations; however, the Underwriters are
not obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Notes. See "Risk Factors -- Absence of Public Market for the Notes."
The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act of
1933.
Smith Barney Inc. is acting as underwriter in connection with the Common
Stock Offering and is the dealer manager for the Tender Offer. Chase Securities
Inc. is an affiliate of The Chase Manhattan Bank, which is agent bank and a
lender to the Company under the Existing Credit Facility and which proposes to
act as agent bank and a lender to the Company under the New Credit Facility. The
Chase Manhattan Bank will receive its proportionate share of any repayment by
the Company of amounts outstanding under the Existing Credit Facility from the
proceeds of this Offering.
CERTAIN LEGAL MATTERS
Certain legal matters with respect to the legality of the Notes offered
hereby will be passed upon for the Company by Palmer & Dodge LLP, Boston,
Massachusetts. In rendering their opinion, Palmer & Dodge LLP will rely on the
opinion of Chadbourne & Parke LLP with respect to matters of New York law and on
the opinion of Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, LLP, Baton
Rouge, Louisiana, with respect to certain matters relating to the Guarantors.
Certain legal matters relating to the Offering will be passed upon for the
Underwriters by Chadbourne & Parke LLP, New York, New York. In rendering their
opinions on the validity of the Notes and the Guarantees, counsel for the
Company and the Underwriters will express no opinion as to federal or state laws
relating to fraudulent transfers.
93
<PAGE> 96
EXPERTS
The consolidated financial statements of Lamar Advertising Company and
Subsidiaries as of October 31, 1994 and 1995, and for each of the years in the
three-year period ended October 31, 1995, included in this Prospectus and
Registration Statement have been included herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of such firm as experts in accounting and auditing.
The consolidated financial statements of Outdoor East, L.P. as of December
31, 1994 and 1995 and for each of the years in the three-year period ended
December 31, 1995 have been included herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
The financial statements of FKM Advertising Co., Inc., as of December 31,
1994 and 1995 and for the years then ended, have been included herein and in the
registration statement in reliance upon the report of McGrail, Merkel, Quinn and
Associates, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
The Company files reports and other information with the Commission
pursuant to the informational requirements of the Exchange Act.
The Company has filed with the Commission a Registration Statement (which
term shall include all amendments thereto) on Form S-3 under the Securities Act
with respect to the Notes offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and reference is made to the Registration
Statement and the exhibits thereto for further information with respect to the
Company and the Notes. Such reports, the Registration Statement and the exhibits
thereto may be inspected, without charge, at the offices of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional offices at
Seven World Trade Center, New York, New York 10048, and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained
from the public reference section of the Commission at its Washington address
upon payment of the prescribed fee. Such reports and other information can also
be reviewed through the Commission's Web site (http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the
following documents heretofore filed with the Commission pursuant to the
Exchange Act: (i) the Company's Annual Report on Form 10-K for the year ended
October 31, 1995, as amended by Amendments No. 1 and 2 thereto on Form 10-K/A,
filed with the Commission on January 26, 1996, March 28, 1996 and August 1,
1996, respectively; (ii) the Company's Quarterly Report on Form 10-Q for the
quarter ended January 31, 1996, as amended by Amendment No. 1 thereto on Form
10-Q/A, filed with the Commission on March 15, 1996 and May 20, 1996,
respectively; (iii) the Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1996, filed with the Commission on June 13, 1996; (iv) the
Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 1996,
filed with the Commission on September 12, 1996; (v) the Company's Current
Reports on Form 8-K dated October 17, 1996 and November 1, 1996, filed with the
Commission on October 25, 1996 and November 15, 1996, respectively; (vi) the
description of the Class A Common Stock contained in the Company's Registration
Statement on Form 8-A, filed with the Commission on June 7, 1996, as amended by
Form 8-A/A, filed with Commission on July 31, 1996; and (vii) the description of
the Notes contained in the Company's Registration Statement on Form 8-A, filed
with the Commission on November 4, 1996.
94
<PAGE> 97
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
termination of this Offering made hereby shall be deemed to be incorporated in
this Prospectus by reference and to be a part hereof from the respective dates
of the filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein, modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any and all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated by
reference into such documents. Requests for such copies should be directed to
the executive offices of the Company, 5551 Corporate Boulevard, Baton Rouge,
Louisiana 70808, Attention: Investor Relations, telephone (504) 926-1000.
95
<PAGE> 98
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets as of October 31, 1994 and 1995, and July 31, 1996 pro
forma and actual (unaudited)........................................................ F-3
Consolidated Statements of Earnings (Loss) for the years ended October 31, 1993, 1994
and 1995, and the nine months ended July 31, 1995 and 1996 (unaudited).............. F-4
Consolidated Statements of Stockholders' Deficit for the years ended October 31, 1993,
1994 and 1995 and the nine months ended July 31, 1996 (unaudited)................... F-5
Consolidated Statements of Cash Flows for the years ended October 31, 1993, 1994 and
1995 and the nine months ended July 31, 1995 and 1996 (unaudited)................... F-6
Notes to Consolidated Financial Statements............................................ F-7
FKM ADVERTISING CO. INC.
Independent Auditor's Report.......................................................... F-19
Balance Sheets as of December 31, 1994 and 1995, and September 30, 1996 (unaudited)... F-20
Statements of Operations for the years ended December 31, 1994 and 1995, and the nine
months ended September 30, 1995 and 1996 (unaudited)................................ F-21
Statements of Changes in Stockholders' Equity for the years ended December 31, 1994
and 1995, and the nine months ended September 30, 1995 and 1996 (unaudited)......... F-22
Statements of Cash Flows for the years ended December 31, 1994 and 1995, and the nine
months ended September 30, 1995 and 1996 (unaudited)................................ F-23
Notes to Financial Statements......................................................... F-24
OUTDOOR EAST, L.P.
Independent Auditors' Report.......................................................... F-33
Balance Sheets as of December 31, 1994 and 1995 and September 30, 1996 (unaudited).... F-34
Statements of Operations for the years ended December 31, 1993, 1994 and 1995 and the
nine months ended September 30, 1995 and 1996 (unaudited)........................... F-35
Statements of Partners' Deficit for the years ended December 31, 1993, 1994 and 1995,
and the nine months ended September 30, 1996 (unaudited)............................ F-36
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and the
nine months ended September 30, 1996 (unaudited).................................... F-37
Notes to Financial Statements......................................................... F-38
</TABLE>
F-1
<PAGE> 99
INDEPENDENT AUDITORS' REPORT
Board of Directors
Lamar Advertising Company:
We have audited the accompanying consolidated balance sheets of Lamar
Advertising Company and subsidiaries as of October 31, 1994 and 1995, and the
related consolidated statements of earnings (loss), stockholders' deficit and
cash flows for each of the years in the three-year period ended October 31,
1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Lamar
Advertising Company and subsidiaries as of October 31, 1994 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended October 31, 1995, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
New Orleans, Louisiana
January 12, 1996, except as to notes 12 and 14,
which are as of October 17, 1996
F-2
<PAGE> 100
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
JULY 31, 1996
OCTOBER 31 ---------------------
-------------------- PRO FORMA
1994 1995 ACTUAL (NOTE 14)
-------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 8,016 $ 5,886 $ 1,965 $ 1,965
Receivables (note 3):
Trade accounts, less allowance for doubtful
accounts of $1,046 (unaudited) in 1996 and
$551 in 1995 and 1994......................... 9,963 10,741 14,527 14,527
Affiliates, related parties and employees....... 560 583 531 531
Other........................................... 68 109 433 433
-------- -------- -------- --------
10,591 11,433 15,491 15,491
Prepaid expenses.................................. 1,200 1,247 1,112 1,112
Other current assets.............................. 1,287 1,266 1,793 1,793
-------- -------- -------- --------
Total current assets....................... 21,094 19,832 20,361 20,361
-------- -------- -------- --------
Property, plant and equipment (note 4).............. 159,707 168,402 189,115 189,115
Less accumulated depreciation and amortization.... (70,884) (77,524) (83,930) (83,930)
-------- -------- -------- --------
88,823 90,878 105,185 105,185
-------- -------- -------- --------
Intangible assets (note 5).......................... 14,062 13,406 16,891 16,891
Receivables -- noncurrent (note 3).................. 751 918 751 751
Deferred taxes (note 10)............................ 2,650 5,951 3,680 3,680
Other assets........................................ 2,628 2,900 3,399 3,399
-------- -------- -------- --------
Total assets............................... $130,008 $133,885 $150,267 $150,267
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable............................ 1,123 2,435 3,115 3,115
Current maturities of long-term debt (note 9)..... 7,054 3,479 5,326 7,326
Accrued expenses (note 8)......................... 9,647 9,733 5,575 10,575
Deferred income................................... 1,579 2,448 4,866 4,866
-------- -------- -------- --------
Total current liabilities.................. 19,403 18,095 18,882 25,882
Long-term debt (note 9)............................. 146,875 142,572 154,681 172,681
Deferred income..................................... 668 749 779 779
Other liabilities................................... 414 623 1,214 1,214
-------- -------- -------- --------
167,360 162,039 175,556 200,556
-------- -------- -------- --------
Stockholders' equity (deficit) (note 12):
Class A preferred stock, par value $638, $63.80
cumulative, 10,000 shares authorized, 5,719.49
(unaudited) shares issued and outstanding in
1996............................................ $ -- $ -- 3,649 3,649
Class A common stock, par value $.001, 50,000,000
shares authorized, 10,180,483 (unaudited),
15,657,623 and 16,504,263 shares issued and
outstanding in 1996, 1995 and 1994,
respectively.................................... 17 16 10 10
Class B common stock, par value $.001, 25,000,000
shares authorized, 14,301,537 (unaudited),
16,897,379 and 17,271,240 shares issued and
outstanding in 1996, 1995 and 1994,
respectively.................................... 17 17 14 14
Accumulated deficit............................... (37,386) (28,187) (28,962) (53,962)
-------- -------- -------- --------
Stockholders' equity (deficit)............. (37,352) (28,154) (25,289) (50,289)
Commitments and contingencies (notes 7 and 13)
-------- -------- -------- --------
Total liabilities and stockholders'
deficit.................................. $130,008 $133,885 $150,267 $150,267
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 101
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED OCTOBER 31, JULY 31,
------------------------------------ -----------------
1993 1994 1995 1995 1996
----------- ----------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Outdoor advertising, net.................. $65,365 $83,627 $101,871 $76,295 $87,647
Management fees from related and
affiliated parties..................... 595 334 31 23 45
Rental income............................. 564 512 506 408 473
------- ------- -------- ------- -------
66,524 84,473 102,408 76,726 88,165
------- ------- -------- ------- -------
Operating expenses:
Direct advertising expenses............... 23,830 28,959 34,386 26,564 30,969
General and administrative expenses....... 19,504 24,239 27,057 20,636 22,842
Depreciation and amortization............. 8,924 11,352 14,090 9,954 10,568
------- ------- -------- ------- -------
52,258 64,550 75,533 57,154 64,379
------- ------- -------- ------- -------
Operating income.................. 14,266 19,923 26,875 19,572 23,786
------- ------- -------- ------- -------
Other expense (income):
Interest income........................... (218) (194) (199) (133) (140)
Interest expense.......................... 11,502 13,599 15,783 11,948 11,957
Loss on disposition of assets............. 729 675 2,328 1,004 818
Other expenses............................ 576 616 655 684 254
------- ------- -------- ------- -------
12,589 14,696 18,567 13,503 12,889
------- ------- -------- ------- -------
Earnings before income taxes and
extraordinary item.............. 1,677 5,227 8,308 6,069 10,897
Income tax expense (benefit) -- (note 10)... 476 (2,072) (2,390) (2,480) 4,420
------- ------- -------- ------- -------
Earnings before extraordinary
item............................ 1,201 7,299 10,698 8,549 6,477
------- ------- -------- ------- -------
Extraordinary loss on debt extinguishment,
net of income tax benefit of $98 (note
9)........................................ (1,854) -- -- -- --
------- ------- -------- ------- -------
Net earnings (loss)............... (653) 7,299 10,698 8,549 6,477
Preferred stock dividends................... -- -- -- -- 274
------- ------- -------- ------- -------
Net earnings (loss) applicable to common
stock..................................... $ (653) $ 7,299 $ 10,698 $ 8,549 $ 6,203
======= ======= ======== ======= =======
Earnings per common share before
extraordinary item........................ $ .03 $ .21 $ .32 $ .26 $ .23
======= ======= ======== ======= =======
Net earnings (loss) per common share........ $ (.02) $ .21 $ .32 $ .26 $ .23
======= ======= ======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 102
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CLASS A CLASS A CLASS B ADDITIONAL
PREFERRED COMMON COMMON PAID-IN ACCUMULATED
STOCK STOCK STOCK CAPITAL DEFICIT TOTAL
--------- ------- ------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1992........................ $ -- $19 $15 $ 403 $ (42,307) $(41,870)
Shares issued.................................. -- 1 2 627 -- 630
Redemption of 1,690,163 shares of common
stock....................................... -- (2) -- (899) -- (901)
Net loss....................................... -- -- -- -- (653) (653)
Dividends ($.01 per share)..................... -- -- -- -- (455) (455)
------ --- --- ------ --------- --------
Balance, October 31, 1993........................ -- 18 17 131 (43,415) (43,249)
Redemption of 1,327,985 shares of common
stock....................................... -- (1) -- (131) (771) (903)
Net earnings................................... -- -- -- -- 7,299 7,299
Dividends ($.01 per share)..................... -- -- -- -- (499) (499)
------ --- --- ------ --------- --------
Balance, October 31, 1994........................ -- 17 17 -- (37,386) (37,352)
Redemption of 1,220,500 shares of common
stock....................................... -- (1) -- -- (999) (1,000)
Net earnings................................... -- -- -- -- 10,698 10,698
Dividends ($.01 per share)..................... -- -- -- -- (500) (500)
------ --- --- ------ --------- --------
Balance, October 31, 1995........................ -- 16 17 -- (28,187) (28,154)
Conversion of 4,454,779 shares of common stock
to 5,719 shares preferred stock
(unaudited)................................. 3,649 (2) (2) -- (3,645) --
Redemption of 3,618,203 shares of common stock,
(unaudited)................................. -- (4) (1) -- (2,958) (2,963)
Net earnings (unaudited)....................... -- -- -- -- 6,477 6,477
Dividends ($.004 per common share at January
1996, $.005 per common share at April 1996,
$15.95 per preferred
share) -- (unaudited)....................... -- -- -- -- (649) (649)
------ --- --- ------ --------- --------
Balance, July 31, 1996, (unaudited).............. $ 3,649 $10 $14 $ -- $ (28,962) $(25,289)
====== === === ====== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 103
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED OCTOBER 31, JULY 31,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)............................ $ (653) $ 7,299 $ 10,698 $ 8,549 $ 6,477
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization................ 8,924 11,352 14,090 9,954 10,568
Loss on disposition of assets................ 729 675 2,328 1,004 818
Deferred taxes............................... -- (2,650) (3,301) (3,312) 2,271
Provision for doubtful accounts.............. 471 508 502 330 550
Changes in operating assets and liabilities:
Increase in receivables.................... (1,998) (1,391) (1,344) (2,062) (3,988)
(Increase) decrease in prepaid expenses.... 4 (321) (47) (198) 97
(Increase) decrease in other assets........ 34 (1,640) (418) (965) (282)
Increase (decrease) in trade accounts
payable................................. (502) (69) 1,312 384 680
Increase (decrease) in accrued expenses.... 4,817 1,356 86 (3,475) (4,157)
Increase (decrease) in deferred income..... 596 (113) 950 517 2,448
Increase (decrease) in other liabilities... (11) 208 209 26 113
-------- -------- -------- -------- --------
Net cash provided by operating
activities.............................. 12,411 15,214 25,065 10,752 15,595
-------- -------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures........................... (7,550) (13,357) (14,046) (8,780) (17,653)
Purchase of new markets........................ -- (40,482) (2,885) (2,353) (9,445)
Proceeds from sale of property and equipment... 396 733 717 629 500
Purchase of intangible assets.................. (2,352) (463) (1,603) (545) (1,525)
Investments in and advances to affiliated
companies.................................... (558) -- -- -- --
Increase in notes receivable................... -- -- -- -- (675)
-------- -------- -------- -------- --------
Net cash used in investing activities...... (10,064) (53,569) (17,817) (11,049) (28,798)
-------- -------- -------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt....... 105,611 44,515 -- -- 15,500
Principal payments on long-term debt........... (97,453) (5,966) (7,878) (5,376) (2,605)
Redemption of common stock..................... (901) (903) (1,000) -- (2,964)
Dividends...................................... (455) (499) (500) (375) (649)
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities.............................. 6,802 37,147 (9,378) (5,751) 9,282
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents............................. 9,149 (1,208) (2,130) (6,048) (3,921)
Cash and cash equivalents at beginning of
year.................................... 75 9,224 8,016 8,016 5,886
-------- -------- -------- -------- --------
Cash and cash equivalents at end of year... $ 9,224 $ 8,016 $ 5,886 $ 1,968 $ 1,965
======== ======== ======== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid for interest......................... $ 6,994 $ 13,461 $ 15,825 $ 14,728 $ 14,744
======== ======== ======== ======== ========
Cash paid for income taxes..................... $ 295 $ 267 $ 1,028 $ 803 $ 1,991
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 104
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
OCTOBER 31, 1993, 1994 AND 1995
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The accompanying consolidated financial statements include Lamar
Advertising Company, its wholly-owned subsidiaries, Lamar Holding Company (LHC)
and The Lamar Corporation (TLC), their majority-owned subsidiaries and
Interstate Logos, Inc., a subsidiary of both LAC and TLC (collectively, the
Company or LAC). All intercompany transactions and balances have been
eliminated. Prior to May 1994, the Company owned 49.36% of the outstanding stock
of LHC, which investment was accounted for by the equity method. On May 10,
1994, LAC acquired substantially all of the assets of LHC. The proceeds from the
sale of its assets were used by LHC to repay existing debt and redeem all of its
shareholders other than LAC, resulting in LHC becoming a wholly-owned subsidiary
of LAC. The acquisition has been accounted for using the purchase method of
accounting.
(b) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is
calculated using accelerated and straight-line methods over the estimated useful
lives of the assets.
(c) Intangible Assets
Debt issuance costs are deferred and amortized over the terms of the
related credit facilities using the interest method. Other intangible assets are
initially recorded at cost and amortized using the straight-line method over the
assets' estimated useful lives, generally from 5 to 10 years.
(d) Deferred Income
Deferred income consists principally of advertising revenue received in
advance and gains resulting from the sale of certain assets to related parties.
Deferred advertising revenue is recognized in income as services are provided
over the term of the contract. Deferred gains are recognized in income in the
consolidated financial statements at the time the assets are sold to an
unrelated party or otherwise disposed of.
(e) Revenue Recognition
The Company recognizes revenue from outdoor and logo sign advertising
contracts, net of agency commissions, on an accrual basis ratably over the term
of the contracts, as advertising services are provided.
(f) Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
F-7
<PAGE> 105
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(g) Earnings Per Share
Earnings per common share are computed by dividing net earnings applicable
to common stock by the weighted average number of common shares outstanding
during each period presented. (35,470,837 shares, 35,089,188 shares and
33,772,107 shares, respectively for the years ended October 31, 1993, 1994 and
1995 and 33,775,222 shares and 27,068,544 shares for the nine-month periods
ended July 31, 1995 and 1996 respectively.) Such amounts have been adjusted to
reflect the approximate 778.9-for-1 stock split and the concurrent exchanges of
shares in a recapitalization that occurred in connection with the Offering
referred to in Note 14.
(h) Cash and Cash Equivalents
The Company considers all highly-liquid investments with original
maturities of three months or less to be cash equivalents.
(i) Reclassification of Prior Year Amounts
Certain amounts in the prior year's consolidated financial statements have
been reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported net earnings.
(j) Unaudited Interim Financial Statements
The unaudited interim financial statements include all adjustments,
consisting of normal recurring adjustments, which are, in the opinion of
management, necessary for a fair presentation of the financial position and the
results of operations of the Company.
(2) NONCASH FINANCING AND INVESTING ACTIVITIES
A summary of significant noncash financing and investing activities
follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JULY 31,
----------------
1993 1994 1995 1995 1996
------ ---- ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Noncash dispositions of assets.............. $ 336 $445 $3,788 $3,788 $ --
Noncash acquisitions of assets.............. 1,817 -- 4,341 4,341 1,113
Common stock issued in exchange for
investment in affiliate................... 630 -- -- -- --
Noncash issuance of preferred stock in
exchange for common stock................. -- -- -- -- 3,649
</TABLE>
F-8
<PAGE> 106
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(3) RECEIVABLES
The following is a summary of accounts and notes receivable as of October
31:
<TABLE>
<CAPTION>
1994 1995
--------------------- ---------------------
CURRENT NONCURRENT CURRENT NONCURRENT
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Trade accounts receivable, net.............. $ 9,963 $ -- $10,741 $ --
Related parties............................. 291 -- 452 --
Employees, other than related parties....... 269 -- 131 --
Other....................................... 68 751 109 918
------- ---- ------- ----
$10,591 $751 $11,433 $918
======= ==== ======= ====
</TABLE>
(4) PROPERTY, PLANT AND EQUIPMENT
Major categories of property, plant and equipment at October 31, 1994 and
1995 are as follows:
<TABLE>
<CAPTION>
ESTIMATED
LIFE (YEARS) 1994 1995
------------ -------- --------
<S> <C> <C> <C>
Land................................................. - $ 7,739 $ 7,826
Building and improvements............................ 10-32 15,132 15,553
Advertising structures............................... 15 123,592 131,071
Automotive and other equipment....................... 3-7 13,244 13,952
-------- --------
$159,707 $168,402
======== ========
</TABLE>
(5) INTANGIBLE ASSETS
The following is a summary of intangible assets at October 31:
<TABLE>
<CAPTION>
ESTIMATED
LIFE (YEARS) 1994 1995
------------ ------- -------
<S> <C> <C> <C>
Debt issuance costs.................................. 10 $ 3,604 $ 3,180
Customer lists and unexpired contracts............... 7 7,581 7,103
Non-compete agreements............................... 7-15 1,296 1,036
Organization costs................................... 5 219 673
Loan fees............................................ 7-10 1,027 1,051
Other................................................ 7-10 335 363
------- -------
$14,062 $13,406
======= =======
Cost................................................. 18,870 20,473
Accumulated amortization............................. 4,808 7,067
------- -------
Net intangible assets...................... $14,062 $13,406
======= =======
</TABLE>
(6) LAMAR HOLDINGS CORPORATION
Prior to May 1994, the Company owned 49.36% of the common stock of LHC. LHC
was founded in 1989 by TLC, members of its management and certain institutional
investors to provide outdoor advertising services in markets other than those
served by TLC.
F-9
<PAGE> 107
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
Effective May 1, 1994, LAC acquired substantially all of the assets and
assumed certain liabilities of LHC for a purchase price of $43,500. The proceeds
from the sale of its assets were used by LHC to repay existing debt and redeem
all of its shareholders other than LAC, resulting in LHC becoming a wholly-owned
subsidiary of LAC. The acquisition has been accounted for as a purchase and
accordingly, the purchase price attributable to shareholders other than LAC
(50.64%) has been allocated to the assets acquired based on their fair values.
The results of operations of LHC have been included in LAC's consolidated
financial statements from May 1, 1994.
The following unaudited pro forma financial information presents the
combined results of operations of LAC and LHC as if the acquisition had occurred
as of the beginning of 1993 and 1994, after giving effect to certain
adjustments, including additional depreciation expense, increased interest
expense on debt related to the acquisition, and related income tax effects. The
pro forma financial information does not necessarily reflect the results of
operations that would have occurred had the companies constituted a single
entity during such period.
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
-------------------
1993 1994
------- -------
(UNAUDITED)
<S> <C> <C>
Revenues......................................................... $81,303 $92,480
======= =======
Net income (loss) before extraordinary item...................... $(1,856) $ 6,265
======= =======
Net income (loss)................................................ $(3,710) $ 6,265
======= =======
Earnings (loss) per share before extraordinary item.............. $ (.05) $ .18
======= =======
Earnings (loss) per share........................................ $ (.10) $ .18
======= =======
</TABLE>
(7) LEASES
The Company is party to various operating leases for production facilities
and sites upon which advertising structures are built. The leases expire at
various dates, generally during the next five years, and have varying options to
renew and to cancel. The following is a summary of minimum annual rental
payments required under those operating leases that have original or remaining
lease terms in excess of one year as of October 31:
<TABLE>
<S> <C>
1996..................................................... $10,546
1997..................................................... 8,654
1998..................................................... 7,172
1999..................................................... 5,857
2000..................................................... 4,486
</TABLE>
Rental expense related to the Company's operating leases was $10,983,
$14,999 and $17,053 for the years ended October 31, 1993, 1994 and 1995,
respectively.
F-10
<PAGE> 108
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
The Company leases a portion of its corporate office building to tenants
under operating leases. The following is a summary of property held for lease at
October 31:
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Land........................................................... $ 47 $ 53
Buildings...................................................... 2,454 1,892
Less accumulated depreciation.................................. (1,754) (1,124)
------- -------
$ 747 $ 821
======= =======
</TABLE>
Minimum future rental income for noncancelable leases in effect as of
October 31, 1995 is as follows:
<TABLE>
<S> <C>
Year ending October 31:
1996.................................................... $224
1997.................................................... 152
1998.................................................... 115
1999.................................................... 99
2000.................................................... 97
====
</TABLE>
(8) ACCRUED EXPENSES
The following is a summary of accrued expenses at October 31:
<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
Payroll............................................................ $2,084 $2,134
Interest........................................................... 5,442 5,400
Insurance benefits................................................. 1,374 1,457
Other.............................................................. 747 742
------ ------
$9,647 $9,733
====== ======
</TABLE>
F-11
<PAGE> 109
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(9) LONG-TERM DEBT
Long-term debt consists of the following at October 31 and July 31, 1996:
<TABLE>
<CAPTION>
JULY 31,
1996
1994 1995 -----------
-------- -------- (UNAUDITED)
<S> <C> <C> <C>
Senior Secured Notes................................ $100,000 $100,000 $ 100,000
Note payable to a bank group........................ 43,000 39,250 37,750
1993 Series A Line of Credit, payable to bank....... 2,000 -- 6,000
1995 Series B Line of Credit, payable to bank....... -- -- 9,500
8% Series A unsecured subordinated discount
debentures, maturing through 2001 (11.5% effective
yield)............................................ 3,095 2,706 2,409
5% to 10% notes payable to banks and others with
varying maturities secured by plant and
equipment......................................... 4,960 3,713 3,974
10% to 12% Series A unsecured subordinated
debentures maturing in 1996 and 1997.............. 372 372 372
Other notes with various rates and terms............ 502 10 2
-------- -------- --------
153,929 146,051 160,007
Less current maturities............................. (7,054) (3,479) (5,326)
-------- -------- --------
Long term debt, excluding current maturities........ $146,875 $142,572 $ 154,681
======== ======== ========
</TABLE>
Long term debt matures as follows:
<TABLE>
<S> <C>
1996...................................................... $ 3,479
1997...................................................... 5,465
1998...................................................... 9,235
1999...................................................... 12,154
2000...................................................... 12,516
Later years............................................... 103,202
--------
$146,051
========
</TABLE>
The Senior Secured Notes were issued on May 19, 1993. The notes bear
interest at 11% payable semiannually. The notes mature in 2003 and are subject
to redemption at the option of the Company at any time on or after May 15, 1998.
There is no sinking fund obligation associated with the notes. The notes rank
senior in right of payment to all subordinated debt of the Company and pari
passu in right of payment with all unsubordinated borrowings of the Company and
are unconditionally guaranteed by certain subsidiaries of the Company. The notes
are secured by a pledge of the capital stock of all of the Subsidiary
Guarantors, subject to certain provisions. Additionally, the Company is
obligated to pledge the capital stock and obtain the guarantee of all future
restricted subsidiaries as security.
A portion of the proceeds from the Senior Secured Notes was used to
extinguish existing variable and fixed rate debt prior to maturity. In
connection with the extinguishment, the Company incurred a loss of approximately
$1,900 which has been reflected as an extraordinary item in the accompanying
consolidated financial statements. The per share amount of the aggregate loss
net of related income tax effect is $0.05 for the year ended October 31, 1993.
F-12
<PAGE> 110
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
The indenture contains certain restrictive financial covenants, including
the following:
- Limitation on outstanding debt of the Company and any of its restricted
subsidiaries;
- Limitation of the payment of cash dividends and other restricted
payments;
- Limitation on sale and leaseback transactions, and
- Limitation on sales or disposals of assets.
The Company was in compliance with such covenants as of October 31, 1995.
On May 19, 1993, the Company also entered into a Bank Credit Agreement
which provided an $8,000 term loan and a $20,000 working capital line of credit.
The term loan will amortize over four years beginning in 1995 and the
availability under the revolving credit facility will be reduced over a
three-year period beginning in 1995 until the facility terminates in 1998. The
term loan and the revolving credit facility are secured by a pledge of the
capital stock of all of the Company's present subsidiaries. During 1994, the
Company executed certain amendments to the Bank Credit Agreement, including
increasing of the term loan to $43,000. During 1995, the Company executed
additional amendments to the Bank Credit Agreement, including a change in the
Commitment to reduce the revolving line of credit over a three-year period
beginning in 1999 until the facility terminates in 2001. As of October 31, 1995,
the balance of the term loan was $39,250 with an interest rate of 8.09%. The
Bank Credit Agreement contains certain restrictive financial covenants,
including the following:
- Maintaining specific ratios of cash flow to debt service and total debt;
- Limitation of the payment of dividends;
- Limitation on investments and joint ventures,
- Limitation on capital expenditures, and
- Limitation on sales or disposals of assets.
The Company was in compliance with such covenants as of October 31, 1995.
The 8% Series A, unsecured subordinated debentures with an original face
amount of $4,844 were issued in 1986 at a discount of $986, which is being
amortized over the life of the debentures. The total unamortized discount was
$314 and $238 at October 31, 1994 and 1995, respectively.
(10) INCOME TAXES
LAC files a consolidated federal income tax return which includes all of
its qualifying subsidiaries.
Total income tax expense (benefit) for the years ended October 31, 1993,
1994 and 1995 is allocated as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ------- -------
<S> <C> <C> <C>
Income from continuing operations........................ $476 $(2,072) $(2,390)
Extraordinary item....................................... (98) -- --
---- ------- -------
$378 $(2,072) $(2,390)
==== ======= =======
</TABLE>
F-13
<PAGE> 111
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
Income tax expense (benefit) attributable to continuing operations for the
years ended October 31, 1993, 1994 and 1995 consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
1993:
U.S. federal......................................... 155 -- 155
State and local...................................... 321 -- 321
----- -------- -------
$ 476 $ -- $ 476
===== ======== =======
1994:
U.S. federal......................................... 165 (2,650) (2,485)
State and local...................................... 413 -- 413
----- -------- -------
$ 578 $ (2,650) $(2,072)
===== ======== =======
1995:
U.S. federal......................................... $ 290 $ (3,301) $(3,011)
State and local...................................... 621 -- 621
----- -------- -------
$ 911 $ (3,301) $(2,390)
===== ======== =======
</TABLE>
Income taxes attributable to continuing operations in 1994 and 1995 include
adjustments to the beginning-of-the-year valuation allowance on the Company's
deferred tax assets in the amount of $3,882 and $5,939, respectively. The
improved business conditions and resulting profitability has resulted in a
change in management's judgment regarding the realizability of the deferred tax
assets.
Income tax expense (benefit) for 1993, 1994 and 1995, differs from the
amounts computed by applying the U.S. federal income tax rate of 34 percent to
pretax income from continuing operations as follows:
<TABLE>
<CAPTION>
1993 1994 1995
----- ------- -------
<S> <C> <C> <C>
Computed "expected" tax expense........................... $ 570 $ 1,777 $ 2,825
Increase (reduction) in income taxes resulting from:
Change in beginning of the year balance of the
valuation allowance for deferred tax assets........ (217) (3,882) (5,939)
State and local income taxes, net of federal income
tax benefit........................................ 214 273 410
Other differences, net............................... (91) (240) 314
----- ------- -------
Actual income tax expense (benefit)............. $ 476 $(2,072) $(2,390)
===== ======= =======
</TABLE>
F-14
<PAGE> 112
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at October 31,
1994 and 1995 are presented below:
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation................................................ $(5,411) $(4,656)
Intangibles, due to differences in amortizable lives........... (569) (594)
------- -------
Deferred tax liabilities............................... $(5,980) $(5,250)
======= =======
Deferred tax assets:
Receivables, principally due to allowance for doubtful accounts
and accounts written off.................................... $ 187 $ 193
Plant and equipment, due to additional costs capitalized for
tax purposes pursuant to the Tax Reform Act of 1986......... 641 764
Plant and equipment, due to basis differences on acquisitions
of assets................................................... 4,276 4,064
Investment in affiliates and plant and equipment due to gains
previously recognized for tax purposes and deferred for
financial reporting purposes................................ 1,357 1,719
Net operating loss carryforwards............................... 6,512 2,262
Investment tax credit carryforwards............................ 982 929
Other, net..................................................... 614 1,270
------- -------
Gross deferred tax assets.............................. 14,569 11,201
Less valuation allowance....................................... (5,939) --
------- -------
Deferred tax assets.................................... $ 8,630 $11,201
======= =======
Net deferred taxes..................................... $ 2,650 $ 5,951
======= =======
</TABLE>
The valuation allowance for deferred tax assets as of November 1, 1993 was
$9,821.
For federal income tax purposes, the following carryforwards are available
as of October 31, 1995:
<TABLE>
<CAPTION>
EXPIRATION
-----------
<S> <C> <C>
Net operating loss.............................................. $6,465 2003-2005
Investment credit............................................... 929 1995-2001
Alternative minimum tax credit.................................. 660 Indefinite
</TABLE>
(11) OTHER RELATED PARTY TRANSACTIONS
Affiliates, as used within these statements, are companies which are
affiliated with Lamar Advertising Company or its subsidiaries through common
ownership and directorate control.
F-15
<PAGE> 113
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
The Company receives income and incurs costs in transactions with related
parties and affiliates. The following is a summary of such transactions for the
years ending October 31:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Revenues:
Management fee income....................................... $595 $334 $ 31
Rental income............................................... 209 -- --
Interest income............................................. 75 59 8
Production of logo plates................................... 341 143 143
Expenses:
Interest expense............................................ 390 308 296
Rent expense................................................ 143 71 --
</TABLE>
The Company is a party to a consulting agreement with a shareholder and
former Chairman of the Board of the Company. The agreement, which expires in
1996, provides for annual payments of $120 and an annual bonus of up to $100.
The Company incurred consulting expense of $120 under this agreement in 1993,
1994 and 1995. Additionally, the Company paid consulting fees of $110 to this
individual in 1995.
As of October 31, 1994 and 1995, debentures totaling $3,600 and $2,950,
respectively, are owned by shareholders, directors and employees.
During 1993, the Company purchased all outstanding stock of Lamar
Advertising of Wichita Falls, Inc., a company which, at the time of the
acquisition, was owned by certain stockholders of LAC. The total consideration
was approximately $1,200, which approximated the book value of the underlying
assets.
During 1993, a subsidiary of the Company purchased a building from a joint
venture whose principals included the former Chairman of the Board and two
officers of the Company for a price of approximately $740. Additionally in 1993,
this subsidiary purchased two buildings from a director of the Company for
approximately $530.
(12) COMMON STOCK
The rights of Class A and Class B common stock (as in effect on October 31,
1995) are equal in all respects, except holders of Class A common stock shall
have preemptive rights with respect to Class A common stock and Class B is
non-voting. In connection with the Initial Public Offering (the "IPO") referred
to in Note 14, the Company effected a recapitalization consisting of an
approximate 778.9-for-1 stock split and an exchange of common stock for new
Class A and Class B common stock which are equal in all respects, except holders
of Class B common stock have ten votes per share and holders of Class A common
stock have one vote per share. Class B common stock will convert automatically
into Class A common stock upon the sale or transfer to persons other than
permitted transferees. All share information has been adjusted to reflect the
recapitalization.
(13) COMMITMENTS AND OTHER CONTINGENCIES
The Company sponsors a partially self-insured group health insurance
program. Coverage is available to all employees who work in excess of 30 hours
per week. The Company is obligated to pay all claims under the program which are
in excess of premiums, up to program limits of $150 per employee, per claim, per
year. The Company has purchased third-party insurance coverage for claims in
excess of this amount. The Company is
F-16
<PAGE> 114
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
also self-insured with respect to its income disability benefits and against
casualty losses on advertising structures. Amounts for expected losses including
a provision for losses incurred but not reported, are included in accrued
expenses in the accompanying consolidated financial statements. The Company
maintains a $1,000 letter of credit with a bank to meet requirements of the
Company's workers' compensation insurance carrier. The Company also maintains a
$375 letter of credit with an insurance company to partially collateralize a
surety bond for a logo company.
The Company established The Lamar Corporation Savings and Profit Sharing
Plan effective January 1, 1988. Participants include all employees who have
completed one year of service and are at least 21 years of age. The Company
matches 50% of employees' contributions up to 5% of related compensation.
Employees can contribute up to 15% of compensation. Full vesting on the
Company's matched contributions occurs after five years. The Company contributed
$313, $230 and $512 for the years ended October 31, 1993, 1994 and 1995,
respectively.
On November 1, 1993, LAC established The Lamar Corporation, Its Affiliates
and Subsidiaries Deferred Compensation Plan (the Plan) for the benefit of
certain of its senior management who meet specified age and years of service
criteria. Employees who have attained the age of 30 and have a minimum of 10
years of service are eligible for annual contributions to the Plan generally
ranging from $3 to $8, depending on the employee's length of service. LAC's
contributions to the Plan will be maintained in a "rabbi" trust and,
accordingly, the assets and liabilities of the Plan will be reflected in the
balance sheet of LAC. Upon termination, death or disability, participating
employees are eligible to receive an amount equal to the fair market value of
the assets in the employee's deferred compensation account. The Company has
contributed $101, $442 and $240 to the Plan during 1993, 1994 and 1995,
respectively. Contributions to the Plan are discretionary and are determined by
the Board of Directors.
The Company is the subject of litigation arising during the normal course
of business. In the opinion of management and general counsel of the Company,
those claims will not have a material impact on the financial position, results
of operations or liquidity of the Company.
(14) SUBSEQUENT EVENTS (UNAUDITED)
On December 30, 1995, the Certificate of Incorporation of the Company was
amended to authorize 10,000 shares of Class A preferred stock with a par value
of $638 per share and no voting rights. The Class A preferred stock are
cumulative and are priority to Class A and Class B common stock dividends at the
rate of $15.95 per share per quarter.
As of December 30, 1995, 4,454,397 shares of Class A common stock with a
$.001 per share par value were converted into 5,719.49 shares of Class A
preferred stock with a $638 per share par value. This conversion resulted in a
$3,600 charge to accumulated deficit.
On March 1, 1996, 3,463,666 shares of Class A common stock and 154,218
shares of Class B common stock, $.001 par value, were redeemed at a price of
$0.82 per share. This redemption resulted in a $3,000 charge to accumulated
deficit. In connection with the redemption, the Company agreed, contingent upon
completion of the IPO referred to below, to pay additional consideration of
$1.38 per share in cash and $5.52 per share in ten-year subordinated notes,
which resulted in an additional charge to stockholders' equity of $25,000. The
accompanying pro forma financial information gives effect to the additional
consideration paid upon completion of the IPO, but does not give effect to the
IPO proceeds.
F-17
<PAGE> 115
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
Subsequent to April 30, 1996, the Company advanced $450 to a stockholder.
The loan was paid on or before October 31, 1996.
Effective July 1, 1996, the Company entered into a consulting agreement
with an affiliate of a shareholder and former Chairman of the Board of the
Company to replace the expiring consulting agreement discussed in Note 11. The
agreement provides for a $120 annual consulting fee for a term of ten years.
In August, 1996, the Company consummated an initial public offering of
4,294,041 shares of Class A Common Stock, $.001 par value per share. In
connection with the IPO, the Company effected the recapitalization referred to
in Note 12.
Also in connection with the IPO, the Company adopted the 1996 Equity
Incentive Plan (the "1996 Plan"). The purpose of the 1996 Plan is to attract and
retain key employees and consultants of the Company. The 1996 Plan authorizes
the grant of stock options, stock appreciation rights and restricted stock to
employees and consultants of the Company capable of contributing to the
Company's performance. The Company has reserved an aggregate of 2,000,000 shares
of Class A Common Stock for awards under the 1996 Plan.
In September, 1996 the Company agreed to acquire all of the outstanding
capital stock of FKM for a cash purchase price of $40.0 million and
substantially all of the assets of Outdoor East for a cash purchase price of
approximately $60.0 million. These acquisitions will be accounted for under the
purchase method of accounting.
On October 8, 1996, the Board of Directors of the Company authorized a Note
Offering of $225 million aggregate principal amount of Notes that would be
subordinate to amounts borrowed under the New Credit Agreement. The Board of
Directors also authorized the offering of up to $100 million of Class A $.001
par value Common Stock. The filings will be registered with the Securities and
Exchange Commission pursuant to the Securities Act of 1933.
On October 17, 1996, the Company commenced a tender offer for all of its
$100,000 outstanding 11% Senior Secured Notes Due May 15, 2003, together with a
consent solicitation to effect certain amendments to the indenture under which
the Notes were issued and the related pledge agreement. The tender offer is
expected to be financed through the New Credit Agreement.
F-18
<PAGE> 116
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
FKM Advertising Co., Inc.
Allentown, Pennsylvania
We have audited the accompanying balance sheets of FKM Advertising Co.,
Inc. as of December 31, 1994 and 1995, and the related statements of operations,
changes in stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of FKM Advertising Co., Inc. as
of December 31, 1994 and 1995, and the results of its operations and cash flows
for the years then ended in conformity with generally accepted accounting
principles.
MCGRAIL, MERKEL, QUINN & ASSOCIATES
Scranton, Pennsylvania
March 14, 1996
F-19
<PAGE> 117
FKM ADVERTISING CO., INC.
BALANCE SHEETS
DECEMBER 31, 1994 AND 1995, AND SEPTEMBER 30, 1996 (UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
1994 1995 -------------
----------- ----------- (UNAUDITED)
<S> <C> <C> <C>
Current assets
Cash..................................................................... $ 27,483 $ 164,643 $ 80,631
Accounts receivable, net of an allowance for doubtful accounts
of $55,000 in 1994 and $33,500 in 1995 and $69,900 in 1996
(unaudited)............................................................ 317,039 686,350 593,700
Note receivable -- shareholder........................................... 63,072 69,296 73,704
Prepaid expenses......................................................... 399,215 469,262 554,336
Other current assets..................................................... 23,100 41,150 66,015
----------- ----------- -----------
Total current assets............................................... 829,909 1,430,701 1,368,386
----------- ----------- -----------
Property and equipment
Land..................................................................... 26,413 126,413 144,763
Buildings................................................................ -- 175,000 175,000
Advertising structures................................................... 5,160,587 7,785,370 8,090,801
Furniture and fixtures................................................... 54,648 56,640 84,502
Equipment................................................................ 118,752 403,785 467,917
Vehicles................................................................. 101,764 118,142 118,142
----------- ----------- -----------
5,462,164 8,665,350 9,081,125
Less: Accumulated depreciation........................................... 1,021,410 1,379,025 1,872,442
----------- ----------- -----------
Net property and equipment......................................... 4,440,754 7,286,325 7,208,683
----------- ----------- -----------
Other assets
Deposits................................................................. 6,400 8,400 7,400
Deferred taxes........................................................... 1,369,940 1,562,383 1,682,383
Intangibles, net of amortization......................................... 4,860,953 10,114,870 8,675,513
----------- ----------- -----------
Total other assets................................................. 6,237,293 11,685,653 10,365,296
----------- ----------- -----------
Total assets....................................................... $11,507,956 $20,402,679 $18,942,365
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt........................................ $ 1,451,989 $ 1,214,613 $ 1,489,788
Accounts payable......................................................... 87,612 159,912 37,917
Accrued severance expense................................................ 28,846 -- --
Accrued interest expense................................................. -- 88,743 174,209
Accrued expenses -- other................................................ 160,072 276,477 156,132
Deferred revenue......................................................... 10,311 9,435 17,672
----------- ----------- -----------
Total current liabilities.......................................... 1,738,830 1,749,180 1,875,718
----------- ----------- -----------
Other liabilities
Long-term accrued expenses............................................... 142,713 -- -
Long-term debt, net of current portion................................... 7,257,867 16,812,828 15,747,553
----------- ----------- -----------
Total other liabilities............................................ 7,400,580 16,812,828 15,747,553
----------- ----------- -----------
Total liabilities.................................................. 9,139,410 18,562,008 17,623,271
----------- ----------- -----------
Stockholders' equity
Preferred stock, $0.01 par value, 619,972 shares authorized, issued and
outstanding............................................................ 6,200 6,200 6,200
Common stock -- Class A, $0.01 par value, 1,000,132 shares authorized,
shares issued -- 220,160 in 1994, 270,160 in 1995 and 270,160 in 1996
(unaudited)............................................................ 2,202 2,702 2,702
Common stock -- Class B, $0.01 par value, 170,000 shares authorized,
shares issued -- 160,000 in 1994, 110,000 in 1995 and 110,000 in 1996
(unaudited)............................................................ 1,600 1,100 1,100
Additional paid-in capital............................................... 4,992,036 4,992,036 4,992,036
Additional paid-in capital from the sale of treasury stock............... 16,140 16,140 16,140
Deficit.................................................................. (2,644,532) (3,172,407) (3,693,984)
Treasury stock -- 30,000 shares of common -- Class B, at cost............ (5,100) (5,100) (5,100)
----------- ----------- -----------
Total stockholders' equity......................................... 2,368,546 1,840,671 1,319,094
----------- ----------- -----------
Total liabilities and stockholders' equity......................... $11,507,956 $20,402,679 $18,942,365
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-20
<PAGE> 118
FKM ADVERTISING CO., INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994 AND 1995, AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1996 (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------- -------------------------
1994 1995 1995 1996
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue
Billboard rentals, net............................................ $4,702,698 $4,955,918 $3,503,686 $5,924,160
Interest income................................................... -- 11,735 7,204 19,961
Other income...................................................... 2,115 44,753 39,498 79,680
---------- ---------- ---------- ----------
Total revenue............................................... 4,704,813 5,012,406 3,550,388 6,023,801
---------- ---------- ---------- ----------
Costs and expenses
Production........................................................ 742,801 909,560 619,827 1,087,111
Lease expense..................................................... 538,481 603,452 423,180 656,790
Sales and marketing............................................... 405,918 359,062 253,495 482,291
General and administrative........................................ 891,906 759,707 584,723 869,633
---------- ---------- ---------- ----------
Total costs and expenses.................................... 2,579,106 2,631,781 1,881,225 3,095,825
---------- ---------- ---------- ----------
Income from operations before depreciation and
amortization.............................................. 2,125,707 2,380,625 1,669,163 2,927,976
---------- ---------- ---------- ----------
Depreciation and amortization
Depreciation...................................................... 385,441 430,922 289,944 493,417
Amortization...................................................... 2,032,353 1,391,606 1,054,106 1,481,574
---------- ---------- ---------- ----------
Total depreciation and amortization......................... 2,417,794 1,822,528 1,344,050 1,974,991
---------- ---------- ---------- ----------
(Loss) income from operations............................... (292,087) 558,097 325,113 952,985
---------- ---------- ---------- ----------
Other expenses
Employee severance expense........................................ 8,654 577 577 --
Interest expense.................................................. 868,561 1,038,807 663,170 1,588,947
Commitment fees................................................... 4,285 6,270 1,575 5,615
Loss on sale and disposal of fixed assets......................... 4,434 232,761 228,602 --
---------- ---------- ---------- ----------
Total other expenses........................................ 885,934 1,278,415 893,924 1,594,562
---------- ---------- ---------- ----------
Net loss before income tax benefit.......................... (1,178,021) (720,318) (568,811) (641,577)
Income tax benefit.................................................. 439,969 192,443 155,000 120,000
---------- ---------- ---------- ----------
Net loss.................................................... $ (738,052) $ (527,875) (413,811) (521,577)
========== ========== ========== ==========
Net loss per common share................................... $ (1.94) $ (1.39) $ (1.09) $ (1.37)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-21
<PAGE> 119
FKM ADVERTISING CO., INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994 AND 1995, AND THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON PAID-IN
STOCK STOCK ADDITIONAL CAPITAL FROM
PREFERRED CLASS CLASS PAID-IN THE SALE OF TREASURY
STOCK A B CAPITAL TREASURY STOCK DEFICIT STOCK TOTAL
--------- ------ ------ ---------- -------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993... $ 6,200 $2,102 $1,700 $4,992,036 $ -- $(1,865,405) $ -- $3,136,633
Purchase of stock:
Preferred stock (15,517
shares).................... -- -- -- -- -- -- (144,576) (144,576)
Common stock -- Class A
(5,260 shares)............. -- -- -- -- -- -- (20,024) (20,024)
Common stock -- Class B
(120,000 shares)........... -- -- -- -- -- -- (20,400) (20,400)
Stock issued:
Preferred stock (15,517
shares).................... -- -- -- -- -- (37,083) 144,576 107,493
Common stock -- Class A
(5,260 shares)............. -- -- -- -- -- (3,992) 20,024 16,032
Common stock -- Class B
(90,000 shares)............ -- -- -- -- 16,140 -- 15,300 31,440
Conversion of 10,000 shares of
common stock -- Class B to
Class A...................... -- 100 (100 ) -- -- -- -- --
Net loss, 1994................. -- -- -- -- -- (738,052) -- (738,052)
------- ------ ------ ---------- -------- ----------- --------- ----------
Balance at December 31, 1994... 6,200 2,202 1,600 4,992,036 16,140 (2,644,532) (5,100) 2,368,546
Conversion of 50,000 shares of
common stock -- Class B to
Class A...................... -- 500 (500 ) -- -- -- -- --
Net loss, 1995................. -- -- -- -- -- (527,875) -- (527,875)
------- ------ ------ ---------- -------- ----------- --------- ----------
Balance at December 31, 1995... $ 6,200 $2,702 $1,100 $4,992,036 $ 16,140 $(3,172,407) $ (5,100) $1,840,671
Net loss (unaudited)........... -- -- -- -- -- (521,577) -- (521,577)
------- ------ ------ ---------- -------- ----------- --------- ----------
Balance at September 30, 1996
(unaudited).................. $ 6,200 $2,702 $1,100 $4,992,036 $ 16,140 $(3,693,984) $ (5,100) $1,319,094
======= ====== ====== ========== ======== =========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-22
<PAGE> 120
FKM ADVERTISING CO., INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1995, AND THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 AND 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- -----------------------
1994 1995 1995 1996
---------- ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating activities
Net loss.................................... $ (738,052) $ (527,875) $ (413,811) $ (521,577)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization............ 2,417,794 1,822,528 1,344,050 1,974,991
Deferred taxes........................... (439,969) (192,443) (155,000) (120,000)
Bad debt expense......................... 138,714 98,010 98,010 89,353
Loss on sale and disposal of fixed
assets................................. 4,434 232,761 228,602 --
(Increase) decrease in:
Accounts receivable.................... 170,324 (467,321) 24,394 3,297
Notes receivable -- shareholder........ (1,272) (6,224) (4,287) (4,408)
Prepaid expenses....................... (93,863) (70,047) (56,984) (85,074)
Other current assets................... 8,503 (18,050) 5,208 (24,865)
Deposits............................... 2,980 (2,000) -- 1,000
Increase (decrease) in:
Accounts payable....................... 15,017 72,300 (34,207) (121,995)
Accrued severance expense.............. (126,443) (28,846) (28,846) --
Accrued expenses....................... 153,316 62,435 (17,891) (34,879)
Deferred revenue....................... 980 (876) (10,311) 8,237
---------- ------------ ---------- ----------
Net cash provided by operating
activities........................ 1,512,463 974,352 978,927 1,164,080
========== ============ ========== ==========
Investing activities
Acquisition costs........................... -- (6,025,667) (83,073) (42,218)
Loan costs.................................. (393,306) (619,856) -- --
Purchase of fixed assets.................... (285,532) (3,509,254) (313,944) (415,774)
Proceeds from sale of fixed assets.......... 12,500 -- -- --
---------- ------------ ---------- ----------
Net cash used by investing
activities........................ (666,338) (10,154,777) (397,017) (457,992)
---------- ------------ ---------- ----------
Financing activities
Loan proceeds............................... 30,000 10,469,559 -- 22,355
Payments of principal....................... (846,900) (1,151,974) (298,512) (812,455)
Acquisition of treasury stock............... (185,000) -- -- --
Issuance of stock........................... 154,965 -- -- --
---------- ------------ ---------- ----------
Net cash (used) provided by
financing activities.............. (846,935) 9,317,585 (298,512) (790,100)
---------- ------------ ---------- ----------
Net (decrease) increase in cash..... (810) 137,160 283,398 (84,012)
Cash, beginning of year....................... 28,293 27,483 27,483 164,643
---------- ------------ ---------- ----------
Cash, end of year............................. $ 27,483 $ 164,643 $ 310,881 $ 80,631
========== ============ ========== ==========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-23
<PAGE> 121
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Business
FKM Advertising Co., Inc. ("FKM") is a Delaware Corporation engaged in the
outdoor advertising business. The Company is located in Allentown, Pennsylvania
and Youngstown, Ohio. Advertising structures are primarily located in
Pennsylvania and Ohio.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Outdoor advertising revenues are recorded in the month the billboard is
displayed, based on the terms of the contract. The date the billboard is
actually displayed may vary slightly from the contract date due to scheduling
and other concerns. These variances do not materially affect revenue.
Allowance for Doubtful Accounts
The allowance for doubtful accounts is the amount that, in management's
judgment, is sufficient to absorb any anticipated losses related to the accounts
receivable.
Property and Equipment
Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets.
Earnings Per Share
Earnings per common share are computed by dividing net earnings applicable
to common stock by the weighted average number of common shares outstanding
during each period presented (380,160 shares for all periods presented).
Intangible Assets and Deferred Costs
The amounts representing the excess of the purchase price over the fair
value of the identifiable assets acquired ("Goodwill") has been recorded as an
intangible asset and is being amortized over a period of fifteen to forty years
using the straight-line method.
Lease rights represent the fair value at acquisition of below market rate
leases assumed in connection with the acquisition referred to above. These lease
rights are being amortized over the average remaining terms of the respective
leases.
Prepaid advertising contracts represent the estimated fair value of
contracts existing at the date of acquisition. The contract values are being
amortized over their remaining lives.
Costs incurred by FKM in securing financing agreements have been recorded
as an asset and amortized over the terms of the agreements using the
straight-line method.
F-24
<PAGE> 122
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109) effective January 1,
1993. SFAS 109 requires an asset and liability approach for accounting and
reporting for income taxes.
Deferred taxes are the result of accounting for certain items differently
for financial reporting purposes than for income tax purposes. These temporary
differences primarily relate to the Company's net operating loss carryover for
Federal income tax purposes, the allowance for doubtful accounts, depreciation
and employee severance expense.
Cash Flow Disclosures
The Company has defined cash as only those amounts included under the
Balance Sheet caption "Cash".
The Company paid interest amounting to $784,499 and $942,458 for the years
ended 1994 and 1995, respectively.
The Company paid no income taxes for the years ended December 31, 1994 and
1995.
Prepaid Expenses
The Company prepays certain costs for land leases and painting of displays
at the inception of the advertising contracts. These costs are deferred and
amortized on a straight-line basis over the period that coincides with the
recognition of income. This period is generally twelve months for land leases
and painting.
Reclassifications
Certain prior year amounts have been reclassified to conform to the 1995
presentation.
Unaudited Interim Financial Statements
The unaudited interim financial statements include all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
financial position and the results of operations of the Company.
NOTE 2 -- ACQUISITIONS
On November 15, 1995, the Company acquired certain assets of Naegele
Outdoor Advertising and Genesis Outdoor Advertising, both located in Youngstown,
Ohio, (the Naegele and Genesis acquisitions) for $8,565,000.
The acquisitions were accounted for as purchases, and the operations are
included in the accompanying financial statements subsequent to the acquisition
date.
The aggregate purchase price of the two acquisitions was allocated to the
assets acquired based upon the fair values at the date of acquisition. The
excess of purchase price over the fair value of assets acquired is recorded as
goodwill and is being amortized over fifteen years using the straight-line
method.
Also, in connection with the Naegele acquisition, the Company acquired real
estate on which potential environmental concerns were identified. The areas of
environmental concern were identified prior to the acquisition date and the
Company has been indemnified against the cost of any environmental remediation
that may be required.
F-25
<PAGE> 123
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- CASH
The current asset caption "Cash" at December 31, 1995 consisted of the
following:
<TABLE>
<S> <C>
Mahoning National Bank.................................................... $125,785
Ambassador Bank........................................................... 38,383
ABN*AMRO Bank N.V. ....................................................... 75
Petty cash................................................................ 400
--------
$164,643
========
</TABLE>
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to expense as incurred, while expenditures for renewals or
betterments are capitalized. Depreciation is computed using the straight-line
method over the useful lives of the assets.
At December 31, 1994 and 1995, property and equipment consisted of the
following:
<TABLE>
<CAPTION>
COST
ESTIMATED USEFUL ------------------------
DESCRIPTION LIVES 1994 1995
---------------------------------------------- ---------------- ---------- ----------
<S> <C> <C> <C>
Land.......................................... -- $ 26,413 $ 126,413
Buildings..................................... 40 years -- 175,000
Advertising structures........................ 15 years 5,160,587 7,785,370
Furniture and fixtures........................ 5-10 years 54,648 56,640
Equipment..................................... 3- 5 years 118,752 403,785
Vehicles...................................... 3- 5 years 101,764 118,142
---------- ----------
5,462,164 8,665,350
Less: Accumulated depreciation................ 1,021,410 1,379,025
---------- ----------
$4,440,754 $7,286,325
========== ==========
</TABLE>
Depreciation expense amounted to $385,441 and $430,922 for the years ended
December 31, 1994 and 1995, respectively.
During the current year, management disposed of advertising structures that
were no longer in service. The cost of the structures was $273,755 and the
resulting loss amounted to $232,761.
NOTE 5 -- INTANGIBLE ASSETS
Intangible assets at December 31, 1994 and 1995 consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED USEFUL
DESCRIPTION LIVES 1994 1995
-------------------------------------------- ---------------- ----------- -----------
<S> <C> <C> <C>
Lease rights................................ 7 years $ 2,500,000 $ 2,745,000
Organization costs.......................... 5 years 918,409 918,409
Noncompetition agreements................... 5 years 3,600,000 4,158,775
Loan costs.................................. 10 years 330,050 330,050
Loan costs -- amendments.................... 74-93 months 403,039 1,022,896
Interest cap................................ 30 months 44,550 44,550
Prepaid advertising contracts............... 30 months 2,700,000 2,700,000
Prepaid contracts and permits............... 15 years -- 1,990,021
Goodwill.................................... 15-40 years 1,055,577 4,287,448
----------- -----------
11,551,625 18,197,149
Less: Accumulated amortization.............. 6,690,672 8,082,279
----------- -----------
$ 4,860,953 $10,114,870
=========== ===========
</TABLE>
F-26
<PAGE> 124
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Amortization expense amounted to $2,032,353 and $1,391,606 for the years
ended December 31, 1994 and 1995, respectively.
NOTE 6 -- LONG-TERM DEBT
Long-term debt at December 31, 1994 and 1995 consisted of the following:
SENIOR DEBT
<TABLE>
<CAPTION>
SEPTEMBER 31,
1994 1995 1996
---------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ABN*AMRO BANK N.V.
Term loan payable. Interest is payable monthly
at the Bank's base rate plus 1 7/8%. Refer
below for principal payments and additional
information. ............................... $8,519,000 $13,500,000 $ 12,700,000
Revolving note payable. Interest is payable
monthly at the Bank's base rate plus 1 7/8%
and all principal is due on December 31,
2001. The maximum borrowing is
$1,500,000. ................................ 150,000 1,000,000 1,000,000
Acquisition loan payable. Interest is payable
monthly at the Bank's base rate plus 1 7/8%
and all principal is due on December 31,
2001. The maximum borrowing is
$1,000,000. ................................ -- -- --
---------- ----------- ------------
8,669,000 14,500,000 13,700,000
========== =========== ============
SUBORDINATED DEBT
CASCADE COMMUNICATIONS VENTURES, L.P.
Promissory loan dated November 15, 1995.
Interest is payable at a rate of 18%. All
principal is due on June 30, 2002........... -- 1,750,000 1,750,000
COAST MEZZANINE INVESTMENTS, LTD.
Promissory loan dated November 15, 1995.
Interest is payable at a rate of 18%. All
principal is due on June 30, 2002. ......... $ -- $ 1,750,000 $ 1,750,000
---------- ----------- ------------
-- 3,500,000 3,500,000
---------- ----------- ------------
INSTALLMENT DEBT
Note payable at 8.75%, payable in 36
installments of $952 per month, including
principal and interest, secured by a
vehicle, maturing June, 1997. .............. 25,536 15,976 8,197
Note payable at 7.75%, payable in 60
installments of $409 per month, including
principal and interest, secured by a
vehicle, maturing July 1998. ............... 15,320 11,465 8,369
Note payable in 24 monthly installments of
$1,111 per month, including principal and
interest, secured by equipment, maturing
July, 1998. ................................ -- -- 20,775
---------- ----------- ------------
40,856 27,441 37,341
---------- ----------- ------------
Total long-term debt.......................... 8,709,856 18,027,441 17,237,341
Less: Current portion......................... 1,451,989 1,214,613 1,489,788
---------- ----------- ------------
Total long-term debt, net of current
portion........................... $7,257,867 $16,812,828 $ 15,747,553
========== =========== ============
</TABLE>
F-27
<PAGE> 125
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
- -------------------------
<S> <C>
1996............................................. $ 1,214,613
1997............................................. 1,610,034
1998............................................. 2,002,794
1999............................................. 2,600,000
2000............................................. 3,000,000
Thereafter....................................... 7,600,000
-----------
$18,027,441
===========
</TABLE>
In addition to the above scheduled repayments, the Company is required to
make principal payments in the amount of varying percents of excess cash flow.
Excess cash flow is defined by the agreement, and the payment is due on April
15th of the following year. For the year ended December 31, 1994, additional
principal was due of $238,558 and is reflected in the current portion of
long-term debt. There is no excess cash flow payment due for the year ended
December 31, 1995.
According to the amended and restated Loan Agreement dated November 15,
1995, prepayment of loan principal equal to the percentage of the Company's
excess cash flow for the immediately preceding calendar year commences in 1997
for the calendar year ended December 31, 1996.
SENIOR DEBT
ABN*AMRO BANK N.V.
To finance the acquisition of its original operating assets, the Company
entered into a loan agreement with ABN*AMRO Bank N.V. dated January 17, 1992
(the "ABN Agreement"). The ABN Agreement provided a total loan facility of
$12,000,000 of which $11,000,000 represented a term loan and $1,000,000
represented a revolving line of credit. The ABN Agreement was amended pursuant
to the first and second amendments dated March 31, 1994 and 1993, respectively.
The Amendments primarily changed certain financial covenants, extended the
maturity date and amortization of the term loan and provided for the payment of
a fee to the Bank for its agreement to the second amendment.
During the current year, the Bank agreed to extend additional credit to the
Company for the purpose of making the acquisition referred to in Note 2, to fund
future acquisitions and for other purposes specifically permitted by the
Agreement. The additional credit was made available through an amendment to and
a restatement of the original loan agreement. The amended and restated loan
agreement is dated November 15, 1995.
Under the terms of this credit agreement, the Bank has committed to advance
to the Company the aggregate sum of up to $16,000,000. This commitment includes
a term loan commitment of $13,500,000, a revolver loan commitment of $1,500,000
and an acquisition loan commitment of $1,000,000.
Interest on the term loan and revolving line of credit is based on the
Bank's prime rate plus 1 7/8 percent and is payable monthly. Interest on the
term loan is also subject to the interest rate swap agreement entered into by
the Company and ABN*AMRO Bank N.V. on March 31, 1994. All unpaid principal and
interest is due on the maturity date of the above loans, December 31, 2001.
Covenants contained in the ABN Agreement, which among other things,
restrict the Company from incurring additional debt or capitalized lease
obligations in excess of $200,000 and indebtedness not to exceed $250,000 for
the purpose of acquiring motor vehicles at any one time while the loans are
outstanding; investing in certain types of securities and granting any security
interest in its assets other than permitted liens. The Agreement restricts
declaring or paying any dividends and issuing, distributing, redeeming,
repurchasing, acquiring or selling any stock or debt securities (except under
certain circumstances). The Agreement also
F-28
<PAGE> 126
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
restricts sales and purchases of assets, mergers, and consolidations. Also, the
Company must meet certain financial ratios relating to cash flows and the
relationship of debt to cash flows. In addition, the Company will be in default
of the Agreement if revenue from the advertisement of alcohol and tobacco
products is greater than five percent of gross revenue.
The borrowings under the Agreement are collateralized by the assets, the
capital stock, existing or subsequently acquired assets, including patents,
trademarks, copyrights and licenses, and leases of the Company. In addition, the
Company must maintain life insurance of $2,000,000 on the President of the
Company. The insurance policy is assigned to ABN*AMRO and serves as additional
collateral.
SUBORDINATED DEBT
The proceeds of the subordinated debt listed above was used solely to
partially finance the Naegele and Genesis acquisitions of November 15, 1995.
The principal balance of the subordinated loans is due and payable on the
maturity date, June 30, 2002. Interest accrues on the outstanding principal
balance, including all accrued interest added to the principal of the loans, at
a simple interest rate per annum of 18%. Beginning January 1, 1996 and on the
first day of each calendar quarter until the maturity date, interest is due and
payable at a simple interest rate of 12.5% from the Agreement date through and
including December 31, 1996, and at a simple interest rate of 15.5% for the
period from and after January 1, 1997. Accrued interest, which is not payable
quarterly, shall be added to the outstanding principal amount of the subordinate
loans and is compounded quarterly until paid.
Under the terms of the subordinated agreements, the Company must comply
with all of the covenants (affirmative and negative) as set forth in the Senior
Loan Agreement. Also, if the subordinated loans are accelerated at any time
prior to the third anniversary of the agreement dates, the present value of the
sum of all the interest that would accrue from the acceleration date through and
including the third anniversary date becomes due along with the outstanding
principal and any accrued interest.
NOTE 7 -- REDEEMABLE PREFERRED STOCK
Preferred Stock -- Series A -- The holders of the outstanding Series A
Preferred Stock shall be entitled to receive cumulative dividends at an annual
rate of fifteen percent of the original issue price of $7.00 or $1.05 per share.
Dividends shall accrue from day-to-day on each share from the date of issuance
of each share whether or not earned or declared. Holders of Series A Preferred
Stock can convert their shares at any time into Class A Common Stock on a
share-for-share basis. Upon any conversion of Series A Preferred Stock to Class
A Common Stock all accrued and unpaid cumulative dividends shall be forfeited.
At December 31, 1994 and 1995, dividends on Preferred Stock were in arrears by
$1,924,375 and $2,575,345, respectively.
The Series A Preferred Stock holders have participation rights in any
dividend other than a stock dividend declared and paid on Common Stock of the
Company.
Beginning in 1997, Series A Preferred Stock holders have the right to
redeem their shares based on an optional redemption schedule. The redemption
price shall be the greater of the fair market value per share or $7.00 per share
plus all unaccrued and unpaid cumulative dividends.
Also, upon any event of default, Series A Preferred Stockholders can redeem
all shares outstanding at the redemption price, even prior to the redemption
date of January 1, 1997, at the redemption price.
NOTE 8 -- COMMON STOCK AND WARRANTS
Class A Shares -- Of the authorized shares of Class A Common Stock, 619,972
shares are reserved for the conversion of the Preferred Stock to Class A Common
Stock and 170,000 shares for the conversion of the Class B Common Stock into
Class A Common Stock of the Company.
F-29
<PAGE> 127
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Class B Shares -- Certain stockholders of the Company to whom shares of
Class B Common Stock have been issued will vest their rights in these shares
over the next four years, based upon the Company's ability to achieve various
performance goals and/or the passage of time.
Treasury Stock -- The purchase of the Company's Common Stock is recorded at
cost. At the date of subsequent reissue, the treasury stock account is reduced
by the cost of such stock on the first-in -- first-out basis.
Warrants -- Cascade Communications Ventures, L.P. and Coast Mezzanine
Investments, Ltd., the subordinated lenders referred to in Note 2, were issued
stock purchase warrants during the current year. Effective November 15, 1995,
each Company is entitled to purchase 25,530 shares of Class A Common Stock at an
exercise price of $.02 per share. The exercise period terminates on June 30,
2002. Among other things, the warrant agreements restrict stockholders' equity
transactions that would dilute the value of their warrants.
NOTE 9 -- DEFINED CONTRIBUTION PLAN
The Company sponsors a defined contribution profit sharing plan. The plan
was established by adopting a New England Mutual Life Company 401(k) prototype
plan. It covers all eligible employees.
The Company contributes to the plan an amount equal to fifty percent of the
participant's salary reduction contributions for the plan year. Employer
matching contributions are further limited to five percent of the participants
compensation. Matching contributions for the current year amounted to $12,753.
For the year ended December 31, 1994, matching contributions amounted to $9,639.
Profit sharing contributions are made by the Company at the discretion of
the Board of Directors. For the years ended December 31, 1994 and 1995,
discretionary contributions of $15,000 were made.
NOTE 10 -- INCOME TAXES
The Company has approximately $4,808,000 of net operating losses available
for Federal income tax purposes which begin to expire in 2007. The Commonwealth
of Pennsylvania provides for the carryover of operating losses up to a maximum
of $1,000,000 per year. Current operating loss carryovers are available through
1997.
The income tax benefits are comprised of the following for the years ended
December 31,
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Current payable
Federal...................................................... $ -- $ --
State........................................................ -- --
Deferred benefit (provision)
Federal...................................................... 359,165 131,941
State........................................................ 80,804 60,502
-------- --------
Income tax benefit................................... $439,969 $192,443
======== ========
</TABLE>
F-30
<PAGE> 128
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The components of the deferred income tax benefit, which result from
temporary differences, are as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Net operating loss (NOL)....................................... $550,909 $243,715
Allowance for doubtful accounts................................ (90,040) (7,327)
Depreciation................................................... (49,524) (32,796)
Employee severance expense..................................... (42,991) (9,809)
Contribution carryover......................................... 3,619 355
Adjustment for enacted changes in state tax laws............... 67,996 (1,695)
-------- --------
Total................................................ $439,969 $192,443
======== ========
</TABLE>
A reconciliation of income taxes at statutory rates to applicable income
taxes reported in the statement of operations and deficit is as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Benefit at the expected statutory rates........................ $485,975 $292,403
NOL carryover unallowable for state tax purposes............... (93,372) (19,797)
Adjustment for enacted changes in state tax laws............... 67,996 (1,695)
Non-deductible expenses for tax purposes....................... (13,889) (13,954)
Other reductions, net........................................ (6,741) (64,514)
-------- --------
Total................................................ $439,969 $192,443
======== ========
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
are as follows for the years ended December 31,
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss (NOL).................................. $1,481,522 $1,948,867
Allowance for doubtful accounts........................... 22,603 12,847
Employee severance expense................................ 12,908 --
Contribution carryover.................................... 4,019 4,325
---------- ----------
Total deferred tax assets......................... 1,521,052 1,966,039
Less valuation allowance.......................... (58,051) (278,935)
---------- ----------
1,463,001 1,687,104
Deferred tax liability -- depreciation...................... (93,061) (124,721)
---------- ----------
Net deferred tax asset...................................... $1,369,940 $1,562,383
========== ==========
</TABLE>
NOTE 11 -- RELATED PARTY TRANSACTIONS
The Company has entered into the following related party transactions:
NOTE RECEIVABLE -- SHAREHOLDER
The Corporation made a loan to a shareholder in the amount of $61,243.
Interest accrues at a rate equal to the variable interest rate which is charged
to the Company under the ABN*AMRO Bank N.V. Loan Agreement. Principal and
interest is payable on demand. If no demand is made, the shareholder shall pay
the amount of unpaid principal and accrued interest as of July 31, 1997, plus
interest thereon, in eight equal quarterly installments commencing August 1,
1997.
F-31
<PAGE> 129
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
CONSULTING AGREEMENT
Brush, Johnsen & Fretty, Inc., is providing the Company with certain
consulting and investment banking services pursuant to an Agreement dated
January 17, 1992. The principals of Brush, Johnsen & Fretty, Inc., are also
shareholders in FKM. The Agreement terminates on January 16, 1999.
EMPLOYMENT AGREEMENT
The Company entered into an Employment Agreement dated May 18, 1994 with a
shareholder of the Company. Under the Agreement, the shareholder was employed as
President of the Company. The Agreement primarily provides for an annual salary,
benefits and a performance bonus arrangement. Additional non-cash compensation
in the form of the Company's Class B Common Stock was also provided to the
President under the terms of the Agreement.
ABN*AMRO BANK
In connection with the second amendment to the loan agreement referred to
in Note 5, the Company agreed to pay the Bank a fee equal to $206,880. On the
amendment date, $25,860 was paid in cash and $181,020 was deferred and terms of
repayment agreed upon. In accordance with section 2.4(d) of the amendment, the
Bank opted to purchase shares of the Company's stock for $154,965 through the
partial liquidation of the deferred fee.
NOTE 12 -- COMMITMENTS AND CONTINGENCIES
Leases
The Company's advertising structures are located on properties leased from
others. The Company also leases its corporate office and plant. Some of the land
leases for advertising structures contain renewal options with varying terms and
escalation clauses which provide, primarily on a yearly basis, for increased
rental. The corporate office and plant lease has a five year term with one five
year renewal term available. For the years ended December 31, 1994 and 1995,
rent expense was $564,262 and $642,344, respectively. Future office and plant
minimum rentals at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
- ------------ -------
<S> <C>
1996................................................ $38,400
=======
</TABLE>
NOTE 13 -- DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has a number of financial instruments, none of which are held
for trading purposes. The Company estimates that the fair value of all financial
instruments at December 31, 1995, does not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
Balance Sheet. The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. Considerable judgment is necessarily required in interpreting
market data to develop the estimates of fair value, and, accordingly, the
estimates are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.
F-32
<PAGE> 130
INDEPENDENT AUDITORS' REPORT
The Partners
Outdoor East, L.P.:
We have audited the accompanying balance sheets of Outdoor East, L.P. as of
December 31, 1994 and 1995, and the related statements of operations, partners'
deficit, and cash flows for each of the years in the three year period ended
December 31, 1995. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Outdoor East, L.P. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
March 1, 1996, except for note 8 which
is as of June 13, 1996
F-33
<PAGE> 131
OUTDOOR EAST, L.P.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- SEPTEMBER
1994 1995 30, 1996
------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 251,659 485,383 1,026,360
Accounts receivable:
Trade, net of allowance for doubtful accounts of
$52,221 and $25,914 at December 31, 1995 and
1994, respectively, and $48,444 at September
30, 1996...................................... 1,655,990 1,840,843 1,836,483
Other........................................... 130,978 79,814 114,017
Prepaid expenses................................... 874,889 649,083 853,126
------------ ---------- ----------
Total current assets....................... 2,913,516 3,055,123 3,829,986
Property and equipment, at cost, net of accumulated
depreciation (note 2).............................. 17,368,265 16,197,181 15,565,545
Intangible assets, net of accumulated amortization:
Site lease rights.................................. 1,710,467 1,213,698 857,740
Goodwill........................................... 1,878,216 1,743,641 1,644,397
Deferred financing costs and other (note 9)........ 214,589 152,923 1,717,172
------------ ---------- ----------
3,803,272 3,110,262 4,219,309
Other assets (note 9)................................ -- -- 775,472
------------ ---------- ----------
$ 24,085,053 22,362,566 24,390,312
============ ========== ==========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current portion of long-term debt (notes 3 and
9).............................................. $ 655,588 21,990,932 866,667
Current portion of notes payable to general
partner......................................... 37,072 45,627 --
Note payable (notes 4 and 9)....................... 445,000 445,000 --
Accounts payable:
Trade........................................... 873,935 430,022 458,092
General partner (note 5)........................ 18,142 -- --
Accrued interest payable........................... 157,418 159,017 522,062
Other accrued liabilities.......................... 172,499 128,419 177,220
Deferred revenue................................... 485,854 483,957 --
------------ ---------- ----------
Total current liabilities.................. 2,845,508 23,682,974 2,024,041
Long-term debt, less current portion (notes 3 and
9)................................................. 22,990,501 998,212 22,942,937
Notes payable to general partner (notes 5 and 9)..... 1,227,377 1,183,273 --
------------ ---------- ----------
Total liabilities.......................... 27,063,386 25,864,459 24,966,978
Partners' deficit:
Partners' capital contributions.................... 23,183,150 23,662,316 28,202,316
Accumulated deficit................................ (26,161,483) (27,164,209) (28,778,982)
------------ ---------- ----------
Total partners' deficit.................... (2,978,333) (3,501,893) (576,666)
------------ ---------- ----------
Commitments and contingencies (notes 3, 6, 7 and 9)
$ 24,085,053 22,362,566 24,390,312
============ ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-34
<PAGE> 132
OUTDOOR EAST, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -----------------------
1993 1994 1995 1995 1996
----------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenue:
Advertising.................... $ 9,792,960 10,554,742 10,981,093 8,152,417 8,684,455
Other.......................... 359,515 809,276 526,440 343,113 545,212
----------- ---------- ---------- --------- ----------
10,152,475 11,364,018 11,507,533 8,495,530 9,229,667
----------- ---------- ---------- --------- ----------
Operating expenses:
Technical services............. 3,659,296 4,085,795 3,883,507 2,945,813 3,004,028
Selling, general and
administrative.............. 3,324,964 3,835,728 3,548,336 2,737,045 2,698,636
Executive recruiting and
severance................... 131,913 163,595 -- -- --
Management fees to general
partner (note 5)............ 457,000 249,996 -- -- --
Depreciation and
amortization................ 3,543,531 3,222,131 2,674,826 1,925,540 2,191,614
----------- ---------- ---------- --------- ----------
11,116,704 11,557,245 10,106,669 7,608,398 7,894,278
Operating income (loss)........ (964,229) (193,227) 1,400,864 887,132 1,335,389
----------- ---------- ---------- --------- ----------
Other expenses:
Interest expense............... 2,102,307 2,073,420 2,059,741 1,547,883 2,159,701
Loss on sale of assets......... 190,189 12,027 -- -- --
Other (note 9)................. 59,942 342,045 343,849 148,901 790,461
----------- ---------- ---------- --------- ----------
Net income (loss)...... $(3,316,667) (2,620,719) (1,002,726) (809,652) (1,614,773)
=========== ========== ========== ========= ==========
</TABLE>
See accompanying notes to financial statements.
F-35
<PAGE> 133
OUTDOOR EAST, L.P.
STATEMENTS OF PARTNERS' DEFICIT
<TABLE>
<CAPTION>
PARTNERS'
CAPITAL ACCUMULATED
CONTRIBUTIONS DEFICIT TOTAL
------------- ----------- ----------
<S> <C> <C> <C>
Balances, January 1, 1993............................ $ 16,233,150 (20,224,097) (3,990,947)
Capital contributions.............................. 6,000,000 -- 6,000,000
Net loss........................................... -- (3,316,667) (3,316,667)
------------ ----------- ----------
Balances, December 31, 1993.......................... $ 22,233,150 (23,540,764) (1,307,614)
Capital contributions.............................. 950,000 -- 950,000
Net loss........................................... -- (2,620,719) (2,620,719)
------------ ----------- ----------
Balances, December 31, 1994.......................... $ 23,183,150 (26,161,483) (2,978,333)
Capital contributions.............................. 479,166 -- 479,166
Net loss........................................... -- (1,002,726) (1,002,726)
------------ ----------- ----------
Balances, December 31, 1995.......................... $ 23,662,316 (27,164,209) (3,501,893)
Capital contributions (Note 9)..................... 4,540,000 -- 4,540,000
Net loss........................................... -- (1,614,773) (1,614,773)
------------ ----------- ----------
Balances, September 30, 1996 (unaudited)............. $ 28,202,316 (28,778,982) (576,666)
============ =========== ==========
</TABLE>
See accompanying notes to financial statements.
F-36
<PAGE> 134
OUTDOOR EAST, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- ------------------------
1993 1994 1995 1995 1996
----------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net loss..................................... $(3,316,667) (2,620,719) (1,002,726) (809,652) (1,614,773)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization............. 3,543,531 3,225,367 2,674,826 1,925,540 2,191,614
Gain (loss) on sale of assets............. (19,921) 12,027 -- -- --
Loss on disposition of assets............. 261,644 -- -- -- --
Changes in operating assets and
liabilities:
Decrease (increase) accounts receivable,
prepaid expenses and other assets.... (353,900) (315,127) 92,117 30,149 (259,359)
(Decrease) increase in accounts payable,
accrued interest payable, other
accrued liabilities, and deferred
revenue.............................. 317,646 (427,469) (515,633) (415,765) (44,041)
----------- ---------- ---------- --------- -----------
Net cash provided by (used in)
operating activities............... 432,333 (125,921) 1,248,584 730,272 273,441
----------- ---------- ---------- --------- -----------
Cash flows from investing activities:
Purchases of property and equipment.......... (2,281,251) (475,240) (810,732) (607,046) (783,580)
Proceeds from sale of assets................. 27,204 -- -- -- --
----------- ---------- ---------- --------- -----------
Net cash used in investing
activities......................... (2,254,047) (475,240) (810,732) (607,046) (783,580)
----------- ---------- ---------- --------- -----------
Cash flows from financing activities:
Capital contributions........................ 6,000,000 950,000 479,166 479,166 4,540,000
Proceeds from notes payable.................. 213,144 73,600 -- -- 22,750,000
Repayments of notes payable and long-term
debt...................................... (3,970,883) (494,378) (683,294) (509,675) (23,603,440)
Cash deposited in escrow..................... -- -- -- -- (750,000)
Payment of debt issuance costs............... (280,645) -- -- -- (1,885,444)
----------- ---------- ---------- --------- -----------
Net cash provided by (used in)
financing activities............... 1,961,616 529,222 (204,128) (30,509) 1,051,116
----------- ---------- ---------- --------- -----------
Net increase (decrease) in cash and
cash equivalents................... 139,902 (71,939) 233,724 92,717 540,977
Cash and cash equivalents at beginning of
year......................................... 183,696 323,598 251,659 251,659 485,383
----------- ---------- ---------- --------- -----------
Cash and cash equivalents at end of year....... $ 323,598 251,659 485,383 344,376 1,026,360
=========== ========== ========== ========= ===========
Supplemental cash flow information:
Cash paid for interest....................... $ 2,274,370 2,083,743 2,067,342 1,559,241 1,796,710
=========== ========== ========== ========= ===========
Issuance of Note Payable for purchase of fixed
assets (note 6).............................. $ -- 445,000 -- -- --
=========== ========== ========== ========= ===========
</TABLE>
See accompanying notes to financial statements.
F-37
<PAGE> 135
OUTDOOR EAST, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Outdoor East, L.P. (the Partnership) is a Delaware limited partnership
which acquires, operates and develops outdoor advertising businesses throughout
the Southeast United States. The managing general partner of the Partnership is
First Carolina Communications, Inc. (FCCI).
The balance sheet as of September 30, 1996, and the statements of
operations, partners' equity, and cash flows for the nine months ended September
30, 1995 and 1996 have been prepared by the Partnership without audit. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial position,
results of operations and cash flows as of September 30, 1996 and for the nine
months ended September 30, 1995 and 1996, have been included.
(b) Allocation of Profits and Losses
The Partnership agreement generally provides for the allocation of profits
and losses among the partners in proportion to their respective capital
contributions. Profits and losses are allocated to the partners in the following
percentages: 19.8% to the general partner and 80.2% to the limited partners.
(c) Cash Equivalents
For purposes of the statements or cash flows, the Partnership considers
investments with original maturities of three months or less to be cash
equivalents.
(d) Revenue Recognition
The Partnership recognizes advertising revenue as the services are
provided. The revenue is recorded net of advertising agency commission expense.
Allowances for doubtful accounts are provided based on estimated losses.
(e) Property and Equipment
Property and equipment are recorded at cost and depreciation is computed
using various accelerated methods over the estimated useful lives of the assets
as follows: buildings and improvements -- 31.5 years; sign structures -- 15
years; vehicles, shop equipment, leasehold improvements, and office furniture
and equipment -- 5 to 7 years. Maintenance and repairs are expensed as incurred;
and property additions, renewals and improvements are capitalized. When assets
are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the respective accounts and any gain or loss is
recognized.
(f) Intangible Assets
The Partnership's display structures are generally located on leased sites
under long-term operating leases providing for monthly rental payments over the
term of the lease, which generally range from 5 to 15 years. The estimated fair
value of leases in place (arising from favorable terms) obtained in business
combinations is allocated to site lease rights and amortized using the
straight-line method over the weighted average remaining life of the leases.
Additionally, direct costs associated with obtaining new site leases are
capitalized and amortized over a period of five years. Accumulated amortization
of site lease rights was approximately $5,299,000 and $5,808,000 at December 31,
1994 and 1995, respectively, and $6,164,000 at September 30, 1996 (unaudited).
F-38
<PAGE> 136
OUTDOOR EAST, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Goodwill arising from business combinations is amortized using the
straight-line method over a period of 20 years. Accumulated amortization of
goodwill was approximately $765,000 and $896,000 at December 31, 1994 and 1995,
respectively, and $1,002,000 at September 30, 1996 (unaudited).
Direct costs associated with obtaining long-term debt are deferred and
amortized using the straight-line method over the term of the loan agreement.
Accumulated amortization of deferred finance costs was approximately $189,000
and $239,000 at December 31, 1994 and 1995, respectively, and $407,000 at
September 30, 1996 (unaudited).
(g) Income Taxes
The Partnership's profits and losses are reported directly by the partners
for income tax purposes. Accordingly, the Partnership is not liable for federal
or state income taxes.
(h) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(2) PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Land........................................ $ 131,173 131,173 131,173
Buildings and leasehold improvements........ 1,191,124 1,205,286 1,218,028
Sign structures............................. 25,453,180 26,162,278 26,760,672
Vehicles.................................... 1,138,059 1,239,132 1,265,351
Shop equipment.............................. 183,766 206,401 221,355
Office furniture and equipment.............. 696,006 876,849 1,008,052
Construction in progress.................... 217,079 -- --
----------- ----------- -----------
29,010,387 29,821,119 30,604,631
Accumulated depreciation.................... (11,642,122) (13,623,938) (15,039,086)
----------- ----------- -----------
$17,368,265 16,197,181 15,565,545
=========== =========== ===========
</TABLE>
F-39
<PAGE> 137
OUTDOOR EAST, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Depreciation expense for the years ended December 31, 1995 and 1994 was
approximately $2,059,000 and $1,985,000, respectively, and $1,415,000 at
September 30, 1996 (unaudited).
(3) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
1994 1995 -------------
----------- ----------- (UNAUDITED)
<S> <C> <C> <C>
Term loan facility, secured by pledged
assets and partnership interests, with
interest payable quarterly at LIBOR plus
3.25%..................................... $ -- -- 22,500,000
Revolving line of credit, secured by pledged
assets and partnership interests, with
interest payable at LIBOR plus 3.25%...... -- -- 250,000
Bank credit facility, secured by pledge of
assets, partnership interests and partial
guarantee of majority limited partner,
with interest payable quarterly at
7 7/8%.................................... 22,370,000 21,870,000 --
Note payable, secured by standby letter of
credit, payable in 120 monthly
installments of $6,250 plus interest at
10%, final installment of $750,000 due
June 1, 1999.............................. 1,081,250 1,006,250 950,000
Other....................................... 194,839 112,894 109,604
----------- ----------- ----------
23,646,089.. 22,989,144 23,809,604
Less current portion........................ (655,588) (21,990,932) (866,667)
----------- ----------- ----------
$22,990,501 998,212 22,942,937
=========== =========== ==========
</TABLE>
The bank credit facility is payable in graduated quarterly installments
through December 31, 1999. The Bank Credit Facility Agreement (the "Agreement")
contains restrictive covenants which include the maintenance of certain
financial ratios.
Effective March 28, 1994, the Agreement was amended to waive certain debt
covenant violations and defaults and to revise certain provisions which, among
other things, restrict capital expenditures and management fees. Effective June
15, 1995, the Agreement was further amended to revise certain covenants and to
prohibit payment of management fees to FCCI.
The Partnership failed to meet certain covenant requirements which has
placed the Partnership in technical default. Consequently, the Partnership has
classified the entire outstanding balance of the bank credit facility as a
current liability as of December 31, 1995.
Scheduled maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1996............................................ $21,990,932
1997............................................ 106,386
1998............................................ 100,932
1999............................................ 790,894
-----------
$22,989,144
===========
</TABLE>
F-40
<PAGE> 138
OUTDOOR EAST, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Partnership has an open letter of credit with an available balance of
$1,175,000. The Partnership pays an annual fee of 1.5% of the available balance.
See note 9.
(4) NOTE PAYABLE
In 1994, the Partnership acquired $445,000 of signboards from Lamar
Advertising, Inc., a Georgia based company in exchange for the issuance of a
note payable. The note is dated September 30, 1994 and calls for interest at 9%,
payable monthly. The note is due in full on May 1, 1996. See note 9.
(5) RELATED PARTY TRANSACTIONS
FCCI provides management services to the Partnership. During 1994, the
Partnership paid $249,996 in management fees. As is required by a covenant in
the Partnership's Bank Credit Facility Agreement, the Partnership did not pay
management fees to FCCI during 1995.
Accounts payable -- general partner primarily represents unpaid management
fees due to FCCI, and are noninterest bearing.
Notes payable to general partner represent unsecured advances from FCCI,
which bear interest at 7 7/8%, payable in graduated quarterly installments. Any
unpaid principal and interest is due in full on March 31, 2000. See note 9.
(6) COMMITMENTS
In the normal course of business, the Partnership maintains long-term
operating leases for land site locations. The aggregate future minimum lease
payments required under noncancelable operating leases as of December 31, 1995
were as follows:
<TABLE>
<S> <C>
1996............................................. $ 429,421
1997............................................. 389,410
1998............................................. 330,445
1999............................................. 271,513
2000............................................. 199,795
Thereafter....................................... 988,271
----------
$2,608,855
==========
</TABLE>
Total site lease expense was approximately $1,467,000, $1,559,000 and
$1,615,000, respectively, for the years ended December 31, 1993, 1994 and 1995
and approximately $1,218,000 for the nine months ended September 30, 1996
(unaudited).
(7) LITIGATION
On December 19, 1995, COA, Inc., formerly known as Columbia Outdoor
Advertising, Inc. filed suit against Outdoor South, L.P. in the Court of Common
Pleas of Richland County, South Carolina. Outdoor South, L.P. was formerly an
affiliate of the Company and ceased to exist on October 25, 1990 in a
transaction in which the Company succeeded to Outdoor South, L.P.'s assets and
liabilities. The suit alleges that Outdoor South, L.P. is indebted to the
plaintiff in the amount of $101,707 arising out of Outdoor South, L.P.'s
acquisition of the assets of COA, Inc. in 1990. An answer denying liability has
been filed in this action and no further proceedings have yet occurred. No
charge has been made to the Company's income related to this litigation.
F-41
<PAGE> 139
OUTDOOR EAST, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(8) LIQUIDITY
The Partnership had a negative working capital balance of $20,627,851 as of
December 31, 1995 as a result of its classifying the outstanding balance of the
Bank Credit Facility as a current liability. The Partnership was in technical
default of the Bank Credit Facility Agreement, since it failed to meet certain
covenant requirements contained therein.
On June 13, 1996, the Partnership signed a new Bank Credit Facility (the
"Facility"). The Facility is comprised of a Term Loan Facility ( the "Term
Loan") for $22.5 million and a Revolving Line of Credit (the "LOC") for up to
$7.5 million. Quarterly installment payments on the Term Loan will commence on
June 30, 1997. Outstanding balances under the LOC will be due on June 30, 2003,
the Facility's termination date. Borrowings under the Facility are secured by
the assets of the Partnership and partnership interests. Covenants under the
Facility require the Partnership to maintain certain debt to cash flow ratios.
The Partnership has placed $750,000 of the proceeds in escrow as provided for in
the Facility. The escrow balance has been recorded in other non-current assets
in the accompanying September 30, 1996 balance sheet. The remaining proceeds
from the Facility were used to pay-off the Partnership's existing Bank Credit
Facility, the note payable to Lamar Advertising, Inc., and for general purposes.
In addition, the lenders and others invested $4,540,000 in the Partnership.
(9) SUBSEQUENT EVENTS (UNAUDITED)
In October 1996, the Partnership signed an agreement for the sale of the
assets and liabilities of the Partnership to Lamar Advertising, Inc.
Through September 30, 1996, the Partnership has recorded approximately
$716,000 of cost associated with an initial potential sale and reorganization of
the Partnership as other expenses.
F-42
<PAGE> 140
[PHOTOGRAPH OF POSTER, BULLETIN, HIGHWAY LOGO SIGN AND BUS SHELTER]
<PAGE> 141
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT RELATES
IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 13
The Transactions...................... 19
Use of Proceeds....................... 22
Capitalization........................ 23
Selected Consolidated Historical and
Pro Forma Financial and Operating
Data................................ 24
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 35
Business.............................. 42
Management............................ 56
Certain Transactions.................. 60
Principal Stockholders................ 61
Description of Notes.................. 63
Description of Capital Stock.......... 87
Description of Other Indebtedness..... 89
Underwriting.......................... 93
Certain Legal Matters................. 93
Experts............................... 94
Additional Information................ 94
Incorporation of Certain Documents by
Reference........................... 94
Index to Consolidated Historical and
Pro Forma Financial Statements...... F-1
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$225,000,000
[LAMAR LOGO]
% SENIOR SUBORDINATED NOTES DUE 2006
------------
PROSPECTUS
, 1996
------------
SMITH BARNEY INC.
CHASE SECURITIES INC.
CIBC WOOD GUNDY SECURITIES CORP.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 142
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses of issuance and distribution of
the Notes registered hereunder on Form S-3 other than underwriting discounts and
commissions:
<TABLE>
<S> <C>
SEC registration fee.................................................... $ 68,181.82
New York Stock Exchange registration fee................................ 11,250.00
NASD filing fee......................................................... 23,000.00
Blue Sky fees and expenses.............................................. 5,000.00
Printing and engraving expenses......................................... 250,000.00
Accounting fees and expenses............................................ 45,000.00
Legal fees and expenses................................................. 125,000.00
Trustee fees............................................................ 5,000.00
Miscellaneous expenses.................................................. 17,568.18
-----------
Total......................................................... $550,000.00
===========
</TABLE>
All of the above figures, except the SEC registration fee, the New York
Stock Exchange registration fee and NASD filing fee, are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law grants Lamar the power
to indemnify each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the fact
that he is or was a director, officer, employee or agent of Lamar, or is or was
serving at the request of Lamar as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with any
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of Lamar, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful, provided, however, no indemnification shall be
made in connection with any proceeding brought by or in the right of Lamar where
the person involved is adjudged to be liable to Lamar except to the extent
approved by a court.
Lamar's By-laws provide that any person who is made a party to any action
or proceeding because such person is or was a director or officer of Lamar will
be indemnified and held harmless against all claims, liabilities and expenses,
including those expenses incurred in defending a claim and amounts paid or
agreed to be paid in connection with reasonable settlements made before final
adjudication with the approval of the Board of Directors, if such person has not
acted, or in the judgement or the shareholders or directors of Lamar has not
acted, with willful or intentional misconduct. The indemnification provided for
in Lamar's By-laws is expressly not exclusive of any other rights to which those
seeking indemnification may be entitled as a matter of law.
Lamar's Certificate of Incorporation (the "Certificate") provides that
directors of Lamar will not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
whether or not an individual continues to be a director at the time such
liability is asserted, except for liability (i) for any breach of the director's
duty of loyalty to Lamar or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, relating to prohibited dividends or
distributions or the repurchase or redemption of stock, or (iv) for any
transaction from which the director derives an improper personal benefit.
The Company carries Directors' and Officers' insurance which covers its
directors and officers against certain liabilities they may incur when acting in
their capacity as directors or officers of the Company.
II-1
<PAGE> 143
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1 -- Form of Underwriting Agreement. Filed herewith.
3.1 -- Amended and Restated Certificate of Incorporation of the Registrant.
Previously filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated herein
by reference.
3.2 -- By-Laws of the Registrant, as amended. Previously filed as Exhibit
3.2 to the Registrant's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
4.1 -- Specimen certificate for the shares of Class A Common Stock of the
Registrant. Previously filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-1 (File No. 333-05479), and
incorporated herein by reference.
4.2 -- Senior Secured Note dated May 19, 1993. Previously filed as Exhibit
4.1 to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.3 -- Subsidiary Guarantees dated May 19, 1993. Previously filed as Exhibit
4.2 to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.4 -- Indenture dated May 15, 1993. Previously filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-1 (File No. 33-59624),
and incorporated herein by reference.
4.5 -- First Supplemental Indenture dated July 30, 1996. Previously filed as
Exhibit 4.5 to the Registrant's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
4.6 -- Form of Second Supplemental Indenture in the form of an Amended and
Restated Indenture dated November 8, 1996. Filed as Exhibit 4.1 to
the Company's Current Report on Form 8-K filed on November 15, 1996
(File No. 0-20833), and incorporated herein by reference.
4.7 -- Notice of Trustee dated November 8, 1996 with respect to the release
of the security interest in the Trustee on behalf of the holders of
the Company's Senior Secured Notes. Filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K filed on November 15, 1996
(Filed No. 0-20833), and incorporated herein by reference.
4.8 -- Pledge Agreement dated May 19, 1993. Previously filed as Exhibit 4.4
to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.9 -- Amendment to Pledge Agreement dated July 30, 1996. Previously filed
as Exhibit 4.7 to the Registrant's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
4.10 -- Form of Subordinated Note. Previously filed as Exhibit 4.8 to the
Registrant's Registration Statement on Form S-1 (File No. 333-05479),
and incorporated herein by reference.
4.11 -- Form of Indenture dated as of November , 1996 relating to the
Registrant's Senior Subordinated Notes. Filed herewith.
4.12 -- Form of Senior Subordinated Note. Filed herewith.
5.1 -- Opinion of Palmer & Dodge LLP. Filed herewith.
5.2 -- Opinion of Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, LLP.
Filed herewith.
5.3 -- Opinion of Chadbourne & Parke LLP. Filed herewith.
10.1 -- Bank Credit Agreement between the Registrant and The Chase Manhattan
Bank (National Association) dated May 19, 1993. Previously filed as
Exhibit 10.1 to the Registrant's Registration Statement on Form S-1
(File No. 33-59624), and incorporated herein by reference.
</TABLE>
II-2
<PAGE> 144
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.2 -- Consultation Agreement dated July 1, 1996 between the Lamar Texas
Limited Partnership and the Reilly Consulting Company, LLC., of which
Kevin P. Reilly, Sr. is the manager. Previously filed as Exhibit 10.2
to the Registrant's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
10.3 -- Indenture dated as of September 24, 1986 relating to the Registrant's
8% Unsecured Subordinated Debentures. Previously filed as Exhibit
10.4 to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
10.4 -- The Lamar Savings and Profit Sharing Plan Trust. Previously filed as
Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.5 -- Amendment and Waiver to the Bank Credit Agreement between the
Registrant and the Chase Manhattan Bank, dated September 30, 1993.
Previously filed as Exhibit 10.6 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended October 31, 1995 (File No.
33-59624), and incorporated herein by reference.
10.6 -- Second Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated January 1, 1994. Previously filed
as Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.7 -- Third Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated May 10, 1994. Previously filed as
Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.8 -- Fourth Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated October 31, 1994. Previously
filed as Exhibit 10.9 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.9 -- Fifth Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated October 15, 1995. Previously
filed as Exhibit 10.10 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.10 -- Sixth Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated July 12, 1996. Previously filed
as Exhibit 10.10 to the Registrant's Registration Statement on Form
S-1 (File No. 333-05479), and incorporated herein by reference.
10.11 -- Trust under The Lamar Corporation, its Affiliates and Subsidiaries
Deferred Compensation Plan dated October 3, 1993. Previously filed as
Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.12 -- Bank Credit Agreement between the Registrant and the Chase Manhattan
Bank (National Association) dated December 22, 1995. Previously filed
as Exhibit 10.12 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.13 -- Amendment No. 1 to Bank Credit Agreement between the Registrant and
the Chase Manhattan Bank (National Association) dated July 12, 1996.
Previously filed as Exhibit 10.13 to the Registrant's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated herein
by reference.
10.14 -- 1996 Equity Incentive Plan. Previously filed as Exhibit 10.14 to the
Registrant's Registration Statement on Form S-1 (File No. 333-05479),
and incorporated herein by reference.
10.15 -- Seventh Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated October 31, 1996. Filed herewith.
10.16 -- Contract to Sell and Purchase, dated as of October 9, 1996, between
the Registrant and Outdoor East L.P. Previously filed as Exhibit
10.16 to the Registrant's Registration Statement on Form S-3 (File
No. 333-14677), and incorporated herein by reference.
</TABLE>
II-3
<PAGE> 145
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.17 -- Stock Purchase Agreement, dated as of September 25, 1996, between the
Registrant and the shareholders of FKM Advertising, Inc. To be filed
by amendment. Previously filed as Exhibit 10.17 to the Registrant's
Registration Statement on Form S-3 (File No. 333-14677), and
incorporated herein by reference.
23.1 -- Consent of KPMG Peat Marwick LLP, independent accountants of Lamar
Advertising Company. Filed herewith.
23.2 -- Consent of KPMG Peat Marwick LLP, independent accountants of Outdoor
East, L.P. Filed herewith.
23.3 -- Consent of McGrail, Merkel, Quinn and Associates, independent
accountants of FKM Advertising Co., Inc. Filed herewith.
23.4 -- Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
23.5 -- Consent of Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, LLP
(included in Exhibit 5.2).
23.6 -- Consent of Chadbourne & Parke LLP (included in Exhibit 5.3).
24.1 -- Power of Attorney (included in the signature page to the initial
filing of this Registration Statement).
25.1 -- Statement of Eligibility of Trustee on Form T-1 of State Street Bank
and Trust Company. Previously filed as the same numbered exhibit to
Amendment No. 1 to this Registration Statement.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be a part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 146
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR ADVERTISING COMPANY
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ DUDLEY W. COATES Director November 19, 1996
- ---------------------------------------------
Dudley W. Coates
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
Director
- ---------------------------------------------
Jack S. Rome, Jr.
Director
- ---------------------------------------------
William R. Schmidt
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
II-5
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
GEORGIA LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
INTERSTATE LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
KANSAS LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 150
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR ADVERTISING OF COLORADO
SPRINGS, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 151
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR ADVERTISING OF JACKSON, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR ADVERTISING OF MOBILE, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 153
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR ADVERTISING OF SOUTH
GEORGIA, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 154
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR ADVERTISING OF SOUTH
MISSISSIPPI, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 155
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR ADVERTISING OF TALLAHASSEE,
INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 156
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR ADVERTISING OF
YOUNGSTOWN, INC.
/s/ KEVIN P. REILLY, JR.
-------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Lamar Advertising of Jackson,
Inc., hereby severally constitute and appoint Kevin P. Reilly, Jr., Keith A.
Istre, Ben R. Miller, Jr. and Stanley Keller, and each of them singly, our true
and lawful attorneys, with full power to them in any and all capacitates, to
sign any amendments to this Registration Statement on Form S-3 (including Pre-
and Post-Effective Amendments), and any related Rule 462(b) registration
statement or amendment thereto, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact may do or cause to be done virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 157
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR AIR, LLC
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 158
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR PENSACOLA TRANSIT, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 159
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR TENNESSEE LIMITED
PARTNER, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 160
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR TENNESSEE LIMITED
PARTNERSHIP
By: THE LAMAR CORPORATION
------------------------------------
its General Partner
By: /s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
<PAGE> 161
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR TENNESSEE LIMITED
PARTNERSHIP II
By: THE LAMAR CORPORATION
------------------------------------
its General Partner
By: /s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR TEXAS GENERAL PARTNER, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
LAMAR TEXAS LIMITED PARTNERSHIP
By: LAMAR TEXAS GENERAL PARTNER,
INC., its General Partner
By: /s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
<PAGE> 164
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
MICHIGAN LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 165
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
MINNESOTA LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 166
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
MINNESOTA LOGOS, A PARTNERSHIP
By: MINNESOTA LOGOS, INC.,
its General Partner
By: /s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
<PAGE> 167
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
MISSISSIPPI LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 168
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
MISSOURI LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 169
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
NEBRASKA LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 170
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
NEW JERSEY LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 171
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
OHIO LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 172
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
OKLAHOMA LOGO SIGNS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 173
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
SOUTH CAROLINA LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 174
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
TENNESSEE LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 175
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
TEXAS LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 176
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
THE LAMAR CORPORATION
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ DUDLEY W. COATES Director November 19, 1996
- ---------------------------------------------
Dudley W. Coates
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
Director
- ---------------------------------------------
Jack S. Rome, Jr.
Director
- ---------------------------------------------
William R. Schmidt
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 177
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
TLC PROPERTIES, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 178
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
TLC PROPERTIES II, INC.
/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
<PAGE> 179
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
UTAH LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 180
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.
VIRGINIA LOGOS, INC.
/s/ T. EVERETT STEWART, JR.
------------------------------------
T. Everett Stewart, Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ T. EVERETT STEWART, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
T. Everett Stewart, Jr.
/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ KEVIN P. REILLY, JR. Director November 19, 1996
- ---------------------------------------------
Kevin P. Reilly, Jr.
/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar
/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand
</TABLE>
<PAGE> 181
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1 -- Form of Underwriting Agreement. Filed herewith.
3.1 -- Amended and Restated Certificate of Incorporation of the Registrant.
Previously filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated herein
by reference.
3.2 -- By-Laws of the Registrant, as amended. Previously filed as Exhibit
3.2 to the Registrant's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
4.1 -- Specimen certificate for the shares of Class A Common Stock of the
Registrant. Previously filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-1 (File No. 333-05479), and
incorporated herein by reference.
4.2 -- Senior Secured Note dated May 19, 1993. Previously filed as Exhibit
4.1 to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.3 -- Subsidiary Guarantees dated May 19, 1993. Previously filed as Exhibit
4.2 to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.4 -- Indenture dated May 15, 1993. Previously filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-1 (File No. 33-59624),
and incorporated herein by reference.
4.5 -- First Supplemental Indenture dated July 30, 1996. Previously filed as
Exhibit 4.5 to the Registrant's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
4.6 -- Form of Second Supplemental Indenture in the form of an Amended and
Restated Indenture dated November 8, 1996. Filed as Exhibit 4.1 to
the Company's Current Report on Form 8-K filed on November 15, 1996
(File No. 0-20833), and incorporated herein by reference.
4.7 -- Notice of Trustee dated November 8, 1996 with respect to the release
of the security interest in the Trustee on behalf of the holders of
the Company's Senior Secured Notes. Filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K filed on November 15, 1996
(Filed No. 0-20833), and incorporated herein by reference.
4.8 -- Pledge Agreement dated May 19, 1993. Previously filed as Exhibit 4.4
to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.9 -- Amendment to Pledge Agreement dated July 30, 1996. Previously filed
as Exhibit 4.7 to the Registrant's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
4.10 -- Form of Subordinated Note. Previously filed as Exhibit 4.8 to the
Registrant's Registration Statement on Form S-1 (File No. 333-05479),
and incorporated herein by reference.
4.11 -- Form of Indenture dated as of November , 1996 relating to the
Registrant's Senior Subordinated Notes. Filed herewith.
4.12 -- Form of Senior Subordinated Note. Filed herewith.
5.1 -- Opinion of Palmer & Dodge LLP. Filed herewith.
5.2 -- Opinion of Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, LLP.
Filed herewith.
5.3 -- Opinion of Chadbourne & Parke LLP. Filed herewith.
</TABLE>
<PAGE> 182
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.1 -- Bank Credit Agreement between the Registrant and The Chase Manhattan
Bank (National Association) dated May 19, 1993. Previously filed as
Exhibit 10.1 to the Registrant's Registration Statement on Form S-1
(File No. 33-59624), and incorporated herein by reference.
10.2 -- Consultation Agreement dated July 1, 1996 between the Lamar Texas
Limited Partnership and the Reilly Consulting Company, LLC., of which
Kevin P. Reilly, Sr. is the manager. Previously filed as Exhibit 10.2
to the Registrant's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
10.3 -- Indenture dated as of September 24, 1986 relating to the Registrant's
8% Unsecured Subordinated Debentures. Previously filed as Exhibit
10.4 to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
10.4 -- The Lamar Savings and Profit Sharing Plan Trust. Previously filed as
Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.5 -- Amendment and Waiver to the Bank Credit Agreement between the
Registrant and the Chase Manhattan Bank, dated September 30, 1993.
Previously filed as Exhibit 10.6 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended October 31, 1995 (File No.
33-59624), and incorporated herein by reference.
10.6 -- Second Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated January 1, 1994. Previously filed
as Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.7 -- Third Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated May 10, 1994. Previously filed as
Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.8 -- Fourth Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated October 31, 1994. Previously
filed as Exhibit 10.9 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.9 -- Fifth Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated October 15, 1995. Previously
filed as Exhibit 10.10 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.10 -- Sixth Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated July 12, 1996. Previously filed
as Exhibit 10.10 to the Registrant's Registration Statement on Form
S-1 (File No. 333-05479), and incorporated herein by reference.
10.11 -- Trust under The Lamar Corporation, its Affiliates and Subsidiaries
Deferred Compensation Plan dated October 3, 1993. Previously filed as
Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.12 -- Bank Credit Agreement between the Registrant and the Chase Manhattan
Bank (National Association) dated December 22, 1995. Previously filed
as Exhibit 10.12 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1995 (File No. 33-59624), and
incorporated herein by reference.
10.13 -- Amendment No. 1 to Bank Credit Agreement between the Registrant and
the Chase Manhattan Bank (National Association) dated July 12, 1996.
Previously filed as Exhibit 10.13 to the Registrant's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated herein
by reference.
</TABLE>
<PAGE> 183
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.14 -- 1996 Equity Incentive Plan. Previously filed as Exhibit 10.14 to the
Registrant's Registration Statement on Form S-1 (File No. 333-05479),
and incorporated herein by reference.
10.15 -- Seventh Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated October 31, 1996. Filed herewith.
10.16 -- Contract to Sell and Purchase, dated as of October 9, 1996, between
the Registrant and Outdoor East L.P. Previously filed as Exhibit
10.16 to the Registrant's Registration Statement on Form S-3 (File
No. 333-14677), and incorporated herein by reference.
10.17 -- Stock Purchase Agreement, dated as of September 25, 1996, between the
Registrant and the shareholders of FKM Advertising, Inc. To be filed
by amendment. Previously filed as Exhibit 10.17 to the Registrant's
Registration Statement on Form S-3 (File No. 333-14677), and
incorporated herein by reference.
23.1 -- Consent of KPMG Peat Marwick LLP, independent accountants of Lamar
Advertising Company. Filed herewith.
23.2 -- Consent of KPMG Peat Marwick LLP, independent accountants of Outdoor
East, L.P. Filed herewith.
23.3 -- Consent of McGrail, Merkel, Quinn and Associates, independent
accountants of FKM Advertising Co., Inc. Filed herewith.
23.4 -- Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
23.5 -- Consent of Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, LLP
(included in Exhibit 5.2).
23.6 -- Consent of Chadbourne & Parke LLP (included in Exhibit 5.3).
24.1 -- Power of Attorney (included in the signature page to the initial
filing of this Registration Statement).
25.1 -- Statement of Eligibility of Trustee on Form T-1 of State Street Bank
and Trust Company. Previously filed as the same numbered exhibit to
Amendment No. 1 to this Registration Statement.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
$225,000,000
LAMAR ADVERTISING COMPANY
__% Senior Subordinated Notes due 2006
UNDERWRITING AGREEMENT
November ___, 1996
SMITH BARNEY INC.
CHASE SECURITIES INC.
CIBC WOOD GUNDY SECURITIES CORP.
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Lamar Advertising Company, a Delaware corporation (the
"Company"), proposes to issue and sell to you (the "Underwriters"),
$225,000,000 aggregate principal amount of its __% Senior Subordinated Notes
due 2006 (the "Notes") to be issued pursuant to the provisions of an Indenture
to be dated as of ___________, 1996 (the "Indenture") among the Company,
certain subsidiaries of the Company, as Guarantors (the "Guarantors"), and
State Street Bank and Trust Company, as trustee (the "Trustee"). Payment of
the principal, interest and premium, if any, on the Notes shall be guaranteed
on a senior subordinated basis by each of the Guarantors as provided and to the
extent set forth in the Indenture (the "Guarantees"). All references herein to
the Notes include the Guarantees. The Company and the Guarantors are
collectively referred to herein as the "Registrants".
As described in the Prospectus (as defined below) under the
caption "The Transactions - The Common Stock Offering", the Company and certain
selling stockholders intend to publicly offer, prior to or concurrently with
the public offering of the Notes, 2,800,000 shares of the Company's Class A
Common Stock, par value $.001 per share
<PAGE> 2
(the "Class A Common Stock"), and up to an additional 420,000 shares of such
Class A Common Stock pursuant to an over-allotment option (the "Common Stock
Offering").
The Registrants wish to confirm as follows their agreements
with you in connection with the several purchases of the Notes by you.
1. Registration Statement and Prospectus. The
Registrants have prepared and filed with the Securities and Exchange Commission
(the "Commission") in accordance in all material respects with the provisions
of the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-3 under the Act (the "registration statement"), including a prospectus
subject to completion relating to the Notes. The term "Registration Statement"
as used in this Agreement means the registration statement (including all
financial schedules and exhibits), as amended at the time it becomes effective,
or, if the registration statement became effective prior to the execution of
this Agreement, as supplemented or amended prior to the execution of this
Agreement. If it is contemplated, at the time this Agreement is executed, that
a post-effective amendment to the registration statement will be filed and must
be declared effective before the offering of the Notes may commence, the term
"Registration Statement" as used in this Agreement means the registration
statement as amended by said post- effective amendment. The term "Registration
Statement" shall also include any registration statement relating to the Notes
that is filed pursuant to Rule 462(b) under the Act.
The term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this
- 2 -
<PAGE> 3
Agreement means the prospectus in the form included in the Registration
Statement as supplemented by the addition of the Rule 430A information
contained in the prospectus filed with the Commission pursuant to Rule 424(b).
The term "Prepricing Prospectus" as used in this Agreement means the prospectus
subject to completion in the form included in the registration statement at the
time of the initial filing of the registration statement with the Commission,
and as such prospectus shall have been amended from time to time prior to the
date of the Prospectus. Any reference in this Agreement to the Registration
Statement, Prospectus or any Prepricing Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein as of the date of
such Registration Statement, Prospectus or Prepricing Prospectus, as the case
may be, and any reference to any amendment or supplement to the Registration
Statement, Prospectus or any Prepricing Prospectus shall be deemed to refer to
and include any documents filed after such date under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") which, upon filing, are
incorporated by reference therein. As used herein, the term "Incorporated
Documents" means the documents which at the time are incorporated by reference
in the Registration Statement, Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto.
2. Agreements to Sell and Purchase. Upon the basis of
the representations, warranties and agreements contained herein and subject to
all the terms and conditions set forth herein, the Company hereby agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company the respective principal amount of Notes
set forth opposite the name of such Underwriter in Schedule I hereto (or such
principal amount of Notes increased as set forth in Section 11 hereof) at a
purchase price equal to _____% of the principal amount thereof.
3. Terms of Public Offering. The Registrants have been
advised by you that the Underwriters propose to
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<PAGE> 4
make a public offering of their respective portions of the Notes as soon after
the Registration Statement and this Agreement have become effective as in your
judgment is advisable and initially to offer the Notes upon the terms set forth
in the Prospectus.
4. Delivery of the Notes and Payment Therefor. Delivery
to the Underwriters of and payment for the Notes shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New
York City time, on November ____, 1996 (the "Closing Date"). The place of
closing for the Notes and the Closing Date may be varied by agreement between
you and the Company.
Payment for the Notes shall be made in immediately available
funds against delivery to you of one or more global certificates representing
the Notes registered in the name of Cede & Co., as custodian for The Depository
Trust Company ("DTC"), with any transfer tax payable in connection with the
transfer of the Notes to the Underwriters duly paid.
5. Agreements of the Registrants. The Registrants
jointly and severally agree with the several Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Notes may
commence, the Registrants will endeavor to cause the Registration Statement or
such post-effective amendment to become effective as soon as possible and will
advise you promptly and, if requested by you, will confirm such advice in
writing, when the Registration Statement or such post-effective amendment has
become effective.
(b) The Registrants will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of any request by
the Commission for amendment of or a supplement to the Registration Statement,
any
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<PAGE> 5
Prepricing Prospectus or the Prospectus or for additional information; (ii) of
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of the suspension of qualification of the
Notes for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time referred to in
paragraph (f) below, of any change in the Registrants' condition (financial or
other), business, prospects, properties, net worth or results of operations, or
of the happening of any event, which makes any statement of a material fact
made in the Registration Statement or the Prospectus (as then amended or
supplemented) untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus (as then amended or
supplemented) in order to state a material fact required by the Act to be
stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectus (as then
amended or supplemented) to comply in all material respects with the Act or any
state securities law specified in Section 5(g). If at any time the Commission
shall issue any stop order suspending the effectiveness of the Registration
Statement, the Registrants will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
(c) The Registrants will furnish to you, without
charge, four (4) signed copies (three (3) of which may be photocopies) of the
registration statement as originally filed with the Commission and of each
amendment thereto, including financial statements and all exhibits thereto, and
will also furnish to you, without charge, such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits and schedules, as you may reasonably request.
(d) The Registrants will not (i) file any amendment
to the Registration Statement or make any amendment or supplement to the
Prospectus (including the filing of any document which, upon filing, becomes an
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<PAGE> 6
Incorporated Document) of which you shall not previously have been advised or
to which you shall reasonably object after being so advised and (ii) so long
as, in the opinion of counsel for the Underwriters, a prospectus is required to
be delivered in connection with sales by any Underwriter or dealer, subject to
the preceding clause (i), file any information, documents or reports pursuant
to the Exchange Act without delivering a copy of such information, documents or
reports to you prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this
Agreement, the Registrants have delivered to you, without charge, in such
quantities as you have requested, copies of each form of the Prepricing
Prospectus. The Registrants consent to the use, in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions within the United States in which the Notes are offered by the
several Underwriters and by dealers, prior to the date of the Prospectus, of
each Prepricing Prospectus so furnished by the Registrants.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer, the
Registrants will expeditiously deliver to each Underwriter and each dealer,
without charge, as many copies of the Prospectus (and of any amendment or
supplement thereto) as you may reasonably request. The Registrants consent to
the use of the Prospectus (and of any amendment or supplement thereto) in
accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions within the United States in which the Notes are
offered by the several Underwriters and by all dealers to whom Notes may be
sold, both in connection with the offering and sale of the Notes and for such
period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during
such period of time any event shall occur
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<PAGE> 7
that in the judgment of the Company or in the opinion of counsel for the
Underwriters is required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus to
comply with the Act or any state securities law specified in Section 5(g), the
Registrants will forthwith prepare and, subject to the provisions of paragraph
(d) above, file with the Commission an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Underwriters and dealers
designated by you a reasonable number of copies thereof. Notwithstanding
anything herein to the contrary, after the expiration of nine months after the
effective date of the Registration Statement, the cost of preparing, delivering
and furnishing to the Underwriters any such amended or supplemented prospectus
shall be borne by the Underwriters. In the event that the Company and you
agree that the Prospectus should be amended or supplemented, the Company, if
reasonably requested by you and not prohibited by law, will promptly issue a
press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement.
(g) The Registrants will cooperate with you and with
counsel for the Underwriters in connection with the registration or
qualification of the Notes for offering and sale by the several Underwriters
and by dealers under the securities or Blue Sky laws of such jurisdictions
within the United States as you may designate and will file such consents to
service of process or other documents necessary or appropriate in order to
effect such registration or qualification; provided that in no event shall any
Registrant be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action which would subject it to service
of process in suits, other than those arising out of the offering or sale of
the Notes, in any jurisdiction where it is not now so subject.
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<PAGE> 8
(h) The Company will make generally available to its
security holders an earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement (as defined in Rule 158 under the Act) and ending not later than 15
months thereafter, as soon as practicable after the end of such period, which
earnings statement shall satisfy the provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the
Company will furnish to you promptly after they become available, a copy of
each report of the Company mailed to stockholders or filed with the Commission
(unless the Company has, in good faith, requested confidential treatment with
respect to such filing) or the New York Stock Exchange, and during the period
which is 18 months after the date hereof, such other information concerning the
Company as you may reasonably request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 10 hereof or by you pursuant to
Section 10 or Section 11 hereof) or if this Agreement shall be terminated by
the Underwriters because of any failure or refusal on the part of the
Registrants to comply in any material respect with the terms of this Agreement,
the Registrants jointly and severally agree to reimburse you for all
out-of-pocket expenses (including reasonable fees and expenses of counsel for
the Underwriters) incurred by you in connection herewith. If this Agreement
shall terminate or be terminated after execution pursuant to the second
paragraph of Section 10 hereof or by you pursuant to Section 10 or Section 11
hereof, the Registrants shall not then be under any liability to reimburse the
Underwriters, for any out-of-pocket expenses incurred by them in connection
herewith, except as provided in Section 9 hereof.
(k) The Company will apply the net proceeds from the
sale of the Notes to be sold by it hereunder
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<PAGE> 9
substantially in accordance with the description set forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the
Registrants will timely file the Prospectus pursuant to Rule 424(b) under the
Act and will advise you of the time of such filing.
(m) Except as set forth in the Registration
Statement, during the period beginning on the date hereof and continuing to and
including the Closing Date, the Registrants will not, without the prior written
consent of Smith Barney Inc., sell, offer to sell, solicit an offer to buy,
contract to sell, pledge or otherwise transfer or dispose of any debt
securities substantially similar to the Notes or securities exchangeable for,
or convertible into, debt securities substantially similar to the Notes.
(n) Except as stated in this Agreement and in the
Prepricing Prospectus and Prospectus, none of the Registrants has taken, nor
will any Registrant take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Notes to facilitate the sale or resale of the
Notes.
(o) The Company will use its best efforts to have
the Notes approved for listing, subject to notice of issuance, on the New York
Stock Exchange.
6. Representations and Warranties of the Registrants.
The Registrants jointly and severally represent and warrant to each Underwriter
that:
(a) Each Prepricing Prospectus included as part of
the registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.
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<PAGE> 10
(b) The Registration Statement in the form in which
it became or becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective, complied or will
comply in all material respects with the provisions of the Act and did not or
will not at any such times contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus and any
supplement or amendment thereto when filed with the Commission under Rule
424(b) under the Act complied or will comply in all material respects with the
provisions of the Act and did not or will not at any such times contain an
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements, in light of the circumstances in which they are
made, not misleading, except that this representation and warranty does not
apply (i) to statements in or omissions from the Registration Statement or the
Prospectus made in conformity with information relating to any Underwriter
furnished to the Company in writing by or on behalf of any Underwriter
expressly for use therein, or (ii) to that part of the Registration Statement
that constitutes the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the Trustee
(the "Form T-1").
(c) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered or qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify or be in good
standing does not, individually or in the aggregate, have a material adverse
effect on the condition (financial or other), business,
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<PAGE> 11
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined), taken as a whole (a "Material Adverse
Effect").
(d) All the Company's consolidated subsidiaries
(collectively, the "Subsidiaries") are listed in Exhibit A hereto. Each
Subsidiary, other than Missouri Logos, a partnership, is a Guarantor and has
guaranteed the Notes pursuant to its Guarantee. Each Subsidiary is a
corporation or partnership duly organized, validly existing and in good
standing in the jurisdiction of its organization, with full corporate or
partnership power and authority, as the case may be, to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus, and is duly registered or qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of such
Subsidiary; all the outstanding shares of capital stock or other equity
interest of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and, except as set forth in the
Registration Statement, are owned by the Company directly, or indirectly
through one of the other Subsidiaries and, except for the liens under, as the
case may be, the Existing Credit Agreement and the New Credit Agreement (each
as defined in the Registration Statement) as described in the Registration
Statement and the Prospectus, free and clear of any lien, adverse claim,
security interest, equity or other encumbrance except for any such lien,
adverse claim, security interest equity or other encumbrance which would not
reasonably be expected, individually or in the aggregate, to materially impair
the value of such shares or other equity interests.
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<PAGE> 12
(e) There are no legal or governmental proceedings
pending or, to the knowledge of the Registrants, threatened, against the
Company or any of the Subsidiaries, or to which the Company or any of the
Subsidiaries, or to which any of their respective properties is subject, that
are required to be described in the Registration Statement or the Prospectus
but are not so described as required; and all pending legal or governmental
proceedings to which the Company or any of the Subsidiaries is a party or that
affect any of their respective properties including ordinary routine litigation
incidental to the business, that are not described in the Prospectus and as to
which an adverse determination is not remote, would not, if determined
adversely to the Company or any of the Subsidiaries, individually or in the
aggregate, result in a Material Adverse Effect.
(f) There are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that are not described or filed as required by the Act.
(g) Neither the Company nor any of the Subsidiaries
is in violation (A) of its certificate or articles of incorporation or by-laws,
or other organizational documents, or (B) of any law, ordinance, administrative
or governmental rule or regulation applicable to the Company or any of the
Subsidiaries, including, without limitation, (i) any foreign, Federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) any Federal or state law relating to
discrimination in the hiring, promotion or pay of employees or any applicable
federal or state wages and hours laws, or (iii) any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder (collectively, "ERISA"), or of any decree of any court or
governmental agency or body having jurisdiction
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<PAGE> 13
over the Company or any of the Subsidiaries except for, in the case of the
foregoing clause (B), such violations which would not, either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(h) Neither the Company nor any of the
Subsidiaries is in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties may be bound, except for such defaults
which would not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(i) None of the issuance or sale of the Notes, the
execution, delivery or performance of this Agreement, the Indenture or the
Notes by the Registrants or the consummation by the Registrants of the
transactions contemplated hereby (A) requires any consent, approval,
authorization or other order of or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required for the registration of the Notes
under the Act and the Exchange Act, the qualification of the Indenture under
Trust Indenture Act, compliance with the securities or Blue Sky laws of various
jurisdictions and compliance with the Conduct Rules of the National Association
of Securities Dealers, Inc. ("NASD"), all of which (except such compliance with
the Conduct Rules of the NASD) have been or will be effected in accordance with
this Agreement) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or (B) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, any agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them
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<PAGE> 14
or any of their respective properties may be bound, or violates or will violate
any statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of the Subsidiaries or any of their respective
properties, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(j) KPMG Peat Marwick LLP, who have certified or
shall certify the financial statements of the Company and Outdoor East, L.P.
included in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) are independent public accountants as required by the Act.
McGrail, Merkel, Quinn & Associates, who have certified or shall certify the
financial statements of FKM Advertising Co., Inc. included in the Registration
Statement and the Prospectus (or any amendment or supplement thereto) are
independent public accountants as required by the Act.
(k) The historical and pro forma financial
statements, together with related schedules and notes, included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) comply as to form in all material respects with the requirements of
the Act; such historical financial statements, together with related schedules
and notes, present fairly the consolidated financial position, results of
operations, cash flows and changes in financial position of the entities to
which they relate on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; such pro forma financial
statements, together with related notes, have been prepared on a basis
consistent with such
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<PAGE> 15
historical statements, except for pro forma adjustments specified therein, and
give effect to assumptions made on a reasonable basis and present fairly the
historical and proposed transactions contemplated by the Registration Statement
and the Prospectus; and the other financial and statistical information and
data included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), historical and pro forma, are accurately
presented in all material respects and prepared on a basis consistent in all
material respects with such financial statements and the books and records of
the entities to which they relate.
(l) The execution and delivery of, and the
performance by the Registrants of their obligations under this Agreement have
been duly and validly authorized by the Registrants, and this Agreement has
been duly executed and delivered by the Registrants and constitutes the valid
and legally binding agreement of the Registrants, enforceable against the
Registrants in accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by federal or state securities laws.
(m) The Indenture has been duly qualified under the
Trust Indenture Act. The execution and delivery of, and the performance by the
Registrants of their obligations under the Indenture have been duly and validly
authorized by the Registrants, and the Indenture has been duly executed and
delivered by the Registrants and constitutes the valid and legally binding
agreement of the Registrants, enforceable against each of them in accordance
with its terms, except (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which the
proceedings may be brought.
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<PAGE> 16
(n) The Notes have been duly authorized and validly
issued by the Company, and when the Notes are executed and authenticated in
accordance with the provisions of the Indenture and delivered to you against
payment therefor in accordance with the terms of this Agreement, the Notes will
be entitled to the benefits of the Indenture and will constitute valid and
legally binding agreements of the Company, enforceable against the Company in
accordance with their terms, except (i) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
(ii) the remedy of specific performance and other forms of equitable relief may
be subject to certain equitable defenses and to the discretion of the court
before which the proceedings may be brought.
(o) The Guarantees have been duly authorized and
validly issued by each of the Guarantors, and when the Notes are executed and
authenticated in accordance with the Indenture and delivered to you against
payment therefor in accordance with the terms of this Agreement, the Notes will
be entitled to the benefit of the Guarantees, and the Guarantees will
constitute valid and legally binding agreements of each of the Guarantors,
enforceable against each of the Guarantors in accordance with their terms set
forth in the Indenture, except (i) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and to the
discretion of the court before which the proceedings may be brought.
(p) Except as disclosed in the Registration
Statement and the Prospectus (or any amendment or supplement thereto),
subsequent to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto),
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<PAGE> 17
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries, taken as a whole, and there has not been any change in the
capital stock, or material increase in the short-term debt or long-term debt,
of the Company or any of the Subsidiaries, or any material adverse change, or
any development involving, or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.
(q) Each of the Company and the Subsidiaries has
good and marketable title to all property (real and personal) described in the
Prospectus as being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the
Registration Statement and the Prospectus or in a document filed as an exhibit
to the Registration Statement or which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or
materially impair the value of such property to the Company or such Subsidiary,
as the case may be, and all the property described in the Prospectus as being
held under lease or sublease by each of the Company and the Subsidiaries is
held by it under valid, subsisting and enforceable leases or subleases with
such exceptions as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or materially impair the value of
such leasehold estate to the Company or such Subsidiary, as the case may be,
and such leases and subleases are in full force and effect; neither the Company
nor any of the Subsidiaries has any notice of any claim of any sort that has
been asserted by anyone adverse to the rights of the Company or any of the
Subsidiaries under any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company or any of the Subsidiaries to the
continued possession of the leased or subleased premises under any
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<PAGE> 18
such lease or sublease, which claim could reasonably be expected individually
or in the aggregate to have a Material Adverse Effect.
(r) The Company has not distributed and, prior to
the later to occur of (i) the Closing Date and (ii) completion of the
distribution of the Notes, will not distribute any offering material in
connection with the offering and sale of the Notes other than the Registration
Statement, the Prepricing Prospectus, the Prospectus or other materials, if
any, permitted by the Act.
(s) The Company and each of the Subsidiaries has
such permits, licenses, franchises and authorizations including, without
limitation, under any applicable Environmental Laws, of governmental or
regulatory authorities ("permits") as are necessary to own its respective
properties and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus and with such exceptions as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; the
Company and each of the Subsidiaries has fulfilled and performed all its
material obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time or both would allow, revocation
or termination thereof or results in any other material impairment of the
rights of the holder of any such permit, subject in each case to such
qualification as may be set forth in the Prospectus; and, except as described
in the Prospectus, none of such permits contains any restriction that is
materially burdensome to the Company or any of the Subsidiaries.
(t) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity
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<PAGE> 19
with generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(u) To the Registrants' knowledge, neither the
Company nor any of its Subsidiaries nor any employee or agent of the Company or
any Subsidiary has made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(v) The Company and each of the Subsidiaries have
filed all tax returns required to be filed, which returns are complete and
correct in all material respects, and neither the Company nor any Subsidiary is
in default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, except for such failures to
file or defaults in payment of a character not required to be disclosed in the
Prospectus and which would not reasonably be expected to have a Material
Adverse Effect.
(w) No holder of any security of the Company has
any right to require registration of any security of the Company because of the
filing of the Registration Statement or consummation of the transactions
contemplated by this Agreement.
(x) The Registrants have not taken, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Notes to
facilitate the sale or resale of the Notes.
(y) The Company and the Subsidiaries own or
possess all patents, trademarks, trademark registrations,
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<PAGE> 20
service marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Prospectus as being owned
by them or any of them or necessary for the conduct of their respective
businesses, and the Registrants are not aware of any claim to the contrary or
any challenge by any other person to the rights of the Company and the
Subsidiaries with respect to the foregoing.
(z) The Incorporated Documents heretofore filed,
when they were filed (or, if any amendment with respect to any such document
was filed, when such amendment was filed), conformed in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, and any further Incorporated Documents so filed will, when they are
filed, conform in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder; no such document when it was
filed (or, if an amendment with respect to any such document was filed, when
such amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; and no such further document, when it is filed,
will contain an untrue statement of a material fact or will omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(aa) The Company is not now, and after sale of the
Notes to be sold by it hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of Proceeds" will
not be, an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
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<PAGE> 21
(bb) The Company has complied with all provisions of
Florida Statutes, Section 517.075, relating to issuers doing business with
Cuba.
(cc) No labor problem exists with the employees of
the Company or any of the Subsidiaries or, to the knowledge of the Registrants,
is imminent that, in either case, could reasonably be expected individually or
in the aggregate to result in any Material Adverse Effect.
(dd) The Company and each of the Subsidiaries
maintain insurance of the types and in the amounts that are reasonable for the
businesses operated by them, including, but not limited to, insurance covering
real and personal property owned or leased by the Company and the Subsidiaries
against theft, damage, destruction, acts of vandalism and liability, all of
which insurance is in full force and effect.
(ee) None of the Registrants is, nor will any of
them be, after giving effect to the issuance of the Notes and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby including without limitation the issuance of
the Guarantees and the guarantee by the Guarantors of the Company's obligations
under the New Credit Agreement (as defined in the Registration Statement), (i)
insolvent, (ii) left with unreasonably small capital with which to engage in
its anticipated businesses or (iii) incurring debts beyond its ability to pay
such debts as they mature.
7. Indemnification and Contribution. (a) The
Registrants, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any
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<PAGE> 22
Prepricing Prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom and in
conformity with the information furnished in writing to the Company by or on
behalf of any Underwriter expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any Prepricing Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Notes by such Underwriter to any person if a copy of the Prospectus shall not
have been delivered or sent to such person within the time required by the Act
and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to such Underwriter in requisite quantity
on a timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Registrants may
otherwise have.
(b) If any action, suit or proceeding shall be
brought against any Underwriter or any person controlling any Underwriter in
respect of which indemnity may be sought against the Registrants, such
Underwriter or such controlling person shall promptly notify the parties
against whom indemnification is being sought (the "indemnifying parties"), and
such indemnifying parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Such Underwriter
or any such controlling person shall have the right to employ
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<PAGE> 23
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
indemnifying parties have agreed in writing to pay such fees and expenses, (ii)
the indemnifying parties have failed to assume the defense and employ counsel,
or (iii) the named parties to any such action, suit or proceeding (including
any impleaded parties) include both such Underwriter or such controlling person
and the indemnifying parties and such Underwriter or such controlling person
shall have been advised in writing by its counsel that representation of such
indemnified party and any indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Underwriter or such controlling person). It is
understood, however, that the indemnifying parties shall, in connection with
any one such action, suit or proceeding or separate but substantially similar
or related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of only one separate firm of attorneys (in addition to any
local counsel) at any time for all such Underwriters and controlling persons
not having actual or potential differing interests with you or among
themselves, which firm shall be designated in writing by Smith Barney Inc., and
that all such fees and expenses shall be reimbursed as they are incurred. The
indemnifying parties shall not be liable for any settlement of any such action,
suit or proceeding effected without their written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify
and hold harmless any Underwriter, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss, claim,
damage,
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<PAGE> 24
liability or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless each Registrant, its directors, its
officers who sign the Registration Statement, and any person who controls such
Registrant within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, to the same extent as the foregoing indemnity from the
Registrants to each Underwriter, but only with respect to information furnished
in writing by or on behalf of such Underwriter expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Registrants, any of their directors, any such officer, or
any such controlling person based on the Registration Statement, the Prospectus
or any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any Underwriter pursuant to
this paragraph (c), such Underwriter shall have the rights and duties given to
the Registrants by paragraph (b) above (except that if the Registrants shall
have assumed the defense thereof such Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Registrants, their directors, any such officer,
and any such controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall
be in addition to any liability which any Underwriter may otherwise have.
(d) If the indemnification provided for in this
Section 7 is unavailable to an indemnified party under paragraphs (a) or (c)
hereof in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such
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<PAGE> 25
losses, claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Registrants on the
one hand and the Underwriters on the other hand from the offering of the Notes,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Registrants on the one hand and the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Registrants on
the one hand and the Underwriters on the other hand shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company 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 Prospectus. The relative fault of
the Registrants on the one hand and the Underwriters on the other hand 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 a Registrant on the
one hand or by the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Registrants and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by a pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities and expenses referred
to in paragraph (d) above shall be deemed to
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<PAGE> 26
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price of the Notes underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. 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. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in proportion
to the respective principal amounts of the Notes set forth opposite their names
in Schedule I hereto (or such principal amounts of the Notes increased as set
forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to indemnification or
contribution under this Section 7 shall be paid by the indemnifying party to
the indemnified party as such losses, claims, damages, liabilities or expenses
are incurred. The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Registrants set forth
in this Agreement shall remain operative and in full force and effect,
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<PAGE> 27
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Registrants, their directors or
officers or any person controlling the Registrants, (ii) acceptance of any
Notes and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Registrants, their directors or officers, or any person
controlling the Registrants, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
7.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Notes hereunder are subject to
the following conditions:
(a) If, at the time this Agreement is executed
and delivered, it is necessary for the registration statement or a
post-effective amendment thereto to be declared effective before the offering
of the Notes may commence, the registration statement or such post-effective
amendment shall have become effective not later than 5:30 P.M. (or in the case
of a Registration Statement filed pursuant to Rule 462(b) under the Act, not
later than 10:00 P.M.), New York City time, on the date hereof, or at such
later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission.
(b) Subsequent to the effective date of this
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition (financial or
other), business, properties, net worth, or results of operations of the
Company or the Subsidiaries not contemplated by the Prospectus, which in your
reasonable opinion would
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<PAGE> 28
materially, adversely affect the market for the Notes, or (ii) any event or
development relating to or involving the Company or any officer or director of
the Company which makes any material statement made in the Prospectus untrue in
any material respect or which, in the opinion of the Company and its counsel or
you and your counsel, requires the making of any addition to or change in the
Prospectus in order to state a material fact required by the Act or any other
law to be stated therein or necessary in order to make the statements therein
not misleading, if amending or supplementing the Prospectus to reflect such
event or development would, in your opinion materially adversely affect the
market for the Notes.
(c) You shall have received on the Closing Date,
an opinion of Palmer & Dodge LLP, counsel for the Company, dated the Closing
Date and addressed to you to the effect that:
(i) The Company is a corporation duly
incorporated and validly existing in good standing under the laws of
the State of Delaware with full corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus (and any
amendment or supplement thereto);
(ii) The Notes (A) have been duly
authorized and (B) when issued and executed and authenticated in
accordance with the provisions of the Indenture and delivered to you
in accordance with the terms of this Agreement, will be entitled to
the benefits of the Indenture, and will constitute valid and legally
binding agreements of the Company in accordance with their terms
except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and other forms
of equitable relief may be
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<PAGE> 29
subject to certain equitable defenses and to the discretion of the
court before which the proceedings may be brought;
(iii) The Registration Statement has
become effective under the Act and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose are pending before or contemplated by the Commission; and any
required filing of the Prospectus pursuant to Rule 424(b) has been
made in accordance with Rule 424(b);
(iv) (A) The Company has the corporate
power and authority to enter into this Agreement and to issue, sell
and deliver the Notes to the Underwriters as provided herein, and (B)
this Agreement has been duly authorized, executed and delivered by the
Company;
(v) (A) The Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended, (B) the
Company has the corporate power and authority to enter into the
Indenture, and (C) the Indenture has been duly authorized, executed
and delivered by the Company and is a legal, valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms except that (a) the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) the remedy of specific performance
and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which the
proceedings may be brought;
(vi) The Notes, the Indenture and the
Guarantees conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus
under the caption "Description of Notes";
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<PAGE> 30
(vii) Neither the issuance, sale or
delivery of the Notes, nor the execution, delivery or performance of
this Agreement or the Indenture, or compliance by the Company with all
provisions of this Agreement or the Indenture, nor consummation by the
Company of the transactions contemplated hereby or thereby constitutes
or will constitute a violation or breach of, or a default under, the
certificate of incorporation or bylaws or other organizational
documents of the Company or any of the Subsidiaries or any agreement,
indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their
respective properties is bound and that is an exhibit to the
Registration Statement, or will result in the creation or imposition
of any lien, charge or encumbrance pursuant to any such agreement,
indenture, lease or other instrument upon any property or assets of
the Company or any of the Subsidiaries, nor will any such action
result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky
laws), judgment, injunction, order or decree known to such counsel, to
be applicable to the Company, the Subsidiaries or any of their
respective properties;
(viii) No consent, approval, authorization
or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body,
agency, or official is required on the part of the Company for the
valid issuance and sale of the Notes pursuant to this Agreement or the
Indenture, except where such have been obtained under the Act, the
Exchange Act and the Trust Indenture Act or such as may be required
under state securities or Blue Sky laws governing the purchase and
distribution of the Notes or such as may be required under the rules
of the NASD;
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<PAGE> 31
(ix) Each of the Registration Statement,
as of its effective date, and the Prospectus, as of its date (except
for the financial statements and the notes thereto and the schedules
and other financial and statistical data included therein, as to which
such counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act; and
(x) the Incorporated Documents (other
than the financial statements (including the notes thereto) and
schedules and other financial and statistical data contained or
incorporated by reference therein, as to which such counsel need
express no opinion), when filed, or as amended or supplemented,
complied as to form in all material respects with the requirements of
the Exchange Act.
In rendering their opinion as aforesaid, counsel may
rely upon an opinion or opinions, each dated the Closing Date, of other counsel
retained by them or the Company as to laws of any jurisdiction other than the
United States or the State of Delaware, provided that (1) each such local
counsel is acceptable to you, (2) such reliance is expressly authorized by each
opinion so relied upon and a copy of each such opinion is delivered to you and
is, in form and substance reasonably satisfactory to you and your counsel, and
(3) counsel shall state in their opinion that they believe that they and the
Underwriters are justified in relying thereon.
For purposes of the opinions in the foregoing clauses
(ii) and (v) insofar as such opinions relate to enforceability, such counsel
may assume that the applicable law chosen by the parties is the same as
applicable Massachusetts law.
In addition to the matters set forth above, such
opinion shall also contain a statement to the effect that, although counsel has
not undertaken, except as otherwise indicated in their opinion, to determine
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<PAGE> 32
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof (including
a review and discussion of the contents of all Incorporated Documents), and
nothing has come to the attention of such counsel that has caused it to believe
(i) that the Registration Statement (including the Incorporated Documents), and
any amendment thereto, at the time it became effective, 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 or
(ii) that the Prospectus (including the Incorporated Documents), or any
amendment or supplement to the Prospectus, as of its respective date and as of
the Closing Date, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other
financial and statistical data included or incorporated by reference in the
Registration Statement or the Prospectus).
(d) You shall have received on the Closing Date,
an opinion of Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, L.L.P.,
counsel to the Company, dated the Closing Date and addressed to you to the
effect that:
(i) The Company is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or qualify does not have,
individually or in the aggregate, a material adverse effect on the
condition (financial or other), business, properties, net worth or
results of
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<PAGE> 33
operations of the Company and the Subsidiaries taken as a whole;
(ii) Each of the Subsidiaries is a
corporation or partnership duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization, with
full corporate or partnership power and authority, as the case may be,
to own, lease, and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus (and any
amendment or supplement thereto); and all the outstanding shares of
capital stock or other equity interests of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and
nonassessable, and are owned by the Company, except as disclosed in
the Registration Statement and the Prospectus, directly, or indirectly
through one of the other Subsidiaries free and clear of any perfected
security interest, or, to the best knowledge of such counsel after
reasonable inquiry, any other security interest, lien, adverse claim,
equity or other encumbrance;
(iii) The authorized and outstanding
capital stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus; and the authorized capital stock
of the Company conforms in all material respects as to legal matters
to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock";
(iv) All the outstanding shares of
capital stock of the Company have been duly authorized and validly
issued, and are fully paid and nonassessable and free of any pre-
emptive or to the best knowledge of such counsel, similar rights;
(v) To the best knowledge of such
counsel (A) other than as described or contemplated in the Prospectus
(or any supplement thereto), there are no legal or governmental
proceedings pending or
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<PAGE> 34
threatened against the Company or any of the Subsidiaries, or to which
the Company or any of the Subsidiaries, or any of their property, is
subject, which are required to be described in the Registration
Statement or Prospectus (or any amendment or supplement thereto) and
(B) there are no agreements, contracts, indentures, leases or other
instruments, that are required to be described in the Registration
Statement or the Prospectus (or any amendment or supplement thereto)
or to be filed as an exhibit to the Registration Statement that are
not described or filed as required, as the case may be;
(vi) Neither the issuance or sale of the
Guarantees, nor the execution, delivery or performance of this
Agreement, or the Indenture, or compliance by the Guarantors with all
the provisions of this Agreement or the Indenture, nor consummation by
the Guarantors of the transactions contemplated hereby or thereby
constitutes or will constitute a violation or breach of, or a default
under, the certificate of incorporation or bylaws or other
organizational documents of the Guarantors or any agreement,
indenture, lease or other instrument to which they are a party or by
which any of them or any of their respective properties is bound and
that is an exhibit to the Registration Statement, or will result in
the creation or imposition of any lien, charge or encumbrance pursuant
ot any such agreement, indenture, lease or other instrument upon any
property or assets of any of the Guarantors, nor will any such action
result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky
laws), judgment, injunction, order or decree known to such counsel, to
be applicable to the Guarantors or any of their respective properties;
(vii) No consent, approval, authorization
or other order of, or registration or filing with, any
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<PAGE> 35
court, regulatory body, adminstirative agency or other governmental
body, agency, or official is required to be obtained or made by any
Guarantor for the valid issuance and sale of the Guarantees pursuant
to this Agreement or the Indenture, except where such have been
obtained under the Act, the Exchange Act and the Trust Indenture Act
or such as may be required under state securities or Blue Sky laws
governing the purchase and distribution of the Notes;
(viii) The Guarantees have been duly
authorized and validly issued by each of the Guarantors, and when the
Notes are executed and authenticated in accordance with the Indenture
and delivered to you in accordance with the terms of this Agreement,
the Notes will be entitled to the benefits of the Guarantees, and the
Guarantees will constitute valid and legally binding agreements of
each of the Guarantors in accordance with their terms set forth in the
Indenture except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) the remedy of specific
performance and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before
which the proceedings may be brought;
(ix) (A) Each of the Guarantors has the
corporate or partnership power and authority, as the case may be, to
enter into this Agreement and to issue its Guarantee as provided
herein, and (B) this Agreement has been duly authorized, executed and
delivered by each of the Guarantors; and
(x) (A) Each of the Guarantors has the
corporate or partnership power and authority, as the case may be, to
enter into the Indenture, and (B) the Indenture has been duly
authorized, executed and
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<PAGE> 36
delivered by each of the Guarantors and is a legal, valid and binding
agreement of each of the Guarantors, enforceable against each of them
in accordance with its terms except that (a) enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (b) the remedy of
specific performance and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the
court before which the proceedings may be brought.
In addition to the matters set forth above, such
opinion shall also contain a statement to the effect that, although counsel has
not undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof (including
a review and discussion of the contents of all Incorporated Documents), and
nothing has come to the attention of such counsel that has caused it to believe
(i) that the Registration Statement (including the Incorporated Documents), and
any amendment thereto, at the time it became effective, 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 or
(ii) that the Prospectus (including the Incorporated Documents), or any
amendment or supplement to the Prospectus, as of its respective date and as of
the Closing Date, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other
financial and
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<PAGE> 37
statistical data included or incorporated by reference in the Registration
Statement or the Prospectus).
(e) You shall have received on the Closing Date,
an opinion of Charles W. Lamar, III, Esq., general counsel of the Company,
dated the Closing Date and addressed to you to the effect that:
(i) The Company and each of the
Subsidiaries has full corporate power and authority, and all necessary
governmental authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental
regulatory officials and bodies (except where the failure so to have
any such authorizations, approvals, orders, licenses, certificates,
franchises or permits, individually or in the aggregate, would not
have a material adverse effect on the business, properties, operations
or financial condition of the Company and the Subsidiaries taken as a
whole), to own their respective properties and to conduct their
respective businesses as now being conducted, as described in the
Prospectus;
(ii) To the best of his knowledge, other
than as described or contemplated in the Prospectus (or any supplement
thereto), there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries, or to which
the Company or any of the Subsidiaries, or any of their property, is
subject, which are required to be described in the Registration
Statement or Prospectus (or any amendment or supplement thereto);
(iii) To the bests of his knowledge, there
are no agreements, contracts, indentures, leases or other instruments,
that are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement thereto) or to be filed as
an exhibit to the Registration Statement that are not described or
filed as required, as the case may be;
- 37 -
<PAGE> 38
(iv) Neither the Company nor any of the
Subsidiaries (A) is in violation of its respective certificate or
articles of incorporation or bylaws, or other organizational
documents, (B) to the best knowledge of such counsel after reasonable
inquiry, is in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note or other
evidence of indebtedness, except as may be disclosed in the Prospectus
or (C) is in violation any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of
the Subsidiaries or of any decree of any court or governmental agency
or body having jurisdiction over the Company or any of the
Subsidiaries which default or violation in the case of either clause
(ii) or (iii), either individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect;
(v) Except as described in the
Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of, and such counsel does not know of any
commitment, plan or arrangement to issue, any shares of capital stock
of the Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company;
(vi) Except as described in the
Prospectus, there is no holder of any security of the Company or any
other person who has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, the Notes or the right to have any securities
of the Company included in the registration statement or the right, as
a result of the filing of the registration statement, to require
registration under the Act of any securities of the Company; and
- 38 -
<PAGE> 39
(vii) The statements in the Prospectus
under the captions "Risk Factors -- Regulation of Outdoor Advertising"
and "Business -- Regulation", insofar as such statements constitute a
summary of regulatory matters relating to the outdoor advertising
industry, fairly describe the regulatory matters relating to such
industry.
In addition to the matters set forth above, such opinion shall
also contain a statement to the effect that nothing has come to the attention
of such counsel that has caused it to believe (i) that the Registration
Statement (including the Incorporated Documents), and any amendment thereto, at
the time it became effective, 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 or (ii) that the Prospectus
(including the Incorporated Documents), or any amendment or supplement to the
Prospectus, as of its respective date, and as of the Closing Date, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included or incorporated by reference in the Registration
Statement or the Prospectus).
(f) You shall have received on the Closing Date
an opinion of Chadbourne & Parke LLP, counsel for the Underwriters, dated the
Closing Date and addressed to you, with respect to the matters referred to in
clauses (ii), (iii), (iv) (with respect to paragraph (B) only), (v) (with
respect to paragraphs (A) and (C) only), and (ix) of the foregoing clause (c),
the matters referred to in clause (viii), (ix) (with respect to paragraph (B)
only) and (x) (with respect to paragraph (B) only) of the foregoing clause (d)
and such other related matters as you may request.
- 39 -
<PAGE> 40
In addition to the matters set forth above, such opinion shall
also contain a statement to the effect that, although such counsel has not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof (including
a review and discussion of the contents of all Incorporated Documents), and
nothing has come to the attention of such counsel that has caused it to believe
(i) that the Registration Statement (including the Incorporated Documents), and
any amendment thereto, at the time it became effective, 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 or
(ii) that the Prospectus (including the Incorporated Documents), any amendment
or supplement to the Prospectus, as of its respective date and as of the
Closing Date, contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other
financial and statistical data included or incorporated by reference in the
Registration Statement or the Prospectus).
(g) You shall have received letters addressed to
you and dated the date hereof and the Closing Date from (i) KPMG Peat Marwick
LLP and (ii) McGrail, Merkel, Quinn & Associates, each independent certified
public accountants, substantially in the forms heretofore approved by you.
(h)(i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been
- 40 -
<PAGE> 41
taken or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing Date; (ii) there shall not have been any
change in the capital stock of the Company nor any material increase in the
short-term or long-term debt of the Company (other than in the ordinary course
of business) from that set forth or contemplated in the Registration Statement
or the Prospectus (or any amendment or supplement thereto); (iii) there shall
not have been, since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
Prospectus (or any amendment or supplement thereto), any material adverse
change in the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Company and the Subsidiaries taken as
a whole; (iv) the Company and the Subsidiaries shall not have any liabilities
or obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to you), to the effect set forth in this Section 8(h) and in Section
8(i) hereof.
(i) The Registrants shall not have failed at or
prior to the Closing Date to have performed or complied with any of their
agreements herein contained and required to be performed or complied with by
them hereunder at or prior to the Closing Date in any material respect.
- 41 -
<PAGE> 42
(j) The Notes shall have been listed or approved
for inclusion upon notice of issuance on the New York Stock Exchange.
(k) The Company shall have consummated the Common
Stock Offering with net cash proceeds to the Company of at least $40 million.
(l) The Registrants shall have furnished or
caused to be furnished to you such further certificates and documents as you
shall have reasonably requested.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by an officer of any of the
Registrants and delivered to you, or to your counsel, shall be deemed a
representation and warranty by such Registrant to each Underwriter as to the
statements made therein.
9. Expenses. The Registrants jointly and severally
agree to pay the following costs and expenses and all other costs and expenses
incident to the performance by them of their obligations hereunder: (i) the
preparation, printing or reproduction, and filing with the Commission of the
Registration Statement (including financial statements and exhibits thereto),
each Prepricing Prospectus, the Prospectus, and each amendment or supplement to
any of them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the registration statement, each Prepricing Prospectus, the
Prospectus, and all amendments or supplements to any of them as may be
reasonably requested for use in connection with the offering and sale of the
Notes; (iii) the preparation, printing, authentication, issuance and delivery
of the Notes, including any stamp taxes in connection with the original
issuance and sale of the Notes; (iv) the printing (or
- 42 -
<PAGE> 43
reproduction) and delivery of this Agreement, the Indenture, the preliminary
and supplemental Blue Sky Memoranda, the Master Agreement Among Underwriters
and dealer contracts; (v) the registration of the Notes under the Exchange Act
and the listing of the Notes on the New York Stock Exchange; (vi) the
registration or qualification of the Notes for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including the reasonable fees, expenses and disbursements of counsel
for the Underwriters relating to the preparation, printing or reproduction, and
delivery of the preliminary and supplemental Blue Sky Memoranda and such
registration and qualification); (vii) the filing fees in connection with any
filings required to be made with the NASD; (viii) the transportation and other
expenses incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Notes (excluding any such
expenses incurred by the Underwriters for their representatives); and (ix) the
fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company. Except as
provided by this Section 9 or Section 5(j) hereof, the Underwriters will pay
all of their own costs and expenses, including fees of their counsel, taxes on
resales of the Notes by them and any advertising expenses in connection with
any offers they make.
10. Effective Date of Agreement. This Agreement shall
become effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Notes may commence, when
notification of the effectiveness of the Registration Statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Registrants, by notifying you, or by you by notifying the Company.
- 43 -
<PAGE> 44
If any one or more of the Underwriters shall fail or refuse to
purchase Notes which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate principal amount of the Notes which such
defaulting Underwriter or Underwriters are obligated but fail or refuse to
purchase is not more than one-tenth of the aggregate principal amount of the
Notes which the Underwriters are obligated to purchase on the Closing Date,
each non-defaulting Underwriter shall be obligated, severally, in the
proportion which the principal amount of the Notes set forth opposite its name
in Schedule I hereto bears to the aggregate principal amount of the Notes set
forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify in accordance with Section 20 of the Master
Agreement Among Underwriters of Smith Barney Inc., to purchase the Notes which
such defaulting Underwriter or Underwriters are obligated, but fail or refuse,
to purchase. If any one or more of the Underwriters shall fail or refuse to
purchase Notes which it or they are obligated to purchase on the Closing Date
and the aggregate principal amount of the Notes with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of the
Notes which the Underwriters are obligated to purchase on the Closing Date and
arrangements satisfactory to you and the Company for the purchase of such Notes
by one or more non-defaulting Underwriters or other party or parties approved
by you and the Company are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company. In any such case which does not result in
termination of this Agreement, either you or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any such default of any such Underwriter under this
Agreement. The term "Underwriter" as used in this Agreement includes, for all
- 44 -
<PAGE> 45
purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Company, purchases Notes which a
defaulting Underwriter is obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram,
telecopy or telephone but, if by telephone, shall be subsequently confirmed in
writing.
11. Termination of Agreement. This Agreement shall be
subject to termination in your absolute discretion, without liability on the
part of any Underwriter to the Registrants, by notice to the Company, if prior
to the Closing Date, (i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York shall have been declared by either federal or
New York State authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis
or material adverse change in political, financial or economic conditions, the
effect of which on the financial markets of the United States is such as to
make it, in your reasonable judgment, impracticable to market the Notes on the
terms and in the manner contemplated in the Prospectus or to enforce contracts
for the resale of the Notes by the Underwriters. Notice of such termination
may be given to the Company by telegram, telecopy or telephone and, if by
telephone, shall be subsequently confirmed in writing.
12. Information Furnished by the Underwriters. The
statements set forth in the last paragraph on the cover page, the stabilization
legend on the inside cover page, and the statements in the first and third
paragraphs under the caption "Underwriting" in any Prepricing Prospectus and in
the Prospectus, constitute the only information furnished by or on behalf of
the Underwriters through you as such information is referred to in Sections
6(b) and 7 hereof.
- 45 -
<PAGE> 46
13. Miscellaneous. Except as otherwise provided in
Sections 5, 10 and 11 hereof, notice given pursuant to any provision of this
Agreement shall be in writing and shall be delivered (i) if to any Registrant,
at the office of the Company at 5551 Corporate Boulevard, Baton Rouge,
Louisiana 70808, Attention: Charles W. Lamar, III, General Counsel; or (ii) if
to you, care of Smith Barney Inc., 388 Greenwich Street, New York, New York
10013, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of
the several Underwriters, the Registrants, their directors and officers, and
the other controlling persons referred to in Section 7 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Notes in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of New
York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement among the Registrants and the several Underwriters.
Very truly yours,
LAMAR ADVERTISING COMPANY
By:
---------------------------------
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<PAGE> 47
Name:
--------------------------
Title:
-------------------------
THE LAMAR CORPORATION
INTERSTATE LOGOS, INC.
LAMAR ADVERTISING OF COLORADO
SPRINGS, INC.
LAMAR ADVERTISING OF JACKSON,
INC.
LAMAR ADVERTISING OF MOBILE,
INC.
LAMAR ADVERTISING OF SOUTH
GEORGIA, INC.
LAMAR ADVERTISING OF SOUTH
MISSISSIPPI, INC.
LAMAR ADVERTISING OF
TALLAHASSEE, INC.
TLC PROPERTIES, INC.
MISSOURI LOGOS, INC.
NEBRASKA LOGOS, INC.
OKLAHOMA LOGO SIGNS, INC.
UTAH LOGOS, INC.
OHIO LOGOS, INC.
GEORGIA LOGOS, INC.
KANSAS LOGOS, INC.
LAMAR AIR, LLC
LAMAR PENSACOLA TRANSIT, INC.
LAMAR TENNESSEE LIMITED
PARTNER, INC.
LAMAR TENNESSEE LIMITED
PARTNERSHIP
LAMAR TENNESSEE LIMITED
PARTNERSHIP II
LAMAR TEXAS GENERAL PARTNER, INC.
LAMAR TEXAS LIMITED
PARTNERSHIP
MICHIGAN LOGOS, INC.
MINNESOTA LOGOS, INC.
- 47 -
<PAGE> 48
MINNESOTA LOGOS, A PARTNERSHIP
MISSISSIPPI LOGOS, INC.
NEW JERSEY LOGOS, INC.
SOUTH CAROLINA LOGOS, INC.
TENNESSEE LOGOS, INC.
TEXAS LOGOS, INC.
TLC PROPERTIES II, INC.
VIRGINIA LOGOS, INC.
By:
--------------------------------
Name:
Title:
Confirmed as of the date first
above mentioned.
- 48 -
<PAGE> 49
SMITH BARNEY INC.
CHASE SECURITIES INC.
CIBC WOOD GUNDY SECURITIES CORP.
By: SMITH BARNEY INC.
By:
----------------------------------------
Name:
-----------------------------------
Title:
- 49 -
<PAGE> 50
SCHEDULE I
LAMAR ADVERTISING COMPANY
Principal Amount
Underwriter of Notes
- ------------------------------------------------------ ----------------------
Smith Barney Inc. . . . . . . . . . . . . . . . . . .
Chase Securities Inc. . . . . . . . . . . . . . . . .
CIBC Wood Gundy Securities Corp. . . . . . . . . . .
------------
Total $225,000,000
============
-50-
<PAGE> 51
Exhibit A
---------
Subsidiaries of Lamar Advertising Company
-----------------------------------------
- 51 -
<PAGE> 1
EXHIBIT 4.11
LAMAR ADVERTISING COMPANY
THE GUARANTORS
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
_____________________
INDENTURE
Dated as of [__________], 1996
_____________________
$225,000,000
[____]% Senior Subordinated Notes due 2006
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . 2.10
(b) . . . . . . . . . . . . . . . . . . 7.08; 7.10; 12.02
(b)(1) . . . . . . . . . . . . . . . . 7.10
(b)(9) . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . 12.03
313(a) . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . 7.06
(b)(2) . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . 7.06; 12.02
(d) . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . 4.02; 4.04; 12.02
(b) . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . 12.04; 12.05
(c)(2) . . . . . . . . . . . . . . . . 12.04; 12.05
(c)(3) . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . 12.05
(f) . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . 7.01; 7.02
(b) . . . . . . . . . . . . . . . . . . 7.05; 12.02
(c) . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . 6.05; 7.01; 7.02
(e) . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . 12.06
(a)(1)(A) . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . 8.02
(b) . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . 8.04
317(a)(1) . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . 2.04; 7.12
318(a) . . . . . . . . . . . . . . . . 12.01
</TABLE>
- ---------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.03. Incorporation by Reference of Trust Indenture Act . . . . . . 24
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 2. THE NOTES
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.02. Execution and Authentication . . . . . . . . . . . . . . . . . 26
Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . 27
Section 2.04. Paying Agent To Hold Assets in Trust . . . . . . . . . . . . . 28
Section 2.05. Noteholder Lists . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . 29
Section 2.07. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.08. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.09. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.12. Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.13. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 3. REDEMPTION
Section 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.02. Selection by Trustee of Notes To Be Redeemed . . . . . . . . . 33
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 33
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . 35
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . 35
Section 3.06. Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 4. COVENANTS
Section 4.01. Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.03. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . 37
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . . . . . . . 37
Section 4.05. Payment of Taxes and Other Claims . . . . . . . . . . . . . . 38
Section 4.06. Maintenance of Properties and Insurance . . . . . . . . . . . 39
Section 4.07. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 39
Section 4.08. Corporate Existence . . . . . . . . . . . . . . . . . . . . . 40
Section 4.09. Maintenance of Office or Agency . . . . . . . . . . . . . . . 40
Section 4.10. Limitation on Additional Indebtedness and Preferred
Stock of Restricted Subsidiaries . . . . . . . . . . . . . . 41
Section 4.11. Limitation on Issuances and Sales of Preferred
Stock by Restricted Subsidiaries . . . . . . . . . . . . . . 42
Section 4.12. Limitation on Restricted Payments . . . . . . . . . . . . . . 42
Section 4.13. Limitation on Other Senior Subordinated Debt . . . . . . . . . 45
Section 4.14. Limitation on Certain Asset Sales . . . . . . . . . . . . . . 45
Section 4.15. Limitation on Transactions with Affiliates . . . . . . . . . . 49
Section 4.16. Limitations on Liens . . . . . . . . . . . . . . . . . . . . . 50
Section 4.17. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . 50
Section 4.18. Guarantees of Certain Indebtedness . . . . . . . . . . . . . . 51
Section 4.19. Payments for Consent . . . . . . . . . . . . . . . . . . . . . 51
Section 4.20. Line of Business . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.21. Change of Control . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 5. SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets . . . . 54
Section 5.02. Successor Person Substituted . . . . . . . . . . . . . . . . . 56
ARTICLE 6. DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.04. Waiver of Past Defaults and Events of Default . . . . . . . . 59
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . 59
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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Section 6.07. Rights of Holders To Receive Payment . . . . . . . . . . . . . 60
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . 61
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . 61
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 7. TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . 65
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . 65
Section 7.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . 66
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . 66
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . 67
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion . . . 68
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . 68
Section 7.11. Preferential Collection of Claims Against Company . . . . . . 69
Section 7.12. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 8. AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . 69
Section 8.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . 70
Section 8.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . 72
Section 8.04. Revocation and Effect of Consents . . . . . . . . . . . . . . 72
Section 8.05. Notation on or Exchange of Notes . . . . . . . . . . . . . . . 73
Section 8.06. Trustee To Sign Amendments, etc. . . . . . . . . . . . . . . . 73
ARTICLE 9. DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture . . . . . . . . . . . . . . . . . . . . 73
Section 9.02. Legal Defeasance . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . 75
Section 9.04. Conditions to Legal Defeasance or Covenant Defeasance . . . . 75
Section 9.05. Deposited Money and U.S. Government Obligations To Be
Held in Trust; Other Miscellaneous Provisions . . . . . . . 77
Section 9.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 78
</TABLE>
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Section 9.07. Moneys Held by Paying Agent . . . . . . . . . . . . . . . . . 78
Section 9.08. Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . 79
ARTICLE 10. GUARANTEE OF NOTES
Section 10.01. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.02. Execution and Delivery of Guarantees . . . . . . . . . . . . 81
Section 10.03. Limitation of Guarantee . . . . . . . . . . . . . . . . . . . 81
Section 10.04. Additional Guarantors . . . . . . . . . . . . . . . . . . . . 82
Section 10.05. Release of Guarantor . . . . . . . . . . . . . . . . . . . . 82
Section 10.06. Guarantee Obligations Subordinate to Senior Indebtedness . . 83
Section 10.07. No Payment on Guarantees in Certain Circumstances . . . . . . 83
Section 10.08. Guarantee Obligations Subordinated to Prior Payment of
All Senior Indebtedness of Guarantors on Dissolution,
Liquidation or Reorganization . . . . . . . . . . . . . . . 85
Section 10.09. Holders to be Subrogated to Rights of Holders of
Senior Indebtedness of Guarantors . . . . . . . . . . . . . 86
Section 10.10. Application of Certain Article 11 Provisions . . . . . . . . 87
Section 10.11. Contribution . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE 11. SUBORDINATION OF NOTES
Section 11.01. Notes Subordinate to Senior Indebtedness . . . . . . . . . . 88
Section 11.02. No Payment on Notes in Certain Circumstances . . . . . . . . 88
Section 11.03. Notes Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation
or Reorganization . . . . . . . . . . . . . . . . . . . . . 90
Section 11.04. Holders to be Subrogated to Rights of Holders of
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . 91
Section 11.05. Obligations of the Company Unconditional . . . . . . . . . . 92
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Section 11.06. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice . . . . . . . . . . . . . . . . . . . . 92
Section 11.07. Application by Trustee of Assets Deposited With it . . . . . 93
Section 11.08. Subordination Rights Not Impaired by Acts of
or Omissions of the Company or Holders
of Senior Indebtedness . . . . . . . . . . . . . . . . . . . 93
Section 11.09. Holders Authorize Trustee to Effectuate
Subordination of Notes . . . . . . . . . . . . . . . . . . . 94
Section 11.10. Right of Trustee to Hold Senior Indebtedness . . . . . . . . 95
Section 11.11. Article 11 Not to Prevent Events of Default . . . . . . . . . 95
Section 11.12. No Fiduciary Duty of Trustee to Holders of
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . 95
ARTICLE 12. MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . 96
Section 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 12.03. Communications by Holders with Other Holders . . . . . . . . 97
Section 12.04. Certificate and Opinion as to Conditions Precedent . . . . . 97
Section 12.05. Statements Required in Certificate and Opinion . . . . . . . 98
Section 12.06. When Treasury Notes Disregarded . . . . . . . . . . . . . . . 98
Section 12.07. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . 99
Section 12.08. Business Days; Legal Holidays . . . . . . . . . . . . . . . . 99
Section 12.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 12.10. No Adverse Interpretation of Other Agreements . . . . . . . . 99
Section 12.11. No Recourse Against Others . . . . . . . . . . . . . . . . 100
Section 12.12. Successors . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 12.13. Multiple Counterparts . . . . . . . . . . . . . . . . . . . 100
Section 12.14. Table of Contents, Headings, etc. . . . . . . . . . . . . . 100
Section 12.15. Separability . . . . . . . . . . . . . . . . . . . . . . . 100
EXHIBITS
Exhibit A. - Form of Note . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
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<PAGE> 8
INDENTURE, dated as of [___________], 1996, among LAMAR
ADVERTISING COMPANY, a Delaware corporation, as Issuer (the "Company"), the
GUARANTORS (as hereinafter defined), and STATE STREET BANK AND TRUST COMPANY, a
trust company duly organized under the laws of the Commonwealth of
Massachusetts, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Company's [____]%
Senior Subordinated Notes due 2006 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (including
an Unrestricted Subsidiary) existing at the time such Person becomes a
Restricted Subsidiary or assumed in connection with the acquisition of assets
from such Person.
"Adjusted Net Assets" of a Guarantor at any date shall mean the
lesser of (x) the amount by which the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities), but excluding liabilities under the Guarantee of such
Guarantor at such date and (y) the amount by which the present fair salable
value of the assets of such Guarantor at such date exceeds the amount that will
be required to pay the probable liability of such Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities and after giving
effect to any collection from any Subsidiary of such Guarantor in respect of
the obligations of such Subsidiary under the Guarantee), excluding Indebtedness
in respect of the Guarantee, as they become absolute and matured.
"Advertising Displays" mean all posters, signs (including logo
sign structures), billboards and other
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<PAGE> 9
outdoor advertising displays and related contracts and sites therefor owned or
leased (as lessee) by the Company and the Restricted Subsidiaries.
"Affiliate" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise.
"Agent" means any Registrar, Paying Agent, co-registrar or agent
for service of notices and demands.
"Asset Acquisition" means (i) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be consolidated or merged with the
Company or any Restricted Subsidiary or (ii) the acquisition by the Company or
any Restricted Subsidiary of assets of any Person.
"Asset Sale" means the sale, transfer or other disposition (other
than to the Company or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions having a fair market value in
excess of $1 million of (a) any Capital Stock of or other equity interest in
any Restricted Subsidiary, (b) all or substantially all of the assets of any
business owned by the Company or any Restricted Subsidiary or a division, line
of business or comparable business segment of the Company or any Restricted
Subsidiary or (c) any other assets or property of the Company or of any
Restricted Subsidiary, (whether real or personal property). For purposes of
this definition, the term Asset Sale shall not include any sale, transfer or
other disposition that is governed by and made in accordance with Section 5.01
or any sale, transfer or
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<PAGE> 10
other disposition to the Company or a Wholly-Owned Restricted Subsidiary that
is a Guarantor.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i)
cash received by the Company or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such
Asset Sale, (b) payment of all brokerage commissions, underwriting and other
fees and expenses related to such Asset Sale, and (c) deduction of appropriate
amounts to be provided by the Company or such Restricted Subsidiary as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or disposed of in such Asset Sale and retained by the Company or
such Restricted Subsidiary after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with the assets sold or disposed of in such Asset Sale,
and (ii) promissory notes and other noncash consideration received by the
Company or any Restricted Subsidiary from such Asset Sale or other disposition
upon the liquidation or conversion of such notes or noncash consideration into
cash.
"Available Asset Sale Proceeds" means, with respect to any Asset
Sale, the aggregate Asset Sale Proceeds from such Asset Sale that have not been
applied in accordance with clauses (iii)(a) or (iii)(b) of Section 4.14, and
which have not been the basis for an Excess Proceeds Offer in accordance with
clause (iii)(c) of such Section 4.14.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years (or any
fraction thereof) from such date to the date or dates of each successive
scheduled principal payment (including, without limitation, any sinking fund
requirements) of such Indebtedness multiplied by (b) the amount of each such
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<PAGE> 11
principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company
or a Guarantor, as appropriate, or any committee authorized to act therefor.
"Board Resolution" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of the Company or a Guarantor, as appropriate, and to be in full
force and effect, and delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), excluding Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person or group shall be deemed to have "beneficial ownership" of
all securities that such person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time, upon the
happening of an event or otherwise), directly or indirectly, of more than 35%
of the total voting power of all Voting Stock of the Company; provided,
however, that the Permitted Holders (i) "beneficially own" (as so defined) a
lower percentage of such total voting power with respect to the Voting Stock
than such other person or "group" and (ii) do not have the
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<PAGE> 12
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of the Company; (b) the
Company consolidates with, or merges with or into, another person or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates with,
or merges with or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is converted
into or exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is converted
into or exchanged for (1) Voting Stock (other than Disqualified Capital Stock)
of the surviving or transferee corporation or (2) cash, securities and other
property in an amount which could then be paid by the Company as a Restricted
Payment under this Indenture, or a combination thereof, and (ii) immediately
after such transaction no "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), excluding Permitted Holders, is
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person or group shall be deemed to have "beneficial
ownership" of all securities that such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time, upon the happening of an event or otherwise), directly or
indirectly, of more than 50% of the total voting power of all Voting Stock of
the surviving or transferee corporation; (c) at any time during any consecutive
two-year period, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of at least 66-2/3% of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office; or (d) the Company is liquidated or
dissolved or adopts a plan of liquidation.
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<PAGE> 13
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or
others that will control the management and policies of such Person.
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces such party pursuant to Article 5 of
this Indenture and thereafter means the successor and any other primary obligor
on the Notes.
"Company Request" means any written request signed in the name of
the Company by its Chief Executive Officer, its President, any Vice President,
its Chief Financial Officer or its Treasurer and attested to by the Secretary
or any Assistant Secretary of the Company.
"Consolidated Interest Expense" means, for any period, the
aggregate amount of interest which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" or any like caption on an income
statement for the Company and its Restricted Subsidiaries on a consolidated
basis (including, but not limited to, imputed interest included in Capitalized
Lease Obligations, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, the net
costs associated with hedging obligations, the interest portion of any deferred
payment obligation, amortization of discount or premium, if any, and all other
non-cash interest expense (other than interest amortized to cost of sales))
plus, without duplication, all net capitalized interest for such period and all
interest incurred or paid under any guarantee of Indebtedness (including a
guarantee of principal, interest or any combination thereof) of any Person,
plus an amount equal to the product of (a) the aggregate dividends paid on
Disqualified Capital Stock during such period and (b) a fraction, the numerator
of which is one and the denominator of which is one minus the Company's then
effective combined tax rate, to the extent paid; provided, however, that
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<PAGE> 14
"Consolidated Interest Expense" shall exclude the amortization of deferred
financing fees.
"Consolidated Net Income" means, for any period, the aggregate of
the Net Income of the Company and its Restricted Subsidiaries for such period,
on a consolidated basis, determined in accordance with GAAP; provided, however,
that (a) the Net Income of any Person (the "other Person") in which the Company
or any of its Restricted Subsidiaries has less than a 100% interest (which
interest does not cause the net income of such other Person to be consolidated
into the net income of the Company in accordance with GAAP) shall be included
only to the extent of the amount of dividends or distributions paid to the
Company or such Restricted Subsidiary, (b) the Net Income of any Restricted
Subsidiary that is subject to any restriction or limitation on the payment of
dividends or the making of other distributions (other than pursuant to the
Notes or this Indenture) shall be excluded to the extent of such restriction or
limitation, except that to the extent that any such restriction or limitation
results solely from covenant limitations under any SBA Indebtedness, there
shall not be deducted that portion of such Restricted Subsidiary's Net Income
which exceeds the outstanding aggregate principal amount of such SBA
Indebtedness, (c)(i) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition and
(ii) any net gain (but not loss) resulting from an Asset Sale by the Company or
any of its Restricted Subsidiaries other than in the ordinary course of
business shall be excluded, and (d) extraordinary gains and losses shall be
excluded.
"Consolidated Net Tangible Assets" means the book value of the
assets of the Company and its Restricted Subsidiaries (other than patents,
patent rights, trademarks, trade names, franchises, copyrights, licenses,
permits, goodwill and other intangible assets classified as such in accordance
with GAAP) after all applicable deductions in accordance with GAAP (including,
without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization) less all liabilities of the
7
<PAGE> 15
Company and its Restricted Subsidiaries determined in accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
located at Two International Place, Boston, MA 02110.
"Cumulative Consolidated Interest Expense" means, as of any date
of determination, Consolidated Interest Expense of the Company from the Issue
Date to the end of the Company's most recently ended full fiscal quarter prior
to such date, taken as a single accounting period.
"Cumulative EBITDA" means, as of any date of determination,
EBITDA of the Company from the Issue Date to the end of the Company's most
recently ended full fiscal quarter prior to such date, taken as a single
accounting period.
"Default" means any event that is, or with the passing of time or
giving of notice or both would be, an Event of Default.
"Depositary" means, with respect to Global Notes, the Person
designated as Depositary pursuant to Section 2.01 until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter "Depositary" shall mean each Person who is then a Depositary
hereunder, and if at any time there is more than one such Person, such Persons.
"Designated Senior Indebtedness," as to the Company or any
Guarantor, as the case may be, means any Senior Indebtedness (a) under or in
respect of the Senior Credit Facility, or (b) which at the time of
determination exceeds $10 million in aggregate principal amount (or accreted
value in the case of Indebtedness issued at a discount) outstanding or
available under a committed facility, and (i) which is specifically designated
in the instrument evidencing such Senior Indebtedness as
8
<PAGE> 16
"Designated Senior Indebtedness" and (ii) as to which the Trustee has been
given written notice of such designation.
"Disqualified Capital Stock" means any Capital Stock of the
Company or any Restricted Subsidiary which, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable at
the option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness.
"EBITDA" means, for any Person, for any period, an amount equal
to (a) the sum of, without duplication, (i) Consolidated Net Income for such
period, plus (ii) the provision for taxes for such period based on income or
profits to the extent such income or profits were included in computing
Consolidated Net Income and any provision for taxes utilized in computing net
loss under clause (i) hereof, plus (iii) to the extent it reduces Consolidated
Net Income during such period, Consolidated Interest Expense for such period,
plus (iv) depreciation for such period on a consolidated basis, plus (v)
amortization of intangibles for such period on a consolidated basis, plus (vi)
any other non-cash items reducing Consolidated Net Income for such period,
minus (b) all non-cash items increasing Consolidated Net Income for such
period, all for the Company and its Restricted Subsidiaries determined in
accordance with GAAP.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"fair market value" means, unless otherwise specified, with
respect to any asset or property, the price which could be negotiated in an
arm's-length, free market transaction, for cash, between a willing seller and a
willing and able buyer, neither of whom is under undue pressure or compulsion
to complete the transaction. Fair market value shall be determined by the
Board of Directors of the Company acting reasonably and in good faith and shall
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<PAGE> 17
be evidenced by a Board Resolution of the Company delivered to the Trustee.
"Final Maturity Date" shall be the date fixed in the Indenture
for the final payment of principal on the Notes.
"GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States from time to time.
"Global Note" means a Note issued to the Depositary or its
nominee in accordance with Section 2.02 and bearing the legend required by
Section 2.02.
"Guarantee" means the guarantee of the Obligations of the Company
with respect to the Notes by each Guarantor pursuant to the terms of Article 10
hereof.
"Guaranteed Permitted Unrestricted Subsidiary Obligations" shall
have the meaning set forth in the definition of "Investments."
"Guarantor" means each Subsidiary of the Company listed on the
signature pages of this Indenture and each Restricted Subsidiary which
thereafter guarantees payment of the Notes pursuant to the covenant described
under Section 4.18.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"incur" means, with respect to any Indebtedness or other
obligation of any Person, to directly or indirectly create, issue, incur (by
conversion, exchange or otherwise), assume, guarantee or otherwise become
liable with respect to (including as a result of an Asset Acquisition), or
otherwise become responsible for, contingently or otherwise any Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise,
of any such Indebtedness or other obligation on the balance sheet of such
Person (and "incurrence," "incurred," "incurrable," and "incurring" shall have
meanings correlative to the
10
<PAGE> 18
foregoing); provided that a change in GAAP that results in an obligation of
such Person that exists at such time becoming Indebtedness shall not be deemed
an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any
Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to
a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding any balances that constitute accounts payable
or trade payables, and other accrued liabilities arising in the ordinary course
of business) if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and shall also include, to the extent not otherwise
included (i) any Capitalized Lease Obligations of such Person, (ii) obligations
secured by a lien to which the property or assets owned or held by such Person
is subject, whether or not the obligation or obligations secured thereby shall
have been assumed (the amount of such obligation being deemed to be the lesser
of the value of such property or asset or the amount of the obligations so
secured), (iii) guarantees of obligations of other Persons which would be
included within this definition for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any banker's acceptance or
for reimbursement of any obligor on any letter of credit with respect to
drawings made thereunder and not yet reimbursed, (v) in the case of the
Company, Disqualified Capital Stock of the Company or any Restricted
Subsidiary, (vi) obligations of any such Person under any Interest Rate
Agreement applicable to any of the foregoing (if and to the extent such
Interest Rate Agreement obligations would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP) and (vii) the
outstanding amount of any Guaranteed Permitted Unrestricted Subsidiary
Obligations; provided, however, that except for purposes of
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this clause (vii) obligations in respect of performance and surety bonds and in
respect of reimbursement obligations for undrawn letters of credit (whether or
not secured by a lien) supporting insurance arrangements and performance and
surety bonds, each incurred in the ordinary course of business and not as a
part of a financing transaction, for the benefit of the Company or any
Restricted Subsidiary, shall not be considered Indebtedness for purposes of
this Indenture. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above, provided (a) that the amount outstanding at any time of any
Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP and (b) that Indebtedness shall not include any liability for Federal,
state, local or other taxes.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement designed to protect the party indicated
therein against fluctuations in interest rates.
"Investments" means, (x) directly or indirectly, any advance,
account receivable (other than an account receivable arising in the ordinary
course of business), loan or capital contribution to (by means of transfers of
property to others, payments for property or services for the account or use of
others or otherwise), the purchase of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities of, the acquisition,
by purchase or otherwise, of all or substantially all of the business or assets
or stock or other evidence of beneficial ownership of, any Person and (y) any
Permitted Unrestricted Subsidiary Obligation to the extent it is guaranteed by
the
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<PAGE> 20
Company or a Restricted Subsidiary or otherwise is recourse to or obligates the
Company or any Restricted Subsidiary, directly or indirectly, contingently or
otherwise, to the satisfaction thereof ("Guaranteed Permitted Unrestricted
Subsidiary Obligations"). Investments shall exclude extensions of trade credit
on commercially reasonable terms in accordance with normal trade practices.
"Issue Date" means November __, 1996.
"Junior Security" means any securities of the Company or any
other Person that are (i) equity securities without special covenants or (ii)
subordinated in right of payment to all Senior Indebtedness of the Company or
any Guarantor, as the case may be, to substantially the same extent as, or to a
greater extent than, the Notes are subordinated as provided in this Indenture,
in any event issued pursuant to a court order so providing and as to which (a)
the rate of interest on such securities shall not exceed the effective rate of
interest on the Notes on the date of this Indenture, (b) such securities shall
not be entitled to the benefits of covenants or defaults materially more
beneficial to the holders of such securities than those in effect with respect
to the Notes on the date of this Indenture and (c) such securities shall not
provide for amortization (including sinking fund and mandatory prepayment
provisions) commencing prior to the date six months following the final
scheduled maturity date of the Senior Indebtedness of the Company or Guarantor,
as the case may be (as modified by the plan of reorganization or readjustment
pursuant to which such securities are issued).
"Leverage Ratio" means the ratio of (i) the sum of the aggregate
outstanding amount of (x) Indebtedness of the Company and the Restricted
Subsidiaries and (y) except to the extent included in the previous clause (x),
Preferred Stock of the Company's Restricted Subsidiaries as of the date of
calculation on a consolidated basis in accordance with GAAP to (ii) the
Company's EBITDA for the four full fiscal quarters (the "Four Quarter Period")
ending on or prior to the date of determination for which financial statements
are available. For purposes of this definition, the Company's "EBITDA" shall
be calculated on a pro forma
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<PAGE> 21
basis after giving effect to any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company or one of the Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of such
Asset Acquisition) incurring, assuming or otherwise becoming liable for
Indebtedness) at any time on or subsequent to the first day of the Four Quarter
Period and on or prior to the date of determination, as if such Asset Sale or
Asset Acquisition (including any EBITDA associated with such Asset Acquisition
and including any pro forma expense and cost reductions determined in
accordance with Article 11 of Regulation S-X relating to such Asset
Acquisition) occurred on the first day of the Four Quarter Period.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority, or other security agreement or preferential arrangement
of any kind or nature whatsoever on or with respect to such property or assets
(including, without limitation, any Capitalized Lease Obligation, conditional
sales, or other title retention agreement having substantially the same
economic effect as any of the foregoing).
"Maturity Date" means [________ __], 2006.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means with respect to any Person for any period, the
net income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock
or Indebtedness by the Company, the aggregate net cash proceeds received by the
Company, after payment of expenses, commissions and the like incurred in
connection therewith, and (b) in the case of any exchange, exercise, conversion
or surrender of outstanding securities
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<PAGE> 22
of any kind for or into shares of Capital Stock of the Company which is not
Disqualified Capital Stock, the net book value of such outstanding securities
on the date of such exchange, exercise, conversion or surrender (plus any
additional amount required to be paid by the holder to the Company upon such
exchange, exercise, conversion or surrender, less any and all payments made to
the holders, e.g., on account of fractional shares and less all expenses
incurred by the Company in connection therewith).
"Notes" means the securities that are issued under this
Indenture, as amended or supplemented from time to time pursuant to this
Indenture.
"Obligations" means, with respect to any Indebtedness, including
any Guarantee, any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other expenses payable under the
documentation governing such Indebtedness or Guarantee.
"Officer" means the Chief Executive Officer, the President, any
Vice President, the Chief Financial Officer, the Treasurer or the Secretary of
the Company or a Guarantor, or any other officer designated by the Board of
Directors, as the case may be.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President, and the Chief Financial Officer or any Treasurer of such Person that
shall comply with applicable provisions of this Indenture.
"Opinion of Counsel" means a written opinion from legal counsel
which counsel is reasonably acceptable to the Trustee.
"Permitted Asset Swap" means the exchange, in the ordinary course
of the outdoor advertising business, of any interest of the Company or any of
the Restricted Subsidiaries in any Advertising Display or Displays for a
similar interest in an Advertising Display or Displays of a Person other than
the Company or such Restricted Subsidiary; provided that the aggregate fair
market value (as determined
15
<PAGE> 23
in good faith by the Board of Directors of the Company) of the Advertising
Display or Displays being transferred by the Company or such Restricted
Subsidiary is not greater than the aggregate fair market value (as determined
in good faith by the Board of Directors of the Company) of the Advertising
Display or Displays received by the Company or such Restricted Subsidiary in
such exchange.
"Permitted Dividend Encumbrances" means encumbrances or
restrictions (a) existing on the Issue Date, (b) arising by reason of Acquired
Indebtedness of any Restricted Subsidiary existing at the time such Person
became a Restricted Subsidiary; provided that in the case of clause (b) above
such encumbrances or restrictions were not created in anticipation of such
Person becoming a Restricted Subsidiary and are not applicable to the Company
or any of the other Restricted Subsidiaries, (c) arising under Indebtedness
incurred pursuant to clause (i) of the definition of Permitted Indebtedness,
(d) arising under Refinancing Indebtedness; provided that the terms and
conditions of any such restrictions are no less favorable to the Holders of
Notes than those under the Indebtedness being refinanced, (e) customary
provisions restricting the assignment of any contract or interest of the
Company or any Restricted Subsidiary, (f) existing under an agreement relating
to SBA Indebtedness, (g) existing under an agreement relating to any Permitted
Lien referred to in clause (v) of the definition of "Permitted Liens" provided
that such encumbrance or restriction only relates to the assets or property
subject to such Permitted Lien and having an aggregate fair market value equal
to the Indebtedness secured thereby, (h) imposed by applicable law and (i)
imposed pursuant to a binding agreement which has been entered into for the
sale or disposition of all or substantially all of the Capital Stock or of any
assets of such Restricted Subsidiary, provided such encumbrances and
restrictions apply solely to such Capital Stock or assets of such Restricted
Subsidiary which are the subject of such binding agreement.
"Permitted Holders" means (x) any of Charles Switzer, Charles W.
Lamar, III, Kevin P. Reilly, Sr.,
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<PAGE> 24
members of their immediate families or any lineal descendant of any of the
foregoing and the immediate families of any such lineal descendant, (y) any
trust, to the extent it is for the benefit of any of the foregoing or (z) any
Person, entity or group of Persons controlled by any of the foregoing.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company and any Restricted
Subsidiaries which are Guarantors pursuant to the Senior Credit Facility
in an aggregate principal amount not to exceed $400 million, less the
aggregate amount of all permanent repayments thereunder made in
accordance with Section 4.14 and guarantees of such Indebtedness by
Restricted Subsidiaries that are Guarantors;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness not covered by any other clause of this
definition which is outstanding on the date of this Indenture;
(iv) Indebtedness of the Company to any Wholly-Owned Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary to the Company
or another Restricted Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred by the Company or any Restricted Subsidiary to
acquire or lease property in the ordinary course of business, provided
that (a) the aggregate amount of such Purchase Money Indebtedness and
Capitalized Lease Obligations outstanding at any time shall not exceed
the greater of (x) 5% of the Company's Consolidated Net Tangible Assets,
at the time of the incurrence of any such Purchase Money Indebtedness or
Capitalized Lease Obligation or (x) $10 million, and (b) in each case,
such Purchase Money Indebtedness or Capitalized Lease Obligation, as the
case may be, would not constitute more than 100% of the
17
<PAGE> 25
cost (determined in accordance with GAAP) of the property so purchased
or leased plus reasonable fees and expenses incurred in connection
therewith;
(vi) Interest Rate Agreements and any guarantees thereof;
(vii) additional Indebtedness of the Company or any Restricted
Subsidiary that is a Guarantor not to exceed $25 million in principal
amount outstanding at any time; and
(viii) Refinancing Indebtedness.
"Permitted Investments" means, for any Person, Investments made
on or after the date of this Indenture consisting of:
(i) Investments by the Company or by a Restricted Subsidiary
in the Company or a Restricted Subsidiary which is a Guarantor;
(ii) Temporary Cash Investments;
(iii) Investments by the Company or by a Restricted Subsidiary
in a Person, if as a result of such Investment (A) such Person becomes a
Restricted Subsidiary which is a Guarantor or (B) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company
or a Restricted Subsidiary which is a Guarantor; and
(iv) an Investment that is made by the Company or a Restricted
Subsidiary in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are
issued by a third party to the Company or such Restricted Subsidiary
solely as partial consideration for the consummation of an Asset Sale
that is otherwise permitted under Section 4.14 hereof.
"Permitted Liens" means (i) Liens existing on the Issue Date,
(ii) Liens on property or assets of, or any
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<PAGE> 26
shares of stock of or secured debt of, any corporation existing at the time
such corporation becomes a Restricted Subsidiary or at the time such
corporation is merged into the Company or any of the Restricted Subsidiaries;
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Restricted Subsidiary or merging
into the Company or any of the Restricted Subsidiaries, (iii) Liens securing
Refinancing Indebtedness; provided that any such Lien does not extend to or
cover any Property, shares or debt other than the Property, shares or debt
securing the Indebtedness so refunded, refinanced or extended, (iv) Liens in
favor of the Company or any of the Restricted Subsidiaries, (v) Liens to secure
Purchase Money Indebtedness that is otherwise permitted under this Indenture;
provided that any such Lien is created solely for the purpose of securing such
Purchase Money Indebtedness and does not extend to or cover any Property other
than such item of Property and any improvements on such item, (vi) statutory
liens or landlords', carriers', warehouseman's, mechanics', suppliers',
materialmen's, repairmen's or other like Liens arising in the ordinary course
of business which do not secure any Indebtedness and secure obligations with
respect to amounts not yet delinquent or being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor,
(vii) Liens for taxes, assessments or governmental charges that are being
contested in good faith by appropriate proceedings, (viii) Liens securing
Capitalized Lease Obligations permitted to be incurred under clause (v) of the
definition of Permitted Indebtedness provided that any such Lien does not
extend to any property other than that subject to the underlying lease, (ix)
Liens securing Senior Indebtedness, (x) Permitted Dividend Encumbrances and
(xi) Liens securing Indebtedness in an aggregate principal amount not to exceed
$1 million outstanding at any time.
"Permitted Unrestricted Subsidiary Obligations" shall have the
meaning specified in the definition of "Unrestricted Subsidiary."
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"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the
holders of other Capital Stock issued by such Person.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries (Restricted Subsidiaries in the case of the Company) under GAAP.
"Public Equity Offerings" means a public offering by the Company
of shares of its common stock (however designated and whether voting or non-
voting but excluding Disqualified Capital Stock) and any and all rights,
warrants or options to acquire such common stock pursuant to a registration
statement registered pursuant to the Securities Act.
"Purchase Money Indebtedness" means any Indebtedness incurred by
a Person to finance the cost (including the cost of construction or improvement
and in the case of any Capitalized Lease Obligation, the lease) of any real or
personal property, the principal amount of which Indebtedness does not exceed
the sum of (i) 100% of such cost and (ii) reasonable fees and expenses of such
Person incurred in connection therewith.
"Redemption Date" when used with respect to any Note to be
redeemed means the date fixed for such redemption pursuant to this Indenture.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances or extends any Indebtedness of the Company or the Restricted
Subsidiaries outstanding on the Issue Date or other Indebtedness permitted to
be incurred by
20
<PAGE> 28
the Company or the Restricted Subsidiaries pursuant to the terms of this
Indenture (other than pursuant to clauses (i), (iv), (v), (vi) and (vii) of the
definition of Permitted Indebtedness), but only to the extent that (i) the
Refinancing Indebtedness is subordinated to the Notes to at least the same
extent as the Indebtedness being refunded, refinanced or extended, (ii) the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the
Indebtedness being refunded, refinanced or extended, or (b) after the maturity
date of the Notes, (iii) the portion, if any, of the Refinancing Indebtedness
that is scheduled to mature on or prior to the maturity date of the Notes has a
weighted average life to maturity at the time such Refinancing Indebtedness is
incurred that is equal to or greater than the weighted average life to maturity
of the portion of the Indebtedness being refunded, refinanced or extended that
is scheduled to mature on or prior to the maturity date of the Notes, (iv) such
Refinancing Indebtedness is in an aggregate principal amount that is equal to
or less than the sum of (a) the aggregate principal amount then outstanding
under the Indebtedness being refunded, refinanced or extended, (b) the amount
of any premium required to be paid in connection with such refunding,
refinancing or extension pursuant to the terms of such Indebtedness or the
amount of any premium reasonably determined by the Board of Directors of the
Company as necessary to accomplish such refunding, refinancing or extension by
means of a tender offer or privately negotiated purchase and (c) the amount of
customary fees, expenses and costs related to the incurrence of such
Refinancing Indebtedness, and (v) such Refinancing Indebtedness is incurred by
the same Person that initially incurred the Indebtedness being refunded,
refinanced or extended, except that the Company may incur Refinancing
Indebtedness to refund, refinance or extend Indebtedness of any Wholly-Owned
Restricted Subsidiary.
"Related Business" means the business conducted (or proposed to
be conducted) by the Company and its Restricted Subsidiaries as of the Issue
Date and any all businesses that in the good faith judgment of the Board of
Directors of the Company are materially related businesses.
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"Responsible Officer" when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution or payment on
Capital Stock of the Company or any Restricted Subsidiary of the Company or any
payment made to the direct or indirect holders (in their capacities as such) of
Capital Stock of the Company or any Restricted Subsidiary of the Company (other
than (x) dividends or distributions payable solely in Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase Capital
Stock (other than Disqualified Stock), and (y) in the case of Restricted
Subsidiaries of the Company, dividends or distributions payable to the Company
or to a Wholly-Owned Restricted Subsidiary), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the Company
or any of the Restricted Subsidiaries (other than Capital Stock owned by the
Company or a Wholly-Owned Restricted Subsidiary), (iii) the making of any
principal payment on, or the purchase, defeasance, repurchase, redemption or
other acquisition or retirement for value, prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of any Indebtedness
which is subordinated or pari passu in right of payment to the Notes, (iv) the
making of any Investment or guarantee of any Investment in any Person other
than a Permitted Investment, (v) any designation of a Restricted Subsidiary as
an Unrestricted Subsidiary to the extent set forth in the definition of
Unrestricted Subsidiary and (vi) forgiveness of any Indebtedness of an
Affiliate of the Company (other than a Wholly-Owned Restricted Subsidiary) to
the Company or a Restricted Subsidiary. For purposes of determining the amount
expended for Restricted Payments, cash distributed or invested shall
22
<PAGE> 30
be valued at the face amount thereof and property other than cash shall be
valued at its fair market value.
"Restricted Subsidiary" means a Subsidiary of the Company other
than an Unrestricted Subsidiary and includes all of the Subsidiaries of the
Company existing as of the Issue Date. The Board of Directors of the Company
may designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary of the Company as a Restricted Subsidiary if immediately after
giving effect to such action (and treating any Acquired Indebtedness as having
been incurred at the time of such action), the Company could have incurred at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.10 and no Default or Event of Default shall have occurred
and be continuing.
"S&P" means Standard & Poor's Corporation and its successors.
"SBA Indebtedness" means Indebtedness incurred pursuant to the
United States Small Business Administration Disaster Relief Loan program or any
similar loan program, provided that such Indebtedness shall at all times be
prepayable without penalty at the option of the obligor.
"SEC" means the United States Securities and Exchange Commission
as constituted from time to time or any successor performing substantially the
same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit Agreements dated as of
May 19, 1993, as amended to date, and December 22, 1995, as amended to date,
respectively, among the Company, the guarantor parties thereto, the several
lenders from time to time parties thereto and The Chase Manhattan Bank, as
agent, together with the documents related thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified
23
<PAGE> 31
from time to time, including any agreement extending the maturity of,
refinancing, replacing, consolidating or otherwise restructuring (including
adding Subsidiaries of the Company as additional guarantors thereunder) all or
any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders and whether or not increasing the amount of Indebtedness that
may be incurred thereunder.
"Senior Indebtedness" means the principal of and premium, if any,
and interest (including, without limitation, interest accruing or that would
have accrued but for the filing of a bankruptcy, reorganization or other
insolvency proceeding whether or not such interest constitutes an allowable
claim in such proceeding) on, and any and all other fees, charges, expense
reimbursement obligations, and other amounts due pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with (a) all obligations
owed to lenders under the Senior Credit Facility, (b) all obligations with
respect to any Interest Rate Agreement, (c) all obligations to reimburse any
bank or other person in respect of amounts paid under letters of credit,
acceptances or other similar instruments, (d) all other current or future
Indebtedness which does not provide that it is to rank pari passu with or
subordinate to the Notes or the Guarantees and (e) all deferrals, renewals,
extensions and refundings of, and amendments, modifications and supplements to,
any of the Senior Indebtedness described above. Notwithstanding anything to
the contrary in the foregoing, Senior Indebtedness will not include (i)
Indebtedness of the Company to any of its Subsidiaries or Indebtedness of any
Subsidiary of the Company to the Company or any other Subsidiary of the
Company, (ii) Indebtedness represented by the Notes and the Guarantees, (iii)
any Indebtedness which by the express terms of the agreement or instrument
creating, evidencing or governing the same is junior or subordinate in right of
payment to any item of Senior Indebtedness, (iv) to the extent it constitutes
Indebtedness, any trade payable arising from the purchase of
24
<PAGE> 32
goods or materials or for services obtained in the ordinary course of business,
(v) Indebtedness represented by Disqualified Capital Stock or (vi) that portion
of any Indebtedness which is incurred in violation of this Indenture, provided,
however, that in the case of any Indebtedness (regardless of whether or not
such Indebtedness is incurred pursuant to the first or second paragraph of
Section 4.10), such Indebtedness shall not be deemed to have been incurred in
violation of this Indenture if the holder(s) of such Indebtedness or their
agent or representative shall have received a representation from the Company
to the effect that the incurrence of such Indebtedness does not violate the
provisions of this Indenture (but nothing in this clause (vi) shall preclude
the existence of any Default or Events of Default in the event that such
Indebtedness is in fact incurred in violation of this Indenture).
"Stated Maturity" means, when used with respect to any Note or
any installment of interest thereon, the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable, and when used with respect to any other Indebtedness, means
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness, or any installment of
interest thereon, is due and payable.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, officers or trustees thereof is held, directly or indirectly by
such Person or any of its Subsidiaries; or (ii) in the case of a partnership,
joint venture, association or other business entity, with respect to which such
Person or any of its Subsidiaries has the power to direct or cause the
direction of the management and policies of such entity by contract or
otherwise or if in accordance with GAAP such entity is
25
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consolidated with such Person for financial statement purposes.
"Temporary Cash Investments" or "cash equivalents" means (i)
Investments in marketable, direct obligations issued or guaranteed by the
United States of America, or of any governmental agency or political
subdivision thereof, maturing within 365 days of the date of purchase; (ii)
Investments in certificates of deposit issued by a bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia, in each case having capital, surplus and undivided profits totaling
more than $500,000,000 and rated at least A by S&P and A-2 by Moody's, maturing
within 365 days of purchase; or (iii) Investments not exceeding 365 days in
duration in money market funds that invest substantially all of such funds'
assets in the Investments described in the preceding clauses (i) and (ii).
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Section
77aaa-77bbbb) as in effect on the date of this Indenture (except as provided in
Section 8.03 hereof).
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer trust accounts.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Company which is
classified after the Issue Date as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors of the Company, but only so long as (i) no
portion of the Indebtedness or any other obligation (contingent or otherwise)
of such Unrestricted Subsidiary (other than obligations in respect of
performance and surety bonds and in respect of reimbursement obligations for
undrawn letters of credit supporting insurance arrangements and performance and
surety bonds, each incurred in the ordinary course of business and not as part
of a financing
26
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transaction (collectively, "Permitted Unrestricted Subsidiary Obligations"))
(A) is guaranteed by the Company or any Restricted Subsidiary, (B) is recourse
to or obligates the Company or any Restricted Subsidiary of the Company,
directly or indirectly, contingently or otherwise, to satisfaction thereof,
(ii) such Unrestricted Subsidiary has no Indebtedness or any other obligation
(other than Permitted Unrestricted Subsidiary Obligations) that, if in default
in any respect (including a payment default), would permit (upon notice, lapse
of time or both) any holder of any other Indebtedness of the Company or its
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity and (iii) no Default or Event of Default shall have occurred and be
continuing. Any designation of a Subsidiary as an Unrestricted Subsidiary
shall be deemed a Restricted Payment in an amount equal to the fair market
value of such Subsidiary (as determined in good faith by the Board of Directors
of the Company) and any such designation shall be permitted only if it complies
with Section 4.12. The Trustee shall be given prompt notice by the Company of
each resolution adopted by the Board of Directors of the Company pursuant to
the foregoing sentence, together with a copy of each such resolution adopted.
"U.S. Government Obligations" means direct non-callable
obligations of, or non-callable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
"Voting Stock" means, with respect to any Person, securities of
any class or classes of Capital Stock in such Person entitling the holders
thereof to vote under ordinary circumstances in the election of members of the
board of directors or other governing body of such Person.
"Wholly-Owned Restricted Subsidiary" means any Restricted
Subsidiary, all of the outstanding Voting Stock (other than directors'
qualifying shares) of which are owned, directly or indirectly, by the Company.
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Section 1.02. Other Definitions.
The definitions of the following terms may be found in the
sections indicated as follows:
<TABLE>
<CAPTION>
Defined
Term in Section
---- ----------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . 4.15
"Bankruptcy Law" . . . . . . . . . . . . . . . 6.01
"Business Day" . . . . . . . . . . . . . . . . 12.08
"Change of Control Offer" . . . . . . . . . . . 4.21
"Change of Control Date" . . . . . . . . . . . 4.21
"Change of Control Purchase Price" . . . . . . 4.21
"Covenant Defeasance" . . . . . . . . . . . . . 9.03
"Custodian" . . . . . . . . . . . . . . . . . . 6.01
"Event of Default" . . . . . . . . . . . . . . 6.01
"Excess Proceeds Offer" . . . . . . . . . . . . 4.14
"Funding Guarantor" . . . . . . . . . . . . . . 10.11
"Guarantee Payment Blockage Period" . . . . . . 10.07
"Guarantor Payment Default" . . . . . . . . . . 10.07
"Guarantor Payment Notice" . . . . . . . . . . 10.07
"Legal Defeasance" . . . . . . . . . . . . . . 9.02
"Legal Holiday" . . . . . . . . . . . . . . . . 12.08
"Offer Period" . . . . . . . . . . . . . . . . 4.14
"Pari Passu Excess Proceeds Offer . . . . . . . 4.14
"Paying Agent" . . . . . . . . . . . . . . . . 2.03
"Payment Blockage Period" . . . . . . . . . . . 11.03
"Payment Default" . . . . . . . . . . . . . . . 11.03
"Payment Notice" . . . . . . . . . . . . . . . 11.03
"Purchase Date" . . . . . . . . . . . . . . . . 4.14
"Registrar" . . . . . . . . . . . . . . . . . . 2.03
"Reinvestment Date" . . . . . . . . . . . . . . 4.14
</TABLE>
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Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
portion of such provision required to be incorporated herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and
made a part of this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture securityholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Company, the
Guarantors or any other obligor on the Notes or the Guarantees.
All other terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings therein assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether
defined expressly or by reference;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
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(5) words used herein implying any gender shall apply to every
gender.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
The Notes (including Global Notes) and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A which is
incorporated in and made part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. The
Company may use "CUSIP" numbers in issuing the Notes. The Company shall
approve the form of the Notes. Each Note shall be dated the date of its
authentication.
If so provided in a Company Request pursuant to Section 2.02, the
Notes shall be issued under this Indenture in the form of Global Notes. In
such case, The Depositary Trust Company shall be the initial Depositary for
such Global Notes. Global Notes will be registered in the name of the
Depositary or a nominee of the Depositary.
The terms and provisions contained in the Notes and the Guarantee
shall constitute, and are hereby expressly made, a part of this Indenture and,
to the extent applicable, the Company, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.02. Execution and Authentication.
The Notes shall be executed on behalf of the Company by two
Officers of the Company or an Officer and an Assistant Secretary of the
Company.
Such signature may be either manual or facsimile. The Company's
seal may be impressed, affixed, imprinted or reproduced on the Notes and may be
in facsimile form.
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If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee authenticates the Note, the Note shall be valid
nevertheless.
A Note shall not be valid until the Trustee manually signs the
certificate of authentication on the Note. Such signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.
The Trustee or an authenticating agent shall authenticate Notes
for original issue in the aggregate principal amount of $225,000,000 upon a
Company Request. The aggregate principal amount of Notes outstanding at any
time may not exceed such amount except as provided in Section 2.07 hereof. The
Notes shall be issuable only in registered form without coupons and only in
denominations of $1,000 and integral multiples thereof.
The Company Request directing the authentication and delivery of
Notes shall specify whether such Notes shall be issued in the form of
definitive Notes or Global Notes. If the Company Request specifies that the
Notes are to be issued in the form of one or more Global Notes, then the
Company shall execute and the Trustee shall, in accordance with this Section
and such Company Request, authenticate and deliver one or more Global Notes in
definitive form that:
(a) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of the Notes,
(b) shall be registered in the name of the Depositary or a
nominee of such Depositary,
(c) shall, at the instruction of the Company, be delivered by
the Trustee to the Depositary or held by the Trustee on behalf of the
Depositary, and
(d) shall include and bear a legend substantially to the
effect that unless and until it is exchanged in whole or in part for definitive
Notes, such Global Notes may not be transferred except as a whole by the
Depositary to a
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nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
The Depositary must, at the time of its designation and at all
times when it serves as Depositary, be a clearing agency registered under the
Exchange Act and any other applicable statute or regulation.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same right as an Agent to deal with the
Company or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency located in the Borough of Manhattan, City of New York, State of New
York where Notes may be presented for payment ("Paying Agent") and an office or
agency where notices and demands to or upon the Company or any Guarantor in
respect of the Notes, Guarantees and this Indenture may be served. The
Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may have one or more co-registrars and one or more
additional paying agents. Neither the Company nor any Affiliate of the Company
may act as Paying Agent. The Company may change any Paying Agent, Registrar or
co-registrar without notice to any Noteholder.
The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture. The agreement
shall implement the provisions of this Indenture that relate to such Agent.
The Company shall notify the Trustee of the name and address of any such Agent.
If the Company fails to maintain a Registrar or Paying Agent, or agent for
service of notices
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and demands, or fails to give the foregoing notice, the Trustee shall act as
such. The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Notes and
the office or agency in the Borough of Manhattan for purposes of this Section
2.03 and 4.09 shall initially be ______________________.
Section 2.04. Paying Agent To Hold Assets in Trust.
The Trustee as Paying Agent shall, and the Company shall require
each Paying Agent other than the Trustee to agree in writing that, subject to
Articles 10 and 11, each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, or interest on, the Notes (whether such assets have been
distributed to it by the Company or any other obligor on the Notes), and the
Company and the Paying Agent shall notify the Trustee in writing of any Default
by the Company (or any other obligor on the Notes) in making any such payment.
The Company at any time may require a Paying Agent to distribute all assets
held by it to the Trustee and account for any assets disbursed and the Trustee
may at any time during the continuance of any payment default with respect to
the Notes, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that shall have
been delivered by the Company to the Paying Agent, the Paying Agent shall have
no further liability for such assets.
Section 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee as of each Record Date and on or before each related Interest
Payment Date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Noteholders.
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Section 2.06. Transfer and Exchange.
Subject to the provisions of this Section 2.06, when a Note is
presented to the Registrar with a request to register the transfer thereof, the
Registrar shall register the transfer as requested if the requirements of
applicable law are met and, when Notes are presented to the Registrar with a
request to exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar shall make the exchange as requested.
To permit transfers and exchanges, upon surrender of any Note for registration
of transfer at the office or agency maintained pursuant to Section 2.03 hereof,
subject to the provisions of this Section 2.06, the Company shall execute and
the Trustee shall authenticate Notes at the Registrar's request.
Notwithstanding any other provision of this Section 2.06, unless
and until it is exchanged in whole or in part for definitive Notes, a Global
Note may not be transferred except as a whole by the Depositary to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by such Depositary or any such nominee to
a successor Depositary or a nominee of such successor Depositary.
If (i) the Depositary is at any time unwilling, unable or
ineligible to continue as Depositary and a successor Depositary is not
appointed by the Company within 60 days of the date the Company is so informed
in writing or becomes aware of the same, or (ii) an Event of Default has
occurred and is continuing, the Company promptly will execute and deliver to
the Trustee definitive Notes (and the Guarantors will execute and deliver the
Guarantees endorsed thereon), and the Trustee, upon receipt of a Company
Request for the authentication and delivery of such definitive Notes (which the
Company will promptly execute and deliver to the Trustee), will authenticate
and deliver definitive Notes, without charge, in an aggregate principal amount
equal to the principal amount of the outstanding Global Notes, in exchange for
all such Global Notes.
In any exchange provided for in the preceding paragraph, the
Company will execute (and the Guarantors will
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<PAGE> 42
execute the Guarantees endorsed thereon) and the Trustee will authenticate and
deliver definitive Notes in the authorized denominations provided by Section
2.01.
Upon the exchange of a Global Note for definitive Notes, such
Global Note shall be canceled by the Trustee. Definitive Notes issued in
exchange for Global Notes pursuant to this Section 2.06 shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration or transfer or exchange.
Every Note presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Registrar or a co-
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar or a co-
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.
Any exchange or transfer shall be without charge, except that the
Company may require payment by the Holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation to a transfer or
exchange, but this provision shall not apply to any exchange pursuant to
Sections 2.09, 3.06, 4.14, 4.21 or 8.05 hereof. The Trustee shall not be
required to register transfers of Notes or to exchange Notes for a period of 15
days before selection of any Notes to be redeemed. The Trustee shall not be
required to exchange or register transfers of any Notes called or being called
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
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Section 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note presents evidence to the satisfaction of the Company and the
Trustee that the Note has been lost, destroyed or wrongfully taken, the Company
shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements are met. An indemnity bond may be required by the
Company or the Trustee that is sufficient in the judgment of the Company and
the Trustee to protect the Company, the Trustee or any Agent from any loss
which any of them may suffer if a Note is replaced. The Company may charge
such Holder for its reasonable, out-of-pocket expenses in replacing a Note,
including reasonable fees and expenses of counsel. Every replacement Note is
an additional obligation of the Company.
Section 2.08. Outstanding Notes.
Notes outstanding at any time are all Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding until
the Company and the Trustee receive proof satisfactory to each of them that the
replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be
outstanding upon surrender of such Note and replacement thereof pursuant to
Section 2.07.
If a Paying Agent holds on a Redemption Date or Maturity Date
money sufficient to pay the principal of, premium, if any, and accrued interest
on Notes payable on that date and is not prohibited from paying such money to
the Holders thereof pursuant to the terms of this Indenture, then on and after
that date such Notes cease to be outstanding and interest on them ceases to
accrue.
Subject to Section 12.06, a Note does not cease to be outstanding
solely because the Company or an Affiliate holds the Note.
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Section 2.09. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form, and shall carry all rights, of definitive
Notes but may have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes
presented to it.
Section 2.10. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel and at the written request of the Company, shall dispose
of all Notes surrendered for transfer, exchange, payment or cancellation. If
the Company or any Guarantor shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.10.
Section 2.11. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted amounts, plus any interest payable on defaulted amounts
pursuant to Section 4.01 hereof, to the persons who are Noteholders on a
subsequent special record date, which date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted interest
or the next succeeding Business Day if such date is not a Business Day. At
least 15 days before the special record date, the Company shall mail or cause
to be mailed to each Noteholder, with a copy to the Trustee, a notice that
states the special record date, the payment date, and the amount of defaulted
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interest, and interest payable on such defaulted interest, if any, to be paid.
Section 2.12. Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest Payment
Date and on the Maturity Date, the Company shall have deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date or on the Maturity Date, as the case may
be, in a timely manner which permits the Trustee to remit payment to the
Holders on such Interest Payment Date or on the Maturity Date, as the case may
be.
Section 2.13. CUSIP Number.
The Company in issuing the Notes may use one or more "CUSIP"
numbers, and if so, the Trustee shall use the CUSIP number(s) in notices of
redemption or exchange as a convenience to Holders, provided that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number(s) printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes.
ARTICLE 3.
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 6 of
the Notes, it shall notify the Trustee of the Redemption Date and the principal
amount of Notes to be redeemed at least 30 days (unless a shorter notice shall
be satisfactory to the Trustee) but not more than 60 days before the Redemption
Date. Any such notice may be canceled at any time prior to notice of such
redemption being mailed to any Holder and shall thereby be void and of no
effect.
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Section 3.02. Selection by Trustee of Notes To Be Redeemed.
If fewer than all of the Notes are to be redeemed, the Trustee
shall select the Notes to be redeemed pro rata, by lot or by any other method
that the Trustee considers fair and appropriate and, if such Notes are listed
on any securities exchange, by a method that complies with the requirements of
such exchange; provided, however, that if a partial redemption is made with the
proceeds of a Public Equity Offering, selection of Notes for redemption shall
be made on a pro rata basis, unless such method is otherwise prohibited.
The Trustee shall make the selection from the Notes outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be redeemed.
Notes in denominations of $1,000 may be redeemed only in whole. The Trustee
may select for redemption portions (equal to $1,000 or integral multiples
thereof) of the principal amount of Notes that have denominations larger than
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
At least 30 days, and no more than 60 days, before a Redemption
Date, the Company shall mail, or cause to be mailed, a notice of redemption by
first-class mail to each Holder of Notes to be redeemed at his or her last
address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.03 hereof.
The notice shall identify the Notes to be redeemed (including the
CUSIP number(s) thereof) and shall state:
(1) the Redemption Date;
(2) the redemption price;
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(3) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date and upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(6) that, unless (a) the Company defaults in making the
redemption payment or (b) such redemption payment is prohibited pursuant
to Article 10 or 11 hereof or otherwise, interest on the Notes called
for redemption ceases to accrue on and after the Redemption Date, and
the only remaining right of the Holders of such Notes is to receive
payment of the redemption price upon surrender to the Paying Agent of
the Notes redeemed;
(7) the paragraph of the Notes pursuant to which the Notes
called for redemption are being redeemed; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.
Section 3.04. Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the redemption price, plus interest, if any, accrued to the
Redemption Date. Upon
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<PAGE> 48
surrender to the Trustee or Paying Agent, such Notes shall be paid at the
redemption price, plus accrued interest, if any, to the Redemption Date unless
prohibited by Article 10 or 11, provided that if the Redemption Date is after a
regular interest payment record date and on or prior to the Interest Payment
Date, the accrued interest shall be payable to the Holder of the redeemed Notes
registered on the relevant record date.
Section 3.05. Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each Redemption
Date, the Company shall deposit with the Paying Agent in immediately available
funds money sufficient to pay the redemption price of and accrued interest, if
any, on all Notes to be redeemed on that date other than Notes or portions
thereof called for redemption on that date which have been delivered by the
Company to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay the
redemption price of and accrued interest on Notes called for redemption shall
have been made available in accordance with the preceding paragraph and the
Company and the Paying Agent are not prohibited from paying such moneys to
Holders, the Notes called for redemption will cease to accrue interest and the
only right of the Holders of such Notes will be to receive payment of the
redemption price of and, subject to the proviso in Section 3.04, accrued and
unpaid interest on such Notes to the Redemption Date. If any Note called for
redemption shall not be so paid, interest will be paid, from the Redemption
Date until such redemption payment is made, on the unpaid principal of the Note
and any interest not paid on such unpaid principal, in each case, at the rate
and in the manner provided in the Notes.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Trustee
shall authenticate for a Holder a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
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ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay the principal of and interest on the Notes
on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid
on the date it is due if the Trustee or Paying Agent holds on that date money
designated for and sufficient to pay such installment and is not prohibited
from paying such money to the Holders pursuant to the terms of this Indenture
or otherwise.
The Company shall pay interest on overdue principal, and overdue
interest, to the extent lawful, at the rate specified in the Notes.
Section 4.02. SEC Reports.
The Company will deliver to the Trustee and Holders of Notes
within 15 days after the filing of the same with the SEC, copies of the
quarterly and annual report and of the information documents and other reports,
if any, which the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company will file with the SEC, to the extent permitted, and provide
the Trustee, Holders of Notes and prospective holders of Notes with such
quarterly and annual reports and such information, documents and other reports
specified in Section 13 and 15(d) of the Exchange Act. The Company will also
comply with the other provisions of TIA Section 314(a).
Section 4.03. Waiver of Stay, Extension or Usury Laws.
The Company and each Guarantor covenant (to the extent that it
may lawfully do so) that they will not at any time insist upon, or plead (as a
defense or otherwise) or in any manner whatsoever claim or take the benefit or
advantage
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of, any stay or extension law or any usury law or other law which would
prohibit or forgive the Company or such Guarantor, as the case may be, from
paying all or any portion of the principal of, premium, if any, and/or interest
on the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that they may lawfully do so) the Company
and each Guarantor hereby expressly waive all benefit or advantage of any such
law, and covenant that they will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year of the Company and on or before 45 days after
the end of the first, second and third quarters of each fiscal year of the
Company, an Officers' Certificate which complies with TIA Section 314(a)(4)
stating that a review of the activities of the Company and its Subsidiaries
during such fiscal year or fiscal quarter, as the case may be, has been made
under the supervision of the signing Officers with a view to determining
whether each has kept, observed, performed and fulfilled its obligations under
this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge each has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he or
she may have knowledge and what action each is taking or proposes to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has
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occurred, a description of the event and what action each is taking or proposes
to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.02 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of this Article 4 or Article 5 hereof of
this Indenture or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such accountants
shall not be liable directly or indirectly for any failure to obtain knowledge
of any such violation.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee an Officers' Certificate specifying such event,
notice or other action within five Business Days of its becoming aware of such
occurrence.
Section 4.05. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all taxes, assessments
and governmental charges (including withholding taxes and any penalties,
interest and additions to taxes) levied or imposed upon it or any of its
Subsidiaries or properties of it or any of its Subsidiaries and (ii) all lawful
claims for labor, materials and supplies that, if unpaid, might by law become a
Lien upon the property of it or any of its Subsidiaries; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim if the amount,
applicability or validity thereof is being contested in good faith by
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appropriate proceedings and an adequate reserve has been established therefor
to the extent required by GAAP.
Section 4.06. Maintenance of Properties and Insurance.
(a) The Company shall cause all properties used in, or useful
to the conduct of, its business or the business of any of its Subsidiaries to
be maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in its
judgment may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times unless the
failure to so maintain such properties (together with all other such failures)
would not have a material adverse effect on the financial condition or results
of operations of the Company and its Subsidiaries, taken as a whole; provided,
however, that nothing in this Section 4.06 shall prevent the Company or any
Subsidiary from discontinuing the operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is
in the good faith judgment of the Board of Directors of the Company or the
Subsidiary concerned, as the case may be, desirable in the conduct of the
business of the Company or such Subsidiary, as the case may be, and is not
disadvantageous in any material respect to the Holders.
(b) The Company shall provide or cause to be provided, for
itself and each of its Restricted Subsidiaries, insurance (including
appropriate self-insurance) against loss or damage of the kinds that, in the
reasonable, good faith opinion of the Company are adequate and appropriate for
the conduct of the business of the Company and such Restricted Subsidiaries in
a prudent manner, with reputable insurers or with the government of the United
States of America or an agency or instrumentality thereof, in such amounts,
with such deductibles, and by such methods as shall be customary, in the good
faith judgment of the Company, for corporations similarly situated in the
industry, unless the failure to provide such insurance (together with all other
such failures) would not have a
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material adverse effect on the financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole.
Section 4.07. Compliance with Laws.
The Company shall, and shall cause each of its Subsidiaries to,
comply with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of its businesses and the ownership of its properties, except for
such noncompliances as would not in the aggregate have a material adverse
effect on the business or financial condition of the Company and its
Subsidiaries, taken as a whole.
Section 4.08. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company and of
each Restricted Subsidiary and the rights (charter and statutory), licenses and
franchises of the Company and its Restricted Subsidiaries; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders.
Section 4.09. Maintenance of Office or Agency.
The Company shall maintain an office or agency where Notes may be
surrendered for registration of transfer
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or exchange or for presentation for payment and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee as set forth in Section 12.02.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations.
The Company shall give prompt written notice to the Trustee of
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby initially designates the Corporate Trust
Office of the Trustee set forth in Section 12.02 as such office of the Company.
Section 4.10. Limitation on Additional Indebtedness and Preferred Stock of
Restricted Subsidiaries.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) other than Permitted Indebtedness and will not permit
any Restricted Subsidiary to issue any Preferred Stock, unless (a) after giving
effect to the incurrence of such Indebtedness and the issuance of any such
Preferred Stock and the receipt and application of the proceeds thereof, the
Company's Leverage Ratio is less than (i) 6.50 to 1 if such Indebtedness is
incurred or Preferred Stock is issued, as the case may be, on or prior to
_____________, 1999, (ii) 6.25 to 1 if such Indebtedness is incurred or
Preferred Stock is issued, as the case may be, after _______________, 1999 and
on or prior to _______________, 2001 and (iii) 6.00 to 1 if such Indebtedness
is incurred or Preferred Stock is issued, as the case may be thereafter, and
(b) no Default or Event of
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Default shall have occurred and be continuing at the time or as a consequence
of the incurrence of such Indebtedness or issuance of such Preferred Stock.
Notwithstanding the foregoing, Preferred Stock may only be issued by a
Restricted Subsidiary of the Company pursuant to the preceding sentence to the
extent such Restricted Subsidiary is a Guarantor.
Notwithstanding the foregoing, the Company and the Restricted
Subsidiaries may incur Permitted Indebtedness; provided that the Company will
not incur any Permitted Indebtedness that ranks junior in right of payment to
the Notes that has a maturity or mandatory sinking fund payment prior to the
maturity of the Notes.
Section 4.11. Limitation on Issuances and Sales of Preferred Stock by
Restricted Subsidiaries.
The Company (a) will not permit any of its Restricted
Subsidiaries to issue any Preferred Stock (other than to the Company or a
Wholly-Owned Restricted Subsidiary of the Company or as permitted by the first
paragraph of Section 4.10) and (b) will not permit any Person (other than the
Company or a Wholly-Owned Restricted Subsidiary of the Company) to own any
Preferred Stock of any Restricted Subsidiary of the Company; provided, however,
that this Section 4.11 shall not prohibit the issuance and sale of (x) all, but
not less than all, of the issued and outstanding Capital Stock of any
Restricted Subsidiary of the Company owned by the Company or any of its
Restricted Subsidiaries in compliance with the other provisions of this
Indenture or (y) to the extent mandated by applicable law, directors'
qualifying shares or investments by foreign nationals.
Section 4.12. Limitation on Restricted Payments.
The Company will not make, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make, any Restricted
Payment, unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or
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immediately after giving effect to such Restricted Payment;
(b) immediately after giving pro forma effect to such
Restricted Payment, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 4.10; and
(c) immediately after giving effect to such Restricted
Payment, the aggregate of all Restricted Payments declared or made after
the Issue Date does not exceed the sum of (1) 100% of the Company's
Cumulative EBITDA minus 1.4 times the Company's Cumulative Consolidated
Interest Expense, plus (2) 100% of the aggregate Net Proceeds and the
fair market value of securities or other property received by the
Company from the issue or sale, after the Issue Date, of Capital Stock
(other than Disqualified Capital Stock or Capital Stock of the Company
issued to any Subsidiary of the Company) of the Company or any
Indebtedness or other securities of the Company convertible into or
exercisable or exchangeable for Capital Stock (other than Disqualified
Capital Stock) of the Company which has been so converted or exercised
or exchanged, as the case may be, plus (3) $25 million plus (4) the net
reductions in Investments (other than reductions in Permitted
Investments) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans, partial or total releases
or discharges of Guaranteed Permitted Unrestricted Subsidiary
Obligations, or from designations of Unrestricted Subsidiaries as
Restricted Subsidiaries, valued in each case at the fair market value
thereof, not to exceed the amount of Investments previously made by the
Company and its Restricted Subsidiaries in such Person. For purposes of
determining under this clause (c) the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof
and property other than cash shall be valued at its fair market value as
determined by the Board of Directors of the Company reasonably and in
good faith.
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The provisions of this Section 4.12 shall not prohibit (i) the
payment of any distribution within 60 days after the date of declaration
thereof, if at such date of declaration such payment would comply with the
provisions of this Indenture, (ii) the retirement of any shares of Capital
Stock of the Company or Indebtedness which is subordinated or pari passu in
right of payment to the Notes by conversion into, or by or in exchange for,
shares of Capital Stock (other than Disqualified Capital Stock), or out of the
Net Proceeds of the substantially concurrent sale (other than to a Subsidiary
of the Company) of other shares of Capital Stock of the Company (other than
Disqualified Capital Stock); provided, however, that the amount of any such Net
Proceeds that are utilized for any such retirement shall be excluded from
clause (c)(2) of the previous paragraph, (iii) the redemption or retirement of
Indebtedness of the Company which is subordinated or pari passu in right of
payment to the Notes in exchange for, by conversion into, or out of the Net
Proceeds of, a substantially concurrent sale or incurrence of Indebtedness of
the Company (other than any Indebtedness owed to a Subsidiary of the Company)
that is, with respect to any such subordinated Indebtedness, contractually
subordinated in right of payment to the Notes to at least the same extent as
the subordinated Indebtedness being redeemed or retired, with respect to any
such pari passu Indebtedness, pari passu or subordinated in right of payment to
the Notes and, with respect to any such subordinated or pari passu
Indebtedness, (x) has no Stated Maturity earlier than the 91st day after the
Final Maturity Date or the final maturity date of the Indebtedness being
redeemed or retired, whichever is earlier and (y) has an Average Life to Stated
Maturity equal to or greater than the remaining Average Life to Stated Maturity
of the Indebtedness being redeemed or retired; provided, however, that the
amount of any such Net Proceeds that are utilized for any such redemption or
retirement shall be excluded from clause (c)(2) of the preceding paragraph,
(iv) the funding of loans (but not including the forgiveness of any such loan)
to executive officers, directors and shareholders for relocation loans, bonus
advances and other purposes consistent with past practices or the purchase,
redemption or other acquisition for value of shares of Capital Stock of
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the Company (other than Disqualified Capital Stock) or options on such shares
held by the Company's or the Restricted Subsidiaries' officers or employees or
former officers or employees (or their estates or trusts or beneficiaries under
their estates or trusts for the benefit of such beneficiaries) upon the death,
disability, retirement or termination of employment of such current or former
officers or employees pursuant to the terms of an employee benefit plan or any
other agreement pursuant to which such shares of Capital Stock or options were
issued or pursuant to a severance, buy-sell or right of first refusal agreement
with such current or former officer or employee; provided that the aggregate
amount of any such loans funded and cash consideration paid, or distributions
made, pursuant to this clause (iv) do not in any one fiscal year exceed $1
million, and (v) the making of Investments in Unrestricted Subsidiaries and
joint ventures in an aggregate amount not to exceed $20 million; provided,
however, that the Company or the Restricted Subsidiaries may make additional
Investments pursuant to this clause (v) up to an aggregate amount not to exceed
$10 million if the Company is able, at the time of any such Investment and
immediately after giving effect thereto, to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
4.10; provided, further, that in calculating the aggregate amount of Restricted
Payments made subsequent to the Issue Date for purposes of clause (c) of the
immediately preceding paragraph, amounts expended pursuant to clause (i) and
(v) shall be included in the calculation.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.12 were computed, which calculations
may be based upon the Company's latest available financial statements, and that
no Default or Event of Default exists and is continuing and no Default or Event
of Default will occur immediately after giving effect to any Restricted
Payments.
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Section 4.13. Limitation on Other Senior Subordinated Debt.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness that is both (i) subordinate in right of payment to any Senior
Indebtedness of the Company or any of the Guarantors, as the case may be, and
(ii) senior in right of payment to the Notes or any of the Guarantees, as the
case may be.
Section 4.14. Limitation on Certain Asset Sales.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time
of such sale or other disposition at least equal to the fair market value
thereof (as determined in good faith by the Company's Board of Directors, and
evidenced by a Board Resolution); (ii) not less than 75% of the consideration
received by the Company or such Restricted Subsidiary, as the case may be, is
in the form of cash or Temporary Cash Investments; provided, however, that the
amount of (x) any liabilities of the Company or any Restricted Subsidiaries
that are assumed by the transferee of such assets and for which the Company and
its Restricted Subsidiaries are released, including any such Indebtedness of a
Restricted Subsidiary whose stock is purchased by the transferee and (y) any
notes or other securities received by the Company or any such Restricted
Subsidiary which are converted into cash within 180 days of such Asset Sale (to
the extent of cash received) shall be deemed to be cash for purposes of this
provision; provided, further, that the Company or such Restricted Subsidiary
will not be required to comply with this clause (ii) with respect to a
Permitted Asset Swap; and (iii) the Asset Sale Proceeds received by the Company
or such Restricted Subsidiary are applied (a) first, to the extent the Company
elects, or is required, to permanently prepay, repay or purchase existing
Senior Indebtedness (or Purchase Money Indebtedness that ranks pari passu in
right of payment with the Notes solely to the extent that such Asset Sale
involves property or assets securing such Purchase Money Indebtedness pursuant
to
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a Lien granted pursuant to clause (v) of the definition of Permitted Liens)
within 270 days following the receipt of the Asset Sale Proceeds from any Asset
Sale; provided that any such repayment shall result in a permanent reduction of
the commitments thereunder in an amount equal to the principal amount so
repaid; (b) second, to the extent of the balance of Asset Sale Proceeds after
application as described above, to the extent the Company elects, to an
investment in assets (including Capital Stock or other securities purchased in
connection with the acquisition of Capital Stock or property of another Person)
used or useful in businesses similar or ancillary to the business of the
Company and the Restricted Subsidiaries as conducted at the time of such Asset
Sale, provided that such investment occurs and such Asset Sale Proceeds are so
applied within 270 days following the receipt of such Asset Sale Proceeds (the
"Reinvestment Date"); and (c) third, if on the Reinvestment Date with respect
to any Asset Sale, the Available Asset Sale Proceeds exceed $10 million, the
Company shall apply an amount equal to such Available Asset Sale Proceeds to an
offer to repurchase the Notes, at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (an "Excess Proceeds Offer"); provided, however, that the Company
may, at the time that it makes any such Excess Proceeds Offer, also offer to
purchase, at a price in cash equal to 100% of the outstanding principal amount
thereof plus accrued and unpaid interest, if any, to the purchase date, any
Indebtedness which ranks pari passu in right of payment to the Notes (a "Pari
Passu Excess Proceeds Offer") and to the extent the Company so elects to make a
Pari Passu Excess Proceeds Offer, Notes and such pari passu Indebtedness shall
be purchased pursuant to such Excess Proceeds Offer and Pari Passu Excess
Proceeds Offer, respectively, on a pro rata basis based on the aggregate
principal amount of such Notes and pari passu Indebtedness then outstanding.
To the extent that the aggregate principal amount of Notes tendered pursuant to
an Excess Proceeds Offer is less than the Available Asset Sale Proceeds, the
Company may use such deficiency for general corporate purposes. To the extent
that the aggregate principal amount of pari passu Indebtedness tendered
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pursuant to a Pari Passu Excess Proceeds Offer is less than such pari passu
Indebtedness' pro rata share of such Available Asset Sale Proceeds, the Company
shall use such remaining Available Asset Sale Proceeds to purchase any Notes
validly tendered and not withdrawn pursuant to such Excess Proceeds Offer. If
the aggregate principal amount of Notes validly tendered and not withdrawn by
holders thereof exceeds the Available Asset Sale Proceeds or to the extent the
Company elects to make a Pari Passu Excess Proceeds Offer, exceeds the Notes'
pro rata share of such Available Asset Sale Proceeds, then Notes to be
purchased will be selected on a pro rata basis. Upon completion of such Excess
Proceeds Offer, the amount of Available Asset Sale Proceeds shall be reset to
zero.
(b) If the Company is required to make an Excess Proceeds
Offer, the Company shall mail, within 30 days following the Reinvestment Date,
a notice to the Holders with a copy to the Trustee which shall include, among
other things, the instructions, determined by the Company, that each such
Holder must follow in order to have such Notes repurchased and the calculations
used in determining the amount of Available Asset Sale Proceeds to be applied
to the repurchase of such Notes. The notice, which shall govern the terms of
the Excess Proceeds Offer, shall also state:
(1) that the Excess Proceeds Offer is being made pursuant to
this Section 4.14 and that the Excess Proceeds Offer shall remain open
for a period of 20 Business Days following its commencement or such
longer period as may be required by law (the "Offer Period");
(2) that such Holders have the right to require the Company to
apply the Available Asset Sale Proceeds to repurchase such Notes at a
purchase price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase;
(3) the purchase price and the purchase date (the "Purchase
Date") which shall be no earlier than 30 days and not later than 60 days
from the date such notice is mailed;
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(4) that any Note not tendered or accepted for payment will
continue to accrue interest;
(5) that any Note accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrue interest on and after the Purchase
Date;
(6) that Holders electing to have a Note purchased pursuant to
any Excess Proceeds Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice at
least three Business Days before the Purchase Date;
(7) that Holders will be entitled to withdraw their election
if the Company, depositary or Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have the Note
purchased;
(8) that Holders whose Notes were purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered;
(9) whether the Company is also making a Pari Passu Excess
Proceeds Offer and to the extent the Company is also making such a Pari
Passu Excess Proceeds Offer the aggregate principal amount of Notes and
such pari passu Indebtedness which may be purchased by the Company on a
pro rata basis based on the aggregate principal amount of Notes and such
pari passu Indebtedness then outstanding (including any calculations
with respect thereto); and
(10) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Available Asset Sale Proceeds or to
the extent the Company elects
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to make a Pari Passu Excess Proceeds Offer, the Notes' pro rata share of
such Available Asset Sale Proceeds, the Company shall select the Notes
to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of
$1,000, or integral multiples thereof, shall be purchased).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, Notes
or portions thereof tendered pursuant to the Excess Proceeds Offer, deposit
with the Paying Agent U.S. legal tender sufficient to pay the purchase price
plus accrued interest, if any, on the Notes to be purchased and deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 4.14. The Paying Agent shall promptly (but in any case not later than
three Business Days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Note tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Note, and the Trustee shall authenticate and mail or make available
for delivery such new Note to such Holder equal in principal amount to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
will publicly announce the results of the Excess Proceeds Offer on the Purchase
Date.
Section 4.15. Limitation on Transactions with Affiliates.
(a) The Company will not, and will not permit any of the
Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate (including entities in which the Company or any of
the Restricted Subsidiaries owns a minority interest) or holder of 5% or more
of the Company's Common Stock (each of the foregoing, an "Affiliate
Transaction") or extend, renew, waive or otherwise modify
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the terms of any Affiliate Transaction entered into prior to the Issue Date
unless the terms of such Affiliate Transaction are fair and reasonable to the
Company or such Restricted Subsidiary, as the case may be, and the terms of
such Affiliate Transaction are at least as favorable as the terms which could
be obtained by the Company or such Restricted Subsidiary, as the case may be,
in a comparable transaction made on an arm's-length basis between unaffiliated
parties. In any Affiliate Transaction involving an amount or having a value in
excess of $1 million, the Company must obtain a Board Resolution approved by a
majority of the members of the Board of Directors of the Company (and a
majority of the disinterested members of the Board of Directors of the Company)
certifying that such Affiliate Transaction complies with this Section 4.15. In
any Affiliate Transaction with a value in excess of $5 million, the Company
must obtain a written opinion that such Affiliate Transaction complies with
this Section 4.15 from an independent investment banking firm of nationally
recognized standing.
(b) The foregoing provisions will not apply to (i) any
Restricted Payment that is not prohibited by Section 4.12, (ii) any transaction
between the Company and any of its Restricted Subsidiaries or between
Restricted Subsidiaries, or (iii) the payment of reasonable and customary
regular fees to directors of the Company who are not employees of the Company
and any employment and consulting agreements entered into by the Company or any
Restricted Subsidiary with their executives or consultants in the ordinary
course of business.
Section 4.16. Limitations on Liens.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any Property,
assets, income or profits of the Company or any Restricted Subsidiary or any
shares of stock or debt of any Restricted Subsidiary (whether or not any of the
foregoing is now owned or hereafter acquired), unless (i) if such Lien secures
Indebtedness which is pari passu in right of payment with
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the Notes, then the Notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligation is no longer secured
by a Lien or (ii) if such Lien secures Indebtedness which is subordinated in
right of payment to the Notes, any such Lien shall be subordinated to the Lien
granted to the Holders of the Notes in the same collateral as that securing
such Lien to the same extent as such subordinated Indebtedness is subordinated
to the Notes.
Section 4.17. Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to the Company or any Restricted Subsidiary on its Capital Stock,
(b) pay any Indebtedness owed to the Company or any Restricted Subsidiary, (c)
make loans or advances to the Company or any Restricted Subsidiary, (d)
transfer any of its properties or assets to the Company or any Restricted
Subsidiary, (e) grant Liens on or security interests on the assets of the
Company or the Restricted Subsidiaries in favor of the Holders of the Notes, or
(f) guarantee the Notes or any renewals or refinancings thereof, except for
Permitted Dividend Encumbrances.
Section 4.18. Guarantees of Certain Indebtedness.
The Company will not permit any of the Restricted Subsidiaries
(other than the Guarantors) to (a) incur, guarantee or secure through the
granting of Liens the payment of any Indebtedness of the Company or any other
Restricted Subsidiary or (b) pledge any intercompany notes representing
obligations of any of the Restricted Subsidiaries to secure the payment of any
Indebtedness of the Company, in each case unless such Restricted Subsidiary,
the Company and the Trustee execute and deliver a supplemental indenture
evidencing such Restricted Subsidiary's Guarantee of the Notes pursuant to
Article 10
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of this Indenture. Thereafter, such Restricted Subsidiary shall be a Guarantor
for all purposes of this Indenture.
Section 4.19. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all Holders of the Notes which so consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
Section 4.20. Line of Business.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly engage to any substantial extent in any
line or lines of business activity other than that which, in the reasonable
good faith judgment of the Board of Directors of the Company, is a Related
Business.
Section 4.21. Change of Control.
(a) Upon the occurrence of a Change of Control (the date of
such occurrence, the "Change of Control Date"), the Company will notify the
Holders of the Notes in writing of such occurrence and shall make an offer to
purchase (a "Change of Control Offer"), and shall purchase, on a Business Day
(a "Change of Control Purchase Date") not more than 60 nor less than 30 days
following the Change of Control Date all of the then outstanding Notes at a
purchase price equal to 101% of the principal amount thereof plus accrued
interest, if any, to the Change of Control Purchase Date.
(b) Notice of a Change of Control Offer shall be sent, by
first-class mail, postage prepaid, by the Company not later than the 30th day
after the Change of Control Date to the Holders of the Notes at their last
registered
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addresses with a copy to the Trustee and the Paying Agent. The Change of
Control Offer shall remain open from the time of mailing for at least 20
Business Days and until 5:00 p.m., New York City time, on the Change of Control
Purchase Date. The notice, which shall govern the terms of the Change of
Control Offer, shall include such disclosures as are required by law and shall
state:
(i) that the Change of Control Offer is being made pursuant to
this Section 4.21 and that all Notes validly tendered into the Change of
Control Offer and not withdrawn will be accepted for payment;
(ii) the purchase price (including the amount of accrued
interest, if any) for each Note, the Change of Control Purchase Date and
the date on which the Change of Control Offer expires;
(iii) that any Note not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(iv) that, unless the Company shall default in the payment of
the purchase price, any Note accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of
Control Purchase Date;
(v) that Holders electing to have Notes purchased pursuant to
a Change of Control Offer will be required to surrender their Notes to
the Paying Agent at the address specified in the notice prior to 5:00
p.m., New York City time, on the Change of Control Purchase Date and
must complete any form of letter of transmittal proposed by the Company
and reasonably acceptable to the Trustee and the Paying Agent;
(vi) that Holders of Notes will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New
York City time, on the Change of Control Purchase Date, a tested telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Notes the Holder
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delivered for purchase, the Note certificate number (if any) and a
statement that such Holder is withdrawing its election to have such
Notes purchased;
(vii) that Holders whose Notes are purchased only in part will
be issued Notes equal in principal amount to the unpurchased portion of
the Notes surrendered;
(viii) the instructions that Holders must follow in order to
tender their Notes; and
(ix) information concerning the business of the Company, the
most recent annual and quarterly reports of the Company filed with the
SEC pursuant to the Exchange Act (or, if the Company is not then
permitted to file any such reports with the SEC, the comparable reports
prepared pursuant to Section 4.02), a description of material
developments in the Company's business, information with respect to pro
forma historical financial information after giving effect to such
Change of Control and such other information concerning the
circumstances and relevant facts regarding such Change of Control Offer
as would be material to a Holder of Notes in connection with the
decision of such Holder as to whether or not it should tender Notes
pursuant to the Change of Control Offer.
On the Change of Control Purchase Date, the Company shall (i)
accept for payment Notes or portions thereof validly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent money, in
immediately available funds, sufficient to pay the purchase price of all Notes
or portions thereof so tendered and accepted and (iii) deliver to the Trustee
the Notes so accepted together with an Officers' Certificate setting forth the
Notes or portions thereof tendered to and accepted for payment by the Company.
The Paying Agent shall promptly mail or deliver to the Holders of Notes so
accepted payment in an amount equal to the purchase price, and the Trustee
shall promptly authenticate and mail or deliver to such Holders a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered;
provided that each such new Note shall be issued in an original principal
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amount in denominations of $1,000 and integral multiples thereof. Any Notes
not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company will publicly announce the results of the Change
of Control Offer not later than the first Business Day following the Change of
Control Purchase Date.
(c) (i) If the Company or any Restricted Subsidiary has issued
any outstanding Indebtedness that is subordinated in right of payment to the
Notes or the Guarantee of such Restricted Subsidiary, as the case may be, or
the Company or any Restricted Subsidiary has issued any Preferred Stock, and
the Company or such Restricted Subsidiary is required to make a change of
control offer or to repurchase or make a distribution with respect to such
subordinated Indebtedness or Preferred Stock in the event of a change of
control, the Company or such Restricted Subsidiary shall not consummate any
such change of control offer, repurchase or distribution with respect to such
subordinated Indebtedness or Preferred Stock until such time as the Company
shall have paid the Change in Control Purchase Price in full to Holders of
Notes that have accepted the Company's Change of Control Offer and shall
otherwise have consummated the Change of Control Offer made to Holders of the
Notes and (ii) the Company or any Restricted Subsidiary will not issue
Indebtedness that is subordinated in right of payment to the Notes or the
Guarantee of such Restricted Subsidiary and the Company and its Restricted
Subsidiaries will not issue Preferred Stock with change of control provisions
requiring the payment of such Indebtedness or Preferred Stock prior to the
payment of the Notes in the event of a Change of Control under this Indenture.
In the event that a Change of Control occurs and the holders of
Notes exercise their right to require the Company to purchase Notes, if such
purchase constitutes a "tender offer" for purposes of Rule 14e-1 under the
Exchange Act at that time, the Company will comply with the requirements of
Rule 14e-1 as then in effect with respect to such repurchase.
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ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets.
(a) The Company will not, in any transaction or series of
transactions, merge or consolidate with or into, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets (as an entirety or substantially as an entirety in one
transaction or a series of related transactions), to any Person or Persons, and
the Company will not permit any of its Restricted Subsidiaries to enter into
any such transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
properties and assets of the Company or the Company and its Restricted
Subsidiaries, taken as a whole, to any other Person or Persons, unless at the
time of and after giving effect thereto (i) either (A) if the transaction or
series of transactions is a merger or consolidation, the Company shall be the
surviving Person of such merger or consolidation, or (B) the Person formed by
such consolidation or into which the Company or such Restricted Subsidiary is
merged or to which the properties and assets of the Company or such Restricted
Subsidiary, as the case may be, are transferred (any such surviving person or
transferee Person being the "Surviving Entity") shall be a corporation
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia and shall expressly assume by a
supplemental indenture executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, all the obligations of the Company
under the Notes and this Indenture, and in each case, this Indenture shall
remain in full force and effect; and (ii) immediately before and immediately
after giving effect to such transaction or series of transactions on a pro
forma basis (including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such transaction
or series of transactions), no Default
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or Event of Default shall have occurred and be continuing and the Company or
the Surviving Entity, as the case may be, after giving effect to such
transaction or series of transactions on a pro forma basis (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 4.10 hereof (assuming a market rate of
interest with respect to such additional Indebtedness).
(b) In connection with any consolidation, merger or transfer
of assets contemplated by this Section 5.01, the Company shall deliver, or
cause to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and the
supplemental indenture in respect thereto comply with this Section 5.01 and
that all conditions precedent herein provided for relating to such transaction
or transactions have been complied with.
Section 5.02. Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company or any Restricted Subsidiary in
accordance with Section 5.01 above, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter
(except with respect to any such transfer which is a lease) the predecessor
corporation shall be relieved of all obligations and covenants under this
Indenture and the Notes.
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ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(1) there is a default in the payment of any principal of, or
premium, if any, on the Notes when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise, whether or not
such payment is prohibited by the provisions of Article 11 hereof;
(2) there is a default in the payment of any interest on any
Note when the same becomes due and payable and the Default continues for
a period of 30 days, whether or not such payment is prohibited by the
provisions of Article 11 hereof;
(3) the Company or any Guarantor defaults in the observance or
performance of any other covenant in the Notes or this Indenture for 45
days after written notice from the Trustee or the Holders of not less
than 25% in the aggregate principal amount of the Notes then
outstanding;
(4) there is a default or are defaults under one or more
agreements, instruments, mortgages, bonds, debentures or other evidences
of Indebtedness under which the Company or any Restricted Subsidiary of
the Company then has outstanding Indebtedness in excess of $10 million,
individually or in the aggregate, and either (a) such Indebtedness is
already due and payable in full or (b) such default or defaults have
resulted in the acceleration of the maturity of such Indebtedness;
(5) a court of competent jurisdiction enters a final judgment
or judgments which can no longer be appealed for the payment of money in
excess of $10 million (not covered by insurance) against the Company or
any Restricted Subsidiary and such judgment remains
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undischarged for a period of 60 consecutive days during which a stay of
enforcement of such judgment shall not be in effect;
(6) the Company or any Restricted Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become
due; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any
Restricted Subsidiary or for all or substantially all of the
property of the Company or any Restricted Subsidiary, or
(C) orders the liquidation of the Company or any
Restricted Subsidiary,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee,
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assignee, liquidator or similar official under any Bankruptcy Law.
The Trustee may withhold notice to the Holders of the Notes of
any Default (except in payment of principal or premium, if any, or interest on
the Notes) in accordance with Section 7.05.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default arising
under Section 6.01(6) or (7)) occurs and is continuing, the Trustee by written
notice to the Company, or the Holders of not less than 25% in aggregate
principal amount of the Notes then outstanding may by written notice to the
Company and the Trustee declare that the entire principal amount of all the
Notes then outstanding plus accrued and unpaid interest to the date of
acceleration are immediately due and payable, in which case either (i) such
amounts shall become immediately due and payable; or (ii) if there are any
amounts outstanding under or in respect of the Senior Credit Facility, such
amounts shall become due and payable upon the first to occur of an acceleration
under or in respect of the Senior Credit Facility or five Business Days after
receipt by the Company and the agent for the lenders under the Senior Credit
Facility of notice of the acceleration of the Notes; provided, however, that
after such acceleration but before a judgment or decree based on such
acceleration is obtained by the Trustee, the Holders of a majority in aggregate
principal amount of the outstanding Notes may rescind and annul such
acceleration and its consequences if (i) all existing Events of Default, other
than the nonpayment of accelerated principal, premium, if any, or interest that
has become due solely because of the acceleration, have been cured or waived,
(ii) to the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid and (iii) if the
rescission would not conflict with any judgment or decree. No such rescission
shall affect any subsequent Default or impair any right consequent thereto. In
case an Event of Default specified in Section 6.01(6) or (7) with respect to
the
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Company occurs, such principal, premium, if any, and interest amount with
respect to all of the Notes shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the Holders of the
Notes.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, or premium, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Section 6.04. Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of a
majority in principal amount of the Notes then outstanding have the right to
waive any existing Default or Event of Default or compliance with any provision
of this Indenture or the Notes. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the Notes then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on
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the Trustee by this Indenture. The Trustee, however, may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines may be unduly prejudicial to the rights of another Noteholder or
that may involve the Trustee in personal liability; provided that the Trustee
may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06. Limitation on Suits.
Subject to Section 6.07 below, a Noteholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense to be incurred in compliance with such request;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60 day period by the Holders of a
majority in aggregate principal amount of the Notes then outstanding.
A Noteholder may not use this Indenture to prejudice the rights
of another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture (but in any
event subject to the provisions of Articles 10 and 11), the right of any Holder
of a Note to
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receive payment of principal of, or premium, if any, and interest of the Note
on or after the respective due dates expressed in the Note, or to bring suit
for the enforcement of any such payment on or after such respective dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or
interest specified in Section 6.01(1) or (2) hereof occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or the Guarantors (or any other obligor on the Notes)
for the whole amount of unpaid principal and accrued interest remaining unpaid,
together with interest on overdue principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the rate then borne by the Notes, and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relative to the Company or the
Guarantors (or any other obligor upon the Notes), any of their respective
creditors or any of their respective property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same after deduction of
its charges and expenses to the extent that any such charges and expenses are
not paid out of the estate in any such proceedings and any custodian in any
such judicial proceeding is hereby authorized by each Noteholder to make such
payments to the Trustee, and in the event that the Trustee shall consent to
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the making of such payments directly to the Noteholders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Noteholder any
plan or reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Noteholder in any such proceedings.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for principal, premium, if any, and interest as to each, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Notes; and
THIRD: to the Company or, to the extent the Trustee collects any
amount from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of
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the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 hereof or a suit by
Holders of more than 10% in principal amount of the Notes then outstanding.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the same circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no covenants or obligations
shall be implied in this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture but, in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture.
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.02 and 6.05 hereof.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
satisfactory to it against such risk or liability is not reasonably assured to
it.
(e) Whether or not therein expressly so provided, paragraphs
(a), (b), (c) and (d) of this Section 7.01 shall govern every provision of this
Indenture that in any way relates to the Trustee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company or
any Guarantor. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by the law.
Section 7.02. Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely on and shall be protected in acting
or refraining from acting upon any document reasonably believed by it to
be genuine and to have been signed or presented by the proper person.
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The Trustee need not investigate any fact or matter stated in the
document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both,
which shall conform to the provisions of Section 12.05 hereof. The
Trustee shall be protected and shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or
opinion.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed by
it with due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(5) The Trustee may consult with counsel of its selection, and
the advice or opinion of such counsel as to matters of law shall be full
and complete authorization and protection from liability in respect of
any action taken, omitted or suffered by it hereunder in good faith and
in accordance with the advice or opinion of such counsel.
(6) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may make loans to, accept deposits from,
perform services for or otherwise deal with the Company or any Guarantor, or
any
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Affiliates thereof, with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. The Trustee, however, shall be
subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Company's use of the proceeds from the sale of Notes or any money paid to the
Company pursuant to the terms of this Indenture and it shall not be responsible
for any statement in the Notes other than its certificate of authentication.
Section 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Noteholder notice
of the Default or the Event of Default, as the case may be, within 30 days
after it occurs. Except in the case of a Default or an Event of Default in
payment of the principal of, or premium, if any, or interest on any Note the
Trustee may withhold the notice if and so long as the Board of Directors of the
Trustee, the executive committee or any trust committee of such board and/or
its Trust Officers in good faith determine(s) that withholding the notice is in
the interests of the Noteholders.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after May 15 of each year, commencing the May 15
following the date of this Indenture, the Trustee shall mail to each Noteholder
a brief report dated as of such May 15 that complies with TIA Section 313(a).
The Trustee also shall comply with TIA Sections 313(b) and 313(c).
A copy of each report at the time of its mailing to Noteholders
shall be filed with the SEC, the New York Stock Exchange and each other stock
exchange, if any, on which the Notes are listed. The Company shall promptly
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notify the Trustee when the Notes are listed on any other stock exchange and
the Trustee shall comply with TIA Section 313(d).
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any provision of law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in connection with
its duties under this Indenture, including the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any and all loss or liability incurred by it in connection with the
acceptance or performance of its duties under this Indenture including the
reasonable costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The Trustee shall notify the Company promptly of any
claim asserted against the Trustee for which it may seek indemnity.
However, the failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations. Notwithstanding the
foregoing, the Company and the Guarantors need not reimburse the Trustee for
any expense or indemnify it against any loss or liability incurred by the
Trustee through its negligence or bad faith. To secure the payment obligations
of the Company and the Guarantors in this Section 7.07, the Trustee shall have
a lien prior to the Notes on all money or property held or collected by the
Trustee except such money or property held in trust to pay principal of and
interest on particular Notes.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section
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6.01(6) or (7) hereof occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall
include any trustee appointed pursuant to Article 9.
Section 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing.
The Holders of a majority in principal amount of the outstanding
Notes may remove the Trustee by notifying the removed Trustee in writing and
may appoint a successor Trustee with the Company's written consent which
consent shall not be unreasonably withheld. The Company may remove the Trustee
at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly notify each
Holder of such event and shall promptly appoint a successor Trustee.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company
or the Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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If the Trustee fails to comply with Section 7.10 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Noteholder.
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), (2) and (5) in every respect. The
Trustee shall have a combined capital and surplus of at least $100,000,000 as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b), including the provision in Section
310(b)(1).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
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Section 7.12. Paying Agents.
The Company shall cause each Paying Agent other than the Trustee
to execute and deliver to it and the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 7.12:
(1) that it will hold all sums held by it as agent for the
payment of principal of, or premium, if any, or interest on, the Notes
(whether such sums have been paid to it by the Company or by any obligor
on the Notes) in trust for the benefit of Holders of the Notes or the
Trustee;
(2) that it will at any time during the continuance of any
Event of Default, upon written request from the Trustee, deliver to the
Trustee all sums so held in trust by it together with a full accounting
thereof; and
(3) that it will give the Trustee written notice within three
(3) Business Days of any failure of the Company (or by any obligor on
the Notes) in the payment of any installment of the principal of,
premium, if any, or interest on, the Notes when the same shall be due
and payable.
ARTICLE 8.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
The Company and the Guarantors, when authorized by a Board
Resolution of each of them, and the Trustee may amend or supplement this
Indenture or the Notes without notice to or consent of any Noteholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Notes in addition to
certificated Notes;
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(3) to add new Subsidiary Guarantors pursuant to Section
10.04;
(4) to comply with any requirements of the SEC under the TIA;
or
(5) to cure any ambiguity, defect or inconsistency, or to make
any other change that does not adversely affect the rights of any
Noteholder.
The Trustee is hereby authorized to join with the Company and the
Guarantors in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.
Section 8.02. With Consent of Holders.
The Company, the Guarantors, when authorized by a Board
Resolution of each of them, and the Trustee may amend or supplement this
Indenture or the Notes with the written consent of the Holders of not less than
a majority in aggregate principal amount of the outstanding Notes without
notice to any Noteholder. The Holders of not less than a majority in aggregate
principal amount of the outstanding Notes may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes
without notice to any Noteholder. Subject to Section 8.04, without the consent
of each Noteholder affected, however, an amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Notes whose Holders must consent to
an amendment, supplement or waiver to this Indenture or the Notes;
(2) reduce the rate of or change the time for payment of
interest on any Note;
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(3) reduce the principal of or premium on or change the stated
maturity of any Note;
(4) make any Note payable in money other than that stated in
the Note;
(5) change the amount or time of any payment required by the
Notes or reduce the premium payable upon any redemption of the Notes, or
change the time before which no such redemption may be made;
(6) waive a default in the payment of the principal of,
interest on, or redemption payment with respect to, any Note;
(7) make any changes in Sections 6.04 or 6.07 hereof or this
sentence of Section 8.02;
(8) amend, alter, change or modify the obligation of the
Company to make and consummate a Change of Control Offer in the event of
a Change of Control or make and consummate an Excess Proceeds Offer
after such obligation has arisen or waive any Default in the performance
of any such offers or modify any of the provisions or definitions with
respect to any such offers; or
(9) take any other action otherwise prohibited by this
Indenture to be taken without the consent of each holder affected
thereby.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Noteholders as aforesaid and upon receipt by the
Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
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It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 8.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the notice of revocation before the date the amendment, supplement, waiver or
other action becomes effective.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver which record date shall be at least 30 days
prior to the first solicitation of such consent. If a record date is fixed,
then, notwithstanding the preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only such Persons,
shall be entitled to consent to such amendment, supplement, or waiver or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described
in any of clauses (1)
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through (10) of Section 8.02 hereof. In that case the amendment, supplement,
waiver or other action shall bind each Holder of a Note who has consented to it
and every subsequent Holder of a Note or portion of a Note that evidences the
same debt as the consenting Holder's Note; provided that any such waiver shall
not impair or affect the right of any Holder to receive payment of principal of
and interest on a Note, on or after the respective due dates expressed in such
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates without the consent of such Holder.
Section 8.05. Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a
Note, the Trustee may request the Holder of the Note to deliver it to the
Trustee. In such case, the Trustee shall place an appropriate notation on the
Note about the changed terms and return it to the Holder. Alternatively, if
the Company or the Trustee so determines, the Company in exchange for the Note
shall issue and the Trustee shall authenticate a new security that reflects the
changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment supplement or
waiver.
Section 8.06. Trustee To Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver the Trustee shall be
entitled to receive and, subject to Section 7.01 hereof, shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that such amendment, supplement or waiver is authorized or permitted by
this Indenture. The Company or any Guarantor may not sign an amendment or
supplement until the Board of Directors of the Company or such Guarantor, as
appropriate, approves it.
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ARTICLE 9.
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture.
The Company and the Guarantors may terminate their obligations
under the Notes, the Guarantees and this Indenture, except the obligations
referred to in the last paragraph of this Section 9.01, if there shall have
been canceled by the Trustee or delivered to the Trustee for cancellation all
Notes theretofore authenticated and delivered (other than any Notes that are
asserted to have been destroyed, lost or stolen and that shall have been
replaced as provided in Section 2.07 hereof) and the Company has paid all sums
payable by it hereunder or deposited all required sums with the Trustee.
After such delivery the Trustee upon request shall acknowledge in
writing the discharge of the Company's and the Guarantors' obligations under
the Notes, the Guarantees and this Indenture except for those surviving
obligations specified below.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company in Sections 7.07, 9.05 and 9.06 hereof shall
survive.
Section 9.02. Legal Defeasance.
The Company may at its option, by Board Resolution, be discharged
from its obligations with respect to the Notes and the Guarantors discharged
from their obligations under the Guarantees on the date the conditions set
forth in Section 9.04 below are satisfied (hereinafter, "Legal Defeasance").
For this purpose, such Legal Defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness represented by the Notes
and to have satisfied all its other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee, at the expense
of the Company, shall, subject to Section 9.06 hereof, execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or
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discharged hereunder: (A) the rights of Holders of outstanding Notes to
receive solely from the trust funds described in Section 9.04 hereof and as
more fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due, (B) the
Company's obligations with respect to such Notes under Sections 2.03, 2.04,
2.05, 2.06, 2.07, 2.08 and 4.09 hereof, (C) the rights, powers, trusts, duties,
and immunities of the Trustee hereunder (including claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof) and (D) this Article 9.
Subject to compliance with this Article 9, the Company may exercise its option
under this Section 9.02 with respect to the Notes notwithstanding the prior
exercise of its option under Section 9.03 below with respect to the Notes.
Section 9.03. Covenant Defeasance.
At the option of the Company, pursuant to a Board Resolution, the
Company and the Guarantors shall be released from their respective obligations
under Sections 4.02 through 4.08 and Sections 4.10 through 4.21 hereof,
inclusive, and Section 5.01 hereof with respect to the outstanding Notes on and
after the date the conditions set forth in Section 9.04 hereof are satisfied
(hereinafter, "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that the Company and the Guarantors may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section or portion thereof, whether directly or
indirectly by reason of any reference elsewhere herein to any such specified
Section or portion thereof or by reason of any reference in any such specified
Section or portion thereof to any other provision herein or in any other
document, but the remainder of this Indenture and the Notes shall be unaffected
thereby.
Section 9.04. Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to application of Section
9.02 or Section 9.03 hereof to the outstanding Notes:
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(1) the Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 hereof who shall agree to comply with the
provisions of this Article 9 applicable to it) as funds in trust for the
purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Notes, (A) money in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than the
due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall
be applied by the Trustee (or other qualifying trustee) to pay and
discharge, the principal of, premium, if any, and accrued interest on
the outstanding Notes at the maturity date of such principal, premium,
if any, or interest, or on dates for payment and redemption of such
principal, premium, if any, and interest selected in accordance with the
terms of this Indenture and of the Notes;
(2) no Event of Default or Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, or
shall have occurred and be continuing at any time during the period
ending on the 91st day after the date of such deposit or, if longer,
ending on the day following the expiration of the longest preference
period under any Bankruptcy Law applicable to the Company in respect of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not
cause the Trustee to have a conflicting interest for purposes of the TIA
with respect to any securities of the Company;
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(4) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute default under any
other agreement or instrument to which the Company is a party or by
which it is bound;
(5) the Company shall have delivered to the Trustee an Opinion
of Counsel stating that, as a result of such Legal Defeasance or
Covenant Defeasance, neither the trust nor the Trustee will be required
to register as an investment company under the Investment Company Act of
1940, as amended;
(6) in the case of an election under Section 9.02 above, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect that
or (ii) there has been a change in any applicable Federal income tax law
with the effect that, and such opinion shall confirm that, the Holders
of the outstanding Notes or persons in their positions will not
recognize income, gain or loss for Federal income tax purposes solely as
a result of such Legal Defeasance and will be subject to Federal income
tax on the same amounts, in the same manner, including as a result of
prepayment, and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(7) in the case of an election under Section 9.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders of the outstanding Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
Covenant Defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(8) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance
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under Section 9.02 above or the Covenant Defeasance under Section 9.03
hereof (as the case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit under clause (1) was not
made by the Company with the intent of defeating, hindering, delaying or
defrauding any creditors of the Company or others; and
(10) the Company shall have paid or duly provided for payment
under terms mutually satisfactory to the Company and the Trustee all
amounts then due to the Trustee pursuant to Section 7.07 hereof.
Section 9.05. Deposited Money and U.S. Government Obligations To Be Held in
Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.04 hereof in respect
of the outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent as the Trustee may
determine, to the Holders of such Notes, of all sums due and to become due
thereon in respect of principal, premium, if any, and accrued interest, but
such money need not be segregated from other funds except to the extent
required by law.
The Company and the Guarantors shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 9.04 hereof or the
principal, premium, if any, and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the
Holders of the outstanding Notes.
Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or
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U.S. Government Obligations held by it as provided in Section 9.04 hereof
which, in the opinion of a nationally-recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 9.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 9.01, 9.02, 9.03 or 9.04
hereof by reason of any legal proceeding or by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's and each Guarantor's obligations
under this Indenture, the Notes and the Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 9 until
such time as the Trustee or Paying Agent is permitted to apply all such money
or U.S. Government Obligations in accordance with Section 9.01, 9.02, 9.03 or
9.04 hereof; provided, however, that if the Company or the Guarantors have
made any payment of principal of, premium, if any, or accrued interest on any
Notes because of the reinstatement of their obligations, the Company or the
Guarantors, as the case may be, shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
Section 9.07. Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of
this Indenture shall, upon demand of the Company, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the
Company (or, if such moneys had been deposited by the Guarantors, to such
Guarantors), and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
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Section 9.08. Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or then
held by the Company or the Guarantors in trust for the payment of the principal
of, or premium, if any, or interest on any Note that are not applied but remain
unclaimed by the Holder of such Note for two years after the date upon which
the principal of, or premium, if any, or interest on such Note shall have
respectively become due and payable shall be repaid to the Company (or, if
appropriate, the Guarantors) upon Company Request, or if such moneys are then
held by the Company or the Guarantors in trust, such moneys shall be released
from such trust; and the Holder of such Note entitled to receive such payment
shall thereafter, as an unsecured general creditor, look only to the Company
and the Guarantors for the payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Trustee or any such Paying Agent, before being
required to make any such repayment, may, at the expense of the Company and the
Guarantors, either mail to each Noteholder affected, at the address shown in
the register of the Notes maintained by the Registrar pursuant to Section 2.03
hereof, or cause to be published once a week for two successive weeks, in a
newspaper published in the English language, customarily published each
Business Day and of general circulation in the City of New York, New York, a
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing or
publication, any unclaimed balance of such moneys then remaining will be repaid
to the Company. After payment to the Company or the Guarantors or the release
of any money held in trust by the Company or any Guarantors, as the case may
be, Noteholders entitled to the money must look only to the Company and the
Guarantors for payment as general creditors unless applicable abandoned
property law designates another person.
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ARTICLE 10.
GUARANTEE OF NOTES
Section 10.01. Guarantee.
Subject to the provisions of this Article 10, each Guarantor
hereby jointly and severally unconditionally guarantees to each Holder and to
the Trustee, on behalf of the Holders, (i) the due and punctual payment of the
principal of, and premium, if any, and interest on each Note, when and as the
same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, and premium, if any, and interest on the Notes, to the extent lawful, and
the due and punctual performance of all other Obligations of the Company to the
Holders or the Trustee all in accordance with the terms of such Note and this
Indenture, and (ii) in the case of any extension of time of payment or renewal
of any Notes or any of such other Obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the
extension or renewal, at stated maturity, by acceleration or otherwise. Each
Guarantor hereby agrees that its obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any such Note or this Indenture, any
failure to enforce the provisions of any such Note or this Indenture, any
waiver, modification or indulgence granted to the Company with respect thereto
by the Holder of such Note or the Trustee, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or such
Guarantor.
Each Guarantor hereby waives diligence, presentment, filing of
claims with a court in the event of merger or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest or notice with
respect to any such Note or the Indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be discharged as to any
such Note except by payment in full of the principal thereof, premium if any,
and interest thereon and as provided in Section 9.01 hereof. Each Guarantor
further agrees that, as between such
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Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the Obligations guaranteed hereby may be accelerated as
provided in Article 6 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (ii) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by each Guarantor for the purpose of this
Guarantee. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article 6 hereof, the Trustee shall
promptly make a demand for payment on the Notes under the Guarantee provided
for in this Article 10 and not discharged.
The Guarantee set forth in this Section 10.01 shall not be valid
or become obligatory for any purpose with respect to a Note until the
certificate of authentication on such Note shall have been signed by or on
behalf of the Trustee.
Section 10.02. Execution and Delivery of Guarantees.
To evidence the Guarantee set forth in this Article 10, each
Guarantor hereby agrees that a notation of such Guarantee shall be placed on
each Note authenticated and made available for delivery by the Trustee and that
this Guarantee shall be executed on behalf of each Guarantor by the manual or
facsimile signature of an Officer of each Guarantor.
Each Guarantor hereby agrees that the Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on the Guarantee
no longer holds that office at the time the Trustee authenticates the Note on
which the Guarantee is endorsed, the Guarantee shall be valid nevertheless.
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The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of each Guarantor.
Section 10.03. Limitation of Guarantee.
The obligations of each Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any guarantees of
Senior Indebtedness) and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of
such Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. In making any calculation
relevant to determining such maximum amount, all Senior Indebtedness shall be
deemed to have been incurred prior to the Issue Date.
Section 10.04. Additional Guarantors.
The Company covenants and agrees that it will cause any
Restricted Subsidiary which becomes obligated to guarantee the Notes, pursuant
to the terms of Section 4.18 hereof, to execute a supplemental indenture
satisfactory in form and substance to the Trustee pursuant to which such
Restricted Subsidiary shall guarantee the obligations of the Company under the
Notes and this Indenture in accordance with this Article 10 with the same
effect and to the same extent as if such Person had been named herein as a
Guarantor. Upon the execution of such a Supplemental Indenture, the Guarantee
of such Restricted Subsidiary shall be deemed to be notated on each outstanding
Note. Notes delivered by the Trustee after the execution and delivery of such
Supplemental Indenture shall include the notation of the Guarantee of such
Restricted Subsidiary but the failure to include such a notation shall not
otherwise effect the validity or enforceability of such Guarantee.
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Section 10.05. Release of Guarantor.
Upon (i) the release of all guarantees by a Guarantor of any
Indebtedness of the Company and the release of all Liens on the property and
assets of such Guarantor securing such guarantees or Indebtedness or (ii) the
sale or disposition (whether by merger, sale of stock or otherwise) of a
Guarantor (or substantially all of its assets) to an entity which is not a
Subsidiary of the Company which is otherwise in compliance with this Indenture
(and providing that the guarantees and Liens referred to in the foregoing
clause (i) are also released at such time), and in each such case, the delivery
to the Trustee of an Officers' Certificate and an Opinion of Counsel, each
stating that all such conditions in the foregoing clause (i) or (ii), as the
case may be, have been complied with, such Guarantor shall be deemed released
from all of its obligations under this Indenture and its Guarantor.
Section 10.06. Guarantee Obligations Subordinate to Senior Indebtedness.
Each Guarantor and each Holder, by its acceptance of the Notes,
agree that the payment of the principal of and interest on the Notes pursuant
to the Guarantees and any other payment in respect of the Notes by each
Guarantor is subordinated, to the extent and in the manner provided in this
Article 10, to the prior payment in full in cash of all Senior Indebtedness of
such Guarantor and that these subordination provisions are for the benefit of
the holders of Senior Indebtedness of the Guarantors.
This Article 10 shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or continue
to hold, Senior Indebtedness of a Guarantor, and such provisions are made for
the benefit of the holders of Senior Indebtedness of the Guarantors, and such
holders are made obligees hereunder and any one or more of them may enforce
such provisions.
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Section 10.07. No Payment on Guarantees in Certain Circumstances.
(a) No payment (by set-off or otherwise) shall be made by or on
behalf of a Guarantor on account of its Obligations on its Guarantee) (other
than Junior Securities), (i) upon the maturity of any Senior Indebtedness of
such Guarantor by lapse of time, acceleration (unless waived) or otherwise,
unless and until all principal of, premium, if any, and interest on such Senior
Indebtedness of such Guarantor are first paid in full in cash or (ii) in the
event of default in the payment of any principal of, premium, if any, or
interest on Senior Indebtedness of such Guarantor when it becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (a "Guarantor Payment Default"), unless and until such
Guarantor Payment Default has been cured or waived or otherwise has ceased to
exist.
(b) Upon (i) the happening of an event of default (other than a
Guarantor Payment Default) that permits the holders of Designated Senior
Indebtedness of a Guarantor to declare such Designated Senior Indebtedness of
such Guarantor to be due and payable and (ii) written notice of such event of
default given to such Guarantor, the Company and the Trustee by the
representative of the holders of such Designated Senior Indebtedness of such
Guarantor (a "Guarantor Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment
(by set-off or otherwise) may be made by or on behalf of such Guarantor on
account of its Obligations under its Guarantee, other than payments made with
Junior Securities. Notwithstanding the foregoing, unless the Designated Senior
Indebtedness of such Guarantor in respect of which such event of default exists
has been declared due and payable in its entirety within 179 days after the
Guarantor Payment Notice is delivered as set forth above (the "Guarantor
Payment Blockage Period") (and such declaration has not been rescinded or
waived), at the end of the Guarantor Payment Blockage Period, such Guarantor
shall, unless a Guarantor Payment Default with respect to such
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Designated Senior Indebtedness of such Guarantor exists, resume making any and
all required payments in respect of its Obligations under its Guarantee. Any
number of Guarantor Payment Notices may be given; provided, however, that (i)
not more than one Guarantor Payment Notice shall be given within a period of
any 360 consecutive days, and (ii) no default that existed upon the date of
such Guarantor Payment Notice if the representative of the holders of
Designated Senior Indebtedness of such Guarantor that gave such Guarantor
Payment Notice knew of such default on such date (whether or not such event of
default is on the same issue of Designated Senior Indebtedness of such
Guarantor) shall be made the basis for the commencement of any other Guarantor
Payment Blockage Period unless such default has been cured or waived for a
period of at least 90 consecutive days.
(c) In furtherance of the provisions of Section 10.01, in the
event that, notwithstanding the foregoing provisions of this Section 10.07, any
payment on account of a Guarantor's Obligations on its Guarantee (other than
Junior Securities) shall be received by the Trustee at a time when such payment
is prohibited by the provisions of this Section 10.07, such payment shall be
held in trust for the benefit of the holders of Senior Indebtedness of such
Guarantor, and shall be paid or delivered by the Trustee, to the holders of
Senior Indebtedness of such Guarantor remaining unpaid or to their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness of such Guarantor may have been issued, ratably according to the
aggregate principal amounts remaining unpaid on account of such Senior
Indebtedness of such Guarantor held or represented by each, for application to
the payment of all such Senior Indebtedness of such Guarantor remaining unpaid,
to the extent necessary to pay or provide for the payment of all such Senior
Indebtedness of such Guarantor in full in cash after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness
of such Guarantor.
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Section 10.08. Guarantee Obligations Subordinated to Prior Payment of All
Senior Indebtedness of Guarantors on Dissolution, Liquidation or
Reorganization.
Upon any distribution of assets of a Guarantor upon any
dissolution, winding up, total or partial liquidation or reorganization of such
Guarantor, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of such Guarantor
will first be entitled to receive payment in full in cash before the Holders
are entitled to receive any payment on account of such Guarantor's Obligations
on its Guarantee (other than Junior Securities);
(b) any payment or distribution of assets of such Guarantor of
any kind or character from any source, whether in cash, property or securities
(other than Junior Securities) to which the Holders or the Trustee on behalf of
the Holders would be entitled (by set-off or otherwise), except for the
provisions of this Article 10, shall be paid by the liquidating trustee or
agent or other person making such a payment or distribution directly to the
holders of such Senior Indebtedness of such Guarantor or their representative
or representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing any of such Senior Indebtedness of such
Guarantor may have been issued, ratably according to the aggregate principal
amounts remaining unpaid on account of such Senior Indebtedness of such
Guarantor held or represented by each, for application to the payment of all
such Senior Indebtedness of such Guarantor remaining unpaid, to the extent
necessary to make payment in full (or have such payment duly provided for) on
all such Senior Indebtedness of such Guarantor remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such Senior
Indebtedness of such Guarantor; and
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(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of such Guarantor (other than Junior
Securities) shall be received by the Trustee at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the holders of such
Senior Indebtedness of such Guarantor, and shall be paid or delivered by the
Trustee to the holders of such Senior Indebtedness of such Guarantor remaining
unpaid, to their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
of such Senior Indebtedness of such Guarantor may have been issued, ratably
according to the aggregate principal amounts remaining unpaid on account of
such Senior Indebtedness of such Guarantor held or represented by each, for
application to the payment of all such Senior Indebtedness of such Guarantor
remaining unpaid, to the extent necessary to pay all such Senior Indebtedness
of such Guarantor in full in cash after giving effect to any concurrent payment
or distribution to the holders of such Senior Indebtedness of such Guarantor.
Section 10.09. Holders to be Subrogated to Rights of Holders of Senior
Indebtedness of Guarantors.
Subject to the payment in full in cash of all Senior Indebtedness
of each Guarantor as provided herein, the Holders of Notes shall be subrogated
to the rights of the holders of such Senior Indebtedness of such Guarantor to
receive payments or distributions of assets of such Guarantor applicable to the
Senior Indebtedness of such Guarantor until all amounts owing on the Notes
shall be paid in full, and for the purpose of such subrogation no such payments
or distributions to the holders of such Senior Indebtedness of such Guarantor
by or on behalf of such Guarantor, or by or on behalf of the Holders by virtue
of this Article 10, which otherwise would have been made to the Holders shall,
as between such Guarantor and the Holders, be deemed to be payment by such
Guarantor or on account of such Senior Indebtedness of such Guarantor, it being
understood that the provisions of this Article 10 are and are intended
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solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of such Senior Indebtedness of such Guarantor, on the
other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 10 shall
have been applied, pursuant to the provisions of this Article 10, to the
payment of amounts payable under Senior Indebtedness of a Guarantor, then the
Holders shall be entitled to receive from the holders of such Senior
Indebtedness of such Guarantor any payments or distributions received by such
holders of Senior Indebtedness of such Guarantor in excess of the amount
sufficient to pay all amounts payable under or in respect of such Senior
Indebtedness of such Guarantor in full in cash.
Section 10.10. Application of Certain Article 11 Provisions.
The provisions of Sections 11.05, 11.06, 11.07, 11.08. 11.09,
11.10, 11.11, and 11.12 hereof shall apply, mutatis mutandis, to each Guarantor
and their respective holders of Senior Indebtedness and the rights, duties and
obligations set forth therein shall govern the rights, duties and obligations
of each Guarantor, the holders of Senior Indebtedness of such Guarantor, the
Holders and the Trustee with respect to the Guarantee of such Guarantor and all
references therein to Article 11 hereof shall mean this Article 10.
Section 10.11. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the
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Notes or any other Guarantor's Obligations with respect to its Guarantee.
ARTICLE 11.
SUBORDINATION OF NOTES
Section 11.01. Notes Subordinate to Senior Indebtedness.
The Company and each Holder, by its acceptance of the Notes,
agree that (a) the payment of the principal of and interest on the Notes and
(b) any other payment in respect of the Notes, including on account of the
acquisition or redemption of the Notes by the Company (including, without
limitation, pursuant to Section 4.14 or 4.21) is subordinated, to the extent
and in the manner provided in this Article 11, to the prior payment in full in
cash of all Senior Indebtedness of the Company and that these subordination
provisions are for the benefit of the holders of Senior Indebtedness.
This Article 11 shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or continue
to hold, Senior Indebtedness, and such provisions are made for the benefit of
the holders of Senior Indebtedness, and such holders are made obligees
hereunder and any one or more of them may enforce such provisions.
Section 11.02. No Payment on Notes in Certain Circumstances.
(a) No payment (by set-off or otherwise) shall be made by or on
behalf of the Company on account of the principal of, premium, if any, or
interest on the Notes (including any repurchases of Notes), or on account of
the redemption provisions of the Notes, for cash or property (other than Junior
Securities), (i) upon the maturity of any Senior Indebtedness of the Company by
lapse of time, acceleration (unless waived) or otherwise, unless and until all
principal of, premium, if any, and interest on such Senior Indebtedness are
first paid in full in cash or (ii) in the event of default in the payment of
any principal of,
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premium, if any, or interest on Senior Indebtedness of the Company when it
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise (a "Payment Default"), unless and until such
Payment Default has been cured or waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a
Payment Default) that permits the holders of Designated Senior Indebtedness to
declare such Designated Senior Indebtedness to be due and payable and (ii)
written notice of such event of default given to the Company and the Trustee by
the representative of the holders of such Designated Senior Indebtedness (a
"Payment Notice"), then, unless and until such event of default has been cured
or waived or otherwise has ceased to exist, no payment (by set-off or
otherwise) may be made by or on behalf of the Company on account of the
principal of, premium, if any, or interest on the Notes, or on account of the
redemption provisions of the Notes, other than payments made with Junior
Securities. Notwithstanding the foregoing, unless the Designated Senior
Indebtedness in respect of which such event of default exists has been declared
due and payable in its entirety within 179 days after the Payment Notice is
delivered as set forth above (the "Payment Blockage Period") (and such
declaration has not been rescinded or waived), at the end of the Payment
Blockage Period, the Company shall, unless a Payment Default exists, be
required to pay all sums not paid to the Holders of the Notes during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Notes. Any number of Payment Notices may
be given; provided, however, that (i) not more than one Payment Notice shall be
given within a period of any 360 consecutive days, and (ii) no default that
existed upon the date of such Payment Notice if the representative of the
holders of Designated Senior Indebtedness that gave such Payment Notice knew of
such default on such date (whether or not such event of default is on the same
issue of Designated Senior Indebtedness) shall be made the basis for the
commencement of any other Payment Blockage Period unless such default has been
cured or waived for a period of at least 90 consecutive days.
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(c) In furtherance of the provisions of Section 11.01, in the
event that, notwithstanding the foregoing provisions of this Section 11.02, any
payment or distribution of assets of the Company (other than Junior Securities)
shall be received by the Trustee at a time when such payment or distribution is
prohibited by the provisions of this Section 11.02, such payment or
distribution shall be held in trust for the benefit of the holders of such
Senior Indebtedness, and shall be paid or delivered by the Trustee, to the
holders of such Senior Indebtedness remaining unpaid or to their representative
or representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate principal amounts remaining
unpaid on account of such Senior Indebtedness held or represented by each, for
application to the payment of all such Senior Indebtedness remaining unpaid, to
the extent necessary to pay or provide for the payment of all such Senior
Indebtedness in full in cash after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
Section 11.03. Notes Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization.
Upon any distribution of assets of the Company upon any
dissolution, winding up, total or partial liquidation or reorganization of the
Company, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company will
first be entitled to receive payment in full in cash before the Holders are
entitled to receive any payment on account of the principal of, premium, if
any, and interest on the Notes (other than Junior Securities);
(b) any payment or distribution of assets of the Company of any
kind or character from any source, whether in cash, property or securities
(other than Junior Securities)
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to which the Holders or the Trustee on behalf of the Holders would be entitled
(by set-off or otherwise), except for the provisions of this Article 11, shall
be paid by the liquidating trustee or agent or other person making such a
payment or distribution directly to the holders of such Senior Indebtedness or
their representative to the extent necessary to make payment in full (or have
such payment duly provided for) on all such Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company (other than Junior Securities)
shall be received by the Trustee at a time when such payment or distribution is
prohibited by the foregoing provisions, such payment or distribution shall be
held in trust for the benefit of the holders of such Senior Indebtedness, and
shall be paid or delivered by the Trustee to the holders of such Senior
Indebtedness remaining unpaid, to their representative or representatives, or
to the trustee or trustees under any indenture pursuant to which any
instruments evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate principal amounts remaining unpaid on
account of such Senior Indebtedness held or represented by each, for
application to the payment of all such Senior Indebtedness remaining unpaid, to
the extent necessary to pay all such Senior Indebtedness in full in cash after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
Section 11.04. Holders to be Subrogated to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full in cash of all Senior Indebtedness
of the Company as provided herein, the Holders of Notes shall be subrogated to
the rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Notes shall be paid in full, and for the purpose
of such subrogation no such payments or distributions to the holders of such
Senior Indebtedness by or on behalf of the Company,
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or by or on behalf of the Holders by virtue of this Article 11, which otherwise
would have been made to the Holders shall, as between the Company and the
Holders, be deemed to be payment by the Company or on account of such Senior
Indebtedness, it being understood that the provisions of this Article 11 are
and are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of such Senior Indebtedness, on the
other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 11 shall
have been applied, pursuant to the provisions of this Article 11, to the
payment of amounts payable under Senior Indebtedness of the Company, then the
Holders shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay all amounts payable
under or in respect of such Senior Indebtedness in full in cash.
Section 11.05. Obligations of the Company Unconditional.
Nothing contained in this Article 11 or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as between the
Company and the Holders, the obligation of each such Person, which is absolute
and unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Notes as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of
the Senior Indebtedness, nor shall anything herein or therein prevent the
Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article 11, of the holders of Senior Indebtedness in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy. Notwithstanding anything to the contrary in this Article 11 or
elsewhere in this Indenture or in the
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Notes, upon any distribution of assets of the Company referred to in this
Article 11, the Trustee, subject to the provisions of Sections 7.01 and 7.02,
and the Holders shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 11 so long as such court has been apprised of the
provisions of, or the order, decree or certificate makes reference to, the
provisions of this Article 11. Nothing in this Section 11.05 shall apply to
the claims of, or payments to, the Trustee under or pursuant to Section 7.07.
Section 11.06. Trustee Entitled to Assume Payments Not Prohibited in Absence of
Notice.
The Trustee shall not at any time be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee unless and until a Trust Officer of the Trustee or any Paying
Agent shall have received, no later than the close of business on the Business
Day prior to such payment, written notice thereof from the Company or from one
or more holders of Senior Indebtedness or from any representative therefor and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Sections 7.01 and 7.02, shall be entitled in all respects
conclusively to assume that no such fact exists.
Section 11.07. Application by Trustee of Assets Deposited With it.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article 9 shall be for the sole benefit of Holders of Notes and
shall not be subject to the subordination provisions of this Article 11.
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Otherwise, any deposit of assets with the Trustee or the Paying Agent (whether
or not in trust) for the payment of principal of or interest on any Notes shall
be subject to the provisions of Sections 11.01, 11.02, 11.03 and 11.04;
provided that, if prior to one Business Day preceding the date on which by the
terms of this Indenture any such assets may become distributable for any
purpose (including without limitation, the payment of either principal of or
interest on any Note) the Trustee or such Paying Agent shall not have received
with respect to such assets the written notice provided for in Section 11.06,
then the Trustee or such Paying Agent shall have full power and authority to
receive such assets and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such date.
Section 11.08. Subordination Rights Not Impaired by Acts of or Omissions of the
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in this Article 11
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms of
this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with. The holders of Senior Indebtedness may
extend, renew, modify or amend the terms of the Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise
deal freely with the Company, all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders.
Section 11.09. Holders Authorize Trustee to Effectuate Subordination of Notes.
Each Holder of the Notes by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained
in this
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Article 11 and to protect the rights of the Holders pursuant to this Indenture,
and appoints the Trustee his attorney-in-fact for such purpose, including, in
the event of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency or receivership proceedings or upon
an assignment for the benefit of creditors or any other marshalling of assets
and liabilities of the Company), the immediate filing of a claim for the unpaid
balance of his Notes in the form required in said proceedings and causing said
claim to be approved. If the Trustee does not file a proper claim or proof of
debt in the form required in such proceeding prior to 30 days before the
expiration of the time to file such claim or claims, then the holders of the
Senior Indebtedness or their representative are or is hereby authorized to have
the right to file and are or is hereby authorized to file an appropriate claim
for and on behalf of the Holders of said Notes. Nothing herein contained shall
be deemed to authorize the Trustee or the holders of Senior Indebtedness or
their representative to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee or the holders of Senior Indebtedness or their representative to vote
in respect of the claim of any Holder in any such proceeding.
Section 11.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in
this Article 11 in respect of any Senior Indebtedness at any time held by it to
the same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as
such holder.
Section 11.11. Article 11 Not to Prevent Events of Default.
The failure to make a payment on account of principal of,
premium, if any, or interest on the Notes by reason of any provision of this
Article 11 shall not be
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construed as preventing the occurrence of a Default or an Event of Default
under Section 6.01 or in any way limit the rights of the Trustee or any Holder
to pursue any other rights or remedies with respect to the Notes.
Section 11.12. No Fiduciary Duty of Trustee to Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Notes or the Company or any
other Person, cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 11 or otherwise.
Nothing in this Section 11.12 shall affect the obligation of any other such
Person to hold such payment for the benefit of, and to pay such payment over
to, the holders of Senior Indebtedness or their representative. In the event
of any conflict between the fiduciary duty of the Trustee to the Holders of
Notes and to the holders of Senior Indebtedness, the Trustee is expressly
authorized to resolve such conflict in favor of the Holders.
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with another provision which is required to be included in this Indenture by
the TIA, the required provision shall control.
Section 12.02. Notices.
Any notice or communication shall be given in writing and
delivered in person, sent by facsimile, delivered by commercial courier service
or mailed by first-class mail, postage prepaid, addressed as follows:
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If to the Company or any Guarantor:
Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attention: Chief Financial Officer
Copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: George Ticknor, Esq.
If to the Trustee:
State Street Bank and Trust Company
________________________________
________________________________
Attention: ____________________
The Company, the Guarantors or the Trustee by written notice to
the others may designate additional or different addresses for subsequent
notices or communications. Any notice or communication to the Company, the
Trustee, or the Guarantors shall be deemed to have been given or made as of the
date so delivered if personally delivered; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and five (5) calendar days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Noteholder shall be
mailed to him by first-class mail, postage prepaid, at his address shown on the
register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its
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sufficiency with respect to other Noteholders. If a notice or communication to
a Noteholder is mailed in the manner provided above, it shall be deemed duly
given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service, or
by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 12.03. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Guarantors, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any Guarantor
to the Trustee to take any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 12.05 below) stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel (which shall include the statements
set forth in Section 12.05 below) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
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Section 12.05. Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, it or he
has made such examination or investigation as is necessary to enable it
or him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
Section 12.06. When Treasury Notes Disregarded.
In determining whether the Holders of the required aggregate
principal amount of Notes have concurred in any direction, waiver or consent,
Notes owned by the Company, any Guarantor or any other obligor on the Notes or
by any Affiliate of any of them shall be disregarded, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes which the Trustee actually
knows are so owned shall be so disregarded. Notes so owned which have been
pledged in good faith shall not be disregarded if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect to
the Notes and that the pledgee is not the Company, a Guarantor or any other
obligor upon the Notes or any Affiliate of any of them.
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Section 12.07. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at
meetings of Noteholders. The Registrar and Paying Agent may make reasonable
rules for their functions.
Section 12.08. Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York
or the Commonwealth of Massachusetts.
If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.
Section 12.09. Governing Law.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE
GUARANTEES.
Section 12.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Company or any Subsidiary thereof. No
such indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 12.11. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as
such, of the Company or any Guarantor shall not have any liability for any
obligations of the Company or
112
<PAGE> 120
any Guarantor under the Notes, the Guarantees or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creations.
Each Noteholder by accepting a Note waives and releases all such liability.
Such waiver and release are part of the consideration for the issuance of the
Notes.
Section 12.12. Successors.
All agreements of the Company and the Guarantors in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee, any additional trustee and any Paying Agents in this Indenture
shall bind its successor.
Section 12.13. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 12.14. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 12.15. Separability.
Each provision of this Indenture shall be considered separable
and if for any reason any provision which is not essential to the effectuation
of the basic purpose of this Indenture or the Notes shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
113
<PAGE> 121
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed, and the Company's corporate seal to be hereunto affixed and
attested, all as of the date and year first written above.
LAMAR ADVERTISING COMPANY
By:
-----------------------------
Name:
Title:
ATTEST:
- ------------------------------
Name:
Title:
Guarantors:
The Lamar Corporation
Interstate Logos, Inc.
Lamar Advertising of
Colorado Springs, Inc.
Lamar Advertising of
Jackson, Inc.
Lamar Advertising of
Mobile, Inc.
Lamar Advertising of
South Georgia, Inc.
Lamar Advertising of
South Mississippi, Inc.
Lamar Advertising of
Tallahassee, Inc.
TLC Properties, Inc.
Missouri Logos, Inc.
Nebraska Logos, Inc.
Oklahoma Logo Signs, Inc.
Utah Logos, Inc.
Ohio Logos, Inc.
Georgia Logos, Inc.
Kansas Logos, Inc.
Lamar Air, LLC
Lamar Pensacola Transit, Inc.
Lamar Tennessee Limited
Partner, Inc.
Lamar Tennessee Limited
Partnership
Lamar Tennessee Limited
Partnership II
114
<PAGE> 122
Lamar Texas General Partner, Inc.
Lamar Texas Limited Partnership
Michigan Logos, Inc.
Minnesota Logos, Inc.
Minnesota Logos, a Partnership
Mississippi Logos, Inc.
New Jersey Logos, Inc.
South Carolina Logos, Inc.
Tennessee Logos, Inc.
Texas Logos, Inc.
TLC Properties II, Inc.
Virginia Logos, In.
Lamar Advertising of Youngstown,
Inc.
By:
-----------------------------
Name:
Title:
ATTEST:
- ------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
-----------------------------
Name:
Title:
ATTEST:
- ------------------------------
Name:
Title:
115
<PAGE> 123
EXHIBIT A
[LEGEND FOR INCLUSION ON GLOBAL NOTES -- THIS NOTE IS A GLOBAL NOTE WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY (AS DEFINED IN THE INDENTURE) OR A NOMINEE THEREOF. UNLESS AND
UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.] [LEGEND FOR
INCLUSION IF THE DEPOSITARY TRUST COMPANY IS THE DEPOSITARY -- UNLESS THIS NOTE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION, TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
CUSIP__________
No. ___________ $____________
LAMAR ADVERTISING COMPANY
[____]% SENIOR SUBORDINATED NOTE DUE 2006
Lamar Advertising Company, a Delaware corporation (the "Company",
which term includes any successor corporation), for value received promises to
pay to _____________________________or registered assigns the principal sum of
____________________________________________________ Dollars, on ____________,
2006.
Interest Payment Dates: ___________ and __________, commencing __
________, 1997.
Record Dates: ____________ and __________________.
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
A-1
<PAGE> 124
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
LAMAR ADVERTISING COMPANY
By:
-----------------------------------
By:
-----------------------------------
[SEAL]
Certificate of Authentication:
This is one of the [ ]%
----
Senior Subordinated Notes due
2006 referred to in the
within-mentioned Indenture
Date:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
------------------------------
Authorized Signatory
A-2
<PAGE> 125
(REVERSE SIDE)
LAMAR ADVERTISING COMPANY
[____]% SENIOR SUBORDINATED NOTE DUE 2006
1. INTEREST.
Lamar Advertising Company, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note
semiannually on ______ and ______ of each year (each an "Interest Payment
Date"), commencing on ____________, 1997 at the rate of [____]% per annum.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
The Company shall pay interest on overdue principal, and on
overdue premium, if any, and overdue interest, to the extent lawful, at a rate
equal to the rate of interest otherwise payable on the Notes.
2. METHOD OF PAYMENT.
The Company will pay interest on this Note provided for in
Paragraph 1 above (except defaulted interest) to the person who is the
registered Holder of this Note at the close of business on the Record Date
immediately preceding the Interest Payment Date. The Holder must surrender
this Note to a Paying Agent to collect principal payments. The Company will
pay principal, premium, if any, and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts;
provided, however, that so long as this Note is a Global Note such payments
will be made in immediately available funds and the Company may pay principal,
premium, if any, and interest on a Note which is not a Global Note by check
payable in such money. The Company may mail an interest check with respect to
any Note that is not a Global Note to the Holder's registered address.
A-3
<PAGE> 126
3. PAYING AGENT AND REGISTRAR.
Initially, State Street Bank and Trust Company, a trust company
duly organized under the laws of the Commonwealth of Massachusetts (the
"Trustee"), will act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to the Holders of the Notes. Neither
the Company nor any of its Subsidiaries or Affiliates may act as Paying Agent
but may act as registrar or co-registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Company issued this Note under an Indenture dated as of
______ __, 1996 (the "Indenture") among the Company, the Guarantors and the
Trustee. The terms of this Note include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of the
Indenture. This Note is subject to all such terms, and the Holder of this Note
is referred to the Indenture and said Trust Indenture Act for a statement of
them. All capitalized terms in this Note, unless otherwise defined, have the
meanings assigned to them by the Indenture.
The Notes are general unsecured obligations of the Company
limited to $225,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of Indebtedness and
Liens by the Company and its Restricted Subsidiaries, mergers and sale of
assets, the payment of dividends on, or the repurchase of, Capital Stock of the
Company and its Restricted Subsidiaries, certain other Restricted Payments by
the Company and its Restricted Subsidiaries and certain transactions with
Affiliates.
5. SUBORDINATION.
The Indebtedness evidenced by the Notes is, to the extent and in
the manner provided in the Indenture, subordinated and subject in right of
payment to the prior payment in full in cash of all Senior Indebtedness, and
this
A-4
<PAGE> 127
Note is issued subject to such provisions. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose.
6. OPTIONAL REDEMPTION.
The Notes will be redeemable at the option of the Company, in
whole or in part, at any time on or after _____________, 2001 at the following
redemption prices (expressed as a percentage of principal amount), together, in
each case, with accrued and unpaid interest to the redemption date, if redeemed
during the twelve-month period beginning on ________, of each year listed
below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . . %
2002 . . . . . . . . . . . . . . . . %
2003 . . . . . . . . . . . . . . . . %
2004 and thereafter . . . . . . . . . 100.0000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the
aggregate up to $75 million of the original principal amount of the Notes at
any time and from time to time prior to ___________, 1999 at a redemption price
equal to _____% of the aggregate principal amount so redeemed, plus accrued
interest to the redemption date out of the Net Proceeds of one or more Public
Equity Offerings; provided that at least $150 million of the aggregate
principal amount of the Notes originally issued remain outstanding immediately
after the occurrence of any such redemption and that any such redemption occurs
within 120 days following the closing of any such Public Equity Offering.
A-5
<PAGE> 128
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first-class mail at least
30 days but not more than 60 days prior to the redemption date to each Holder
of Notes to be redeemed at its registered address as it shall appear on the
register of the Notes maintained by the Registrar. On and after any Redemption
Date, interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Company shall fail to redeem any such Note.
8. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales be
used, subject to further limitations contained therein, to make an offer to
purchase certain amounts of Notes in accordance with the procedures set forth
in the Indenture. The Company is also required to make an offer to purchase
Notes upon occurrence of a Change of Control in accordance with procedures set
forth in the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations
of $1,000 and integral multiples thereof. As provided in the Indenture and
subject to certain limitations therein set forth, a Holder may register the
transfer or exchange of Notes in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Note selected for redemption or register the transfer of or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed or any Note after it is called for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
10. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner of
it for all purposes.
A-6
<PAGE> 129
11. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on any
Note remains unclaimed for two years, the Trustee or Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to
money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another person.
12. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented by the Company, the Guarantors and the
Trustee with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding and any existing default or compliance
with any provision may be waived in a particular instance with the consent of
the Holders of a majority in principal amount of the Notes then outstanding.
Without the consent of Holders, the Company, the Guarantors and the Trustee may
amend the Indenture or the Notes or supplement the Indenture for certain
specified purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or
making any other change that does not adversely affect the rights of any
Holder.
13. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of Notes then
outstanding may declare all the Notes to be due and payable immediately in the
manner and with the effect provided in the Indenture. Holders of Notes may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity reasonably satisfactory to it before it enforces
the Indenture or the Notes. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Notes then outstanding may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of Notes notice of any continuing Default or Event of Default
(except a Default in
A-7
<PAGE> 130
payment of principal or interest) if it determines that withholding notice is
in their interest.
14. TRUSTEE DEALINGS WITH THE COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company, any Guarantor or their Affiliates, and may otherwise deal with the
Company, any Guarantor or their Affiliates, as if it were not Trustee.
15. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Company or any Guarantor shall not
have any liability for any obligations of the Company or any Guarantor under
the Notes or the Indenture or for any claim based on, in respect or by reason
of, such obligations or their creation. The Holder of this Note by accepting
this Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Note.
16. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Company with certain conditions set forth in
the Indenture.
17. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of a
Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants
by the entireties), JT TEN (joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to Minors
Act).
18. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the
A-8
<PAGE> 131
Company has caused CUSIP Numbers to be printed on the Notes and has directed
the Trustee to use CUSIP numbers in notices of redemption as a convenience to
Holders of the Notes. No representation is made as to the accuracy of such
numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
19. GOVERNING LAW.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES TO THE INDENTURE AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS NOTE.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
LAMAR ADVERTISING COMPANY, 5551 CORPORATE BOULEVARD, BATON ROUGE, LOUISIANA
70808, Attention: Chief Financial Officer.
A-9
<PAGE> 132
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
Date: Your Signature:
------------------- ------------------------
---------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee:
----------------------------------
A-10
<PAGE> 133
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
Each Guarantor (the "Guarantor", which term includes any
successor Person under the Indenture) has unconditionally guaranteed, on a
senior subordinated basis, jointly and severally, to the extent set forth in
the Indenture and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of, and premium, if any, and interest on the
Notes, when and as the same shall become due and payable, whether at maturity,
by acceleration or otherwise, the due and punctual payment of interest on
overdue principal of, and interest on the Notes, to the extent permitted by law
and the due and punctual performance of all other Obligations of the Company to
the Noteholders or the Trustee all in accordance with the terms set forth in
the Indenture, and (b) in case of any extension of time of payment or renewal
of any Notes or any of such other Obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the
extension or renewal, at stated maturity, by acceleration or otherwise.
The obligations of each Guarantor to the Noteholders and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms of this Guarantee.
This Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Guarantee
is noted shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized signatories.
Guarantors:
THE LAMAR CORPORATION
INTERSTATE LOGOS, INC.
LAMAR ADVERTISING OF
COLORADO SPRINGS, INC.
LAMAR ADVERTISING OF
JACKSON, INC.
LAMAR ADVERTISING OF
MOBILE, INC.
LAMAR ADVERTISING OF
SOUTH GEORGIA, INC.
LAMAR ADVERTISING OF
SOUTH MISSISSIPPI, INC.
A-11
<PAGE> 134
LAMAR ADVERTISING OF
TALLAHASSEE, INC.
TLC PROPERTIES, INC.
MISSOURI LOGOS, INC.
NEBRASKA LOGOS, INC.
OKLAHOMA LOGO SIGNS, INC.
UTAH LOGOS, INC.
OHIO LOGOS, INC.
GEORGIA LOGOS, INC.
KANSAS LOGOS, INC.
LAMAR AIR, LLC
LAMAR PENSACOLA TRANSIT, INC.
LAMAR TENNESSEE LIMITED
PARTNER, INC.
LAMAR TENNESSEE LIMITED
PARTNERSHIP
LAMAR TENNESSEE LIMITED
PARTNERSHIP II
LAMAR TEXAS GENERAL PARTNER, INC.
LAMAR TEXAS LIMITED PARTNERSHIP
MICHIGAN LOGOS, INC.
MINNESOTA LOGOS, INC.
MINNESOTA LOGOS, A PARTNERSHIP
MISSISSIPPI LOGOS, INC.
NEW JERSEY LOGOS, INC.
SOUTH CAROLINA LOGOS, INC.
TENNESSEE LOGOS, INC.
TEXAS LOGOS, INC.
TLC PROPERTIES II, INC.
VIRGINIA LOGOS, INC.
Lamar Advertising of Youngstown,
Inc.
By:
----------------------------------
Name:
Title:
ATTEST:
- ------------------------------
Name:
Title:
A-12
<PAGE> 135
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.14 or Section 4.21 of the
Indenture, check the appropriate box:
/ / Section 4.14 / / Section 4.21
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.14 or Section 4.21 of the Indenture, state the
amount you elect to have purchased:
$
-----------------
Date:
-----------
Your Signature:
-----------------------------
(Sign exactly as your name appears on the face
of this Note)
- ---------------------------
Signature Guaranteed
A-13
<PAGE> 1
EXHIBIT 4.12
[LEGEND FOR INCLUSION ON GLOBAL NOTES -- THIS NOTE IS A GLOBAL NOTE WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY (AS DEFINED IN THE INDENTURE) OR A NOMINEE THEREOF. UNLESS AND
UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.] [LEGEND FOR
INCLUSION IF THE DEPOSITARY TRUST COMPANY IS THE DEPOSITARY -- UNLESS THIS NOTE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION, TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
CUSIP__________
No. ___________ $____________
LAMAR ADVERTISING COMPANY
[____]% SENIOR SUBORDINATED NOTE DUE 2006
Lamar Advertising Company, a Delaware corporation (the "Company", which
term includes any successor corporation), for value received promises to pay
to __________________ or registered assigns the principal sum of ______________
Dollars, on ____________, 2006.
Interest Payment Dates: ___________ and __________, commencing
___________, 1997.
Record Dates: ____________ and __________________.
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at
this place.
<PAGE> 2
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
LAMAR ADVERTISING COMPANY
By:
-------------------------
By:
-------------------------
[SEAL]
Certificate of Authentication:
This is one of the [____]%
Senior Subordinated Notes due
2006 referred to in the
within-mentioned Indenture
Date:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
------------------------------
Authorized Signatory
2
<PAGE> 4
(REVERSE SIDE)
LAMAR ADVERTISING COMPANY
[____]% SENIOR SUBORDINATED NOTE DUE 2006
1. INTEREST.
Lamar Advertising Company, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note semiannually on
______ and ______ of each year (each an "Interest Payment Date"), commencing on
____________, 1997 at the rate of [____]% per annum. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of the original issuance of the Notes.
The Company shall pay interest on overdue principal, and on overdue
premium, if any, and overdue interest, to the extent lawful, at a rate equal to
the rate of interest otherwise payable on the Notes.
2. METHOD OF PAYMENT.
The Company will pay interest on this Note provided for in Paragraph 1
above (except defaulted interest) to the person who is the registered Holder of
this Note at the close of business on the Record Date immediately preceding the
Interest Payment Date. The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts; provided, however, that so long
as this Note is a Global Note such payments will be made in immediately
available funds and the Company may pay principal, premium, if any, and interest
on a Note which is not a Global Note by check payable in such money. The
Company may mail an interest check to the Holder's registered address.
3
<PAGE> 5
3. PAYING AGENT AND REGISTRAR.
Initially, State Street Bank and Trust Company, a trust company duly
organized under the laws of the Commonwealth of Massachusetts (the "Trustee"),
will act as Paying Agent and Registrar. The Company may change any Paying Agent
or Registrar without notice to the Holders of the Notes. Neither the Company
nor any of its Subsidiaries or Affiliates may act as Paying Agent but may act as
registrar or co-registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Company issued this Note under an Indenture dated as of _________,
1996 (the "Indenture") among the Company, the Guarantors and the Trustee. The
terms of this Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the Indenture. This Note is
subject to all such terms, and the Holder of this Note is referred to the
Indenture and said Trust Indenture Act for a statement of them. All capitalized
terms in this Note, unless otherwise defined, have the meanings assigned to them
by the Indenture.
The Notes are general unsecured obligations of the Company limited to
$225,000,000 aggregate principal amount. The Indenture imposes certain
restrictions on, among other things, the incurrence of Indebtedness and Liens by
the Company and its Restricted Subsidiaries, mergers and sale of assets, the
payment of dividends on, or the repurchase of, Capital Stock of the Company and
its Restricted Subsidiaries, certain other Restricted Payments by the Company
and its Restricted Subsidiaries and certain transactions with Affiliates.
5. SUBORDINATION.
The Indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinated and subject in right of payment
to the prior
4
<PAGE> 6
payment in full in cash of all Senior Indebtedness, and this Note is issued
subject to such provisions. Each Holder of this Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs
the Trustee, on behalf of such Holder, to take such action as may be necessary
or appropriate to effectuate the subordination as provided in the Indenture and
(c) appoints the Trustee attorney-in-fact of such Holder for such purpose.
6. OPTIONAL REDEMPTION.
The Notes will be redeemable at the option of the Company, in whole or
in part, at any time on or after _____________, 2001 at the following redemption
prices (expressed as a percentage of principal amount), together, in each case,
with accrued and unpaid interest to the redemption date, if redeemed during the
twelve-month period beginning on ________, of each year listed below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . . . %
2002 . . . . . . . . . . . . . . . . . %
2003 . . . . . . . . . . . . . . . . . %
2004 and thereafter . . . . . . . . . . 100.0000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the aggregate
up to $75 million of the original principal amount of the Notes at any time and
from time to time prior to ___________, 1999 at a redemption price equal to
_____% of the aggregate principal amount so redeemed, plus accrued interest to
the redemption date out of the Net Proceeds of one or more Public Equity
Offerings; provided that at least $150 million of the aggregate principal amount
of the Notes originally issued remain outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 120
days following the closing of any such Public Equity Offering.
5
<PAGE> 7
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first-class mail at least 30
days but not more than 60 days prior to the redemption date to each Holder of
Notes to be redeemed at its registered address as it shall appear on the
register of the Notes maintained by the Registrar. On and after any Redemption
Date, interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Company shall fail to redeem any such Note.
8. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales be used,
subject to further limitations contained therein, to make an offer to purchase
certain amounts of Notes in accordance with the procedures set forth in the
Indenture. The Company is also required to make an offer to purchase Notes upon
occurrence of a Change of Control in accordance with procedures set forth in the
Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples thereof. As provided in the Indenture and subject
to certain limitations therein set forth, a Holder may register the transfer or
exchange of Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Note
selected for redemption or register the transfer of or exchange any Note for a
period of 15 days before a selection of Notes to be redeemed or any Note after
it is called for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part.
6
<PAGE> 8
10. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner of it for
all purposes.
11. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on any Note
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company at its request. After that, Holders entitled to money must
look to the Company for payment as general creditors unless an "abandoned
property" law designates another person.
12. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented by the Company, the Guarantors and the Trustee
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding and any existing default or compliance with any
provision may be waived in a particular instance with the consent of the Holders
of a majority in principal amount of the Notes then outstanding. Without the
consent of Holders, the Company, the Guarantors and the Trustee may amend the
Indenture or the Notes or supplement the Indenture for certain specified
purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or making
any other change that does not adversely affect the rights of any Holder.
13. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Notes then outstanding
may declare all the Notes to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Notes may not enforce the
Indenture or the Notes except as
7
<PAGE> 9
provided in the Indenture. The Trustee may require indemnity reasonably
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in aggregate principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH THE COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company, any Guarantor or their Affiliates, and may otherwise deal with the
Company, any Guarantor or their Affiliates, as if it were not Trustee.
15. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer, employee
or stockholder, as such, of the Company or any Guarantor shall not have any
liability for any obligations of the Company or any Guarantor under the Notes or
the Indenture or for any claim based on, in respect or by reason of, such
obligations or their creation. The Holder of this Note by accepting this Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Note.
16. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Company with certain conditions set forth in
the Indenture.
8
<PAGE> 10
17. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of a Note or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (joint tenants with right of survivorship and not as tenants
in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to Minors Act).
18. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP Numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
19. GOVERNING LAW.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES TO THE INDENTURE AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS NOTE.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: LAMAR
ADVERTISING COMPANY, 5551 CORPORATE BOULEVARD, BATON ROUGE, LOUISIANA 70808,
Attention: Chief Financial Officer.
9
<PAGE> 11
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee) and irrevocably appoint:
and irrevocably appoint:
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date: Your Signature:
------------------- --------------------
-----------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
----------------------------------
10
<PAGE> 12
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
Each Guarantor (the "Guarantor", which term includes any successor
Person under the Indenture) has unconditionally guaranteed, on a senior
subordinated basis, jointly and severally, to the extent set forth in the
Indenture and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of, and premium, if any, and interest on the
Notes, when and as the same shall become due and payable, whether at maturity,
by acceleration or otherwise, the due and punctual payment of interest on
overdue principal of, and interest on the Notes, to the extent permitted by law
and the due and punctual performance of all other Obligations of the Company to
the Noteholders or the Trustee all in accordance with the terms set forth in the
Indenture, and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other Obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, at stated maturity, by acceleration or otherwise.
The obligations of each Guarantor to the Noteholders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
10 of the Indenture and reference is hereby made to the Indenture for the
precise terms of this Guarantee.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Guarantee is noted
shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized signatories.
Guarantors:
THE LAMAR CORPORATION
INTERSTATE LOGOS, INC.
LAMAR ADVERTISING OF
COLORADO SPRINGS, INC.
LAMAR ADVERTISING OF
JACKSON, INC.
LAMAR ADVERTISING OF
MOBILE, INC.
LAMAR ADVERTISING OF
SOUTH GEORGIA, INC.
LAMAR ADVERTISING OF
SOUTH MISSISSIPPI, INC.
11
<PAGE> 13
LAMAR ADVERTISING OF
TALLAHASSEE, INC.
TLC PROPERTIES, INC.
MISSOURI LOGOS, INC.
NEBRASKA LOGOS, INC.
OKLAHOMA LOGO SIGNS, INC.
UTAH LOGOS, INC.
OHIO LOGOS, INC.
GEORGIA LOGOS, INC.
KANSAS LOGOS, INC.
LAMAR AIR, LLC
LAMAR PENSACOLA TRANSIT, INC.
LAMAR TENNESSEE LIMITED
PARTNER, INC.
LAMAR TENNESSEE LIMITED
PARTNERSHIP
LAMAR TENNESSEE LIMITED
PARTNERSHIP II
LAMAR TEXAS GENERAL PARTNER, INC.
LAMAR TEXAS LIMITED PARTNERSHIP
MICHIGAN LOGOS, INC.
MINNESOTA LOGOS, INC.
MINNESOTA LOGOS, A PARTNERSHIP
MISSISSIPPI LOGOS, INC.
NEW JERSEY LOGOS, INC.
SOUTH CAROLINA LOGOS, INC.
TENNESSEE LOGOS, INC.
TEXAS LOGOS, INC.
TLC PROPERTIES II, INC.
VIRGINIA LOGOS, INC.
LAMAR ADVERTISING OF
YOUNGSTOWN, INC.
By:
--------------------------------
Name:
Title:
ATTEST:
- ----------------------------
Name:
Title:
12
<PAGE> 14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Company pursuant to Section 4.14 or Section 4.21 of the Indenture, check the
appropriate box:
/ / Section 4.14 / / Section 4.21
If you want to have only part of the Note purchased by the Company
pursuant to Section 4.14 or Section 4.21 of the Indenture, state the amount you
elect to have purchased:
$
-----------------
Date:
------------------------
Your Signature:
--------------------------------
(Sign exactly as your name appears on the face
of this Note)
- -----------------------------
Signature Guaranteed
13
<PAGE> 1
EXHIBIT 5.1
[PALMER & DODGE LLP LETTERHEAD]
November 19, 1996
Lamar Advertising Company
5551 Corporate Blvd.
Baton Rouge, Louisiana 70808
We are furnishing this opinion in connection with the Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act") filed on October 24, 1996 by Lamar
Advertising Company (the "Company") and certain subsidiaries of the Company
listed as Additional Registrants in the Registration Statement (the "Subsidiary
Guarantors") relating to $225,000,000 aggregate principal amount of Senior
Subordinated Notes (the "Notes") to be issued and sold by the Company and
guaranteed (the "Guarantees") by the Subsidiary Guarantors. The Notes are to
be issued pursuant to an Indenture (the "Indenture") between the Company and
State Street Bank and Trust Company, as trustee (the "Trustee"), the proposed
form of which is filed as an exhibit to the Registration Statement.
We have acted as your counsel in connection with the Registration
Statement and are familiar with the proceedings taken by the Company in
connection with the authorization, issuance and sale of the Notes. We have
made such examination as we consider necessary to render this opinion.
This opinion is limited to the federal laws of the United States and
the Delaware General Corporation Law. We note that the Indenture, Notes and
Guarantees and governed by the laws of the State of New York and, therefore, in
rendering this opinion, we have relied, as to the opinions set forth in
paragraphs 1 and 2 below, upon the opinion of Chadbourne & Parke LLP with
respect to matters of New York law. In addition, as to the opinions set forth
in paragraph 2 below, we have relied upon the opinion of Kean, Miller,
Hawthorne, D'Armand, McCowan & Jarman, L.L.P. with respect to matters relating
to the due incorporation and good standing of the Subsidiary Guarantors, the
corporate power and authority of the Subsidiary Guarantors to execute, deliver
and perform the Guarantees, and the due execution and delivery by the
Subsidiary Guarantors of the Guarantees.
Based upon the foregoing, we are of the opinion that:
1. Upon the due execution and delivery of the Indenture by the
Company and the Trustee and the due execution, authentication and delivery of
the Notes in accordance with the Indenture against payment therefor as
contemplated by the Registration Statement, the Notes will be valid and legally
binding obligations of the Company, subject to bankruptcy,
<PAGE> 2
Lamar Advertising Company
November 19, 1996
Page 2
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
2. When the Notes are duly issued and delivered by the Company
and at the time any subsidiary of the Company becomes a Subsidiary Guarantor,
the Guarantee of such Subsidiary Guarantor will be the valid and legally
binding obligations of such Subsidiary Guarantor, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
In rendering the foregoing opinions, we express no opinion as to
federal or state laws relating to fraudulent transfers.
We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference to our firm under the caption
"Certain Legal Matters" in the Prospectus filed as part thereof.
Very truly yours,
/s/ Palmer & Dodge LLP
----------------------
Palmer & Dodge LLP
<PAGE> 1
EXHIBIT 5.2
[Kean, Miller, Hawthorne, D'Armond,
McCowan & Jarman, LLP letterhead]
November 19, 1996
Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
We are furnishing this opinion in connection with the Registration
Statement of Form S-3 (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act") filed on October 24, 1996 by Lamar
Advertising Company (the "Company") and certain subsidiaries of the Company
listed as Additional Registrants in the Registration Statement (the "Subsidiary
Guarantors") relating to $225,000,000 aggregate principle amount of Senior
Subordinated Notes (the "Notes") to be issued and sold by the Company and
guaranteed (the "Guarantees") by the Subsidiary Guarantors. The Notes are to
be issued pursuant to an Indenture (the "Indenture") between the Company and
State Street Bank and Trust Company, as trustee (the "Trustee"), the proposed
form of which is filed as an exhibit to the Registration Statement.
We have acted as corporate counsel in connection with the Registration
Statement and are familiar with the proceedings taken by the Company and the
Subsidiary Guarantors in connection with the authorization, issuance and sale
of the Notes and the Guarantees. We have made such examination as we consider
necessary to render this opinion.
Based upon the foregoing, we are of the opinion that:
1. Each of the Subsidiary Guarantors has been duly incorporated
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
execute, deliver and perform its Guarantee.
2. The Guarantees have been duly authorized, executed and
delivered by each of the Subsidiary Guarantors, and no consent or approval of
any court or governmental agency or body is required for such execution and
delivery except consents or approvals as may be required under federal
securities laws or under state securities or Blue Sky laws.
We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference to our Firm under the caption
"Certain Legal Matters" in the Prospectus filed as part thereof.
Very truly yours,
KEAN, MILLER, HAWTHORNE,
D'ARMOND, McCOWAN & JARMAN, L.L.P
By: /s/ Ben R. Miller, Jr.
----------------------------
Ben R. Miller, Jr.
<PAGE> 1
[LETTERHEAD OF CHADBOURNE & PARKE LLP]
EXHIBIT 5.3
November 19, 1996
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Ladies and Gentlemen:
In connection with the registration under the Securities Act of
1933, as amended (the "Act") of $225,000,000 aggregate principal amount of
Senior Subordinated Notes due 2006 (the "Securities") of Lamar Advertising
Company, a Delaware corporation (the "Company"), and the related guarantees
(the "Guarantees") by certain subsidiaries of the Company (the "Subsidiary
Guarantors") listed as additional registrants in the registration statement on
Form S-3 under the Act filed with the Securities and Exchange Commission in
connection therewith, as amended to the date hereof (the "Registration
Statement"), we, as counsel to the Underwriters, have examined such corporate
records, certificates and other
<PAGE> 2
November 19, 1996
documents, and such questions of law, as we have deemed necessary as a basis for
the opinions hereinafter expressed. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity with the originals of all documents submitted to
us as copies. Capitalized terms used herein but not otherwise defined shall
have the respective meaning assigned to them in the Registration Statement.
Upon the basis of such examination, we advise you that, in our
opinion, when the Registration Statement has become effective under the Act,
the Indenture relating to the Securities and the Guarantees has been duly
authorized, executed and delivered by all parties thereto, the terms of the
Securities and the Guarantees and of their issuance and sale have been duly
established in conformity with the Indenture so as not to violate any
applicable law or result in a default under or breach of any agreement or
instrument binding upon the Company or any Subsidiary Guarantor and so as to
comply with any requirement or restriction imposed by any court or governmental
body having jurisdiction over the
-2-
<PAGE> 3
November 19, 1996
Company or any Subsidiary Guarantor, the Securities and Guarantees have been
duly authorized by the Company and the Subsidiary Guarantors, respectively, and
the Securities, with the Guarantees endorsed thereon, have been duly executed
and authenticated in accordance with the Indenture and issued and sold as
contemplated in the Registration Statement, the Securities and the Guarantees
will constitute valid and legally binding obligations of the Company and the
Subsidiary Guarantors, respectively, subject to bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other similar laws
affecting creditors' rights generally and by general equitable principles.
In rendering the foregoing opinion, we have assumed that each of
the Company and the Subsidiary Guarantors has been duly incorporated or
organized and is an existing corporation or partnership, as the case may be, in
good standing under the laws of its jurisdiction of incorporation or
organization, as the case may be, with corporate or partnership power and
authority, as the case may be, to
-3-
<PAGE> 4
November 19, 1996
execute, deliver and perform the Indenture, the Securities and the Guarantees,
to which such entity may be a party, and that the Securities and Guarantees are
valid and legally binding obligations of the Company and each Subsidiary
Guarantor, respectively, under the applicable laws of each such entity's
jurisdiction of incorporation or organization, as the case may be.
Our opinion herein is expressly limited to the laws of the
State of New York and we do not express any opinion herein concerning any other
law.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the references to us under the heading
"Certain Legal Matters" in the Registration Statement.
Very truly yours,
CHADBOURNE & PARKE LLP
-4-
<PAGE> 1
EXHIBIT 10.15
(EXECUTION COUNTERPART)
SEVENTH AMENDMENT
SEVENTH AMENDMENT dated as of October 31, 1996, between LAMAR
ADVERTISING COMPANY, a corporation duly organized and validly existing under
the laws of the State of Delaware (the "Company"); each of the Subsidiaries of
the Company identified under the caption "SUBSIDIARY GUARANTORS" on the
signature pages hereto (individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors" and, together with the Company, the
"Obligors"); each of the lenders that is a signatory hereto (individually a
"Bank" and, collectively, the "Banks"); and THE CHASE MANHATTAN BANK, as agent
for the Banks (in such capacity, together with its successors in such capacity,
the "Agent").
The Company, the Subsidiary Guarantors, the Banks and the Agent are
parties to a Credit Agreement dated as of May 19, 1993 (as heretofore modified
and supplemented and in effect on the date hereof, the "Credit Agreement").
The Company, the Subsidiary Guarantors, the Banks and the Agent wish to
increase the aggregate amount of the Revolving Credit Commitments under the
Credit Agreement from $20,000,000 to $50,000,000, and to amend the Credit
Agreement in certain other respects. Accordingly the parties hereto hereby
agree as follows:
Section 1. Definitions. Except as otherwise defined in this Seventh
Amendment, terms defined in the Credit Agreement are used herein as defined
therein.
Section 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Section 5 below, but effective as of the date hereof,
the Credit Agreement shall be amended as follows:
2.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect
references such as "hereunder", "hereby", "herein" and "hereof") shall be
deemed to be references to the Credit Agreement as amended hereby. References
in the Credit Agreement to "the Notes" shall be deemed to include reference to
the New Revolving Credit Notes referred to in Section 5.02 hereof.
2.02. The following definitions in Section 1.01 of the Credit
Agreement shall be amended in their entirety to read as follows:
"'Applicable Margin' shall means (a) with respect to Base Rate
Loans, 3/4% per annum; and (b) with respect to Eurodollar Loans, 2%
per annum; provided that if the Leverage Ratio as at the last day of
any fiscal quarter of the Company shall fall within any of the ranges
set forth in the schedule below then, subject to the delivery
Seventh Amendment
<PAGE> 2
2
to the Agent of a certificate of a senior financial officer of the
Company demonstrating such fact prior to the end of the next
succeeding fiscal quarter (accompanied by the financial statements
required to be delivered pursuant to Section 9.01(a) or 9.01(b), as
the case may be, hereof), the "Applicable Margin" for each Loan shall
be reduced to the rate for the respective Type of Loan set forth
opposite such range in the schedule below during the period commencing
on the Quarterly Date on or immediately following the date of receipt
of such certificate to but not including the next succeeding Quarterly
Date thereafter (except that notwithstanding the foregoing, if an
Event of Default shall have occurred and be continuing at the time of
delivery of such certificate or at any time following the same until
such next succeeding Quarterly Date, and the Agent acting on the
instructions of the Majority Banks shall have notified the Company
that this proviso shall not apply, the Applicable Margin for any such
Loan shall not as a consequence of this proviso be so reduced for the
period from and including the date of such notice to but excluding the
date such Event of Default shall have been cured to the reasonable
satisfaction of the Agent or the Majority Banks):
<TABLE>
<CAPTION>
Applicable Margin (% p.a.)
---------------------------------
Range of
Leverage Ratio Base Rate Loans Eurodollar Loans
-------------- ---------------------------------
<S> <C> <C>
Greater than or equal
to 5.00 to 1 3/4% 2%
Greater than or equal
to 4.50 to 1 and less
than 5.00 to 1 1/2% 1-3/4%
Greater than or equal
to 4.00 to 1 and less
than 4.50 to 1 1/4% 1-1/2%
Greater than or equal
to 3.50 to 1 and less
than 4.00 to 1 0% 1-1/4%
Less than 3.50 to 1 0% 1%"
</TABLE>
"'Interest Period' shall mean, with respect to any Eurodollar
Loan, each period commencing on the date such Eurodollar Loan is made
or converted from a Base Rate Loan or the last day of the next
preceding Interest Period for such Loan and ending on the numerically
corresponding day in the first, third or sixth or (with
Seventh Amendment
<PAGE> 3
3
the approval of all of the Banks) ninth or twelfth calendar month
thereafter, as the Company may select as provided in Section 4.05
hereof, except that each Interest Period that commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate
subsequent calendar month. Notwithstanding the foregoing: (i) if any
Interest Period for any Revolving Credit Loan would otherwise end
after the Revolving Credit Termination Date, such Interest Period
shall end on the Revolving Credit Termination Date; (ii) no Interest
Period for any Term Loan may commence before and end after any
Principal Payment Date unless, after giving effect thereto, the
aggregate principal amount of the Term Loans having Interest Periods
that end after such Principal Payment Date shall be equal to or less
than the aggregate principal amount of the Term Loans scheduled to be
outstanding after giving effect to the payments of principal required
to be made on such Principal Payment Date; (iii) each Interest Period
that would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next
preceding Business Day); and (iv) notwithstanding clause (i) above, no
Interest Period shall have a duration of less than one month and, if
the Interest Period for any Eurodollar Loan would otherwise be a
shorter period, such Loan shall not be available hereunder for such
period."
"'Leverage Ratio' shall mean, as at any date, the ratio of
Total Indebtedness on such date to Operating Cash Flow for the period
of twelve calendar months ending on or most recently prior to such
date."
"'Revolving Credit Commitment' shall mean, as to each Bank,
the obligation of such Bank to make Revolving Credit Loans in an
aggregate principal or face amount at any one time outstanding up to
but not exceeding the amount set opposite such Bank's name on Annex 1
hereto under the caption "Revolving Credit Commitment" (as the same
may be reduced at any time or from time to time pursuant to Section
2.04 hereof)."
"'Revolving Credit Termination Date' shall mean April 30, 1997
(of, if said date is not a Business Day, the Business Day most
immediately preceding said date)."
2.03. Section 1.01 of the Credit Agreement shall be amended by
deleting the definition of "Commitment Reduction Dates".
2.04. Section 2.04(b) of the Credit Agreement shall be amended to
read as follows:
"(b) [Intentionally deleted]"
Seventh Amendment
<PAGE> 4
4
2.05. Section 2.04(d) of the Credit Agreement shall be amended to
read as follows:
"(d) [Intentionally deleted]"
2.06. Section 2.10 of the Credit Agreement shall be amended by adding
the following new subsection (e) at the end thereof:
"(e) Cover for Letter of Credit Liabilities on the Revolving Credit
Termination Date. In the event that on the Revolving Credit
Termination Date there are outstanding Letter of Credit Liabilities,
the Company shall be required to provide cover for such Letter of
Credit Liabilities in an amount equal to the aggregate face amount of
the outstanding Letter of Credit Liabilities. The Company shall
effect the same by paying to the Agent immediately available funds in
an amount equal to the required amount, which funds shall be retained
by the Agent in the Collateral Account (as provided therein as
collateral security in the first instance for the Letter of Credit
Liabilities) until such time as the Letters of Credit shall have been
terminated and all of the Letter of Credit Liabilities paid in full."
2.07. Section 3.01(a) of the Credit Agreement shall be amended to
read as follows:
"(a) The Company hereby promises to pay to the Agent for account of
each Bank the entire outstanding principal amount of such Bank's
Revolving Credit Loans, and each Revolving Credit Loan shall mature,
on the Revolving Credit Termination Date."
2.08. Section 7.02 of the Credit Agreement shall be amended to add a
new paragraph to the end thereof to read as follows:
"In addition to the conditions precedent set forth above, it
shall be a condition precedent to any borrowing of Revolving Credit
Loans hereunder, or any issuance of a Letter of Credit hereunder, that
would increase the aggregate outstanding principal or face amount of
the Revolving Credit Loans and Letter of Credit Liabilities to an
amount greater than $20,000,000 that the Agent shall have received
evidence that:
(i) the Company shall be permitted to incur the
Indebtedness represented by such borrowing or issuance under the first
paragraph of Section 1009 of the Indenture,
(ii) the Subsidiary Guarantors shall be entitled to
Guarantee such Indebtedness under Clause (1) of Section 1010 of the
Indenture, and
(iii) the Liens provided under the Pledge Agreement shall
be permitted to secure such Indebtedness under Clause (1) of Section
1012 of the Indenture
Seventh Amendment
<PAGE> 5
5
and, in that connection the Company shall have delivered a certificate
of its chief financial officer certifying as to the foregoing and
setting forth a calculation demonstrating that the ratio set forth in
the first paragraph of Section 1009 of the Indenture, after giving
effect to such borrowing or issuance, shall be less than 5.5 to 1."
2.09. Section 9.13 of the Credit Agreement shall be amended by
replacing "$10,000,000" with "$15,000,000".
2.10 The Credit Agreement shall be amended by inserting as Annex 1
thereto Annex 1 hereto.
Section 3. Commitment Fee. Notwithstanding that the increase of the
commitments contemplated by Section 2 hereof shall not become effective until
the satisfaction of the conditions precedent specified in Section 5 hereof, for
purposes of calculating the amount of commitment fee payable under Section 2.05
of the Credit Agreement, the Commitments of the Banks shall be deemed to have
been so increased on the date hereof.
Section 4. Representations and Warranties. Each party hereto (other
than the Banks and the Agent) hereby represents and warrants to the Banks and
the Agent that the representations and warranties made by such party in each
Basic Document by which such party is bound are true and complete as if made on
and as of the date hereof and as if each reference in such representations and
warranties to the Credit Agreement included reference to the Credit Agreement
as amended by this Seventh Amendment.
Section 5. Conditions Precedent. As provided in Section 2 above, the
amendments to the Credit Agreement set forth in said Section 2 shall become
effective, as of the date hereof, upon the satisfaction of the following
conditions precedent:
5.01. Execution by All Parties. This Seventh Amendment shall have
been executed and delivered by each of the parties hereto.
5.02. Notes and Initial Loans. The Company shall have delivered to
the Agent for each Bank whose Revolving Credit Commitment is increasing (an
"Increasing Bank"), in exchange for the Revolving Credit Note heretofore
delivered to such Bank pursuant to Section 2.08 of the Credit Agreement, a new
Revolving Credit Note of the Company in substantially the form of Exhibit A-1
to the Credit Agreement, dated the date of the Revolving Credit Note being
exchanged, payable to such Bank in a principal amount equal to its Revolving
Credit Commitment (as increased hereby) and otherwise duly completed, and each
of such Revolving Credit Notes (a "New Revolving Credit Note") delivered to the
Increasing Banks shall constitute a "Revolving Credit Note" under the Credit
Agreement as amended hereby.
Seventh Amendment
<PAGE> 6
6
5.03 Documents. The Agent shall have received the following
documents, each of which shall be satisfactory to the Agent in form and
substance:
(1) Corporate Documents. Certified copies of the charter
and by-laws (or equivalent documents) of the Company (or, in the
alternative, a certification to the effect that none of such documents
has been modified since delivery thereof on the Closing Date pursuant
to the Credit Agreement) and of all corporate authority for each
Obligor (including, without limitation, board of director resolutions
and evidence of the incumbency of officers for each Obligor) with
respect to the execution, delivery and performance of this Seventh
Amendment and the Credit Agreement as amended hereby and the
extensions of credit under the Credit Agreement as amended hereby, the
New Revolving Credit Notes and each other document to be delivered by
each Obligor from time to time in connection with the Credit Agreement
as amended hereby (and the Agent and each Bank may conclusively rely
on such certificate until it receives notice in writing from each
Obligor to the contrary).
(2) Opinion of Counsel to the Obligors. An opinion of
Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, L.L.P., counsel
to the Obligors (and each Obligor hereby instructs such counsel to
deliver such opinion to the Banks and the Agent).
(3) TLC Properties II, Inc. Satisfaction of the
conditions precedent specified in Section 7.01 with respect to TLC
Properties II, Inc. as though it had been a Subsidiary Guarantor on
the date of the Credit Agreement, and evidence that all its capital
stock has been pledged under the Pledge Agreement.
(4) Other Documents. Such other documents as the Agent
or any Bank or special New York counsel to Chase may reasonably
request.
5.04. Pro Rata Adjustment. On the date the amendments to the Credit
Agreement set forth in Section 2 above shall become effective, the Company,
without regard to the provisions of Section 4.02 of the Credit Agreement, shall
have borrowed and prepaid Loans from the Banks in such amounts (and made such
other adjustments, including reallocating Letter of Credit Interests held by
them) as shall be necessary, so that after giving effect to such borrowing and
prepayments (and adjustments), the Loans and Letter of Credit Interests shall
be held by the Banks pro rata in accordance with the respective amounts of
their Commitments (as increased hereby). In such connection, the company shall
make any payments required to be made under Section 5.05 of the Credit
Agreement as a result of any such prepayments.
Section 6. New Subsidiary Guarantor. Subject to Section 5 hereof,
each of the parties hereto, by its signature below, hereby agrees that, from
and after the date hereof,
Seventh Amendment
<PAGE> 7
7
TLC Properties II, Inc. is and shall be a Restricted Subsidiary and a party to,
and a Subsidiary Guarantor under, the Credit Agreement.
Section 7. Miscellaneous. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This Seventh
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same amendatory instrument and any of the
parties hereto may execute this Seventh Amendment by signing any such
counterpart. This Seventh Amendment shall be governed by, and construed in
accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Amendment to be duly executed and delivered as of the day and year first above
written.
LAMAR ADVERTISING COMPANY
By:
-------------------------
Title:
SUBSIDIARY GUARANTORS
---------------------
THE LAMAR CORPORATION
INTERSTATE LOGOS, INC.
NEBRASKA LOGOS, INC.
OKLAHOMA LOGO SIGNS, INC.
MISSOURI LOGOS, INC.
OHIO LOGOS, INC.
UTAH LOGOS, INC.
TEXAS LOGOS, INC.
MISSISSIPPI LOGOS, INC.
GEORGIA LOGOS, INC.
SOUTH CAROLINA LOGOS, INC.
VIRGINIA LOGOS, INC.
MINNESOTA LOGOS, INC.
LAMAR ADVERTISING OF MOBILE, INC.
LAMAR ADVERTISING OF COLORADO
SPRINGS, INC.
LAMAR ADVERTISING OF SOUTH
MISSISSIPPI, INC.
LAMAR ADVERTISING OF JACKSON, INC.
LAMAR TEXAS GENERAL PARTNER, INC.
Seventh Amendment
<PAGE> 8
8
LAMAR ADVERTISING OF SOUTH
GEORGIA, INC.
LAMAR TENNESSEE LIMITED PARTNER,
INC.
TLC PROPERTIES, INC.
LAMAR PENSACOLA TRANSIT, INC.
MICHIGAN LOGOS, INC.
NEW JERSEY LOGOS, INC.
TLC PROPERTIES II, INC.
For each of the above Subsidiary
Guarantors
By:
-------------------------
Title:
LAMAR TEXAS LIMITED PARTNERSHIP
By Lamar Texas General Partner,
Inc., its general partner
By:
-------------------------
Title:
LAMAR TENNESSEE LIMITED
PARTNERSHIP
LAMAR TENNESSEE LIMITED
PARTNERSHIP II
By The Lamar Corporation, their
general partner
By:
-------------------------
Title:
LAMAR AIR, L.L.C.
By The Lamar Corporation, its
manager
By:
-------------------------
Title:
Seventh Amendment
<PAGE> 9
9
BANKS
-----
THE CHASE MANHATTAN BANK
By:
-------------------------
Title:
BANK ONE, LOUISIANA,
NATIONAL ASSOCIATION
By:
-------------------------
Title:
CIBC INC.
By:
-------------------------
Title:
Title:
THE CHASE MANHATTAN BANK
as Agent
By:
-------------------------
Title:
Seventh Amendment
<PAGE> 10
10
ANNEX 1
<TABLE>
<CAPTION>
Revolving Credit
Banks Commitment
- ----- ----------------
<S> <C>
THE CHASE MANHATTAN BANK $31,313,131.27
BANK ONE, LOUISIANA
NATIONAL ASSOCIATION 9,764,309.82
CIBC INC. 8,922,558.91
Total $50,000,000.00
==============
</TABLE>
Seventh Amendment
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Lamar Advertising Company:
We consent to the use of our report included herein and to the references
to our firm under the headings "Selected Consolidated Historical and Pro Forma
Financial and Operating Data" and "Experts" in the prospectus.
KPMG Peat Marwick LLP
New Orleans, Louisiana
November 19, 1996
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Partners
Outdoor East, L.P.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Charlotte, North Carolina
November 19, 1996
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors November 19, 1996
FKM Advertising Co., Inc.
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
McGrail Merkel Quinn & Associates
