<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1996
REGISTRATION NO. 333-05479
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 3
FORM S-1
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 Classification Code Number) Identification Number)
Organization)
</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:
<TABLE>
<S> <C>
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
</TABLE>
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
LAMAR ADVERTISING COMPANY
CROSS-REFERENCE SHEET SHOWING LOCATION IN THE
PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF PART I OF FORM S-1
(PURSUANT TO ITEM 501 OF REGULATION S-K)
<TABLE>
<CAPTION>
REGISTRATION STATEMENT
ITEMS AND HEADING LOCATION IN PROSPECTUS
------------------------------------------- -------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Additional
Information; Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............. Prospectus Summary; Risk Factors
4. Use of Proceeds............................ Prospectus Summary; Use of Proceeds
5. Determination of Offering Price............ Underwriting
6. Dilution................................... Dilution
7. Selling Security Holders................... Principal and Selling Stockholders
8. Plan of Distribution....................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered............................... Outside Front Cover Page; Description of
Capital Stock
10. Interests of Named Experts and Counsel..... Experts; Certain Legal Matters
11. Information with Respect to the
Registrant............................... Outside Front Cover Page; Prospectus
Summary; Risk Factors; The Company; Use of
Proceeds; Dividend Policy;
Capitalization; Selected Financial and
Operating Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions;
Principal and Selling Stockholders;
Shares Eligible for Future Sale;
Description of Indebtedness; Description
of Capital Stock; Consolidated Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
</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 JULY 31, 1996
PROSPECTUS
4,735,000 SHARES
[LAMAR LOGO]
CLASS A COMMON STOCK
------------------
Of the 4,735,000 shares of Class A Common Stock, $0.001 par value per share
(the "Class A Common Stock"), offered hereby, 4,000,000 shares are being issued
and sold by Lamar Advertising Company (the "Company") and 735,000 shares are
being sold by certain stockholders of the Company (the "Selling Stockholders").
The Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. See "Principal and Selling Stockholders." Prior to this
offering (the "Offering"), there has been no public market for the Class A
Common Stock. It is currently anticipated that the initial public offering price
of the Class A Common Stock will be between $15.00 and $17.00 per share. See
"Underwriting" for information relating to the factors considered in determining
the initial public offering price. Application has been made to approve the
shares of Class A Common Stock for quotation on The Nasdaq National Market under
the symbol "LAMR."
Upon consummation of this Offering, the Company's authorized capital stock
will include the Class A Common Stock and shares of Class B Common Stock, $0.001
par value per share (the "Class B Common Stock"). The economic rights of the
Class A Common Stock and the Class B Common Stock (collectively, the "Common
Stock") will be identical, except that each share of Class A Common Stock will
entitle the holder thereof to one vote in respect of matters submitted for the
vote of holders of Common Stock, whereas each share of Class B Common Stock will
entitle the holder thereof to ten votes on such matters. Immediately after this
Offering, the Reilly Family Limited Partnership, of which Kevin P. Reilly, Jr.,
the Company's Chief Executive Officer, is managing general partner, will have
the power to vote all the outstanding shares of Class B Common Stock
(representing approximately 93.1% of the aggregate voting power of the Common
Stock, assuming no exercise of the Underwriters' over-allotment option). Each
share of Class B Common Stock will convert automatically into one share of Class
A Common Stock upon sale or other transfer to a party other than a Permitted
Transferee (as defined herein). See "Description of Capital Stock."
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS FOR A DISCUSSION
OF RISK FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
SHARES OF CLASS A COMMON STOCK OFFERED HEREBY.
------------------
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>
============================================================================================================
UNDERWRITING PROCEEDS
PRICE TO DISCOUNTS AND PROCEEDS TO TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share $ $ $ $
- ------------------------------------------------------------------------------------------------------------
Total(3) $ $ $ $
============================================================================================================
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $ , all of which will be
paid by the Company.
(3) The Company and certain Selling Stockholders have granted to the
Underwriters a 30-day option to purchase an additional 479,000 and
231,250 shares, respectively, of Class A Common Stock on the same terms
as set forth above solely to cover over-allotments, if any. See
"Underwriting." If all such 710,250 shares are purchased, the total Price
to Public, Underwriting Discounts and Commissions, Proceeds to Company
and Proceeds to Selling Stockholders will be $ , $ ,
$ and $ , respectively. See "Underwriting." The Company
will not receive any of the proceeds from the sale of shares by the
Selling Stockholders pursuant to the over-allotment option.
------------------
The shares of Class A Common Stock are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if received and
accepted by them and subject to certain conditions. It is expected that
certificates for shares of Class A Common Stock will be available for delivery
on or about , 1996 at the offices of Smith Barney Inc., 333 W. 34th
Street, New York, New York 10001.
------------------
SMITH BARNEY INC.
ALEX. BROWN & SONS
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
, 1996
<PAGE> 4
[COMPANY MAP -- OUTDOOR MARKETS AND LOGO STATES]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET 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 in this Prospectus. Unless otherwise provided herein, the "Company"
refers to Lamar Advertising Company, together with its consolidated
subsidiaries. Unless otherwise indicated, the information in this Prospectus (i)
gives effect to the amendment and restatement of the Company's certificate of
incorporation and by-laws and related actions regarding the restructuring of the
Company's capital stock immediately prior to this Offering as more fully
described below under "The Company" and (ii) assumes the Underwriters'
over-allotment option is not exercised.
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
April 30, 1996, the Company operated approximately 23,000 outdoor advertising
displays in 13 southeastern, midwestern and mid-Atlantic states. In each of the
Company's 33 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 12
of the 20 states which have a privatized logo sign program. In addition, the
Company has executed an agreement to acquire the logo sign franchises in
Tennessee and Kansas and has been awarded the logo sign franchise for the state
of New Jersey. As of April 30, 1996, the Company maintained over 13,500 logo
sign structures containing over 34,000 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
7 of its 33 primary markets. For the twelve months ended October 31, 1995, the
Company reported net revenues and operating income of $102.4 million and $26.9
million, respectively. For the six months ended April 30, 1996, the Company
reported net revenues and operating income of $56.6 million and $14.0 million,
respectively, compared to $50.0 million and $11.8 million, respectively, for the
six months ended April 30, 1995.
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. Through its local offices,
the Company offers a full complement of outdoor advertising services coupled
with local production facilities, management and account executives in order to
be more responsive to specific local market demands. 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 which the Company believes provide it with
an opportunity to gain a leading revenue share. 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.
3
<PAGE> 6
Management believes that operating in small to medium-sized markets
provides the Company with a diverse and reliable mix of local advertisers,
geographic diversification, direct transactions which eliminate many agency
commissions, rate integrity, stable real estate portfolios 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.
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 24 years. The average tenure of the Company's 33 local
managers is 11 years. In addition, each of the four regional managers and 30 of
the 33 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 employs a total of 120 local account executives. 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.
Outdoor advertising 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. 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.
As used in this Prospectus, the term "market" refers to the geographic area
represented by the Fall 1995 Arbitron Radio Metro Market ranking, as determined
by The Arbitron Company, which ranks, according to population of persons 12
years or older, the largest 261 markets in the U.S. -- from New York, NY (1) to
Casper, WY (261). The Company believes that the Metro Market ranking is a
standard measure of market size used by the media industry.
4
<PAGE> 7
The following table sets forth certain information regarding the Company's
33 primary outdoor advertising markets and the Company's logo sign franchises.
THE COMPANY'S 33 PRIMARY OUTDOOR ADVERTISING MARKETS
AND LOGO SIGN FRANCHISES(1)
OUTDOOR ADVERTISING
<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4)
------------------------------------------------------------
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS NET REVENUES(5)
- --------------------------------------------------------- -------------- --------- ------- ---------------
(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................................................. 224 123 508 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............................................... 104 184 372 2,586
Fort Myers............................................. 77 133 297 2,153
Panama City............................................ 223 223 306 1,962
Tallahassee............................................ 167 121 302 1,908
Fort Walton............................................ 206 151 220 1,627
Daytona Beach.......................................... 93 54 339 1,456
------ ----- -------
Total............................................ 1,116 2,498 14,805
ALABAMA
Mobile................................................. 84 381 630 4,755
Montgomery............................................. 142 248 499 3,598
------ ----- -------
Total............................................ 629 1,129 8,353
MISSISSIPPI
Jackson................................................ 118 268 698 4,420
Gulfport............................................... 134 207 559 2,953
------ ----- -------
Total............................................ 475 1,257 7,373
GEORGIA
Savannah............................................... 153 344 604 3,307
Augusta................................................ 116 163 471 2,482
Albany................................................. 241 92 271 1,031
------ ----- -------
Total............................................ 599 1,346 6,820
VIRGINIA
Richmond............................................... 56 309 616 4,288
Roanoke................................................ 101 83 450 1,750
------ ----- -------
Total............................................ 392 1,066 6,038
TEXAS
Brownsville............................................ 63 204 873 2,577
Beaumont............................................... 127 204 308 2,165
Wichita Falls.......................................... 233 89 165 902
------ ----- -------
Total............................................ 497 1,346 5,644
KENTUCKY
Lexington.............................................. 105 117 507 3,127
WEST VIRGINIA
Wheeling............................................... 212 261 551 2,626
COLORADO
Colorado Springs....................................... 98 141 355 2,486
OHIO
Dayton................................................. 52 3 529 1,960
------ ----- -------
TOTAL.................................................... 6,590 15,959 $92,334
</TABLE>
5
<PAGE> 8
LOGO SIGN FRANCHISES
<TABLE>
<CAPTION>
LOGO LOGO
YEAR ADVERTISING YEAR ADVERTISING
FRANCHISE AWARDED DISPLAYS(6) FRANCHISE AWARDED DISPLAYS(6)
- ----------- ------- ----------- -------------- ------- -----------
<S> <C> <C> <C> <C> <C>
Nebraska 1989 784 Georgia 1995 5,236
Oklahoma 1989 1,363 Minnesota(8) 1995 1,922
Utah 1990 1,463 South Carolina 1995 1,887
Missouri(7) 1991 7,619 Virginia 1995 4,748
Ohio 1992 5,447 Michigan 1996 --(9)
Texas 1993 924 New Jersey 1996 --(9)
Mississippi 1993 2,761
</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 is not included.
(3) Indicates the Fall 1995 Arbitron Radio Metro Market ranking within which the
office is located, as determined by The Arbitron Company. The Company
believes that the Metro Market ranking, which ranks, according to population
of persons 12 years or older, the largest 261 markets in the U.S., is a
standard measure of market size used by the media industry. Houma and
Clarksville are not ranked.
(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.
(5) 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) Number of logo advertising displays as of April 30, 1996, which totals
34,154.
(7) Franchise operated by a 66.7% owned partnership.
(8) Franchise operated by a 95.0% owned partnership.
(9) The Company was recently awarded the New Jersey and Michigan franchises,
and, accordingly, no logo signs had been erected as of April 30, 1996.
The Company's address is 5551 Corporate Boulevard, Baton Rouge, Louisiana
70808. Its telephone number is (504) 926-1000.
6
<PAGE> 9
THE OFFERING
Class A Common Stock offered by
the Company...................... 4,000,000 shares
Class A Common Stock offered by
the Selling Stockholders......... 735,000 shares
Common Stock to be outstanding
after the Offering............... 14,446,735 shares of Class A Common Stock
14,035,289 shares of Class B Common Stock
28,482,024 total shares of Common Stock
Use of proceeds.................. $5 million for payment of contingent
consideration in connection with certain
previous common stock redemptions; $43.8
million to repay certain outstanding bank
debt, contingent upon approval of
amendments to the Company's Senior Note
Indenture; and the remainder for general
corporate purposes, including possible
acquisitions and repayment of indebtedness.
See "Use of Proceeds."
Voting rights.................... 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 be otherwise required by Delaware law)
on all matters submitted to a vote of
stockholders, with each share of Class A
Common Stock entitled to one vote and each
share of Class B Common Stock entitled to
ten votes. 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 or entity other
than a Permitted Transferee (as defined
under "Description of Capital
Stock -- Common Stock"). Each class of
Common Stock otherwise has identical
rights.
Proposed Nasdaq National
Market Symbol.................. LAMR
Dividend policy.................. The Company does not expect to pay
dividends on the Common Stock in the
foreseeable future. The Company's ability
to pay dividends in the future to holders
of the Common Stock is subject to
limitations and prohibitions contained in
certain debt instruments to which the
Company is a party and to the rights of the
holders of its preferred stock. See
"Dividend Policy."
7
<PAGE> 10
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, FISCAL YEAR ENDED OCTOBER 31,
----------------- ------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- -------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.............................. $56,645 $49,999 $102,408 $84,473 $66,524 $61,955 $62,262
Operating expenses:
Direct advertising expenses............. 20,893 18,184 34,386 28,959 23,830 22,783 22,143
General and administrative expenses..... 14,695 13,243 27,057 24,239 19,504 18,225 17,703
Depreciation and amortization........... 7,028 6,768 14,090 11,352 8,924 8,881 8,826
Total operating expenses......... 42,616 38,195 75,533 64,550 52,258 49,889 48,672
Operating income.......................... 14,029 11,804 26,875 19,923 14,266 12,066 13,590
Interest expense.......................... 7,852 7,857 15,783 13,599 11,502 10,454 11,650
Earnings before income taxes and
extraordinary item...................... 5,451 2,802 8,308 5,227 1,677 2,625 936
Income tax expense (benefit)(1)........... 2,190 (1,767) (2,390) (2,072) 476 270 207
Net earnings (loss)(2).................... 3,261 4,569 10,698 7,299 (653) 2,355 729
Net earnings (loss) applicable to common
stock................................... 3,079 4,569 10,698 7,299 (653) 2,355 729
Earnings per common share before
extraordinary item(3)................... $ .11 $ .14 $ .32 $ .21 $ .03 $ .07 $ .02
======= ======= ======== ======= ======= ======= =======
Net earnings (loss) per common share(3)... $ .11 $ .14 $ .32 $ .21 $ (.02) $ .07 $ .02
======= ======= ======== ======= ======= ======= =======
OTHER DATA:
Operating cash flow(4).................... $21,057 $18,572 $ 40,965 $31,275 $23,190 $20,947 $22,416
Cash flows from operating activities(5)... 8,486 4,977 25,065 15,214 12,411 12,930 10,328
Cash flows from investing activities(5)... (18,403) (7,030) (17,817) (53,569) (10,064) (7,273) (4,236)
Cash flows from financing activities(5)... 5,783 (2,855) (9,378) 37,147 6,802 (6,734) (5,133)
Capital expenditures:
Outdoor advertising..................... 2,676 2,628 6,643 4,997 2,374 1,695 1,847
Logos................................... 5,849 330 1,567 2,761 2,009 3,056 629
Number of outdoor advertising
displays(6)............................. 23,209 22,555 22,547 22,369 17,659 17,835 18,829
Number of logo advertising displays(6).... 34,154 19,161 24,219 18,266 13,820 11,371 5,027
Cumulative logo sign franchises(6)(7)..... 12 8 11 7 7 5 4
</TABLE>
<TABLE>
<CAPTION>
AS OF APRIL 30, 1996
---------------------------
ACTUAL AS ADJUSTED(8)
-------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ 1,752 $ 55,522
Working capital............................. 1,164 54,934
Total assets................................ 142,360 196,130
Total long-term obligations................. 153,567 173,567
Stockholders' equity (deficit).............. (28,288) 5,482
</TABLE>
- ---------------
(1) 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 six months ended April 30, 1996, compared to the income tax benefit
for the same period in the prior year.
(2) Includes, in 1993, an extraordinary loss on debt extinguishment, net of an
income tax benefit, of $1.9 million.
(3) After giving effect to the proposed stock split and subsequent exchanges
discussed under "The Company."
(4) "Operating Cash Flow" 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, operating cash flow 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.
(5) 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.
(6) As of the end of the period.
(7) In May 1996, the Company was awarded the logo sign franchise for the state
of New Jersey.
(8) Adjusted for the Offering and the other matters discussed under "The
Company;" does not give effect to the possible repayment of $43.8 million of
outstanding bank debt. See "Use of Proceeds."
8
<PAGE> 11
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Class A Common Stock offered hereby.
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 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.
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. 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 -- Customers." 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 addition, the United States
Food and Drug Administration recently proposed regulations which would prohibit
the use of pictures and color in tobacco advertising and restrict the
9
<PAGE> 12
proximity of outdoor tobacco advertising to schools and playgrounds. While such
regulations have not been adopted, 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
some of 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 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.
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. 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, that acquisitions can be completed on
terms acceptable to the Company, or that any acquisitions that are completed can
be integrated successfully into the Company. While the Company continues to
evaluate acquisition opportunities, the Company has not entered into any
definitive agreement or understanding with respect to any particular acquisition
as of the date of this Prospectus, except with respect to the acquisition of the
Tennessee and Kansas logo sign franchises for an aggregate purchase price of
$1.4 million. The Company has entered into letters of intent to purchase certain
10
<PAGE> 13
outdoor advertising properties for an aggregate purchase price of $11.2 million.
There is no assurance that any of these acquisitions will be consummated. 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 in
operating this business.
RISKS IN OBTAINING AND RETAINING LOGO SIGN FRANCHISES
State 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. Further,
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 four 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."
SUBSTANTIAL INDEBTEDNESS OF THE COMPANY
The Company has substantial indebtedness and, subject to the terms of the
covenants included in the Indenture (the "Senior Note Indenture") governing its
11% Senior Secured Notes due May 15, 2003 (the "Senior Notes") and in its bank
credit agreements (the "Bank Credit Agreements"), may incur additional
indebtedness in the future. See "Description of Indebtedness." At April 30,
1996, after giving effect to the issuance of ten-year subordinated notes being
issued at the time of completion of this Offering as described under "Certain
Transactions," the Company's total long-term debt was approximately $171.7
million. Annual interest expense for fiscal 1995 was approximately $15.8 million
or 15.4% of net revenues and, after giving effect to the issuance of the
ten-year subordinated notes, would have been approximately $17.4 million or
17.0% of net revenues. Additionally, at April 30, 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. 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.
In addition, the entire outstanding principal amount of the Senior Notes will
become due in 2003, and the Company may be required to obtain additional debt or
equity financing or sell assets to make such principal payment. 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 Bank Credit Agreements or holders of
other debt of the Company.
11
<PAGE> 14
The level of the Company's indebtedness could have important consequences
to stockholders, including: (i) a substantial part of the Company's cash flow
from operations must be dedicated to debt service and will not be available for
other purposes; (ii) the Company's ability to obtain additional financing in the
future, if needed, may be limited; (iii) the Company's leveraged position and
covenants contained in the Senior Note Indenture and the Bank Credit Agreements
(or any replacements thereof) could limit its ability to expand and make
acquisitions; (iv) the Senior Note Indenture and Bank Credit Agreements contain
certain restrictive covenants, including covenants that restrict or prohibit the
payment of dividends or other distributions by the Company to its stockholders;
and (v) the Company's level of indebtedness could make it more vulnerable to
economic downturns, limit its ability to withstand competitive pressures and
limit its flexibility in reacting to changes in its industry and economic
conditions generally. Certain of the Company's competitors currently operate on
a less leveraged basis and may have greater operating and financial flexibility
than the Company. In addition, in the event of a liquidation of the Company, the
Class A and Class B Common Stock would be subordinate to the Company's debt
instruments, as well as other indebtedness incurred, the Class A Preferred Stock
and, possibly, any outstanding preferred stock which may be issued in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources," "Description of
Indebtedness" and "Description of Capital Stock."
RESTRICTIVE COVENANTS IN DEBT INSTRUMENTS
The Company's Bank Credit Agreements and Senior Note Indenture contain
numerous restrictive covenants which, among other things, restrict the ability
of the Company to dispose of assets, incur or repay debt, pay dividends, redeem
stock, make capital expenditures and make certain investments or acquisitions
and which otherwise restrict corporate activities. The Company has expanded in
part through acquisitions that have required the consent of its lenders under
the Bank Credit Agreements and, while the Company has been able to obtain such
consents in the past, there can be no assurance that the Company will be able to
obtain such consents as necessary to make future acquisitions. In addition,
pursuant to the Bank Credit Agreements, the Company is required to maintain
specified financial ratios and levels, including cash interest coverage, fixed
charges coverage and total debt ratios. The ability of the Company to comply
with such provisions will depend on its future performance, which performance is
subject to prevailing economic, financial and business conditions and other
factors beyond the Company's control. See "Description of Indebtedness."
STOCKHOLDERS' DEFICIT
At April 30, 1996 and October 31, 1995, the Company had a stockholders'
deficit of $28.3 million and $28.2 million, respectively. The deficit results
primarily from net losses that were incurred during the fiscal years ended
October 31, 1983 through 1990 caused primarily by high levels of depreciation
and amortization of fixed assets and acquired intangibles, and from stock
redemptions and dividends. Although the stockholders' deficit declined by
approximately $9.2 million in fiscal 1995, primarily as a result of net
earnings, there can be no assurance that this trend will continue. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of the Class A Common Stock offered hereby will suffer an
immediate and substantial dilution in the net tangible book value of the Common
Stock from the initial public offering price. See "Dilution."
CONTROLLING STOCKHOLDER
Upon consummation of this Offering, the Reilly Family Limited Partnership,
of which Kevin P. Reilly, Jr., the Company's Chief Executive Officer, is the
managing general partner, will beneficially own shares of the Company's Common
Stock having approximately 93.1% of the total voting power of the Common Stock.
As a result, Mr. Reilly, or his successor as managing general partner, will
effectively be able to control the outcome of matters requiring a stockholder
vote, including electing directors, adopting or amending certain provisions of
the Company's certificate of incorporation and by-laws and approving or
preventing certain mergers or other similar transactions, such as a sale of
substantially all the Company's assets (including
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<PAGE> 15
transactions that could give holders of the Company's Class A Common Stock the
opportunity to realize a premium over the then-prevailing market price for their
shares). In addition, upon consummation of this Offering, the Company's
officers, directors and their respective affiliates, other than the Reilly
Family Limited Partnership, will beneficially own shares of the Company's Common
Stock having approximately 2.6% of the total voting power of the Company's
Common Stock. Therefore, purchasers of Class A Common Stock offered hereby will
become minority stockholders of the Company and will be unable to control the
management or business policies of the Company. Moreover, subject to contractual
restrictions and general fiduciary obligations, the Company is not prohibited
from engaging in transactions with its management and principal stockholders, or
with entities in which such persons are interested. The Company's certificate of
incorporation does not provide for cumulative voting in the election of
directors and, as a result, the controlling stockholders can elect all the
directors if they so choose.
CERTAIN ANTI-TAKEOVER PROVISIONS
Prior to the completion of the Offering, the Company will adopt an amended
and restated certificate of incorporation and amended and restated by-laws.
Certain provisions of these documents may have the effect of discouraging a
third party from making an acquisition proposal for the Company and thereby
inhibit a change in control of the Company in circumstances that could give the
holders of the Class A Common Stock the opportunity to realize a premium over
the then prevailing market price of such stock. Such provisions may also
adversely affect the market price of the Class A Common Stock. For example, the
Company's certificate of incorporation will authorize the issuance of "blank
check" preferred stock (the "Preferred Stock") with such designations, rights
and preferences as may be determined from time to time by the Board of
Directors. In the event of issuance, such Preferred Stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing
a change in control of the Company. In addition, the issuance of Preferred Stock
may adversely affect the voting and dividend rights, rights upon liquidation and
other rights of the holders of Common Stock (including the purchasers of Class A
Common Stock in this Offering). Although the Company has no present intention to
issue any shares of such Preferred Stock, the Company retains the right to do so
in the future. See "Description of Capital Stock -- Preferred Stock."
Furthermore, the Company is subject to Section 203 of the Delaware General
Corporation Law. The existence of this provision, as well as the control of the
Company by the Reilly Family Limited Partnership, would be expected to have an
anti-takeover effect, including possibly discouraging takeover attempts that
might result in a premium over the market price for the shares of Class A Common
Stock. See "Description of Capital Stock" and "Principal and Selling
Stockholders."
ABSENCE OF PRIOR PUBLIC MARKET; DETERMINATION OF OFFERING PRICE; POSSIBLE
VOLATILITY OF STOCK PRICE
Prior to this Offering, there has been no public market for the Class A
Common Stock of the Company. There can be no assurance that, following this
Offering, an active trading market for the Class A Common Stock will develop or
be sustained or that the market price of the Class A Common Stock will not
decline below the initial public offering price. The initial public offering
price will be determined by negotiations among the Company and the
Representatives of the Underwriters and will not necessarily be indicative of
the market price of the Class A Common Stock after this Offering. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. From time to time, the stock market
experiences significant price and volume volatility, which may affect the market
price of the Class A Common Stock for reasons unrelated to the Company.
BENEFITS OF OFFERING TO CERTAIN STOCKHOLDERS
Approximately $1.25 million of the net proceeds to the Company of the
Offering will be paid to executive officers, directors, beneficial owners of 5%
or more of the Common Stock and their affiliates in satisfaction of contingent
consideration due in connection with prior repurchases of common stock. See "Use
of Proceeds." Of this amount, approximately $362,000 is payable to Charles W.
Lamar, III, approximately $731,000 is payable to Mary Lee Lamar Dixon, and
approximately $161,000 is payable to Gerald H. Marchand. Such persons will also
receive approximately $5.0 million aggregate principal amount of ten-year
subordinated notes
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<PAGE> 16
of the Company as part of such contingent consideration. Mr. Lamar and Ms. Dixon
are also Selling Stockholders and will receive $930,000 and $1,860,000,
respectively, in net proceeds from sales of Class A Common Stock in the
Offering.
MANAGEMENT DISCRETION OVER USE OF NET PROCEEDS
A substantial portion of the net proceeds of the Offering will be available
for general corporate purposes, including possible acquisitions and repayment of
indebtedness. Accordingly, management will have considerable discretion over the
use of such proceeds and may use them without stockholder approval. If the
Company receives the requisite consent of the holders of its Senior Notes,
however, it plans to use a considerable portion of this amount for repayment of
indebtedness. In that event, though, it would be able to reborrow the amounts
repaid on a discretionary basis. See "Use of Proceeds."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market after
this Offering could adversely affect the prevailing market price of such shares.
In addition to the 4,735,000 shares of Class A Common Stock offered hereby, as
of the date of this Prospectus, there will be 23,747,024 shares of Common Stock
outstanding, all of which are "restricted" shares (the "Restricted Shares")
under the Securities Act of 1933, as amended (the "Securities Act"). Of the
Restricted Shares, 715,922 will be eligible for sale immediately following this
Offering subject to certain volume and other resale restrictions pursuant to
Rule 144 under the Securities Act. Beginning 180 days after such date, an
additional 23,031,102 Restricted Shares will first become eligible for sale in
the public market subject to certain volume and resale restrictions pursuant to
Rule 144 under the Securities Act, upon the expiration of certain lock-up
agreements with the Underwriters. See "Principal and Selling Stockholders" and
"Shares Eligible for Future Sale."
ABSENCE OF DIVIDENDS
The Company does not anticipate paying dividends on its Common Stock in the
foreseeable future. In addition, as stated above, the Company's Bank Credit
Agreements and Senior Note Indenture place limitations on the Company's ability
to pay dividends and make other distributions on its Common Stock, and the
Company's Class A Preferred Stock is entitled to preferential dividends before
any dividends may be paid on the Common Stock. See "Dividend Policy,"
"Description of Capital Stock" and "Description of Indebtedness."
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<PAGE> 17
THE COMPANY
The Company is one of the largest and most experienced owners and operators
of outdoor advertising structures in the United States. The Company also
operates the largest logo sign business in the United States and has recently
expanded into the transit advertising business.
Prior to this Offering, the Company's equity has been privately held, with
the Reilly Family Limited Partnership holding a controlling interest. See
"Principal and Selling Stockholders."
Immediately prior to this Offering, the Company will adopt an Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation") and
By-Laws (the "By-Laws"). The Certificate of Incorporation will provide for Class
A Common Stock, Class B Common Stock, Class A Preferred Stock and "blank check"
preferred stock. See "Description of Capital Stock." Also immediately prior to
this Offering, the Company will effect an approximate 778.9 for one stock split
of its existing common stock, following which the Company's current stockholders
will exchange such common stock on a one-for-one basis for Class A Common Stock
or, in the case of the Reilly Family Limited Partnership, Class B Common Stock.
The holders of Class A and Class B Common Stock will have identical economic
rights and will vote together as a single class (except as may otherwise be
required under Delaware law) on all matters submitted to a vote of stockholders;
however, in any such vote, each share of Class A Common Stock will be entitled
to one vote and each share of Class B Common Stock will be entitled to ten
votes. Each share of the Company's Class B Common Stock automatically converts
into a share of Class A Common Stock upon transfer to a person or entity other
than a Permitted Transferee, as defined in "Description of Capital Stock."
In October 1995 and March 1996, the Company repurchased 1,220,500 and
3,617,884 shares, respectively, of its then outstanding common stock (as
adjusted to reflect the stock split referred to above). In satisfaction of the
rights of the holders of those shares to receive additional consideration upon
consummation by the Company of this Offering, the Company will pay such holders
$5.0 million from the proceeds of this Offering and issue to them $20.0 million
aggregate principal amount of ten-year subordinated notes. These notes will bear
interest at a rate equal to 100 basis points over the ten-year Treasury Note
rate in effect ten days prior to their issuance and will amortize monthly until
their maturity in 2006. Also in March 1996, the Company issued shares of its
Class A Preferred Stock with an aggregate liquidation preference of $3.6 million
to certain of its stockholders in exchange for shares of its then outstanding
common stock. The Class A Preferred Stock is entitled to cumulative dividends at
the rate of 10% per annum. See "Certain Transactions."
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<PAGE> 18
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 4,000,000 shares of
Class A Common Stock offered by it hereby are estimated to be approximately
$58,770,000 (or approximately $65,897,520 if the Underwriters' over-allotment
option to purchase an additional 479,000 shares from the Company is exercised in
full), after deducting estimated expenses and underwriting discounts and
assuming an initial offering price of $16.00 per share.
The Company intends to use approximately $5.0 million of such net proceeds
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 will also issue to such stockholders $20.0 million aggregate
principal amount of ten-year subordinated notes as the balance of the contingent
consideration. See "Description of Indebtedness -- Subordinated Notes" and
"Certain Transactions." The remaining net proceeds from this Offering, estimated
to be approximately $53,770,000 ($60,897,520 if the Underwriters' over-allotment
option is exercised in full), will be available for general corporate purposes,
including possible acquisitions and repayment of indebtedness. The Company has
executed an agreement to acquire the logo sign franchises in Tennessee and
Kansas for an aggregate cash purchase price of $1.4 million. It has also entered
into letters of intent to purchase certain outdoor advertising properties for an
aggregate cash price of $11.2 million. If any of these transactions is
consummated, the Company plans to use the net proceeds from this Offering to
fund such transaction.
If the Company obtains the requisite consents of the holders of the Senior
Notes to amendments to the Senior Note Indenture permitting the reincurrence of
indebtedness as described under "Description of Indebtedness -- Senior Notes,"
it plans to use the net proceeds from this Offering to repay existing
indebtedness in the aggregate principal amount of approximately $43.8 million,
consisting of (i) bank term loans, of which $37.8 million is expected to be
outstanding at the time of this Offering, and (ii) an estimated $6.0 million of
outstanding loans under a revolving credit facility. The term loans mature
October 31, 2001 and amortize as set forth under "Description of
Indebtedness -- Bank Credit Facilities," and the revolving credit facility is
required to be repaid at various times from 1999 to 2001, as set forth under
such caption. The term loans and revolving credit loans bear interest at
variable rates which, at June 30, 1996, were 7.23% and 7.50%, respectively. The
foregoing indebtedness may be repaid without premium.
The Company will not receive any proceeds from the sale of Class A Common
Stock by the Selling Stockholders. Such net proceeds are estimated to be
$10,936,800 (or approximately $14,377,800 if the Underwriters' over-allotment
option to purchase an additional 231,250 shares from the Selling Stockholders is
exercised in full).
DIVIDEND POLICY
The Company does not anticipate paying dividends on its Common Stock in the
foreseeable future. The Company intends to retain future earnings for
reinvestment in the Company. In addition, the Company's Bank Credit Agreements
and Senior Note Indenture place limitations on the Company's ability to pay
dividends or make any other distributions on the Common Stock. The Company's
Class A Preferred Stock is entitled to preferential dividends, in an annual
aggregate amount of $364,903, before any dividends may be paid on the Common
Stock. See "Description of Capital Stock" and "Description of Indebtedness." Any
future determination as to the payment of dividends will be subject to such
limitations, will be at the discretion of the Company's Board of Directors and
will depend on the Company's results of operations, financial condition, capital
requirements and other factors deemed relevant by the Board of Directors.
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<PAGE> 19
DILUTION
The deficit in net tangible book value of the Common Stock as of April 30,
1996 was approximately $(42.8) million, or $(1.75) per share of Common Stock.
The deficit in net tangible book value per share of Common Stock represents the
amount of the Company's Stockholders' Deficit, less intangible assets, divided
by 24,482,024 shares of Common Stock outstanding as of April 30, 1996.
Net tangible book value dilution per share of Common Stock represents the
difference between the amount per share paid by purchasers of shares of Common
Stock in this Offering and the pro forma net tangible book value per share of
Common Stock immediately after completion of this Offering. After giving effect
to the sale of 4,000,000 shares of Class A Common Stock by the Company in this
Offering at an assumed offering price of $16.00 per share and the application of
the estimated net proceeds therefrom, and the issuance of $20 million aggregate
principal amount of ten-year subordinated notes to certain stockholders. See
"Certain Transactions." The pro forma deficit in net tangible book value of the
Common Stock as of April 30, 1996 would have been $(9.1) million or $(.32) per
share of Common Stock. This represents an immediate decrease in the deficit in
net tangible book value of $1.43 per share of Common Stock to existing common
stockholders and an immediate dilution in net tangible book value of $16.32 per
share of Class A Common Stock to purchasers of Class A Common Stock in this
Offering. The following table illustrates the dilution in the net tangible book
value per share to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of Class A Common
Stock................................................................. $ 16.00
Deficit in net tangible book value per share of Common Stock at April
30, 1996, after giving effect to the stock split discussed under "The
Company".............................................................. (1.75)
Decrease in deficit per share of Common Stock attributable to new
investors............................................................. 1.43
Pro forma net tangible book value per share of Common Stock after the
Offering.............................................................. (0.32)
-----
Dilution per share to new investors..................................... 16.32
=====
</TABLE>
The following table sets forth, as of the close of this Offering, the
number of shares of Common Stock issued by the Company and the total
consideration paid and the average price per share paid by new investors
purchasing shares of Class A Common Stock in this Offering:
<TABLE>
<CAPTION>
SHARES OF COMMON TOTAL
STOCK ACQUIRED CONSIDERATION(1)
---------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE(1)
---------- ------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders......... 24,482,024 86.0 -- -- --
---------- ------ ---------- --- -----
New investors................. 4,000,000 14.0 64,000,000 100 16.00
---------- ------ ---------- --- -----
Total............... 28,482,024 100.00 64,000,000 100 2.25
========== ====== ========== === =====
</TABLE>
- ---------------
(1) The Common Stock held by existing stockholders has been issued over time for
various consideration and, for purposes of this comparison, is assumed to
have been issued for nominal consideration.
17
<PAGE> 20
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
April 30, 1996 and the capitalization adjusted for the sale by the Company of
4,000,000 shares of Class A Common Stock offered hereby at an assumed offering
price of $16.00 per share and the application of the net proceeds therefrom as
set forth in "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF APRIL 30, 1996
--------------------------
ACTUAL(1) AS ADJUSTED(2)
--------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................................ $ 1,752 $ 55,522
========= ========
Current maturities of long-term debt................................. 4,617 4,617
Long-term debt, less current maturities
Senior secured notes............................................... 100,000 100,000
Notes payable to bank group........................................ 35,250 35,250
Revolving credit facilities........................................ 11,000 11,000
Other long-term debt............................................... 5,423 5,423
Ten-year subordinated notes........................................ -- 20,000
--------- --------
Total long-term debt, less current maturities.............. 151,673 171,673
--------- --------
Stockholders' equity
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................................... 0 0
Class A Common Stock, $0.001 par value, 50,000,000 shares
authorized, 10,180,485 actual shares issued and outstanding,
14,446,735 issued and outstanding, as adjusted.................. 10 14
Class B Common Stock, $0.001 par value, 25,000,000 shares
authorized, 14,301,539 actual shares issued and outstanding,
14,035,289 issued and outstanding, as adjusted.................. 14 14
Additional paid-in capital......................................... -- 33,766
Accumulated deficit................................................ (31,961) (31,961)
--------- --------
Total stockholders' equity (deficit)....................... (28,288) 5,482
--------- --------
Total capitalization....................................... $ 123,385 $177,155
========= ========
</TABLE>
- ---------------
(1) After giving effect to the proposed stock split and subsequent exchanges
discussed under "The Company."
(2) As adjusted for the Offering and the issuance of the ten-year subordinated
notes discussed under "The Company." Does not reflect the possible
application of the net proceeds of the Offering to repay the "Notes payable
to bank group" and a portion of the "Revolving credit facilities" if the
Company obtains the requisite consents of the Senior Note holders to
amendments to the Senior Note Indenture. See "Use of Proceeds" and
"Description of Indebtedness -- Senior Notes."
18
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected consolidated statement of operations and balance sheet data
presented below are derived from the audited 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, 1995 and 1994 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 six months ended April 30, 1996 and 1995
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>
SIX MONTHS ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
----------------- -------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- -------- -------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Net advertising revenues............................ $56,261 $49,686 $101,871 $ 83,627 $65,365 $60,760 $60,834
Management fees..................................... 30 15 31 334 595 623 827
Rental income....................................... 354 298 506 512 564 572 601
------- ------- -------- -------- ------- ------- -------
Total net revenues............................ 56,645 49,999 102,408 84,473 66,524 61,955 62,262
Operating expenses:
Direct advertising expenses......................... 20,893 18,184 34,386 28,959 23,830 22,783 22,143
General and administrative expenses................. 14,695 13,243 27,057 24,239 19,504 18,225 17,703
Depreciation and amortization....................... 7,028 6,768 14,090 11,352 8,924 8,881 8,826
------- ------- -------- -------- ------- ------- -------
Total operating expenses...................... 42,616 38,195 75,533 64,550 52,258 49,889 48,672
Operating income...................................... 14,029 11,804 26,875 19,923 14,266 12,066 13,590
Non-operating expense (income):
Interest income..................................... (101) (81) (199) (194) (218) (96) (213)
Interest expense.................................... 7,852 7,857 15,783 13,599 11,502 10,454 11,650
Loss (gain) on disposition of assets................ 581 816 2,328 675 729 (1,309) 216
Other expense....................................... 246 410 655 616 576 392 1,001
------- ------- -------- -------- ------- ------- -------
Total non-operating expense................... 8,578 9,002 18,567 14,696 12,589 9,441 12,654
------- ------- -------- -------- ------- ------- -------
Earnings before income taxes and extraordinary item... 5,451 2,802 8,308 5,227 1,677 2,625 936
Income tax expense (benefit)(1)....................... 2,190 (1,767) (2,390) (2,072) 476 270 207
------- ------- -------- -------- ------- ------- -------
Earnings before extraordinary item.................... 3,261 4,569 10,698 7,299 1,201 2,355 729
Extraordinary loss on debt extinguishment, net of
income tax benefit of $98........................... -- -- -- -- (1,854) -- --
------- ------- -------- -------- ------- ------- -------
Net earnings (loss)................................... 3,261 4,569 10,698 7,299 (653) 2,355 729
Preferred stock dividends............................. (182) -- -- -- -- -- --
------- ------- -------- -------- ------- ------- -------
Net earnings (loss) applicable to common stock........ 3,079 4,569 10,698 7,299 (653) 2,355 729
======= ======= ======== ======== ======= ======= =======
Earnings per common share before extraordinary
item(2)............................................. $ .11 $ .14 $ .32 $ .21 $ .03 $ .07 $ .02
======= ======= ======== ======== ======= ======= =======
Net earnings (loss) per common share(2)............... $ .11 $ .14 $ .32 $ .21 $ (.02) $ .07 $ .02
======= ======= ======== ======== ======= ======= =======
OTHER DATA:
Operating cash flow(3)................................ 21,057 18,572 40,965 31,275 23,190 20,947 22,416
Cash flows from operating activities(4)............... 8,486 4,977 25,065 15,214 12,411 12,930 10,328
Cash flows from investing activities(4)............... (18,403) (7,030) (17,817) (53,569) (10,064) (7,273) (4,236)
Cash flows from financing activities(4)............... 5,783 (2,855) (9,378) 37,147 6,802 (6,734) (5,133)
Capital expenditures:
Outdoor advertising................................. 2,676 2,628 6,643 4,997 2,374 1,695 1,847
Logos............................................... 5,849 330 1,567 2,761 2,009 3,056 629
Number of outdoor advertising displays(5)............. 23,209 22,555 22,547 22,369 17,659 17,835 18,829
Number of logo advertising displays(5)................ 34,154 19,161 24,219 18,266 13,820 11,371 5,027
Cumulative logo sign franchises(5)(6)................. 12 8 11 7 7 5 4
BALANCE SHEET DATA(5):
Cash and cash equivalents............................. 1,752 3,108 5,886 8,016 9,224 75 1,152
Working capital....................................... 1,164 956 1,737 1,691 7,274 (7,557) (2,876)
Total assets.......................................... 142,360 130,114 133,885 130,008 92,041 78,649 81,737
Total long-term obligations........................... 153,567 145,034 143,944 147,957 122,774 103,567 111,267
Stockholders' deficit................................. (28,288) (33,033) (28,154) (37,352) (43,249) (41,870) (43,787)
</TABLE>
- ---------------
(1) 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 six months ended April 30, 1996, compared to the income tax benefit
for the same period in the prior year.
(2) After giving effect to the proposed stock split and subsequent exchanges
discussed under "The Company."
(3) "Operating cash flow" 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, operating cash flow 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.
(4) 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.
(5) As of the end of the period.
(6) In May 1996, the Company was awarded a logo sign franchise for the state of
New Jersey.
19
<PAGE> 22
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 six months ended April 30, 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
included elsewhere in 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, operating cash flow 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 purchase of displays in existing markets to increase market
penetration and the effects of consolidation of operations following each
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 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 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, 1995 and 1994, 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
20
<PAGE> 23
recognized as of October 31, 1995, resulting in the recognition of income tax
expense for the six months ended April 30, 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, 1995, 1994 and 1993 and for the six months ended April 30, 1996 and 1995:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 30, YEAR ENDED OCTOBER 31,
--------------- ----------------------
1996 1995 1995 1994 1993
------ ------- ------ ----- -----
<S> <C> <C> <C> <C> <C>
Net revenues..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses
Direct advertising expenses.................... 36.9 36.4 33.6 34.3 35.8
General and administrative expenses............ 25.9 26.5 26.4 28.7 29.3
Operating cash flow.............................. 37.2 37.1 40.0 37.0 34.9
Depreciation and amortization.................... 12.4 13.5 13.8 13.4 13.4
Operating income................................. 24.8 23.6 26.2 23.6 21.4
Interest expense................................. 13.9 15.7 15.4 16.1 17.3
Non-operating expense............................ 15.1 18.0 18.1 17.4 18.9
Net earnings (loss).............................. 5.8 9.1 10.4 8.6 (1.0)
</TABLE>
SIX MONTHS ENDED APRIL 30, 1996 COMPARED TO SIX MONTHS ENDED APRIL 30, 1995
Net revenues increased $6.6 million or 13.3% to $56.6 million for the six
months ended April 30, 1996 compared to $50.0 million for the same period in
1995. This increase was primarily a result of the $4.1 million increase in
outdoor advertising net revenues, principally attributable to increases in
number of displays and advertising rates, with occupancy rates remaining
relatively steady. In addition, revenues from the logo sign business increased
$2.2 million or 79.5% due to the continued development of that program.
Operating expenses, exclusive of depreciation and amortization, increased
$4.2 million or 13.2% for the six months ended April 30, 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 $0.3 million or 3.8% from
$6.8 million for the six months ended April 30, 1995 to $7.0 million for six
months ended April 30, 1996.
Due to the above factors, operating income increased $2.2 million or 18.8%
to $14.0 million for the six months ended April 30, 1996 from $11.8 million for
the same period in 1995.
Interest expense remained constant for both periods.
Income tax expense for the six months ended April 30, 1996 increased $4.0
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 six months ended
April 30, 1996 decreased $1.3 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
21
<PAGE> 24
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.
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.
22
<PAGE> 25
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
Senior Notes with a fixed interest rate of 11.0%. Prior to the issuance of the
Senior 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'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 six months ended April 30, 1996, net cash provided by operating
activities was $8.5 million, a $3.5 million increase from $5.0 million in the
corresponding period of 1995. The increase was due primarily to the addition of
a non-cash $4.1 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 $0.8 million increase in accrued expenses offset by
a $1.3 million decrease in net earnings for the six months ended April 30, 1996
compared to the same period in fiscal 1995. Net cash used in investing
activities increased $11.4 million for the six months ended April 30, 1996 as
compared to the same period in 1995 due to a $5.5 million increase in capital
expenditures, a $4.7 million increase in purchase of new markets and a $0.6
million increase in purchase of intangible assets. Net cash provided by
financing activities increased $8.6 million for the six months ended April 30,
1996 as compared to the same period in 1995. The increase was due to the
increase in borrowings of $10.0 million under revolving credit facilities to
finance capital expenditures, purchase new markets and meet seasonal operating
requirements. A $1.8 million decrease in principal payments on long-term debt
was partially offset by a $3.0 million stock redemption.
In the past, as a private company, the Company followed a policy of
offering to purchase its stock on occasion when it was in a financial position
to do so. In October 1995 and March 1996, the Company redeemed 3.6% and 12.9%,
respectively, of its then outstanding common stock (1,220,500 and 3,617,884
shares, respectively, on a post-split basis) for $1.0 million and $3.0 million
in cash, respectively. The stockholders whose shares were redeemed were
primarily non-affiliates and non-employees of the Company. In connection with
the March 1996 redemption, the Company agreed to pay additional consideration in
the event of a public offering of its shares at a higher price, and in
satisfaction of this agreement it will pay $5.0 million from the proceeds of
this Offering and issue $20.0 million of ten-year subordinated notes.
During the three fiscal years ended October 31, 1995, the Company's
aggregate capital expenditures, as shown in the Consolidated Statements of Cash
Flow, were $35.0 million. Of this amount, the Company spent
23
<PAGE> 26
in the fiscal years 1993, 1994 and 1995 approximately $2.4 million, $5.0 million
and $9.3 million, respectively, 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 expenditures 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.
In addition, during fiscal 1996, the State of Texas expanded its existing
program, which is currently run by the Company, and awarded the expansion
contract to the Company. In addition, the Company has recently been awarded the
franchises for the states of Michigan and New Jersey. Due to the capital needed
in 1996 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.
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 Senior Notes. Simultaneously with the sale of the Senior 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 majority of the
net proceeds from the issuance of Senior Notes was utilized to extinguish
existing variable rate debt prior to maturity and pay related expenses. See
"Description of Indebtedness--Senior Notes."
If holders of the Senior Notes approve amendments to the Senior Note
Indenture to permit the reincurrence of indebtedness, the Company plans to use
net proceeds of this Offering to repay approximately $43.8 million of
outstanding bank debt.
The Company expects to pursue a policy of continued growth through
acquisitions. In this connection, the Company has executed an agreement to
acquire logo sign franchises in two states for an aggregate cash purchase price
of $1.4 million. The Company has also entered into letters of intent to purchase
certain outdoor advertising properties for an aggregate cash cost of $11.2
million. If any of these transactions is consummated, the Company plans to fund
such transaction from the net proceeds of the Offering.
The Company believes that remaining net proceeds of this Offering,
internally generated funds and funds available for borrowing under the Bank
Credit Agreements will be sufficient for the foreseeable future to satisfy all
debt service obligations and to finance its current operations. At April 30,
1996 the Company had $22.6 million available under its Bank Credit Agreements,
$8.5 million of which is restricted to fund the development of certain logo sign
franchises. See "Description of Indebtedness."
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 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
24
<PAGE> 27
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.
25
<PAGE> 28
BUSINESS
GENERAL
The 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 April 30, 1996, the
Company operated approximately 23,000 outdoor advertising displays in 13
southeastern, midwestern and mid-Atlantic states. In each of the Company's 33
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 12 of the 20 states which
have a privatized logo sign program. In addition, the Company has executed
agreements to acquire the logo sign franchises in Tennessee and Kansas and has
been awarded the logo sign franchise for the state of New Jersey. As of April
30, 1996, the Company maintained over 13,500 logo sign structures containing
over 34,000 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 7 of its 33 primary markets. For
the twelve months ended October 31, 1995, the Company reported net revenues and
operating income of $102.4 million and $26.9 million, respectively. For the six
months ended April 30, 1996, the Company reported net revenues and operating
income of $56.6 million and $14.0 million, respectively, compared to $50.0
million and $11.8 million, respectively, for the six months ended April 30,
1995.
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. Through its local offices,
the Company offers a full complement of outdoor advertising services coupled
with local production facilities, management and account executives in order to
be more responsive to specific local market demands. 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 which the Company believes provide it with
an opportunity to gain a leading revenue share. 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 a diverse and reliable mix of local advertisers,
geographic diversification, direct transactions which eliminate many agency
commissions, rate integrity, stable real estate portfolios 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
Outdoor advertising 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, 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.
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
26
<PAGE> 29
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 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 20 other states have
awarded contracts for privatized logo sign programs, and several others are
considering such privatization programs.
27
<PAGE> 30
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.
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<PAGE> 31
MARKETS
The following table sets forth certain information with respect to the
Company's 33 primary outdoor advertising markets and the Company's logo sign
franchises.
THE COMPANY'S 33 PRIMARY OUTDOOR ADVERTISING MARKETS
AND LOGO SIGN FRANCHISES(1)
OUTDOOR ADVERTISING
<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4)
------------------------------------------------------------------
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS NET REVENUES(5)
- --------------------------------------------------- -------------- --------- ------- ---------------
(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........................................... 224 123 508 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......................................... 104 184 372 2,586
Fort Myers....................................... 77 133 297 2,153
Panama City...................................... 223 223 306 1,962
Tallahassee...................................... 167 121 302 1,908
Fort Walton...................................... 206 151 220 1,627
Daytona Beach.................................... 93 54 339 1,456
------ ------ -------
Total...................................... 1,116 2,498 14,805
ALABAMA
Mobile........................................... 84 381 630 4,755
Montgomery....................................... 142 248 499 3,598
------ ------ -------
Total...................................... 629 1,129 8,353
MISSISSIPPI
Jackson.......................................... 118 268 698 4,420
Gulfport......................................... 134 207 559 2,953
------ ------ -------
Total...................................... 475 1,257 7,373
GEORGIA
Savannah......................................... 153 344 604 3,307
Augusta.......................................... 116 163 471 2,482
Albany........................................... 241 92 271 1,031
------ ------ -------
Total...................................... 599 1,346 6,820
VIRGINIA
Richmond......................................... 56 309 616 4,288
Roanoke.......................................... 101 83 450 1,750
------ ------ -------
Total...................................... 392 1,066 6,038
TEXAS
Brownsville...................................... 63 204 873 2,577
Beaumont......................................... 127 204 308 2,165
Wichita Falls.................................... 233 89 165 902
------ ------ -------
Total...................................... 497 1,346 5,644
KENTUCKY
Lexington........................................ 105 117 507 3,127
WEST VIRGINIA
Wheeling......................................... 212 261 551 2,626
COLORADO
Colorado Springs................................. 98 141 355 2,486
OHIO
Dayton........................................... 52 3 529 1,960
------ ------ -------
TOTAL.............................................. 6,590 15,959 $92,334
</TABLE>
29
<PAGE> 32
LOGO SIGN FRANCHISES
<TABLE>
<CAPTION>
LOGO LOGO
YEAR ADVERTISING YEAR ADVERTISING
FRANCHISE AWARDED DISPLAYS(6) FRANCHISE AWARDED DISPLAYS(6)
- ----------- ------- ----------- -------------- ------- -----------
<S> <C> <C> <C> <C> <C>
Nebraska 1989 784 Georgia 1995 5,236
Oklahoma 1989 1,363 Minnesota(8) 1995 1,922
Utah 1990 1,463 South Carolina 1995 1,887
Missouri(7) 1991 7,619 Virginia 1995 4,748
Ohio 1992 5,447 Michigan 1996 --(9)
Texas 1993 924 New Jersey 1996 --(9)
Mississippi 1993 2,761
</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 is not included.
(3) Indicates the Fall 1995 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 261 markets in the U.S., is a
standard measure of market size used by the media industry. Houma and
Clarksville are not ranked.
(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.
(5) 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) Number of logo advertising displays as of April 30, 1996, which totals
34,154.
(7) Franchise operated by a 66.7% owned partnership.
(8) Franchise operated by a 95.0% owned partnership.
(9) The Company was recently awarded the New Jersey and Michigan franchises,
and, accordingly, no logo signs had been erected as of April 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 33 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 the benefits of a
diverse and reliable mix of local advertisers, geographic diversification,
direct transactions which eliminate many agency commissions, rate integrity,
stable real estate portfolios 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 120-person sales force is supported by 33 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 33 primary markets, the Company is the only full-service outdoor advertising
company offering a full complement of outdoor
30
<PAGE> 33
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 four 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.
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 leading 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. As part of its acquisition strategy,
management maintains close ties with industry associations and other advertising
company executives, and the Company also prepares surveys of billboards owned by
competitors within states in which the Company operates.
The table below sets forth certain information regarding acquisitions made
by the Company subsequent to the fiscal year ended October 31, 1993:
<TABLE>
<CAPTION>
YEAR MARKET BULLETINS POSTERS
- ---- ----------------------- --------- -------
<S> <C> <C> <C>
1994 Panama City, FL(1)..... 214 317
1994 Daytona Beach, FL(1)... 56 353
1994 Shreveport, LA(1)...... 271 760
1994 Savannah, GA(1)........ 350 621
1994 Beaumont, TX(1)........ 200 295
1994 Fort Myers, FL(1)...... 123 221
1994 Clarksville, TN(1)..... 112 327
1994 Lakeland, FL(1)........ 209 356
1994 Augusta, GA............ 8 69
<CAPTION>
YEAR MARKET BULLETINS POSTERS
- ---- ----------------------- --------- -------
<S> <C> <C> <C>
1994 Pensacola, FL.......... 49 218
1994 Montgomery, AL......... 76 33
1994 Branmont, 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
1996 Lakeland, FL........... 249 0
</TABLE>
- ---------------
(1) Acquired on May 1, 1994 from LHC, which prior to such date was a 49% owned
and managed subsidiary of the Company.
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
31
<PAGE> 34
small to medium-sized markets which fit the Company's growth strategy offer a
large number of potential acquisition opportunities.
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 13 of the 21 privatized state logo sign franchises awarded
to date. In addition, the Company has executed agreements to acquire the logo
sign franchises in Tennessee and Kansas. The Company's strategy is to be the
leading logo sign provider in the country.
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 recognize the track record and
core competency of the Company in building and servicing logo sign programs. The
Company anticipates bidding on logo sign franchises in two additional states
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.
Additionally, the Company plans to pursue logo sign 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 seven of
its 33 primary markets. 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
32
<PAGE> 35
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 33
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 four 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 April
30, 1996:
<TABLE>
<CAPTION>
YEARS YEARS
WITH IN
NAME REGION COMPANY INDUSTRY
- -------------------- ------------------- ------- --------
<S> <C> <C> <C>
Gerald H. Marchand Baton Rouge Region 37 37
Robert E. Campbell Central Region 24 24
Phillip C. Durant Knoxville Region 19 21
Thomas F. Sirmon Mobile Region 16 16
</TABLE>
The Company's regional managers have been with the Company, on average, for
24 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 handprinted 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.
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,
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<PAGE> 36
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 33 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.
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 OF FISCAL 1995
CATEGORY NET ADVERTISING 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
34
<PAGE> 37
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 13,500 logo sign structures containing over 34,000 logo
advertising displays. The Company has been awarded exclusive franchises to erect
and operate logo signs in the states of 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
executed an agreement to acquire the logo sign franchises in Tennessee and
Kansas.
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, 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.
EMPLOYEES
The Company employed approximately 825 persons at April 30, 1996. Of these,
37 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 120 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 37 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
35
<PAGE> 38
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 Gannett Outdoor (the sale of which by Gannett Co. Inc. to Outdoor
Systems, Inc. has been announced), 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 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 a 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
36
<PAGE> 39
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.
The FDA has proposed new rules which, among other things, regulate
advertising of certain tobacco products, including prohibiting the placement of
tobacco products advertising within 1,000 feet of playgrounds and primary and
secondary schools and limiting tobacco products advertising to a format
consisting of black text on a white background. The Liggett Group, Inc.
("Liggett"), in recent settlements of two tobacco liability actions, agreed to
comply with certain of the proposed FDA advertising regulations. Liggett
controls approximately 2% of the U.S. market for tobacco products and the
remainder of the tobacco industry has yet to comply voluntarily with the
proposed FDA regulations. If the larger tobacco companies were to elect to
comply voluntarily with the proposed FDA regulations, the Company's outdoor
advertising revenues could be adversely affected. In response to the proposed
FDA regulations, Philip Morris Companies Inc. recently proposed to Congress an
alternative version of regulations which would also restrict certain tobacco
advertising as part of a general legislative plan. The Company cannot predict
whether or in what form the proposed FDA regulations will be adopted, or whether
they will be modified or nullified by legislative or judicial action, or whether
legislation restricting tobacco advertising will be enacted.
To date, 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.
37
<PAGE> 40
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company as of July 10, 1996
were as follows:
<TABLE>
<CAPTION>
YEARS WITH
NAME AGE TITLE THE COMPANY
- ------------------------------ --- ------------------------------------------- -----------
<S> <C> <C> <C>
Kevin P. Reilly, Jr........... 41 Chairman, President, Chief Executive 18
Officer and Director
Keith A. Istre................ 43 Chief Financial Officer, Treasurer and 17
Director
Charles W. Lamar, III......... 48 General Counsel, Secretary and Director 14
Gerald H. Marchand............ 65 Vice President, Regional Manager of Baton 37
Rouge Region, and Director
T. Everett Stewart, Jr........ 42 President of Interstate Logos, Inc., a 16
subsidiary of the Company, and Director
Robert E. Campbell............ 47 Vice President, Regional Manager of Central 24
Region
Phillip C. Durant............. 49 Vice President, Regional Manager of 19
Knoxville Region
Thomas F. Sirmon.............. 40 Vice President, Regional Manager of Mobile 16
Region
Robert B. Switzer............. 43 Vice President of Operations 20
Dudley W. Coates*............. 65 Director --
Jack S. Rome, Jr.*............ 48 Director --
William R. Schmidt*........... 44 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 Florida, Louisiana, Mississippi and Texas, since
1988 and a director of the Company since 1978. He 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
38
<PAGE> 41
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 Knoxville 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.
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.
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.
39
<PAGE> 42
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 $500
for each Board meeting attended and are reimbursed for travel expenses incurred
to attend Board meetings. Executive officers of the Company are elected by the
Board of Directors on an annual basis and serve at the discretion of the Board
of Directors.
EXECUTIVE COMPENSATION
The following table sets forth certain compensation information for the
Chief Executive Officer and each of the four most highly compensated executive
officers of the Company for the fiscal year ended October 31, 1995.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1)
- --------------------------------------------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
Kevin P. Reilly, Jr. 1995 120,000 200,000 5,500
Chairman, President and Chief Executive Officer 1994 120,000 150,000 5,000
1993 120,000 100,000 --
Gerald H. Marchand 1995 106,000 156,543 50,000
Vice President, Regional Manager of Baton Rouge 1994 106,000 197,443 50,000
Region 1993 106,000 75,000 --
Robert E. Campbell 1995 90,000 96,984 7,500
Vice President, Regional Manager of Central 1994 90,000 73,208 7,500
Region 1993 84,000 61,000 --
T. Everett Stewart, Jr. 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
Former Vice President, Regional Manager of 1994 90,000 89,638 6,000
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.
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
40
<PAGE> 43
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
expects that options to purchase approximately 1.2 million shares of Class A
Common Stock will be granted concurrently with the Offering.
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.
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
BEGINNING OF LAST BALANCE OUTSTANDING AS
NAME FISCAL YEAR OF MAY 31, 1996
- --------------------------------------------------------- ------------------- ----------------------
<S> <C> <C>
Wendell S. Reilly(1)..................................... $ 500,000 $500,000
Jack S. Rome (2)......................................... 147,230 147,230
Kevin P. Reilly, Jr.(1)(2)(3)............................ 135,000 100,000
Sean E. Reilly(1)........................................ 73,945 58,532
Anna Reilly Cullinan(1).................................. 80,000 53,500
Robert B. Switzer(3)..................................... 80,582 50,592
T. Everett Stewart(2)(3)................................. 75,000 37,500
Kevin P. Reilly, Sr.(1)(4)............................... 154,586 29,105
Gerald H. Marchand(3).................................... 175,000 0
</TABLE>
- ---------------
(1) Member of the Reilly family.
(2) The named individual is a director of the Company.
(3) The named individual is an executive officer of the Company.
(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 stock split described under
"The Company") 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
41
<PAGE> 44
offering of its common stock at a higher price within 24 months of the
repurchase. In satisfaction of that obligation, upon completion of this
Offering, the Company will pay the selling stockholders an aggregate of $5.0
million in cash from the proceeds of this Offering and issue to them $20.0
million aggregate principal amount of ten-year subordinated notes. See
"Description of Indebtedness -- Subordinated Notes." Of the total $25.0 million
additional amount payable on account of the common stock repurchased, $6.3
million will be payable to the Company's executive officers, directors,
beneficial owners of 5% or more of the Common Stock and their 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> 45
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of the Company's capital stock as of April 30, 1996, as adjusted to reflect the
sale of the shares offered hereby, (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, (iv) by all directors and executive officers as a group and (v) by
each Selling Stockholder. The capital stock of the Company is owned
substantially by members of four related families.
<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL OWNERSHIP AMOUNT OF BENEFICIAL
PRIOR TO THE OWNERSHIP AFTER THE
OFFERING(1) OFFERING(1)
--------------------- SHARES ---------------------
DIRECTORS, OFFICERS AND 5% NUMBER OF BEING NUMBER OF
STOCKHOLDERS SECURITY(2) SHARES PERCENT OFFERED(2) SHARES PERCENT
- -------------------------------- ---------- ---------- ------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
The Reilly Family Limited
Partnership(3)................ Common 14,301,539 58.42% 266,250 14,035,289 49.28%
c/o The Lamar Companies Preferred 3,134.80 54.81% 0 3,134.80 54.81%
5551 Corporate Blvd.
Baton Rouge, LA 70808
Mary Lee Lamar Dixon(4)......... Common 2,297,688 9.39% 125,000 2,172,688 7.63%
c/o The Lamar Companies Preferred 1,084.69 18.96% 0 1,084.69 18.96%
5551 Corporate Blvd.
Baton Rouge, LA 70808
Charles W. Lamar, III(5)........ Common 4,840,722 19.77% 68,750 4,771,972 16.75%
c/o The Lamar Companies Preferred 1,500.00 26.23% 0 1,500.00 26.23%
5551 Corporate Blvd.
Baton Rouge, LA 70808
Dudley W. Coates(6)............. Common 163,564 * 0 163,564 *
Phillip C. Durant............... -- -- -- -- --
Keith A. Istre.................. -- -- -- -- --
Gerald H. Marchand.............. Common 155,775 * 0 155,775 *
Jack S. Rome, Jr................ -- -- -- -- --
William R. Schmidt.............. -- -- -- -- --
Robert B. Switzer(7)............ Common 785,683 3.21% 25,000 760,683 2.67%
Robert E. Campbell.............. -- -- -- -- --
Thomas F. Sirmon................ -- -- -- -- --
T. Everett Stewart, Jr.......... -- -- -- -- --
All Directors and Executive
Officers
as a Group (12 Persons)....... Common 20,247,283 82.70% 360,000 19,887,283 69.82%
Preferred 5,719.49 100.00% 0 5,719.49 100.00%
Albert L. Lamar................. Common 122,284 * 12,500 109,784 *
Kevin P. Reilly, Sr. ........... Common 389,439 1.59% 187,500 201,939 *
Charles Switzer(8).............. Common 688,324 2.81% 25,000 663,324 2.33%
John Switzer.................... Common 737,005 3.01% 25,000 712,005 2.53%
</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
43
<PAGE> 46
shares of Class A Common Stock. See "Description of Capital Stock." "Shares
Being Offered" does not include shares that may be sold pursuant to the
Underwriters' over-allotment 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 1,752,474 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.
(5) Includes 1,335,775 shares of Class A Common Stock held in trust for Mr.
Lamar's three children, of which Mr. Lamar is considered the beneficial
owner, and 264,818 shares of Class A Common Stock held by Mr. Lamar's
daughter (6,250 of which are to be sold in the Offering). Mr. Lamar
disclaims beneficial ownership to such shares.
(6) These shares are held in trust for Mr. Coates' three children, and Mr.
Coates disclaims beneficial ownership to such shares.
(7) Includes 97,360 shares of Class A Common Stock held by Mr. Switzer's wife
(12,500 of which are to be sold in the Offering), as to which he disclaims
beneficial ownership, and 688,323 shares of Class A Common Stock held by Mr.
Switzer as custodian for his three children.
(8) Includes 171,352 shares of Class A Common Stock held by Mr. Switzer's
children (6,250 of which are to be sold in the Offering).
Kevin P. Reilly, Jr. is the managing general partner of the Reilly Family
Limited Partnership (the "Partnership"), owner of all of the issued and
outstanding Class B Common Stock of the Company. As managing general partner, he
has the ability to vote all the shares of the Company owned by the Partnership
and, with the approval of the partners owning a majority of the general partner
interests, to dispose of such shares. The other general partners of the
Partnership, Mr. Reilly's three siblings, and Mr. Reilly presently own equal
partnership interests. Two of the other general partners may remove Mr. Reilly
as managing general partner and any three of the general partners may select one
of them to replace him. If no successor is selected, three of the general
partners may act on behalf of the Partnership. The Partnership continues in
effect until December 21, 2020 unless terminated earlier by unanimous vote of
the general partners and the holders of preferred interests.
DESCRIPTION OF CAPITAL STOCK
After giving effect to the matters described under "The Company," as of the
date of this Prospectus, 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 filed as an
exhibit to the registration statement of which this Prospectus is a part.
COMMON STOCK
Following this Offering, 14,446,735 shares of Class A Common Stock will be
issued and outstanding and 14,035,289 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
44
<PAGE> 47
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 this 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 Senior Note Indenture and Bank Credit Agreements. 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. See "Dividend Policy."
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 of 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.
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 and Selling
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.
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<PAGE> 48
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 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. Accordingly, the
issuance of shares of additional Preferred Stock may discourage bids for the
Common Stock or may otherwise adversely affect the market price of the Class A
Common Stock.
SPECIAL PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BY-LAWS AND DELAWARE LAW
Certain provisions of the Company's Certificate of Incorporation and
By-Laws as well as certain provisions of Delaware law may be deemed to have an
anti-takeover effect or may delay, defer or prevent a tender offer or takeover
attempt that a stockholder might consider in such stockholder's best interest,
including those attempts that might result in a premium over the market price
for the shares held by a stockholder. These provision are in addition to the
anti-takeover effect of the substantial ownership and voting power of the
controlling stockholders of the Company.
Delaware Anti-Takeover Law. Section 203 of the Delaware General
Corporation Law ("Section 203") generally provides that a person who, together
with affiliates and associates owns, or within three years did own, 15% or more
of the outstanding voting stock of a corporation, but less than 85% of such
stock (an "Interested Stockholder"), may not engage in certain business
combinations with the corporation for a period of three years after the date on
which the person became an Interested Stockholder unless (i) prior to such date,
the corporation's board of directors approved either the business combination or
the transaction in which the stockholder became an Interested Stockholder or
(ii) subsequent to such date, the business combination is approved by the
corporation's board of directors and authorized at a stockholders' meeting by a
vote of at least two-thirds of the corporation's outstanding voting stock not
owned by the Interested Stockholder. Section 203 defines the term "business
combination" to encompass a wide variety of transactions with or caused by an
Interested Stockholder, including mergers, asset sales, and other transactions
in which the Interested Stockholder receives or could receive a benefit on other
than a pro rata basis with other stockholders.
The provisions of Section 203, coupled with the Board's authority to issue
Preferred Stock without further stockholder action and the fact that, after
giving effect to the Offering, 93.1% of the voting power of the Common Stock
will be held by the Reilly Family Limited Partnership, could delay or frustrate
the removal of
46
<PAGE> 49
incumbent directors or a change in control of the Company. The provisions also
could discourage, impede or prevent a merger, tender offer or proxy contest,
even if such event would be favorable to the interests of stockholders. The
Company's stockholders, by adopting an amendment to the Certificate of
Incorporation, may elect not to be governed by Section 203 which election would
be effective twelve months after such adoption. Such a change in the Company's
Certificate of Incorporation could not be made without the affirmative vote of
shares held by the Reilly Family Limited Partnership. Neither the Certificate of
Incorporation nor the By-Laws exclude the Company from the restrictions imposed
by Section 203. These restrictions will not apply to stockholders who were
interested stockholders prior to the date of this Offering.
Notice Provisions. The By-Laws provide that only business or proposals,
properly brought before an annual meeting of stockholders may be conducted at
such meeting. In order to bring business or a proposal before an annual meeting,
a stockholder is required to provide written notice to the Company at least 45
days prior to the annual meeting which described the business or proposal to be
brought before the annual meeting, the name and address of the stockholder
proposing the business, the class and number of shares of stock held by such
stockholder, and any material interest of the stockholder in the business to be
brought before the meeting. These procedures may operate to limit the ability of
stockholders to bring business before the annual meeting or consider any
transaction that could result in a change of control of the Company. In
addition, the By-Laws provide that in order for a stockholder to nominate a
candidate for election to the Board of Directors, the stockholder must provide
written notice of intent to nominate a candidate at least 45 days prior to the
meeting of stockholders called for the election of directors. Such written
notice is required to contain the name and address of the stockholder, a
representation that the stockholder is a holder of record of the Company's
voting stock and intends to appear in person or by proxy at the meeting to
nominate the persons specified in the notice, such information regarding each
nominee as would have been required to have been included in a proxy statement
filed pursuant to Regulation 14A of the rules and regulations of the Securities
and Exchange Commission (the "Commission") under the Securities Exchange Act of
1934 had proxies been solicited with respect to such nominee by the Board of
Directors, a description of all arrangements or other understandings among the
stockholder and any other person pursuant to which such nominations are to be
made by the stockholder and the written consent of each nominee to serve as a
director of the Company if elected. These requirements will limit the ability of
stockholders to nominate candidates for election to the Board of Directors to
the extent that the notice requirements are not satisfied.
Procedures for Special Meeting of Stockholders. The By-Laws provide for
special meetings of stockholders only upon the direction of the Chairman of the
Board of Directors, the President, or a majority of the Board of Directors.
Exculpation and Indemnification. The Company's Certificate of
Incorporation provides that no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law or (iv) for any transaction from which the director derived an improper
personal benefit. The effect of these provisions is to eliminate the rights of
the Company and its stockholders (through stockholders' derivative suits on
behalf of the Company) to recover monetary damages against a director for breach
of fiduciary duty as a director (including breaches resulting from grossly
negligent behavior), except in the situations described above. The Commission
has taken the position that the provision will have no effect on claims arising
under federal securities law.
The Company's By-Laws provide that the Company will indemnify its directors
and officers to the fullest extent permissible under Delaware law. These
indemnification provisions require the Company to indemnify such persons against
certain liabilities and expenses to which they may become subject by reason of
their service as a director or officer of the Company. The provisions also set
forth certain procedures, including the advancement of expenses, that apply in
the event of a claim for indemnification.
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<PAGE> 50
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Class A Common Stock is Chase
Mellon Shareholder Services, L.L.C.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the Common
Stock of the Company. No prediction can be made as to the effect, if any, that
market sales of shares of Common Stock or the availability of shares of Common
Stock for sale will have on the market price prevailing from time to time.
Nevertheless, sales of substantial amounts of Common Stock of the Company in the
public market after the restrictions described below lapse could adversely
affect the prevailing market price of the Common Stock and the ability of the
Company to raise equity capital in the future.
Upon completion of this Offering, the Company will have outstanding
28,482,024 shares of Common Stock. See "Capitalization." Of these shares, the
4,735,000 shares (5,445,250 shares if the Underwriters' over-allotment option is
exercised in full) of Common Stock sold in this Offering will be freely tradable
without restriction under the Securities Act except for any shares purchased by
"affiliates," as that term is defined in the Securities Act, of the Company. The
remaining 23,747,024 shares are "restricted securities" within the meaning of
Rule 144 adopted under the Securities Act (the "Restricted Shares"). The
Restricted Shares generally may not be sold unless they are registered under the
Securities Act or are sold pursuant to an exemption from registration, such as
the exemption provided by Rule 144.
Certain of the Company's security holders and all of its executive officers
and directors have agreed not to offer, sell or otherwise dispose of any shares
of Common Stock for a period of 180 days after the date of this Prospectus (the
"Lock-up Period") without the prior written consent of Smith Barney Inc. on
behalf of the Underwriters. See "Underwriting." Following the Lock-up Period,
any shares owned prior to this Offering will not be eligible for sale in the
public market without registration unless such sales meet the conditions and
restrictions of Rule 144 as described below.
In general, under Rule 144, as currently in effect, any person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
shares for a period of at least two years (as computed under Rule 144) is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of (i) 1% of the then-outstanding shares of Common Stock
(approximately 284,820 shares after giving effect to this Offering) and (ii) the
average weekly trading volume in the Company's Common Stock during the four
calendar weeks immediately preceding the date on which the notice of such sale
on Form 144 is filed with the Commission. Sales under Rule 144 are also subject
to certain provisions relating to notice and manner of sale and the availability
of current public information about the Company. In addition, a person (or
persons whose shares are aggregated) who has not been an affiliate of the
Company at any time during the 90 days immediately preceding a sale, and who has
beneficially owned the shares for at least three years (as computed under Rule
144), would be entitled to sell such shares under Rule 144(k) without regard to
the volume limitation and other conditions described above. The foregoing
summary of Rule 144 is not intended to be a complete description thereof. In
addition, the Commission has proposed reducing the two-year and three-year
periods referred to above to one and two years, respectively.
As soon as practicable following the consummation of this Offering, the
Company intends to file a registration statement under the Securities Act to
register the shares of Common Stock available for issuance pursuant to its stock
option plans as of the date hereof. Shares issued pursuant to such plans after
the effective date of such registration statement will be available for sale in
the open market subject to the Lock-up Period and, for affiliates of the
Company, subject to certain conditions and restrictions of Rule 144.
48
<PAGE> 51
DESCRIPTION OF INDEBTEDNESS
The following is a description of the principal agreements governing the
indebtedness of the Company. The following summaries of certain provisions of
the Bank Credit Agreements and the Senior Note Indenture 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 herein have meanings set forth in such respective agreements.
BANK CREDIT FACILITIES
Primary Facility and New Logo Facility. The Company has two syndicated
bank credit facilities, both of which are agented by Chase Manhattan Bank
(National Association): (i) a revolving credit and term loan facility (the
"Primary Facility") providing for term loans in the principal amount currently
outstanding of $38.3 million and a reducing revolving facility with a maximum
borrowing availability of $20 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 of subsidiaries 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 hereinafter as the
"Credit Facilities".
Interest. Borrowings under the Credit Facilities 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 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 New Logo
Facility, both of which mature October 31, 2001, 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(1)
------------------------------------------ ---------------- --------------- -----------------
<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) 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 obligations under the Primary Facility
and the guarantees in respect thereof are secured, on an equal and ratable basis
with the subsidiary guarantees and Company obligations in respect of the Senior
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 capital stock, and security interest in the assets, of the New Logo
Subsidiaries.
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<PAGE> 52
Covenants. Each of the Credit Facilities places certain restrictions upon
the ability of the Company and its Restricted Subsidiaries that are parties
thereto, among other things, to (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 Credit Facilities
require 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 Credit Facilities to accelerate the
indebtedness and terminate the 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 20.0% of the
total amount of voting stock of the Company.
SENIOR NOTES
General. On May 15, 1993, the Company issued $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 Senior 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 Senior Notes.
Interest. The Senior Notes bear interest at 11% per annum. Interest is
payable semi-annually on each May 15 and November 15.
Security. The Senior 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.
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 Senior Note Indenture places certain restrictions on the
ability of the Company and its Restricted Subsidiaries to (i) incur
indebtedness, (ii) incur liens or guaranty obligations, (iii) make restricted
payments (dividends, redemptions and certain other payments), (iv) engage in
transactions with affiliates except on an arms-length basis, (v) dispose of
assets, (vi) enter into mergers, consolidations or acquisitions.
Change of Control. Upon a Change of Control (as defined in the Senior Note
Indenture), each holder of a Senior Note may require the Company to repurchase
all or portions of such holder's Senior 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.
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<PAGE> 53
Proposed Amendment. The Company has requested the holders of the Senior
Notes to consent to certain amendments to the Senior Note Indenture which, if
approved, would permit the Company to retire up to $38.3 million of currently
outstanding bank term loans under the Primary Facility while preserving the
Company's ability, upon satisfying certain financial ratios, to reincur
indebtedness up to such amount, secured and guaranteed in the same manner as the
existing term loans. Restrictions in the existing Senior Note Indenture preclude
the Company from securing, and its Restricted Subsidiaries from guaranteeing,
any indebtedness in excess of the $20 million revolving credit facility and the
presently outstanding term loans, as such term loans are reduced by
amortization. The consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Senior Notes is required to
approve the amendments.
SUBORDINATED NOTES
After the completion of the Offering, the Company will have outstanding
three classes of subordinated notes: (i) $2.5 million aggregate principal amount
of 8% Series A Unsecured Subordinated Discount Debentures due 2001; (ii) $0.4
million aggregate principal amount of 10% to 12% Series A Unsecured Subordinated
Debentures due 1996 and 1997; and (iii) $20.0 million aggregate principal amount
of ten-year subordinated notes which are to be issued at the time of the
completion of the Offering. 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) will be issued as a portion of the additional consideration
to be paid on account of stock redemptions occurring in October 1995 and March
1996. These subordinated notes will bear interest at a rate equal to 100 basis
points over the ten-year Treasury Note rate in effect ten days prior to their
issuance and will amortize monthly until their maturity in 2006. See "Certain
Transactions."
51
<PAGE> 54
UNDERWRITING
Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated the date hereof, each of the underwriters named below (the
"Underwriters"), for whom Smith Barney Inc., Alex. Brown & Sons Incorporated and
Prudential Securities Incorporated are acting as representatives (the
"Representatives"), has severally agreed to purchase, and the Company and the
Selling Stockholders have agreed to sell to each such Underwriter, the number of
shares of Class A Common Stock set forth opposite the name of such Underwriter.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ----------------------------------------------------------------------------- ----------------
<S> <C>
Smith Barney Inc.............................................................
Alex. Brown & Sons Incorporated..............................................
Prudential Securities Incorporated...........................................
---------
Total.............................................................. 4,735,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares 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 shares of Class A Common
Stock offered hereby (other than those covered by the over-allotment option
described below) if any such shares are taken.
The Underwriters initially propose to offer part of the shares directly to
the public at the public offering price set forth on the cover page of this
Prospectus and part of the shares to certain dealers at a price which represents
a concession not in excess of $ per share below the public offering price.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per share to certain other dealers. After the initial public
offering of the shares to the public, the public offering price and such
concessions may be changed by the Underwriters. The Representatives of the
Underwriters have advised the Company that the Underwriters do not intend to
confirm any shares to any accounts over which they exercise discretionary
authority.
The Company and certain of the Selling Stockholders have granted to the
Underwriters an option, exercisable for thirty days from the date of this
Prospectus, to purchase up to an aggregate of 710,250 additional shares of Class
A Common Stock (479,000 from the Company and 231,250 from the Selling
Stockholders) at the public offering price set forth on the cover page of this
Prospectus less the underwriting discounts and commissions. The Underwriters may
exercise such option solely for the purpose of covering over-allotments, if any,
in connection with the Offering.
The Company, its officers and directors, and certain stockholders of the
Company have agreed that, for a period of 180 days from the date of this
Prospectus, they will not, without the prior written consent of Smith Barney
Inc., offer, sell, contract to sell, or otherwise dispose of, any shares of
Common Stock of the Company or any securities convertible into, or exercisable
or exchangeable for, Common Stock of the Company.
Prior to this offering, there has not been any public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
shares of Class A Common Stock included in this Offering has been determined by
negotiations between the Company and the Representatives. Among the factors
considered in determining such price were the history of and prospects for the
Company's business and the industry in which it competes, an assessment of the
Company's management and the present state of the Company's development, the
past and present revenues and earnings of the Company, the prospects for growth
of the Company's revenues and earnings, the current state of the economy in the
United States and the
52
<PAGE> 55
current level of economic activity in the industry in which the Company competes
and in related or comparable industries, and currently prevailing conditions in
the securities markets, including current market valuations of publicly traded
companies which are comparable to the Company. There can be no assurance that an
active trading market will develop for the Class A Common Stock or that the
Class A Common Stock will trade in the public market subsequent to the Offering
at or above the initial public offering price.
The Company, the Selling Stockholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act of 1933.
CERTAIN LEGAL MATTERS
The validity of the issuance of the shares of Class A Common Stock will be
passed upon for the Company by Palmer & Dodge LLP, Boston, Massachusetts.
Chadbourne & Parke LLP, New York, New York will pass on certain legal matters
for the Underwriters in connection with this Offering.
EXPERTS
The consolidated financial statements of Lamar Advertising Company and
Subsidiaries as of October 31, 1995 and 1994, 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.
ADDITIONAL INFORMATION
The Company files reports and other information with the Commission
pursuant to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
The Company has filed with the Commission a Registration Statement (which
term shall include all amendments thereto) on Form S-1 under the Securities Act,
with respect to the Class A Common Stock 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, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract,
agreement or other document referred to herein are not necessarily complete.
With respect to each report or other information filed with the Commission
pursuant to the Exchange Act, and such contract, agreement or document filed as
an exhibit to the Registration Statement, reference is made to such exhibit for
a more complete description, and each such statement is deemed to be qualified
in all respects by such reference. The Registration Statement 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.
53
<PAGE> 56
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report........................................................... F-2
Consolidated Balance Sheets as of April 30, 1996, actual and pro forma (unaudited), and
October 31, 1995 and 1994............................................................ F-3
Consolidated Statements of Earnings (Loss) for the six months ended April 30, 1996 and
1995 (unaudited) and the years ended October 31, 1995, 1994 and 1993................. F-4
Consolidated Statements of Stockholders' Deficit for the years ended October 31, 1993,
1994 and 1995 and the six months ended April 30, 1996 (unaudited).................... F-5
Consolidated Statements of Cash Flows for the six months ended April 30, 1996 and 1995
(unaudited) and the years ended October 31, 1995, 1994 and 1993...................... F-6
Notes to Consolidated Financial Statements............................................. F-7
</TABLE>
F-1
<PAGE> 57
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, 1995 and 1994, 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, 1995 and 1994, 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 July 24, 1996
F-2
<PAGE> 58
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
APRIL 30, 1996
----------------------- OCTOBER 31,
PRO FORMA --------------------
(NOTE 14) ACTUAL 1995 1994
----------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents........................ $ 1,752 $ 1,752 $ 5,886 $ 8,016
Receivables (note 3):
Trade accounts, less allowance for doubtful
accounts of $872 (unaudited) in 1996 and $551
in 1995 and 1994............................. 13,128 13,128 10,741 9,963
Affiliates, related parties and employees...... 450 450 583 560
Other.......................................... 81 81 109 68
-------- -------- -------- --------
13,659 13,659 11,433 10,591
Prepaid expenses................................. 1,145 1,145 1,247 1,200
Other current assets............................. 1,689 1,689 1,266 1,287
-------- -------- -------- --------
Total current assets...................... 18,245 18,245 19,832 21,094
-------- -------- -------- --------
Property, plant and equipment (note 4)............. 183,270 183,270 168,402 159,707
Less accumulated depreciation and amortization... (81,888) (81,888) (77,524) (70,884)
-------- -------- -------- --------
101,382 101,382 90,878 88,823
-------- -------- -------- --------
Intangible assets (note 5)......................... 14,548 14,548 13,406 14,062
Receivables -- noncurrent (note 3)................. 806 806 918 751
Deferred taxes (note 10)........................... 4,043 4,043 5,951 2,650
Other assets....................................... 3,336 3,336 2,900 2,628
-------- -------- -------- --------
Total assets.............................. $ 142,360 $142,360 $133,885 $130,008
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable........................... 2,191 2,191 2,435 1,123
Current maturities of long-term debt (note 9).... 4,617 4,617 3,479 7,054
Accrued expenses (note 8)........................ 12,014 7,014 9,733 9,647
Deferred income.................................. 3,259 3,259 2,448 1,579
-------- -------- -------- --------
Total current liabilities................. 22,081 17,081 18,095 19,403
Long-term debt (note 9)............................ 171,673 151,673 142,572 146,875
Deferred income.................................... 754 754 749 668
Other liabilities.................................. 1,140 1,140 623 414
-------- -------- -------- --------
195,648 170,648 162,039 167,360
-------- -------- -------- --------
Stockholders' 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, 10,180,485 (unaudited),
15,657,623 and 16,504,263 shares issued and
outstanding in 1996, 1995 and 1994,
respectively................................... 10 10 16 17
Class B common stock, par value $.001, 25,000,000
shares authorized, 14,301,539 (unaudited),
16,897,379 and 17,271,240 shares issued and
outstanding in 1996, 1995 and 1994,
respectively................................... 14 14 17 17
Accumulated deficit.............................. (56,961) (31,961) (28,187) (37,386)
-------- -------- -------- --------
Stockholders' deficit..................... (53,288) (28,288) (28,154) (37,352)
Commitments and contingencies (notes 7 and 13)
-------- -------- -------- --------
Total liabilities and stockholders'
deficit................................. $ 142,360 $142,360 $133,885 $130,008
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 59
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, YEARS ENDED OCTOBER 31,
------------------------- ----------------------------
1996 1995 1995 1994 1993
----------- ----------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Outdoor advertising, net.................. $56,261 $49,686 $101,871 $83,627 $65,365
Management fees from related and
affiliated parties..................... 30 15 31 334 595
Rental income............................. 354 298 506 512 564
------- ------- -------- ------- -------
56,645 49,999 102,408 84,473 66,524
------- ------- -------- ------- -------
Operating expenses:
Direct advertising expenses............... 20,893 18,184 34,386 28,959 23,830
General and administrative expenses....... 14,695 13,243 27,057 24,239 19,504
Depreciation and amortization............. 7,028 6,768 14,090 11,352 8,924
------- ------- -------- ------- -------
42,616 38,195 75,533 64,550 52,258
------- ------- -------- ------- -------
Operating income.................. 14,029 11,804 26,875 19,923 14,266
------- ------- -------- ------- -------
Other expense (income):
Interest income........................... (101) (81) (199) (194) (218)
Interest expense.......................... 7,852 7,857 15,783 13,599 11,502
Loss on disposition of assets............. 581 816 2,328 675 729
Other expenses............................ 246 410 655 616 576
------- ------- -------- ------- -------
8,578 9,002 18,567 14,696 12,589
------- ------- -------- ------- -------
Earnings before income taxes and
extraordinary item.............. 5,451 2,802 8,308 5,227 1,677
Income tax expense (benefit) -- (note 10)... 2,190 (1,767) (2,390) (2,072) 476
------- ------- -------- ------- -------
Earnings before extraordinary
item............................ 3,261 4,569 10,698 7,299 1,201
------- ------- -------- ------- -------
Extraordinary loss on debt extinguishment,
net of income tax benefit of $98 (note
9)........................................ -- -- -- -- (1,854)
------- ------- -------- ------- -------
Net earnings (loss)............... 3,261 4,569 10,698 7,299 (653)
Preferred stock dividends................... (182) -- -- -- --
------- ------- -------- ------- -------
Net earnings (loss) applicable to common
stock..................................... $ 3,079 $ 4,569 $ 10,698 $ 7,299 $ (653)
======= ======= ======== ======= =======
Earnings per common share before
extraordinary item........................ $ .11 $ .14 $ .32 $ .21 $ .03
======= ======= ======== ======= =======
Net earnings (loss) per common share........ $ .11 $ .14 $ .32 $ .21 $ (.02)
======= ======= ======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 60
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) $(41,870)
Shares issued (note 12)........................ -- 1 2 627 -- 630
Redemption of 1,690,163 shares of common
stock....................................... -- (2) -- (899) -- (901)
Net loss....................................... -- -- -- -- (653) (653)
Dividends ($.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 4,454,397 shares of common stock
to 5,719 shares preferred stock
(unaudited)................................. 3,649 (2) (2) -- (3,645) --
Redemption of 3,617,884 shares of common stock,
(unaudited)................................. -- (4) (1) -- (2,958) (2,963)
Net earnings (unaudited)....................... -- -- -- -- 3,261 3,261
Dividends ($.004 per common share at January
1996 $.005 per common share at April 1996,
$15.95 per preferred
share) -- (unaudited)....................... -- -- -- -- (432) (432)
------ --- --- ------ --------- --------
Balance, April 30, 1996, (unaudited)............. $3,649 $10 $14 $ -- $ (31,961) $(28,288)
====== === === ====== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 61
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, YEARS ENDED OCTOBER 31,
-------------------------- --------------------------------
1996 1995 1995 1994 1993
----------- ----------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss).......................... $ 3,261 $ 4,569 $ 10,698 $ 7,299 $ (653)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating
activities:
Depreciation and amortization.............. 7,028 6,768 14,090 11,352 8,924
Loss on disposition of assets.............. 581 816 2,328 675 729
Deferred taxes............................. 1,908 (2,208) (3,301) (2,650) --
Provision for doubtful accounts............ 621 203 502 508 471
Changes in operating assets and
liabilities:
Increase in receivables.................. (2,608) (2,854) (1,344) (1,391) (1,998)
(Increase) decrease in prepaid
expenses.............................. 67 (192) (47) (321) 4
(Increase) decrease in other assets...... (323) (296) (418) (1,640) 34
Increase (decrease) in trade accounts
payable............................... (243) 1 1,312 (69) (502)
Increase (decrease) in accrued
expenses.............................. (2,718) (1,880) 86 1,356 4,817
Increase (decrease) in deferred income... 817 51 950 (113) 596
Increase (decrease) in other
liabilities........................... 95 (1) 209 208 (11)
--------- ------- -------- -------- --------
Net cash provided by operating
activities............................ 8,486 4,977 25,065 15,214 12,411
--------- ------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures......................... (10,557) (5,044) (14,046) (13,357) (7,550)
Purchase of new markets...................... (7,043) (2,329) (2,885) (40,482) --
Proceeds from sale of property and
equipment.................................. 236 558 717 733 396
Purchase of intangible assets................ (833) (211) (1,603) (463) (2,352)
Investments in and advances to affiliated
companies.................................. -- -- -- -- (558)
Increase in notes receivable................. (206) (4) -- -- --
--------- ------- -------- -------- --------
Net cash used in investing activities.... (18,403) (7,030) (17,817) (53,569) (10,064)
--------- ------- -------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt..... 11,000 1,000 -- 44,515 105,611
Principal payments on long-term debt......... (1,821) (3,605) (7,878) (5,966) (97,453)
Redemption of common stock................... (2,964) -- (1,000) (903) (901)
Dividends.................................... (432) (250) (500) (499) (455)
--------- ------- -------- -------- --------
Net cash provided by (used in) financing
activities............................ 5,783 (2,855) (9,378) 37,147 6,802
--------- ------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents........................... (4,134) (4,908) (2,130) (1,208) 9,149
Cash and cash equivalents at beginning of
year.................................. 5,886 8,016 8,016 9,224 75
--------- ------- -------- -------- --------
Cash and cash equivalents at end of
year.................................. $ 1,752 $ 3,108 $ 5,886 $ 8,016 $ 9,224
========= ======= ======== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid for interest....................... $ 7,917 $ 7,879 $ 15,825 $ 13,461 $ 6,994
========= ======= ======== ======== ========
Cash paid for income taxes................... $ 542 $ 490 $ 1,028 $ 267 $ 295
========= ======= ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 62
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
OCTOBER 31, 1995, 1994 AND 1993
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 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
F-7
<PAGE> 63
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 IS UNAUDITED)
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.
(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. (28,373,710 shares and 33,775,222 shares for the
six-month periods ended April 30, 1996 and 1995 respectively and 33,772,107
shares, 35,089,188 shares, and 35,470,837 shares, respectively for the years
ended October 31, 1995, 1994 and 1993.) 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 will occur 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>
SIX MONTHS
ENDED
APRIL 30,
----------------
1996 1995 1995 1994 1993
------ ------ ------ ---- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Noncash dispositions of assets.............. $ -- $3,788 $3,788 $445 $ 336
Noncash acquisitions of assets.............. 1,113 4,341 4,341 -- 1,817
Common stock issued in exchange for
investment in affiliate................... -- -- -- -- 630
Noncash issuance of preferred stock in
exchange of common stock.................. 3,649 -- -- -- --
</TABLE>
F-8
<PAGE> 64
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 IS UNAUDITED)
(3) RECEIVABLES
The following is a summary of accounts and notes receivable as of October
31:
<TABLE>
<CAPTION>
1995 1994
--------------------- ---------------------
CURRENT NONCURRENT CURRENT NONCURRENT
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Trade accounts receivable, net.............. $10,741 $ -- $ 9,963 $ --
Related parties............................. 452 -- 291 --
Employees, other than related parties....... 131 -- 269 --
Other....................................... 109 918 68 751
------- ---- ------- ----
$11,433 $918 $10,591 $751
======= ==== ======= ====
</TABLE>
(4) PROPERTY, PLANT AND EQUIPMENT
Major categories of property, plant and equipment at October 31, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
ESTIMATED
LIFE (YEARS) 1995 1994
------------ -------- --------
<S> <C> <C> <C>
Land................................................. - $ 7,826 $ 7,739
Building and improvements............................ 10-32 15,553 15,132
Advertising structures............................... 15 131,071 123,592
Automotive and other equipment....................... 3-7 13,952 13,244
-------- --------
$168,402 $159,707
======== ========
</TABLE>
(5) INTANGIBLE ASSETS
The following is a summary of intangible assets at October 31:
<TABLE>
<CAPTION>
ESTIMATED
LIFE (YEARS) 1995 1994
------------ ------- -------
<S> <C> <C> <C>
Debt issuance costs.................................. 10 $ 3,180 $ 3,604
Customer lists and unexpired contracts............... 7 7,103 7,581
Non-compete agreements............................... 7-15 1,036 1,296
Organization costs................................... 5 673 219
Loan fees............................................ 7-10 1,051 1,027
Other................................................ 7-10 363 335
------- -------
$13,406 $14,062
======= =======
Cost................................................. 20,473 18,870
Accumulated amortization............................. 7,067 4,808
------- -------
Net intangible assets...................... $13,406 $14,062
======= =======
</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> 65
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 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 1994 and 1993, 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,
-------------------
1994 1993
------- -------
(UNAUDITED)
<S> <C> <C>
Revenues......................................................... $92,480 $81,303
======= =======
Net income (loss) before extraordinary item...................... $ 6,265 $(1,856)
======= =======
Net income (loss)................................................ $ 6,265 $(3,710)
======= =======
Earnings (loss) per share before extraordinary item.............. $ .18 $ (.05)
======= =======
Earnings (loss) per share........................................ $ .18 $ (.10)
======= =======
</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 $17,053,
$14,999 and $10,983 for the years ended October 31, 1995, 1994 and 1993,
respectively.
F-10
<PAGE> 66
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 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>
1995 1994
------- -------
<S> <C> <C>
Land........................................................... $ 53 $ 47
Buildings...................................................... 1,892 2,454
Less accumulated depreciation.................................. (1,124) (1,754)
------- -------
$ 821 $ 747
======= =======
</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>
1995 1995
------ ------
<S> <C> <C>
Payroll............................................................ $2,134 $2,084
Interest........................................................... 5,400 5,442
Insurance benefits................................................. 1,457 1,374
Other.............................................................. 742 747
------ ------
$9,733 $9,647
====== ======
</TABLE>
F-11
<PAGE> 67
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 IS UNAUDITED)
(9) LONG-TERM DEBT
Long-term debt consists of the following at April 30, 1996 and October 31:
<TABLE>
<CAPTION>
APRIL 30,
1996 1995 1994
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Senior Secured Notes................................ $ 100,000 $100,000 $100,000
Note payable to a bank group........................ 38,250 39,250 43,000
1993 Series A Line of Credit, payable to bank....... 4,500 -- 2,000
1995 Series B Line of Credit, payable to bank....... 6,500 -- --
8% Series A unsecured subordinated discount
debentures, maturing through 2001 (11.5% effective
yield)............................................ 2,509 2,706 3,095
5% to 10% notes payable to banks and others with
varying maturities secured by plant and
equipment......................................... 4,157 3,713 4,960
10% to 12% Series A unsecured subordinated
debentures maturing in 1996 and 1997.............. 372 372 372
Other notes with various rates and terms............ 2 10 502
--------- -------- --------
156,290 146,051 153,929
Less current maturities............................. (4,617) (3,479) (7,054)
--------- -------- --------
Long term debt, excluding current maturities........ $ 151,673 $142,572 $146,875
========= ======== ========
</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> 68
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 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
$238 and $314 at October 31, 1995 and 1994, 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, 1995,
1994 and 1993 is allocated as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- ----
<S> <C> <C> <C>
Income from continuing operations........................ $(2,390) $(2,072) $476
Extraordinary item....................................... -- -- (98)
------- ------- ----
$(2,390) $(2,072) $378
======= ======= ====
</TABLE>
F-13
<PAGE> 69
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 IS UNAUDITED)
Income tax expense (benefit) attributable to continuing operations for the
years ended October 31, 1995, 1994 and 1993 consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
1995:
U.S. federal......................................... $ 290 $ (3,301) $(3,011)
State and local...................................... 621 -- 621
----- -------- -------
$ 911 $ (3,301) $(2,390)
===== ======== =======
1994:
U.S. federal......................................... 165 (2,650) (2,485)
State and local...................................... 413 -- 413
----- -------- -------
$ 578 $ (2,650) $(2,072)
===== ======== =======
1993:
U.S. federal......................................... 155 -- 155
State and local...................................... 321 -- 321
----- -------- -------
$ 476 $ -- $ 476
===== ======== =======
</TABLE>
Income taxes attributable to continuing operations in 1995 and 1994 include
adjustments to the beginning-of-the-year valuation allowance on the Company's
deferred tax assets in the amount of $5,939 and $3,882, 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 1995, 1994 and 1993, 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>
1995 1994 1993
------- ------- -----
<S> <C> <C> <C>
Computed "expected" tax expense........................... $ 2,825 $ 1,777 $ 570
Increase (reduction) in income taxes resulting from:
Change in beginning of the year balance of the
valuation allowance for deferred tax assets........ (5,939) (3,882) (217)
State and local income taxes, net of federal income
tax benefit........................................ 410 273 214
Other differences, net............................... 314 (240) (91)
------- ------- -----
Actual income tax expense (benefit)............. $(2,390) $(2,072) $ 476
======= ======= =====
</TABLE>
F-14
<PAGE> 70
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 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,
1995 and 1994 are presented below:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation................................................ $(4,656) $(5,411)
Intangibles, due to differences in amortizable lives........... (594) (569)
------- -------
Deferred tax liabilities............................... $(5,250) $(5,980)
======= =======
Deferred tax assets:
Receivables, principally due to allowance for doubtful accounts
and accounts written off.................................... $ 193 $ 187
Plant and equipment, due to additional costs capitalized for
tax purposes pursuant to the Tax Reform Act of 1986......... 764 641
Plant and equipment, due to basis differences on acquisitions
of assets................................................... 4,064 4,276
Investment in affiliates and plant and equipment due to gains
previously recognized for tax purposes and deferred for
financial reporting purposes................................ 1,719 1,357
Net operating loss carryforwards............................... 2,262 6,512
Investment tax credit carryforwards............................ 929 982
Other, net..................................................... 1,270 614
------- -------
Gross deferred tax assets.............................. 11,201 14,569
Less valuation allowance....................................... -- (5,939)
------- -------
Deferred tax assets.................................... $11,201 $ 8,630
======= =======
Net deferred taxes..................................... $ 5,951 $ 2,650
======= =======
</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> 71
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 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>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues:
Management fee income....................................... $ 31 $334 $595
Rental income............................................... -- -- 209
Interest income............................................. 8 59 75
Production of logo plates................................... 143 143 341
Expenses:
Interest expense............................................ 296 308 390
Rent expense................................................ -- 71 143
</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 1995,
1994 and 1993. Additionally, the Company paid consulting fees of $110 to this
individual in 1995.
As of October 31, 1995 and 1994, debentures totaling $2,950 and $3,600,
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 Offering 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> 72
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 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
$512, $230 and $313 for the years ended October 31, 1995, 1994, and 1993,
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 $240, $442 and $101 to the Plan during 1995, 1994 and 1993,
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 has agreed, contingent
upon completion of the Offering 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 would result in an additional charge to stockholders'
equity of $25,000. The accompanying pro forma financial information gives effect
to the additional consideration to be paid upon completion of the Offering, but
does not give effect to the Offering proceeds.
F-17
<PAGE> 73
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF APRIL 30, 1996 AND FOR
THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995 IS UNAUDITED)
Subsequent to April 30, 1996, the Company advanced $450 to a stockholder.
The loan is payable on or before October 15, 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.
On July 24, 1996, the Board of Directors of the Company authorized the
issuance of up to 5,445,250 shares of Class A Common Stock, $.001 par value per
share, to be registered under the Securities Act of 1933 (the "Offering"). In
connection with the Offering, the Company effected the recapitalization referred
to in Note 12.
Also in connection with the Offering, the Company proposes to adopt 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
will authorize 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 will reserve an aggregate
of 2,000,000 shares of Class A Common Stock for awards under the 1996 Plan.
F-18
<PAGE> 74
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 75
[PHOTOGRAPH OF POSTER, BULLETIN, HIGHWAY LOGO SIGN AND BUS SHELTER]
<PAGE> 76
================================================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer contained herein and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company, any of the Selling Stockholders 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.......................... 9
The Company........................... 15
Use of Proceeds....................... 16
Dividend Policy....................... 16
Dilution.............................. 17
Capitalization........................ 18
Selected Consolidated Financial and
Operating Data...................... 19
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 26
Management............................ 38
Certain Transactions.................. 41
Principal and Selling Stockholders.... 43
Description of Capital Stock.......... 44
Shares Eligible for Future Sale....... 48
Description of Indebtedness........... 49
Underwriting.......................... 52
Certain Legal Matters................. 53
Experts............................... 53
Additional Information................ 53
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
Until , 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Class A Common Stock, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as Underwriters and with respect to their unsold allotments or
subscriptions.
================================================================================
================================================================================
4,735,000 SHARES
[LAMAR LOGO]
CLASS A COMMON STOCK
------------
PROSPECTUS
, 1996
------------
SMITH BARNEY INC.
ALEX. BROWN & SONS
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
================================================================================
<PAGE> 77
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses of issuance and distribution of
the Class A Common Stock registered hereunder on Form S-1 other than
underwriting discounts and commissions:
<TABLE>
<S> <C>
SEC registration fee.................................................... $ 31,920.43
Nasdaq listing fee...................................................... $ 50,000.00
NASD filing fee......................................................... $ 9,125.00
Blue Sky fees and expenses.............................................. $ 20,000.00
Printing and engraving expenses......................................... $275,000.00
Accounting fees and expenses............................................ $100,000.00
Legal fees and expenses................................................. $250,000.00
Transfer Agent and Registrar fees....................................... $ 10,000.00
Miscellaneous expenses.................................................. $ 3,954.57
-----------
Total......................................................... $750,000.00
===========
</TABLE>
All of the above figures, except the SEC registration fee, the Nasdaq
listing fee and NASD filing fee, are estimates.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law grants the Company 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 the Company, or is
or was serving at the request of the Company 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
the Company, 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 the Company where the person involved is adjudged to be liable to
the Company except to the extent approved by a court.
The Company'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 the
Company 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 the
Company has not acted, with willful or intentional misconduct. The
indemnification provided for in the Company's By-laws is expressly not exclusive
of any other rights to which those seeking indemnification may be entitled as a
matter of law.
The Company's Certificate of Incorporation (the "Certificate") provides
that directors of the Company 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 the Company 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.
II-1
<PAGE> 78
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since June 1, 1993, the Registrant has sold the following unregistered
securities:
During 1993 and 1994, the Company issued in consideration of stock
redemptions $2.5 million aggregate principal amount of 8% Series A
Unsecured Subordinated Discount Debentures due 2001 and $0.4 aggregate
principal amount of 10% to 12% Series A Unsecured Subordinated Debentures
due 1996 and 1997.
On March 1, 1996, the Company issued 5,719.49 shares of its Class A
Preferred Stock to certain of its stockholders in exchange for shares of
then outstanding Common Stock.
Each of the above described issuances of securities were made in reliance
upon the exemption from registration under Section 3(a)(9) of the Securities Act
of 1933, as amended, for securities exchanged with existing securityholders
where no remuneration is paid for soliciting the exchange. In addition, such
issuances were exempt under Section 4(2) as transactions not involving any
public offering. The Company has reason to believe that all of the persons who
received the foregoing securities in such exchanges were familiar with or had
access to information concerning the operations and financial condition of the
Company, and all of those persons were acquiring the securities for investment
and not with a view to the distribution thereof. No underwriter was engaged in
connection with the foregoing issuances of securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S> <C>
1.1 -- Form of Underwriting Agreement. Filed herewith.
3.1 -- Amended and Restated Certificate of Incorporation of the Registrant. Filed herewith.
3.2 -- By-Laws of the Registrant, as amended. Filed herewith.
4.1 -- Specimen certificate for the shares of Class A Common Stock of the Registrant. Filed
herewith.
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. Filed herewith.
4.6 -- 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.
4.7 -- Amendment to Pledge Agreement dated July 30, 1996. Filed herewith.
4.8 -- Form of Subordinated Note. Filed herewith.
5.1 -- Opinion of Palmer & Dodge 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.
10.2 -- Consultation Agreement dated July 1, 1996 between the Lamar Texas Limited
Partnership and the Reilly Consulting Company, L.L.C., of which Kevin P. Reilly, Sr.
is the manager. Filed herewith.
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.
</TABLE>
II-2
<PAGE> 79
<TABLE>
<C> <S> <C>
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. Filed herewith.
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. Filed herewith.
10.14 -- 1996 Equity Incentive Plan. Filed herewith.
23.1 -- Consent of KPMG Peat Marwick LLP. Filed herewith.
23.2 -- Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
24.1 -- Power of Attorney (included in the signature page to the initial filing of this
Registration Statement).
27.1 -- Financial Data Schedule. Previously filed as the same numbered exhibit to the
initial filing of this Registration Statement.
</TABLE>
(b) Financial Statement Schedules
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
(a) 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
II-3
<PAGE> 80
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.
(b) 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.
(3) It will provide to the underwriter, at the closing specified in
the underwriting agreement, certificates in such denominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
II-4
<PAGE> 81
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Baton Rouge, State of Louisiana, on July 31, 1996.
LAMAR ADVERTISING COMPANY
By: /s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the 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 R. REILLY, JR. Director and Principal July 31, 1996
- --------------------------------------------- Executive Officer
Kevin R. Reilly, Jr.
/s/ KEITH A. ISTRE Director and Principal July 31, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer
/s/ DUDLEY W. COATES Director July 31, 1996
- ---------------------------------------------
Dudley W. Coates
/s/ CHARLES W. LAMAR, III Director July 31, 1996
- ---------------------------------------------
Charles W. Lamar, III
/s/ GERALD H. MARCHAND Director July 31, 1996
- ---------------------------------------------
Gerald H. Marchand
/s/ JACK S. ROME, JR. Director July 31, 1996
- ---------------------------------------------
Jack S. Rome, Jr.
/s/ WILLIAM R. SCHMIDT Director July 31, 1996
- ---------------------------------------------
William R. Schmidt
/s/ T. EVERETT STEWART, JR. Director July 31, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>
II-5
<PAGE> 82
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- -------------------------------------------------------------------------------
<C> <S> <C>
1.1 -- Form of Underwriting Agreement. Filed herewith.
3.1 -- Amended and Restated Certificate of Incorporation of the Registrant. Filed
herewith.
3.2 -- By-Laws of the Registrant, as amended. Filed herewith.
4.1 -- Specimen certificate for the shares of Class A Common Stock of the Registrant.
Filed herewith.
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. Filed herewith.
4.6 -- 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.
4.7 -- Amendment to Pledge Agreement dated July 30, 1996. Filed herewith.
4.8 -- Form of Subordinated Note. Filed herewith.
5.1 -- Opinion of Palmer & Dodge 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.
10.2 -- Consultation Agreement dated July 1, 1996 between the Lamar Texas Limited
Partnership and the Reilly Consulting Company, L.L.C., of which Kevin P.
Reilly, Sr. is the manager. Filed herewith.
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.
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- -------------------------------------------------------------------------------
<C> <S> <C>
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. Filed herewith.
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. Filed herewith.
10.14 -- 1996 Equity Incentive Plan. Filed herewith.
23.1 -- Consent of KPMG Peat Marwick LLP. Filed herewith.
23.2 -- Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
24.1 -- Power of Attorney (included in the signature page to the initial filing of this
Registration Statement).
27.1 -- Financial Data Schedule. Previously filed as the same numbered exhibit to the
initial filing of this Registration Statement.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
4,735,000 Shares
LAMAR ADVERTISING COMPANY
Class A Common Stock
UNDERWRITING AGREEMENT
July __, 1996
SMITH BARNEY INC.
ALEX. BROWN & SONS INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the Several Underwriters
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 an aggregate of 4,000,000 shares of its
Class A Common Stock, $0.001 par value per share, to the several Underwriters
named in Schedule II hereto (the "Underwriters"), and the persons named in Part
A of Schedule I hereto (the "Selling Stockholders") propose to sell to the
several Underwriters an aggregate of 735,000 shares of such Class A Common
Stock of the Company. The Company and the Selling Stockholders are hereinafter
sometimes referred to as the "Sellers". The Company's Class A Common Stock,
$0.001 par value, is hereinafter referred to as the "Common Stock" and the
4,000,000 shares of Common Stock to be issued and sold to the Underwriters by
the Company and the 735,000 shares of Common Stock to be sold to the
Underwriters by the Selling Stockholders are hereinafter referred to as the
"Firm Shares". The Company and the Selling Stockholders listed in Part B of
Schedule I hereto also propose to sell to the Underwriters, upon the terms and
conditions set forth in Section 2 hereof, up to an additional 710,250 shares
(the "Additional Shares") of Common Stock. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares".
The Company and the Selling Stockholders wish to confirm as
follows their respective agreements with you (the "Representatives") and the
other several Underwriters on
<PAGE> 2
whose behalf you are acting, in connection with the several purchases of the
Shares by the Underwriters.
1. Registration Statement and Prospectus. The Company
has 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-1 under the Act (the "registration statement"), including a prospectus
subject to completion relating to the Shares. 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 Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. 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
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 Amendment No. 1 to
registration statement at the time of the initial filing of Amendment No. 1 to
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.
2. Agreements to Sell and Purchase. Subject to such
adjustments in the allocation of Shares between Underwriters as you may
determine in your capacity as Representatives in order to avoid fractional
shares, the Company hereby agrees, subject to all the terms and
-2-
<PAGE> 3
conditions set forth herein, to issue and sell to each Underwriter and, upon
the basis of the representations, warranties and agreements of the Company and
the Selling Stockholders herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_______ per
Share (the "purchase price per share"), the number of Firm Shares which bears
the same proportion to the aggregate number of Firm Shares to be issued and
sold by the Company as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule II hereto (or such number of Firm Shares increased
as set forth in Section 12 hereof) bears to the aggregate number of Firm Shares
to be sold by the Company and the Selling Stockholders.
Subject to such adjustments in the allocation of Shares
between Underwriters as you may determine in your capacity as Representatives
in order to avoid fractional shares, each Selling Stockholder agrees, subject
to all the terms and conditions set forth herein, to sell to each Underwriter
and, upon the basis of the representations, warranties and agreements of the
Company and the Selling Stockholders herein contained and subject to all the
terms and conditions set forth herein, each Underwriter, severally and not
jointly, agrees to purchase from each Selling Stockholder at the purchase price
per share that number of Firm Shares which bears the same proportion to the
number of Firm Shares set forth opposite the name of such Selling Stockholder
in Schedule I hereto as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule II hereto (or such number of Firm Shares
increased as set forth in Section 12 hereof) bears to the aggregate number of
Firm Shares to be sold by the Company and the Selling Stockholders.
The Company and the Selling Stockholders listed in Part B of
Schedule I hereto also agree, subject to all the terms and conditions set forth
herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from the
Company and the Selling Stockholders listed in Part B of Schedule I hereto, at
the purchase price per share, pursuant to an option (the "over-allotment
option") which may be exercised at any time and from time to time prior to 9:00
P.M., New York City
- 3 -
<PAGE> 4
time, on the 30th day after the date of the Prospectus (or, if such 30th day
shall be a Saturday or Sunday or a holiday, on the next business day thereafter
when the New York Stock Exchange is open for trading), up to an aggregate of
479,000 Additional Shares from the Company and up to an aggregate of 231,250
Additional Shares from the Selling Stockholders listed in Part B of Schedule I
hereto (the maximum number of Additional Shares which each of them agrees to
sell upon the exercise by the Underwriters of the over-allotment option is set
forth opposite their respective names in Part B of Schedule I). Additional
Shares may be purchased only for the purpose of covering over-allotments made
in connection with the offering of the Firm Shares. The number of Additional
Shares which the Underwriters elect to purchase upon any exercise of the
over-allotment option shall be provided by the Company and by each Selling
Stockholder who has agreed to sell Additional Shares in proportion to the
respective maximum numbers of Additional Shares which the Company and each such
Selling Stockholder has agreed to sell. Upon any exercise of the
over-allotment option, each Underwriter, severally and not jointly, agrees to
purchase from each of the Company and each Selling Stockholder who has agreed
to sell Additional Shares the number of Additional Shares (subject to such
adjustments in the allocation of Shares between Underwriters as you may
determine in your capacity as Representatives in order to avoid fractional
shares) which bears the same proportion to the aggregate number of Additional
Shares to be sold by the Company and each Selling Stockholder who has agreed to
sell Additional Shares as the aggregate number of Firm Shares set forth
opposite the name of such Underwriter in Schedule II hereto (or such number of
Firm Shares increased as set forth in Section 12 hereof) bears to the aggregate
number of Firm Shares to be sold by the Company and the Selling Stockholders.
Certificates in transferable form for the Shares (including
any Additional Shares) which each of the Selling Stockholders agrees to sell
pursuant to this Agreement have been placed in custody with
_____________________ (the "Custodian") for delivery under this Agreement
pursuant to a Custody Agreement and Power of Attorney (the "Custody Agreement")
executed by each of the Selling Stockholders appointing Kevin P. Reilly, Jr.
and Keith A. Istre as agents and attorneys-in-fact (the "Attorneys-in-Fact").
Each Selling Stockholder agrees that (i) the Shares represented by the
certificates held in custody pursuant to the Custody Agreement are subject to
the interests of the Underwriters,
- 4 -
<PAGE> 5
the Company and each other Selling Stockholder, (ii) the arrangements made by
the Selling Stockholders for such custody are, except as specifically provided
in the Custody Agreement, irrevocable, and (iii) the obligations of the Selling
Stockholders hereunder and under the Custody Agreement shall not be terminated
by any act of such Selling Stockholder or by operation of law, whether by the
death or incapacity of any Selling Stockholder or the occurrence of any other
event. If any Selling Stockholder shall die or be incapacitated or if any
other event shall occur before the delivery of the Shares hereunder,
certificates for the Shares of such Selling Stockholder shall be delivered to
the Underwriters by the Attorneys-in-Fact in accordance with the terms and
conditions of this Agreement and the Custody Agreement as if such death or
incapacity or other event had not occurred, regardless of whether or not the
Attorneys-in-Fact or any Underwriter shall have received notice of such death,
incapacity or other event. Each Attorney-in-Fact is authorized, on behalf of
each of the Selling Stockholders, to execute this Agreement and any other
documents necessary or desirable in connection with the sale of the Shares to
be sold hereunder by such Selling Stockholder, to make delivery of the
certificates for such Shares, to receive the proceeds of the sale of such
Shares, to give receipts for such proceeds, to pay therefrom any expenses to be
borne by such Selling Stockholder in connection with the sale and public
offering of such Shares, to distribute the balance thereof to such Selling
Stockholder, and to take such other action as may be necessary or desirable in
connection with the transactions contemplated by this Agreement. Each
Attorney-in-Fact agrees to perform his duties under the Custody Agreement.
3. Terms of Public Offering. The Sellers have been
advised by you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement and
this Agreement have become effective as in your judgment is advisable and
initially to offer the Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor.
Delivery to the Underwriters of and payment for the Firm Shares 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 August __, 1996 (the "Closing Date").
The place of closing for the Firm Shares and the Closing
- 5 -
<PAGE> 6
Date may be varied by agreement among you, the Company and the Attorneys-in-
Fact.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at the aforementioned
office of Smith Barney Inc. at such time on such date (the "Option Closing
Date"), which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor earlier than two nor later than five business
days after the giving of the notice hereinafter referred to, as shall be
specified in a written notice from you on behalf of the Underwriters to the
Company and the Attorneys-in-Fact, of the Underwriters' determination to
purchase a number, specified in such notice, of Additional Shares. The place
of closing for any Additional Shares and the Option Closing Date for such
Shares may be varied by agreement among you, the Company and the
Attorneys-in-Fact.
Certificates for the Firm Shares and for any Additional Shares
to be purchased hereunder shall be registered in such names and in such
denominations as you shall request prior to 9:30 A.M., New York City time, on
the second business day preceding the Closing Date or any Option Closing Date,
as the case may be. Such certificates shall be made available to you in New
York City for inspection and packaging not later than 9:30 A.M., New York City
time, on the business day next preceding the Closing Date or the Option Closing
Date, as the case may be. The certificates evidencing the Firm Shares and any
Additional Shares to be purchased hereunder shall be delivered to you on the
Closing Date or the Option Closing Date, as the case may be, against payment of
the purchase price therefor in immediately available funds.
5. Agreements of the Company. The Company agrees 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 Shares may commence, the Company 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.
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<PAGE> 7
(b) The Company 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 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 Shares 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 Company's
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 Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to you, without
charge, four (4) signed copies 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 Company will not (i) file any amendment
to the Registration Statement or make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to which you
reasonably shall object after being so advised or (ii) so long as, in the
opinion of counsel for the Underwriters, a Prospectus is
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<PAGE> 8
required to be delivered in connection with sales by any Underwriter or dealer,
file any information, documents or reports pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") without delivering a copy of such
information, documents or reports to you, as Representatives of the
Underwriters, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such quantities
as you have requested, copies of each form of the Prepricing Prospectus. The
Company consents 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 Shares are offered by the several Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing Prospectus so
furnished by the Company.
(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
Company 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 Company consents 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 Shares are offered by the
several Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares 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 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 Company will forthwith prepare and, subject to
the provisions of paragraph (d) above, file with the Commission
- 8 -
<PAGE> 9
an appropriate supplement or amendment thereto, and will expeditiously furnish
to the Underwriters and dealers designated by you as Representatives for the
Underwriters a reasonable number of copies thereof. 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, as Representatives of the several Underwriters, agree that
the Prospectus should be amended or supplemented, the Company, if requested by
you, will promptly issue a press release announcing or disclosing the matters
to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with
counsel for the Underwriters in connection with the registration or
qualification of the Shares 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 the
Company 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
Shares, in any jurisdiction where it is not now so subject.
(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), and (ii) from time to time such other information
concerning the Company as you may reasonably request.
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<PAGE> 10
(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 12 hereof or by you pursuant to
Section 12 or Section 13 hereof) or if this Agreement shall be terminated by
the Representatives on behalf of Underwriters because of any failure or refusal
on the part of the Company or the Selling Stockholders to comply with the terms
or fulfill any of the conditions of this Agreement, the Company agrees to
reimburse the Representatives 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 12 hereof or by you
pursuant to Section 12 or Section 13 hereof, the Company and the Selling
Stockholders shall not then be under any liability to reimburse the
Underwriters, including the Representatives, for any out of pocket expenses
incurred by them in connection herewith, except as provided in Section 11
hereof.
(k) The Company will apply the net proceeds from
the sale of the Shares to be sold by it hereunder substantially in accordance
with the description set forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the
Company 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 provided in this Agreement, the
Company will not sell, offer to sell, solicit an offer to buy, contract to
sell, grant any option or warrant to purchase, or otherwise transfer or dispose
of any Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, for a period of 180 days after the date of the
Prospectus, without the prior written consent of Smith Barney Inc.; provided,
however, that the Company may issue shares of Common Stock (i) as consideration
for the acquisition of additional outdoor advertising or logo sign assets
provided that the persons receiving such shares are bound by lock-up provisions
substantially similar to those referred to in clause (n) below and (ii)
pursuant to the Company's 1996 Equity Incentive Plan.
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<PAGE> 11
(n) The Company has furnished or will furnish to
you "lock-up" letters, in substantially the form agreed to by you, signed by
each of its current officers and directors and each of its stockholders
reasonably designated by you.
(o) Except as stated in this Agreement and in the
Prepricing Prospectus and Prospectus, the Company has not taken, nor will it
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 Common Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have
the Common Stock included for quotation, subject to notice of issuance, on the
Nasdaq National Market concurrently with the effectiveness of the Registration
Statement.
6. Agreements of the Selling Stockholders. Each of the
Selling Stockholders agrees with the several Underwriters as follows:
(a) Such Selling Stockholder will cooperate to
the extent necessary to cause the Registration Statement or any post-effective
amendment thereto to become effective at the earliest possible time.
(b) On the Closing Date or the Option Closing
Date, as the case may be, all stock transfer or other taxes (other than income
taxes and excise taxes measured by income) that are required to be paid in
connection with the sale or transfer hereunder to the Underwriters by such
Selling Stockholder of the Shares to be sold by such Selling Stockholder to the
several Underwriters hereunder on such date will have been paid or provided for
by such Selling Stockholders.
(c) Such Selling Stockholder will do or perform
all things reasonably required to be done or performed by the Selling
Stockholder prior to the Closing Date or any Option Closing Date, as the case
may be, to satisfy all conditions precedent to the delivery of the Shares
pursuant to this Agreement.
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<PAGE> 12
(d) Such Selling Stockholder has executed or will
execute a "lock-up" letter as provided in Section 5(n) above.
(e) Except as stated in this Agreement and in the
Prepricing Prospectus and the Prospectus, such Selling Stockholder will not
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 Common Stock to facilitate the sale or resale of the Shares.
(f) Such Selling Stockholder will advise you
promptly, and if requested by you, will confirm such advice in writing, within
the period of time referred to in Section 5(f) hereof, of any change in the
Company's condition (financial or other), business, prospects, properties, net
worth or results of operations or of any change in information relating to such
Selling Stockholder or the Company or any new information relating to the
Company or relating to any matter stated in the Prospectus or any amendment or
supplement thereto which comes to the attention of such Selling Stockholder
that suggests that any statement made in the Registration Statement or the
Prospectus (as then amended or supplemented, if amended or supplemented) is or
may be untrue in any material respect or that the Registration Statement or
Prospectus (as then amended or supplemented, if amended or supplemented) omits
or may omit to state a material fact or a fact necessary to be stated therein
in order to make the statements therein not misleading in any material respect,
or of the necessity to amend or supplement the Prospectus (as then amended or
supplemented, if amended or supplemented) in order to comply with the Act or
any other law.
7. Representations and Warranties of the Company. The
Company represents and warrants 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> 13
(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 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 through
you expressly for use therein.
(c) All the outstanding shares of Common Stock of
the Company (including the Shares to be sold by the Selling Stockholders) have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the Shares to be issued and sold
by the Company have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor in accordance with the terms hereof, will
be validly issued, fully paid and nonassessable and free of any preemptive or
similar rights; and the capital stock of the Company conforms in all material
respects to the description thereof in the Registration Statement and the
Prospectus.
(d) 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 does not, individually or in the aggregate, have a material adverse
effect on the condition
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<PAGE> 14
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries (as hereinafter defined) taken as a whole
(a "Material Adverse Effect").
(e) All the Company's consolidated subsidiaries
(collectively, the "Subsidiaries") are listed in Exhibit __ hereto. 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 are owned by the Company
directly, or indirectly through one of the other Subsidiaries and, except for
the liens under the Bank Credit Agreements (as defined in the Registration
Statement) and the Note Indenture governing the 11% Senior Secured Notes due
May 15, 2003, 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 by expected, individually or in
the aggregate, to materially impair the value of such shares or other equity
interests.
(f) There are no legal or governmental
proceedings pending or, to the knowledge of the Company, 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
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<PAGE> 15
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.
(g) 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.
(h) Neither the Company nor any of the
Subsidiaries is in violation of its certificate or articles of incorporation or
by-laws, or other organizational documents, or 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"), which in the case of any of
(i), (ii) or (iii) above would reasonably be expected to have a Material
Adverse Effect or of any decree of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries, or in default
in any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material 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.
(i) Neither the issuance and sale of the Shares,
the execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby (including,
without limitation, the inclusion in the Registration Statement of the Shares
to be sold by the Selling Stockholders) (A) requires any consent, approval,
authorization or other order of or registration or filing with, any court,
regulatory
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<PAGE> 16
body, administrative agency or other governmental body, agency or official
(except such as may be required for the registration of the Shares under the
Act and the Exchange Act, compliance with the securities or Blue Sky laws of
various jurisdictions and compliance with the Rules of Fair Practice of the
National Association of Securities Dealers ("NASD"), all of which (except such
compliance with the Rules of Fair Practice 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 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) The accountants, KPMG Peat Marwick LLP, who
have certified or shall certify the financial statements 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 financial statements, together with
related schedules and notes, included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company and the Subsidiaries 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; and the other financial and statistical information and data included
in
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<PAGE> 17
the Registration Statement and the Prospectus (and any amendment or supplement
thereto) 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 Company and the Subsidiaries.
(l) The execution and delivery of, and the
performance by the Company of its obligations under, this Agreement have been
duly and validly authorized by the Company, and this Agreement has been duly
executed and delivered by the Company and constitutes the valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as rights to indemnity and contribution hereunder may be
limited by federal or state securities laws.
(m) 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), 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.
(n) 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 impair
the value of such property to the Company 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
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<PAGE> 18
subleases with such exceptions as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or impair the value of
such leasehold estate to the Company 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 such lease or sublease, which claim could
reasonably be expected individually or in the aggregate to have a Material
Adverse Effect.
(o) 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 Shares, will not distribute any offering material in
connection with the offering and sale of the Shares other than the Registration
Statement, the Prepricing Prospectus, the Prospectus or other materials, if
any, permitted by the Act.
(p) 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.
(q) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in
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<PAGE> 19
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity 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.
(r) To the Company's 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.
(s) 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.
(t) No holder of any security of the Company has
any right to require registration of shares of Common Stock or any other
security of the Company because of the filing of the Registration Statement or
consummation of the transactions contemplated by this Agreement.
(u) The Company and the Subsidiaries own or
possess all patents, trademarks, trademark registrations, 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 Company is 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.
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<PAGE> 20
(v) The Company is not now, and after sale of the
Shares 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.
(w) Each such document or report required to be
filed by the Company pursuant to the Exchange Act and the rules and regulations
thereunder at the time it was filed conformed to the requirements of the
Exchange Act and the rules and regulations thereunder; and none of such
documents or reports contained an untrue statement of any material fact or
omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading.
(x) The Company has complied with all provisions
of Florida Statutes, Section 517.075, relating to issuers doing business with
Cuba.
(y) Except as disclosed in the Registration
Statement and the Prospectus, there are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, the Company or
any Subsidiary thereof.
(z) No labor problem exists with the employees of
the Company or any of the Subsidiaries or, to the knowledge of the Company, is
imminent that, in either case, could reasonably be expected individually or in
the aggregate to result in any Material Adverse Effect.
(aa) 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.
8. Representations and Warranties of the Selling
Stockholders. Each Selling Stockholder represents and warrants to each
Underwriter that:
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<PAGE> 21
(a) Such Selling Stockholder now has, and on the
Closing Date and any Option Closing Date will have, valid and marketable title
to the Shares to be sold by such Selling Stockholder, free and clear of any
lien, claim, security interest or other encumbrance, including, without
limitation, any restriction on transfer, other than as provided is the Custody
Agreement or under any Federal or State securities laws.
(b) Such Selling Stockholder now has, and on the
Closing Date and any Option Closing Date will have, full legal right, power and
authorization, and any approval required by law, to sell, assign transfer and
deliver such Shares in the manner provided in this Agreement, and upon delivery
of and payment for such Shares hereunder, the several Underwriters will acquire
valid and marketable title to such Shares free and clear of any lien, claim,
security interest, or other encumbrance.
(c) This Agreement and the Custody Agreement have
been duly authorized, executed and delivered by or on behalf of such Selling
Stockholder and the Custody Agreement is the valid and binding agreements of
such Selling Stockholder enforceable against such Selling Stockholder in
accordance with its terms.
(d) Neither the execution and delivery of this
Agreement or the Custody Agreement by or on behalf of such Selling Stockholder
nor the consummation of the transactions herein or therein contemplated by or
on behalf of such Selling Stockholder requires any consent, approval,
authorization or order of, or filing or registration with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required under the Act or such as may be
required under state securities or Blue Sky laws governing the purchase and
distribution of the Shares and compliance with the Rules of Fair Practice of
the NASD) or conflicts or will conflict with or constitutes or will constitute
a breach of, or default under, or violates or will violate, any agreement,
indenture or other instrument to which such Selling Stockholder is a party or
by which such Selling Stockholder is or may be bound or to which any of such
Selling Stockholder's property or assets is subject, or any statute, law, rule,
regulation, ruling, judgment, injunction, order or decree applicable to such
Selling Stockholder or to any property or assets of such Selling Stockholder.
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<PAGE> 22
(e) The Registration Statement and the
Prospectus, insofar as they relate to such Selling Stockholder, do not and will
not as of the date it became effective in the case of the Registration
Statement and within the period of time referred to in Section 5(f) in the case
of the Prospectus, contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(f) Such Selling Stockholder does not have any
knowledge or any reason to believe that the Registration Statement or the
Prospectus (or any amendment or supplement thereto) contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(g) The representations and warranties of such
Selling Stockholder in the Custody Agreement are, and on the Closing Date and
any Option Closing Date will be, true and correct.
(h) Such Selling Stockholder has 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 Common Stock to facilitate the sale or resale of the Shares, except for the
lock-up arrangements described in the Prospectus and the sales contemplated
herein.
9. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each of you and each other 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 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
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<PAGE> 23
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 through you 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 Shares 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 Company or any Selling Stockholder 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 Company, 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 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
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<PAGE> 24
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, liability or expense by reason of
such settlement or judgment.
(c) Each Selling Stockholder agrees, severally
and not jointly, to indemnify and hold harmless each of you and each other
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, the
Company, its directors, its officers who sign the Registration Statement, and
any person who controls the Company 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 Company to each Underwriter, but only with respect to the
information furnished in writing by or on behalf of such Selling Stockholder
expressly for use in the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto provided,
however, that (i) such Selling Stockholder shall not be liable in any such
case, whether for indemnification pursuant to this Section 9(c) or contribution
pursuant to Section 9(e), if any such untrue statement or alleged untrue
statement or omission or alleged omission was contained in or omitted from the
Registration Statement or any Prospectus used after such time as the
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<PAGE> 25
Company shall have been advised by or on behalf of such Selling Stockholder of
such untrue statement or alleged untrue statement or omission or alleged
omission, and (ii) the obligations and liability of such Selling Stockholder,
whether with respect to indemnification pursuant to this Section 9(c) or
contribution pursuant to Section 9(e), shall not in any event exceed in the
aggregate the amount of net proceeds received by such Selling Stockholder from
the sale of the Shares sold by such Selling Stockholder to the Underwriters
pursuant to this Agreement. If any action, suit or proceeding shall be brought
against any Underwriter, any such controlling person of any Underwriter, the
Company, any of its directors, any such officer, or any such controlling person
of the Company, 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 Selling Stockholder pursuant to this
paragraph (c), such Selling Stockholder shall have the rights and duties given
to the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof such Selling Stockholder 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 Selling
Stockholder's expense), and each Underwriter, each such controlling person of
any Underwriter, the Company, its directors, any such officer, and any such
controlling person of the Company 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 Selling Stockholder may otherwise
have.
(d) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement, each Selling Stockholder, and any
person who controls the Company 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 Company and the Selling Stockholders to each Underwriter,
but only with respect to information furnished in writing by or on behalf of
such Underwriter through you 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
Company, any of its directors, any such officer, any Selling Stockholder, or
any such controlling person based on the
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<PAGE> 26
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 (d), such Underwriter
shall have the rights and duties given to the Company by paragraph (b) above
(except that if the Company 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 Company, its
directors, any such officer, the Selling Stockholder, 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.
(e) If the indemnification provided for in this
Section 9 is unavailable to an indemnified party under paragraphs (a), (c) or
(d) 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 losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other hand from the offering of the Shares, 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
Company and the Selling Stockholders on the one hand and the Underwriters on
the other 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 Company and
the Selling Stockholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders 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; provided that, in the event that the Underwriters shall have
purchased any Additional Shares hereunder, any determination of the relative
benefits
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<PAGE> 27
received by the Company, the Selling Stockholders or the Underwriters from the
offering of the Shares shall include the net proceeds (before deducting
expenses) received by the Company and the Selling Stockholders, and the
underwriting discounts and commissions received by the Underwriters, from the
sale of such Additional Shares, in each case computed on the basis of the
respective amounts set forth in the notes to the table on the cover page of the
Prospectus. The relative fault of the Company and the Selling Stockholders 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 the Company or the Selling
Stockholders 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. In determining the benefits to,
or the fault of, any particular Selling Stockholder, the benefits to and fault
of each other Selling Stockholder and the Company shall not be taken into
account.
(f) The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 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 (e) 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 (e) above shall be deemed to 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 9, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price of the Shares
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 9 are several in
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<PAGE> 28
proportion to the respective numbers of Firm Shares set forth opposite their
names in Schedule II hereto (or such numbers of Firm Shares increased as set
forth in Section 12 hereof) and not joint. The obligations of the Selling
Stockholders to contribute pursuant to this Section 9 are several and not joint
and no Selling Stockholder shall in any event be required to contribute any
amount which is in excess of the amount by which the total net proceeds
received by such Selling Stockholder from the sale of the Shares sold by such
Selling Stockholder to the Underwriters pursuant to this Agreement exceeds the
amounts that such Selling Stockholder has otherwise been required to pay by
reason of the statements or omissions which result in such obligation to
contribute.
(g) 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.
(h) Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to indemnification or
contribution under this Section 9 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 9 and the representations and warranties of the Company and the Selling
Stockholders set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or the Selling Stockholders or any person controlling the
Company, (ii) acceptance of any Shares 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 Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 9.
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<PAGE> 29
10. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares 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 Shares 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, and any request of the Commission for additional
information (to be included in the registration statement or the prospectus or
otherwise) shall have been complied with to your satisfaction.
(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, as Representatives of the several Underwriters, would
materially, adversely affect the market for the Shares, or (ii) any event or
development relating to or involving the Company or any officer or director of
the Company or any Selling Stockholder which makes any statement made in the
Prospectus untrue in any material respect or which, in the opinion of the
Company and its counsel or you, as Representatives of the several Underwriters
and counsel to the Underwriters, 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, as Representatives
of the several Underwriters, materially adversely affect the market for the
Shares.
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<PAGE> 30
(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, as Representatives of the several Underwriters, 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 Shares to be issued and sold to
the Underwriters by the Company hereunder (A) have been duly
authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and (B) free of any preemptive,
or to the best knowledge of such counsel, similar rights that entitle
or will entitle any person to acquire any shares of Common Stock upon
the issuance thereof by the Company;
(iii) The form of certificates for the
Shares conforms to the requirements of the Delaware General
Corporation Law;
(iv) The Registration Statement and all
post-effective amendments, if any, have 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);
(v) (A) The Company has the corporate
power and authority to enter into this Agreement and to issue, sell
and deliver the Shares to be sold by it to the Underwriters as
provided herein, and (B) this Agreement has been duly authorized,
executed and delivered by the Company and is a valid, legal and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement of rights to
indemnity and contribution
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<PAGE> 31
hereunder may be limited by Federal or state securities laws or
principles of public policy and subject to the qualification that the
enforceability of the Company's obligations hereunder may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights
generally and by general equitable principles;
(vi) Neither the offer, sale or delivery
of the Shares, the execution, delivery or performance of this
Agreement, compliance by the Company with the provisions hereof, nor
consummation by the Company of the transactions contemplated hereby
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;
(vii) 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 (except as
have been obtained under the Act and the Exchange Act or such as may
be required under state securities or Blue Sky laws governing the
purchase and distribution of the Shares or such as may be required
under the rules of Fair Practice of the NASD) for the valid issuance
and sale of the Shares to the Underwriters as contemplated by this
Agreement;
(viii) Each of the Registration Statement,
as of its effective date, and the Prospectus, as of its
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<PAGE> 32
date, and any supplements or amendments thereto (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;
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, and
nothing has come to the attention of such counsel that has caused it to believe
(i) that the Registration Statement 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 any amendment or
supplement to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, 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 in
the Registration Statement or the Prospectus).
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 States of Delaware or New York, provided that (1) each such local
counsel is acceptable to the Representatives, (2) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to the Representatives and is, in form and substance reasonably
satisfactory to them and their counsel, and (3) counsel shall state in their
opinion that they believe that they and the Underwriters are justified in
relying thereon.
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<PAGE> 33
(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 and the Selling Stockholders, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters 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 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";
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<PAGE> 34
(iv) All the shares of capital stock of
the Company outstanding prior to the issuance of the Shares to be
issued and sold by the Company hereunder (including the Shares to be
sold by the Selling Stockholders), 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 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) This Agreement and the Custody
Agreement have each been duly executed and delivered by or on behalf
of each of the Selling Stockholders and are valid and binding
agreements of each Selling Stockholder enforceable against each
Selling Stockholder in accordance with their terms, except as
enforcement of rights to indemnity and contribution hereunder may be
limited by Federal or state securities laws or principles of public
policy and subject to the qualification that the enforceability of
each Selling Stockholder's obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles;
(vii) To the knowledge of such counsel,
each Selling Stockholder has full legal right, power and
authorization, and any approval required by law, to sell, assign,
transfer and deliver good and marketable title to the Shares which
such Selling Stockholder has agreed to sell pursuant to this
Agreement;
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<PAGE> 35
(viii) The execution and delivery of this
Agreement and the Custody Agreement by the Selling Stockholders and
the consummation of the transactions contemplated hereby and thereby
will not conflict with, violate, result in a breach of or constitute a
default under the terms or provisions of any agreement, indenture,
mortgage or other instrument known to such counsel to which any
Selling Stockholder is a party or by which any of them or any of their
assets or property is bound, or any court order or decree or any law,
rule, or regulation applicable to any Selling Stockholder or to any of
the property or assets of any Selling Stockholder;
(ix) Upon delivery of the Shares by the
Selling Stockholders pursuant to this Agreement and payment therefor
as contemplated herein, and assuming that the Underwriters shall have
purchased such Shares in good faith without notice of any adverse
claim, the Underwriters will acquire good and marketable title to such
Shares free and clear of any lien, claim, security interest, or other
encumbrance, restriction on transfer or other defect in title; and
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, and
nothing has come to the attention of such counsel that has caused it to believe
(i) that the Registration Statement 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 any amendment or
supplement to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, 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
- 35 -
<PAGE> 36
schedules and other financial and statistical data included 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, as Representatives of the several
Underwriters, 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;
(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
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<PAGE> 37
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 Shares or the right to have any Common
Stock or other 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 shares of
Common Stock or other securities of the Company; and
(vii) The statements 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.
(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, as Representatives of the several
Underwriters, with respect to the matters referred to in clauses (ii) (with
respect to paragraph (A) only), (iv), (v) (with respect to paragraph
- 37 -
<PAGE> 38
(B) only) and (viii) of the foregoing paragraph (c) and clause (ix) of the
foregoing paragraph (d) and such other related matters as you may request.
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, and
nothing has come to the attention of such counsel that has caused it to believe
(i) that the Registration Statement 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 any amendment or
supplement to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, 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 in
the Registration Statement or the Prospectus).
(g) You shall have received letters addressed to
you, as Representatives of the several Underwriters, and dated the date hereof
and the Closing Date from KPMG Peat Marwick LLP, 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 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
- 38 -
<PAGE> 39
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 10(h) and in Section 10(i)
hereof.
(i) The Company shall not have failed at or prior
to the Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it hereunder
at or prior to the Closing Date in any material respect.
(j) All the representations and warranties of the
Selling Stockholders 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 or on behalf of the Selling Stockholders to the
effect set forth in this Section 10(j) and in Section 10(k) hereof.
(k) The Selling Stockholders 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.
- 39 -
<PAGE> 40
(l) The Shares shall have been listed or approved
for quotation upon notice of issuance on the Nasdaq National Market.
(m) The Sellers 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 any officer of the
Company or any Attorney-in-Fact or any Selling Stockholder and delivered to
you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Company, the
Selling Stockholders or the particular Selling Stockholder, as the case may be,
to each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on and as of any
Option Closing Date of the conditions set forth in this Section 10, except
that, if any Option Closing Date is other than the Closing Date, and you so
request, the certificates, opinions and letters referred to in paragraphs (c)
through (j) shall be dated the applicable Option Closing Date and the opinions
called for by paragraphs (c), (d), (e) and (f) shall be revised to reflect the
sale of Additional Shares.
11. Expenses. The Company agrees to pay the following costs
and expenses and all other costs and expenses incident to the performance by it
of its 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 Shares; (iii) the preparation, printing,
- 40 -
<PAGE> 41
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the
Shares; (iv) the printing (or reproduction) and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda, the Master Agreement Among
Underwriters and dealer contracts; (v) the registration of the Shares under the
Exchange Act and the listing of the Shares on the Nasdaq National Market; (vi)
the registration or qualification of the Shares 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 National Association of Securities
Dealers, Inc.; (viii) the transportation and other expenses incurred by or on
behalf of Company representatives in connection with presentations to
prospective purchasers of the Shares; 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 and the Selling Stockholders. Except as
provided by this Section 11 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 Shares by them and any advertising expenses in connection with
any offers they make.
12. 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 Shares 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
Company, by notifying you, or by you, as Representatives of the several
Underwriters, by notifying the Company and the Selling Stockholders.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or
- 41 -
<PAGE> 42
Underwriters are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm
Shares set forth opposite its name in Schedule II hereto bears to the aggregate
number of Firm Shares 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 Shares 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 Shares which it or they are
obligated to purchase on the Closing Date and the aggregate number of Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase on
the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares 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 purposes of this Agreement, any party not listed in
Schedule II hereto who, with your approval and the approval of the Company,
purchases Shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.
Any notice under this Section 12 may be given by telegram,
telecopy or telephone but, if by telephone, shall be subsequently confirmed in
writing.
13. Termination of Agreement. This Agreement shall be
subject to termination in your absolute discretion, without liability on the
part of any Underwriter to the Company or any Selling Stockholder, by notice to
the
- 42 -
<PAGE> 43
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (i) trading in securities generally on the New York Stock Exchange,
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 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
judgment, impracticable or inadvisable to commence or continue the offering of
the Shares at the offering price to the public set forth on the cover page of
the Prospectus or to enforce contracts for the resale of the Shares 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.
14. 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
7(b) and 9 hereof.
15. Miscellaneous. Except as otherwise provided in
Sections 5, 12 and 13 hereof, notice given pursuant to any provision of this
Agreement shall be in writing and shall be delivered (i) if to the Company, 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 the
Selling Stockholders, at Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman,
L.L.P., Attention: Ben Miller, or (iii) if to you, as Representatives of the
several Underwriters, 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 Selling Stockholders, the Company, its directors
and officers, and the other controlling persons referred to in Section 9 hereof
and their respective successors and assigns, to the
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<PAGE> 44
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 Shares in his status as such
purchaser.
16. 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.
- 44 -
<PAGE> 45
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Stockholders and the several
Underwriters.
Very truly yours,
LAMAR ADVERTISING COMPANY
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Each of the Selling
Stockholders named in
Schedule I hereto
By:
------------------------------------
Attorney-in-Fact
By:
------------------------------------
Attorney-in-Fact
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule II
hereto.
SMITH BARNEY INC.
ALEX. BROWN & SONS INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the Several Underwriters
By: SMITH BARNEY INC.
By:
-----------------------------------------
Name:
------------------------------------
Title: Managing Director
- 45 -
<PAGE> 46
SCHEDULE I
LAMAR ADVERTISING COMPANY
Part A - Firm Shares
<TABLE>
<CAPTION>
Number of
Selling Stockholders Firm Shares
-------------------- -----------
<S> <C>
The Reilly Family Limited
Partnership . . . . . . . . . . . . . . . . . . . . 266,250
Mary Lee Lamar Dixon . . . . . . . . . . . . . . . . 125,000
Charles W. Lamar, III . . . . . . . . . . . . . . . . 68,750
Robert B. Switzer . . . . . . . . . . . . . . . . . . 25,000
Albert L. Lamar . . . . . . . . . . . . . . . . . . . 12,500
Kevin P. Reilly, Sr. . . . . . . . . . . . . . . . . 187,500
Charles Switzer . . . . . . . . . . . . . . . . . . . 25,000
John Switzer . . . . . . . . . . . . . . . . . . . . 25,000
Total 735,000
</TABLE>
Part B - Additional Shares
<TABLE>
<CAPTION>
Number of
Additional
Selling Stockholders Shares
-------------------- ----------
<S> <C>
Total 231,250
</TABLE>
- 46 -
<PAGE> 47
SCHEDULE II
LAMAR ADVERTISING COMPANY
<TABLE>
<CAPTION>
Number of Number of
Underwriter Firm Shares Underwriter Firm Shares
----------- ----------- ----------- -----------
<S> <C> <C> <C>
Smith Barney Inc.
Alex. Brown & Sons
Incorporated
Prudential
Securities
Incorporated
Total 4,735,000
</TABLE>
- 47 -
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
LAMAR ADVERTISING COMPANY
The undersigned, Kevin P. Reilly, Jr. and Charles W. Lamar, III, do
hereby certify:
A. They are the duly elected President and Secretary,
respectively, of Lamar Advertising Company, a Delaware corporation (the
"Corporation").
B. The original Certificate of Incorporation of the Corporation
was filed with the Secretary of State on October 23, 1989, and the name under
which the Corporation was originally incorporated is Lamar Advertising Company.
C. The Certificate of Incorporation, as previously amended, is
further amended and restated to read in full as follows:
FIRST. The name of the Corporation is Lamar Advertising Company.
SECOND. The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
County of New Castle, Delaware 19801. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is seventy-six million ten thousand
(76,010,000) shares, and shall consist of:
(1) Fifty million (50,000,000) shares of Class A Common
Stock, $0.001 par value per share;
(2) Twenty-five million (25,000,000) shares of Class B
Common Stock, $0.001 par value per share;
(3) Ten thousand (10,000) shares of Class A Preferred
Stock, $638.00 par value per share; and
(4) One million (1,000,000) shares of undesignated
Preferred Stock, $0.001 par value per share.
The Class A Common Stock and the Class B Common Stock are hereinafter
collectively referred to as "Common Stock."
<PAGE> 2
4.1 Common Stock
The powers, preferences, rights, qualifications, limitations and
restrictions relating to the Common Stock are as follows:
4.1.1. Rank
The Common Stock is junior to the Class A Preferred Stock and
is subject to all the powers, preferences, rights and priorities of Preferred
Stock designated herein or in any resolution or resolutions adopted by the
Board of Directors pursuant to authority expressly vested in it by the
provisions of Section 4.3 of this Article FOURTH (the "Designated Preferred
Stock").
4.1.2. Voting
Holders of Class A Common Stock are entitled to one (1) vote
for each share of such stock held, and holders of Class B Common Stock are
entitled to ten (10) votes for each share of such stock held, with respect to
all matters properly submitted for the vote of holders of Common Stock. Except
as otherwise provided by law, the holders of Common Stock will vote together as
a single class on all matters properly submitted for their vote, including
without limitation any amendment to this Amended and Restated Certificate of
Incorporation which would increase or decrease the number of authorized shares
of Class A Common Stock or Class B Common Stock.
4.1.3. Dividends and Other Distributions
(a) Except as provided herein, each share of Common Stock
issued and outstanding shall be identical in all respects, and no dividend
shall be paid on any share of Common Stock unless the same dividend is paid on
all shares of Common Stock outstanding at the time of such payment. Except for
and subject to those special voting rights expressly granted herein to the
holders of the Class B Common Stock and subject to the powers, rights,
privileges, preferences and priorities of the Class A Preferred Stock and any
Designated Preferred Stock, the holders of Common Stock shall have exclusively
all other rights of stockholders, including without limitation (i) the right to
receive dividends, when, as and if declared by the Board of Directors out of
funds legally available therefor, and (ii) in the event of any distribution of
assets upon liquidation, dissolution or winding up of the Corporation or
otherwise, the right to receive ratably all of the assets and funds of the
Corporation remaining after the payment to the creditors of the Corporation.
(b) Dividends and distributions payable in shares of
Class A Common Stock may not be made on or to shares of Class B Common Stock
and dividends and distributions payable in shares of Class B Common Stock may
not be made on or to shares of any class of the Corporation's capital stock
other than the Class B Common Stock. If a dividend or distribution payable in
shares of Class A Common Stock shall be made on the shares of Class A Common
Stock, a dividend or distribution payable in shares of Class B Common Stock
shall be made simultaneously on the shares of Class B Common Stock, and the
number of shares of Class B Common Stock payable on each share of Class B
Common Stock pursuant to such
- 2 -
<PAGE> 3
dividend or distribution shall be equal to the number of shares of Class A
Common Stock payable on each share of Class A Common Stock pursuant to such
dividend or distribution. If a dividend or distribution payable in shares of
Class B Common Stock shall be made on the shares of Class B Common Stock, a
dividend or distribution payable in shares of Class A Common Stock shall be
made simultaneously on the shares of Class A Common Stock, and the number of
shares of Class A Common stock pursuant to such dividend or distribution shall
be equal to the number of shares of Class B Common Stock payable on each share
of Class B Common Stock pursuant to such dividend or distribution.
(c) If the Corporation shall in any manner subdivide (by
stock split, reclassification, stock dividend, recapitalization, or otherwise)
or combine (by reverse stock split or otherwise) the outstanding shares of
Class A Common Stock or Class B Common Stock, then the outstanding shares of
each other class of Common Stock shall be subdivided or combined, as the case
may be, to the same extent, on an equal share basis.
4.1.4. Conversion of Class B Common Stock
(a) In the event that the number of outstanding shares of
Class B Common Stock falls below ten percent (10%) of the total number of
shares of Common Stock outstanding, each share of Class B Common Stock shall at
that time be converted automatically to one (1) fully paid and non-assessable
share of Class A Common Stock.
(b) Upon the sale or other transfer by a holder of Class B
Common Stock to a person or entity other than a Permitted Transferee (as such
term is defined below), such shares of Class B Common Stock shall be converted
automatically into an equal number of shares of Class A Common Stock. Promptly
upon such sale or other transfer, the holder of Class B Common Stock shall
surrender the certificate or certificates therefor, duly endorsed in blank or
accompanied by proper instruments of transfer, at the office of the Corporation
or of any transfer agent for the Class A Common Stock, and shall give written
notice to the Corporation at such office: (i) stating that the shares are being
converted pursuant to this paragraph, (ii) identifying the number of shares of
Class B Common Stock being converted and (iii) setting forth the name or names
(with addresses) and denominations in which the certificate or certificates for
Class A Common Stock shall be issued and shall include instructions for
delivery thereof. Delivery of such notice together with the certificates
representing the Class B Common Stock shall obligate the Corporation or its
transfer agent to issue and deliver at such stated address to such stated
transferee a certificates or certificates for the number of shares of Class A
Common Stock to which such transferee is entitled, registered in the name of
such transferee. In the event of a sale or other transfer of less than all of
the Class B Common Stock evidenced by a certificate surrendered to the
Corporation in accordance with the above procedures, subject to paragraph (a)
above, the Corporation shall execute and deliver to the transferor, without
charge, a new certificate evidencing the number of shares of Class B Common
Stock not sold or otherwise transferred.
For the purpose of paragraph (b) above, a "Permitted Transferee" is
defined as :
(i) (A) any Controlling Stockholder (which shall mean
the Reilly Family Limited Partnership or any successor entity thereto, Kevin P.
Reilly, Sr., Kevin P. Reilly, Jr.,
- 3 -
<PAGE> 4
Wendell S. Reilly, Sean E. Reilly, and Anna R. Cullinan; (B) the estate of a
Controlling Stockholder; (C) the spouse or former spouse of a Controlling
Stockholder; (D) any lineal descendent of a Controlling Stockholder, any spouse
of such lineal descendent, a Controlling Stockholder's grandparent, parent,
brother or sister or a Controlling Stockholder's spouse's brother or sister;
(E) any guardian or custodian (including a custodian for purposes of the
Uniform Gift to Minors Act or Uniform Transfers to Minors Act) for, or any
conservator or other legal representative of, one or more Permitted
Transferees; or (F) any trust or savings or retirement account, including an
individual retirement account for purposes of federal income tax laws, whether
or not involving a trust, principally for the benefit of one or more Permitted
Transferees, including any trust in respect of which a Permitted Transferee has
any general or special testamentary power of appointment which is limited to
any other Permitted Transferee;
(ii) the Corporation;
(iii) any employee benefit plan or trust thereunder
sponsored by the Corporation or any of its subsidiaries;
(iv) any trust principally for the benefit of one or more
of the individuals, persons, firms or entities ("Persons") referred to in (i)
through (iii) above;
(v) any corporation, partnership, or other entity if all
of the beneficial ownership is held solely by one or more of the Persons
referred to in (i) through (iv) above;
(vi) any voting trust for the benefit of one or more of
the Persons referred to in (i) through (v) above; and
(vii) any broker or dealer in securities, clearing house,
bank, trust company, savings and loan association or other financial
institution which holds the Class B Common Stock as nominee for the benefit of
a Permitted Transferee thereof.
(c) Notwithstanding anything to the contrary set forth
herein, any holder of Class B Common Stock may pledge his shares of Class B
Common Stock to a pledgee pursuant to a bona fide pledge of such shares as
collateral security for indebtedness due to the pledgee without causing an
automatic conversion of such shares into Class A Common Stock, provided,
however, that such shares may not be transferred to or registered in the name
of the pledgee unless such pledgee is a Permitted Transferee. In the event of
foreclosure or other similar action by a pledgee who is not a Permitted
Transferee, such pledged shares of Class B Common Stock shall be converted
automatically, without any act or deed on the part of the Corporation or any
other person, into shares of Class A Common Stock as provided above.
(d) Each share of Class B Common Stock shall be
convertible, at the option of its holder, into one fully paid and
non-assessable share of Class A Common Stock at any time. In the event of such
voluntary conversion, the procedures set forth in paragraph (b) above shall be
followed.
(e) The Corporation hereby reserves and shall at all
times reserve and keep available, out of its authorized and unissued Class A
Common Stock, for the purpose of
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effecting the conversions provided for herein, a sufficient number of shares of
Class A Common Stock to effect the conversion of all outstanding Class B Common
Stock. All of the Class A Common Stock so issuable shall, when issued, be duly
and validly issued, fully paid and non-assessable, and free from liens and
charges with respect to the issue. The Corporation will take such action as
may be necessary to ensure that all such Class A Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirements
of any stock exchange or market on which any shares of the Class A Common Stock
are listed or quoted.
(f) In any merger, consolidation or business combination,
the consideration to be received per share by the holders of Class A Common
Stock and Class B Common Stock must be identical for each class of stock,
except that in any such transaction in which shares of Common Stock are to be
distributed, such shares may differ as to voting rights to the extent that
voting rights differ among Class A Common Stock and Class B Common Stock as
provided herein.
4.1.5. Preemptive Rights
No holder of shares of Common Stock shall be entitled to
preemptive or subscription rights.
4.2 Class A Preferred Stock
The powers, preferences, rights, qualifications, limitations and
restrictions relating to the Class A Preferred Stock are as follows:
4.2.1. Rank
The Class A Preferred Stock, with respect to dividends and
upon liquidation, ranks senior to the Common Stock and is subject to all the
powers, preferences, rights and priorities of any Designated Preferred Stock.
4.2.2. Dividends
Holders of Class A Preferred Stock, in priority to the Common
Stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, dividends at the rate of
fifteen and 95/100 dollars ($15.95) per share per quarter, payable to the
stockholders of record at the close of business on such date before the payment
thereof as is fixed by the Board of Directors on declaring any such dividend.
Dividends shall be cumulative and the holders of Class A Preferred Stock shall
have no right to such dividend even though the Corporation has funds available
for the payment therefor, unless payment has been declared by the Board of
Directors. Dividends on the Class A Preferred Stock shall be paid or declared
and set apart for payment before dividends are declared and paid on the Common
Stock.
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4.2.3. Dissolution or Liquidation
In the case of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the Class A
Preferred Stock shall be entitled to receive out of the assets of the
Corporation, whether such assets are capital or surplus, the sum of the par
value of the Class A Preferred Stock plus a further amount equal to any
dividend thereon accrued and unpaid to the date of such distribution before any
payment shall be made or any assets distributed to the Common Stock. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, if the assets distributed among the holders of the Class A
Preferred Stock are insufficient to permit the payment to such holders of the
full preferential amounts to which they are entitled, the entire assets of the
Corporation to be distributed shall be distributed among the holders of the
Class A Preferred Stock. After payment to the holders of the Class A Preferred
Stock of the full preferential amounts to which they are entitled, the holders
of the Common Stock shall be entitled to receive ratably all the remaining
assets. A merger or consolidation of the Corporation with or into any other
corporation or entity, shall not be deemed to be a dissolution or liquidation
within the meaning of this provision.
4.2.4. Voting
Except as otherwise provided by law, the holders of the Class
A Preferred Stock shall not be entitled to vote.
4.2.5. Preemptive Rights
No holder of shares of Class A Preferred Stock shall be
entitled to preemptive or subscription rights.
4.3. Designated Preferred Stock
The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article FOURTH, to provide by
resolution for the issuance of the shares of undesignated Preferred Stock in
one or more series, and by filing a certificate pursuant to the applicable law
of the State of Delaware, to establish from time to time the number of shares
to be included in each such series, and to fix the designations, powers,
preferences and rights of the shares of each such series and qualifications,
limitations or restrictions thereof.
The authority of the Board with respect to each series, which shall be
Designated Preferred Stock, shall include, but shall not be limited to,
determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate, if any, on the shares of that
series, whether dividends shall be cumulative, and if so, from which date or
dates, and the relative rights of priority, if any, of payment of dividends on
shares of the series;
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(c) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board of Directors
shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and if so, the terms and
amount of such sinking fund;
(g) The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
(h) Any other relative rights, preferences and
limitations of that series.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. Election of directors need not be by written ballot unless
the by-laws of the Corporation shall so provide.
SEVENTH. The Board of Directors of the Corporation is expressly
authorized to exercise all powers granted to it by law except insofar as such
powers are limited or denied herein or by the by-laws of the Corporation. In
furtherance of such powers, the Board of Directors shall have the right to
adopt, amend or repeal the by-laws of the Corporation.
EIGHTH. No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) pursuant to Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which the director
derived an improper personal benefit. If the Delaware General Corporation Law
is hereafter amended to authorize a further limitation or elimination of the
liability of directors or officers, then the liability of a director or officer
of the Corporation shall, in addition to the limitation on personal liability
provided herein, be limited or eliminated to the fullest extent permitted by
the Delaware General Corporation Law, as from time to time amended. No
amendment to or repeal of this Article Ninth shall apply to or have any effect
on the liability or alleged liability of any director or officer of the
Corporation for or with respect to any acts or omissions of such director or
officer occurring prior to such amendment or repeal.
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<PAGE> 8
NINTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
D. 1. Each share of Class A common stock, no par value, and
Class B common stock, no par value, outstanding immediately prior to the time
the Amended and Restated Certificate of Incorporation becomes effective under
the General Corporation Law of the State of Delaware (the "Outstanding Common
Stock") shall be reclassified and exchanged as follows:
a. Each share of Outstanding Common Stock held
by a stockholder other than the Lamar Family Limited Partnership (the
"Partnership"), who voted its shares to approve the Amended Restated
Certificate of Incorporation, shall automatically become 778.877 fully paid and
nonassessable shares of Class A Common Stock, $0.001 par value per share,
without the surrender of stock certificates or any other action by the holder
of such shares or any other person;
b. Each other share of Outstanding Common Stock,
including the shares held by the Partnership, shall automatically become
778.877 fully paid and nonassessable shares of Class B Common Stock, $0.001 par
value par share, without the surrender of stock certificates or any other
action by the holder of such shares or any other person; and
c. Notwithstanding the foregoing, no fractional
shares shall be issued but rather the shares issuable to any holder shall be
rounded to the nearest full number of shares.
2. The capital of the Corporation on account of the
Class A Common Stock and Class B Common Stock issued pursuant to the foregoing
paragraph 1 shall equal the par value of the shares so issued and the balance,
if any, of the capital of the Corporation on account of the Outstanding Common
Stock shall be transferred to surplus.
3. All of the outstanding certificates which represented
shares of Outstanding Common Stock shall be deemed for all purposes to evidence
ownership of and to represent the number of shares of Class A Common Stock and
Class B Common Stock issuable pursuant to paragraph 1, as applicable. Such
outstanding certificates shall be exchanged for new certificates as soon as
practicable.
E. This Certificate and the foregoing Amended and Restated
Certificate of Incorporation has been approved by the Board of Directors of the
Corporation.
F. This Certificate and the foregoing Amended and Restated
Certificate of Incorporation was adopted by (i) the holders of a majority of
the shares of Outstanding Common Stock and (ii) the holders of a majority of
the outstanding shares of Class A Preferred Stock, in accordance with the
provisions of Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Kevin P. Reilly, Jr., its President, and attested by Charles W.
Lamar, III, its Secretary, on July 30, 1996.
/s/ KEVIN P. REILLY, JR.
--------------------------------------
Kevin P. Reilly, Jr., President
Attest:
/s/ CHARLES W. LAMAR, III
- -------------------------------------
Charles W. Lamar, III, Secretary
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<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
BYLAWS
OF
LAMAR ADVERTISING COMPANY
Adopted by the Board of Directors on July 24, 1996
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of stockholders
shall be held at the principal office of the corporation or at such other place
as may be named in the notice.
SECTION 2. Annual Meeting. The annual meeting of
stockholders for the election of directors and the transaction of such other
business as may properly come before the meeting shall be held on such date and
at such hour and place as the directors or an officer designated by the
directors may determine. If the annual meeting is not held on the date
designated therefor, the directors shall cause the meeting to be held as soon
thereafter as convenient.
SECTION 3. Special Meetings. Special meetings of the
stockholders may be called at any time by the chief executive officer or a
majority of the Board of Directors.
SECTION 4. Notice of Meetings. Except where some other
notice is required by law, written notice of each meeting of stockholders,
stating the place, date and hour thereof and the purposes for which the meeting
is called, shall be given by the Secretary under the direction of the Board of
Directors or the chief executive officer, not less than ten nor more than sixty
days before the date fixed for such meeting, to each stockholder of record
entitled to vote at such meeting. Notice shall be given personally to each
stockholder or left at his or her residence or usual place of business or
mailed postage prepaid and addressed to the stockholder at his or her address
as it appears upon the records of the corporation. In case of the death,
absence, incapacity or refusal of the Secretary, such notice may be given by a
person designated either byP the Secretary or by the person or persons calling
the meeting or by the Board of Directors. A waiver of such notice in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent to such notice.
Attendance of a person at a meeting of stockholders shall constitute a waiver
of notice of such meeting, except when the stockholder attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice. Except as required by statute, notice of any adjourned
meeting of the stockholders shall not be required.
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SECTION 5. Record Date. The Board of Directors may fix
in advance a record date for the determination of the stockholders entitled to
notice of or to vote at any meeting of stockholders, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action. Such record
date shall not be more than 60 nor less than 10 days before the date of such
meeting, nor more than 60 days before any other action to which such record
date relates. If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day before the day on which notice is
given, or, if notice is waived, at the close of business on the day before the
day on which the meeting is held, and the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
SECTION 6. Nomination of Directors. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors at any annual or special meeting of stockholders.
Nominations of persons for election as directors may be made only by or at the
direction of the Board of Directors, or by any stockholder entitled to vote for
the election of directors at the meeting in compliance with the notice
procedures set forth in this Section 6. Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant
to timely notice in writing to the Chairman of the Board, if any, the President
or the Secretary. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the corporation
not less than 45 days before the meeting; provided, however, that if less than
60 days' notice or prior public disclosure of the date of the meeting is given
or made to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the 15th day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or re-election as
a director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the corporation that are
beneficially owned by the person and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, or any successor provision thereto; and (b) as to the
stockholder giving the notice, (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
corporation that are beneficially owned by such stockholder.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if the chairman should so determine, he or she shall
so declare to the meeting and the defective nomination shall be disregarded.
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<PAGE> 3
SECTION 7. Advance Notice of Business at Annual Meetings. At
any annual meeting of the stockholders, only such business shall be conducted
as shall have been properly brought before the meeting. To be brought properly
before an annual meeting, business must be either (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the
chief executive officer or the Board of Directors, (b) otherwise properly
brought before the meeting by or at the direction of the Board of Directors, or
(c) properly brought before the meeting by a stockholder. In addition to any
other applicable requirements, for business to be brought properly before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Chairman of the Board, if any, the President or the
Secretary. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the corporation not less
than 45 days before the meeting; provided, however, that if less than 60 days'
notice or prior public disclosure of the date of the meeting is given or made
to stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 15th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice shall set forth as to each matter
the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of the corporation that are beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 7, provided, however, that nothing in this
Section 7 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure.
The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the foregoing procedure, and if the
chairman should so determine, he or she shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted.
SECTION 8. Voting List. The officer who has charge of the
stock ledger of the corporation shall make or have made, at least 10 days
before every meeting of stockholders, a complete list of the stockholders,
arranged in alphabetical order and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
before the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or if not
so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present. The
stock ledger shall be the only
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evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote
at any meeting of stockholders.
SECTION 9. Quorum of Stockholders. At any meeting of
the stockholders, the holders of a majority in interest of all stock issued and
outstanding and entitled to vote upon a question to be considered at the
meeting, present in person or represented by proxy, shall constitute a quorum
for the consideration of such question, but in the absence of a quorum a
smaller group may adjourn any meeting from time to time. When a quorum is
present at any meeting, a majority of the votes properly cast shall, except
where a different vote is required by law, by the Certificate of Incorporation
or by these by-laws, decide any question brought before such meeting. Any
election by stockholders shall be determined by a plurality of the vote cast by
the stockholders entitled to vote at the election.
SECTION 10. Proxies and Voting. Unless otherwise provided in
the Certificate of Incorporation, each stockholder shall at every meeting of
the stockholders be entitled to one vote in person or by proxy for each share
of the capital stock held of record by such stockholder, but no proxy shall be
voted or acted upon after three years from its date, unless said proxy provides
for a longer period. Persons holding stock in a fiduciary capacity shall be
entitled to vote the shares so held, and persons whose stock is pledged shall
be entitled to vote unless in the transfer by the pledgor on the books of the
corporation the pledgee shall have been expressly empowered to vote thereon, in
which case only the pledgee or the pledgee's proxy may represent said stock and
vote thereon. Shares of the capital stock of the corporation belonging to the
corporation or to another corporation, a majority of whose shares entitled to
vote in the election of directors is owned by the corporation, shall neither be
entitled to vote nor be counted for quorum purposes.
SECTION 11. Conduct of Meeting. Meetings of the stockholders
shall be presided over by one of the following officers in the order specified
and if present and acting: the Chairman of the Board, if any, the
Vice-Chairman of the Board, if any, the President, a Vice-President (and, in
the event there be more than one person in any such office, in the order of
their seniority), or, if none of the foregoing is in office and present and
acting, a chairman designated by the Board of Directors or, in the absence of
such designation, a chairman chosen by the stockholders at the meeting. The
Secretary of the corporation, if present, or an Assistant Secretary, shall act
as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the chairman of the meeting shall appoint a secretary of
the meeting.
The Board of Directors may adopt such rules, regulations and
procedures for the conduct of the meeting of stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules and regulations
as adopted by the Board of Directors, the chairman of the meeting shall have
the right and authority to prescribe such rules, regulations and procedures and
to do all such acts as, in the judgement of such chairman, are appropriate for
the proper conduct of the meeting. Such rules, regulations or procedures,
whether adopted by the Board of Directors or prescribed by the chairman of the
meeting, may include, without limitation, (i) the establishment of an agenda or
order of business for the meeting, (ii) rules and procedures
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for maintaining order at the meeting and the safety of those present, (iii)
limitations on attendance at or participation in the meeting to stockholders of
record of the corporation, their duly authorized and constituted proxies or
such other persons as the chairman of the meeting shall determine, (iv)
restrictions on entry to the meeting after the time fixed for the commencement
thereof, and (v) limitations on the time allotted to questions or comments by
participants. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with the rules of parliamentary procedure.
SECTION 12. Action Without Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any annual or special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, is signed by the holders or by
proxy for the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote on such action were present and
voted. Prompt notice of the taking of corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
DIRECTORS
SECTION 1. General Powers. The business and affairs of
the corporation shall be managed by or under the direction of a Board of
Directors, who may exercise all of the powers of the corporation that are not
by law required to be exercised by the stockholders. In the event of a vacancy
in the Board of Directors, the remaining directors, except as otherwise
provided by law, may exercise the powers of the full Board until the vacancy is
filled.
SECTION 2. Number; Election; Tenure and Qualification.
Subject to any restrictions contained in the Certificate of Incorporation, the
number of directors that shall constitute the whole Board shall be fixed by
resolution of the Board of Directors but in no event shall be less than one.
The directors shall be elected in the manner provided in the Certificate of
Incorporation, by such stockholders as have the right to vote thereon. The
number of directors may be increased or decreased by action of the Board of
Directors. Directors need not be stockholders of the corporation.
SECTION 3. Enlargement of the Board. Subject to any
restrictions contained in the Certificate of Incorporation, the number of the
Board of Directors may be increased at any time, such increase to be effective
immediately unless otherwise specified in the resolution, by vote of a majority
of the directors then in office.
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SECTION 4. Vacancies. Unless and until filled by the
stockholders and except as otherwise determined by the Board of Directors in
establishing a series of Preferred Stock as to directors elected by the holders
of such series, any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board and an unfilled
vacancy resulting from the removal of any director, may be filled by vote of a
majority of the directors then in office although less than a quorum, or by the
sole remaining director. Each director so chosen to fill a vacancy shall serve
for a term determined in the manner provided in the Certificate of
Incorporation. When one or more directors shall resign from the Board,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective. If at any time there are no directors in
office, then an election of directors may be held in accordance with the
General Corporation Law of the State of Delaware.
SECTION 5. Resignation. Any director may resign at any time
upon written notice to the corporation. Such resignation shall take effect at
the time specified therein, or if no time is specified, at the time of its
receipt by the Chairman of the Board, if any, the President or the Secretary.
SECTION 6. Removal. Directors may be removed from office
only as provided in the Certificate of Incorporation. The vacancy or vacancies
created by the removal of a director may be filled by the stockholders at the
meeting held for the purpose of removal or, if not so filled, by the directors
in the manner provided in Section 4 of this Article II.
SECTION 7. Committees. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board of Directors,
designate one or more committees, each committee to consist of one or more
directors of the corporation. The Board of Directors may designate one or more
directors as alternate members of any committee to replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any such committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
such member or members constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of such
absent or disqualified member. The Board of Directors shall have the power to
change the members of any such committee at any time, to fill vacancies therein
and to discharge any such committee, either with or without cause, at any time.
Any such committee, to the extent permitted by law and to the extent
provided in the resolution of the Board of Directors or in these by-laws, shall
have and may exercise all the powers and authority of the Board of Directors in
the management of the business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all papers that may
require it.
A majority of all the members of any such committee may fix its rules
of procedure, determine its action and fix the time and place, whether within
or without the State of Delaware,
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of its meetings and specify what notice thereof, if any, shall be given, unless
the Board of Directors shall otherwise by resolution provide. Each committee
shall keep regular minutes of its meetings and make such reports as the Board
of Directors may from time to time request.
SECTION 8. Meetings of the Board of Directors. Regular
meetings of the Board of Directors may be held without call or formal notice at
such places either within or without the State of Delaware and at such times as
the Board may by vote from time to time determine. A regular meeting of the
Board of Directors may be held without call or formal notice immediately after
and at the same place as the annual meeting of the stockholders, or any special
meeting of the stockholders at which a Board of Directors is elected.
Special meetings of the Board of Directors may be held at any place
either within or without the State of Delaware at any time when called by the
Chairman of the Board, if any, the President, the Secretary or two or more
directors. Reasonable notice of the time and place of a special meeting shall
be given to each director unless such notice is waived by attendance or by
written waiver in the manner provided in these by-laws for waiver of notice by
stockholders. Notice may be given by, or by a person designated by, the
Secretary, the person or persons calling the meeting, or the Board of
Directors. No notice of any adjourned meeting of the Board of Directors shall
be required. In any case it shall be deemed sufficient notice to a director to
send notice by mail at least seventy-two hours, or by telegram or fax at least
forty-eight hours, before the meeting, addressed to such director at his or her
usual or last known business or home address.
Directors or members of any committee may participate in a meeting of
the Board of Directors or of such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation by such means shall
constitute presence in person at such meeting.
SECTION 9. Quorum and Voting. A majority of the total
number of directors shall constitute a quorum, except that when a vacancy or
vacancies exist in the Board, a majority of the directors then in office (but
not less than one-third of the total number of the directors) shall constitute
a quorum. A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting from time to time. The vote of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the Board of Directors, except where a different vote is required by
law, by the Certificate of Incorporation or by these by-laws.
SECTION 10. Compensation. The Board of Directors may fix fees
for their services and for their membership on committees, and expenses of
attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity, as an officer, agent or otherwise, and
receiving compensation therefor.
- 7 -
<PAGE> 8
SECTION 11. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting and without notice if a
written consent thereto is signed by all members of the Board of Directors or
of such committee, as the case may be, and such written consent is filed with
the minutes of proceedings of the Board of Directors or of such committee.
ARTICLE III
OFFICERS
SECTION 1. Titles. The officers of the corporation
shall consist of a President, a Secretary, a Treasurer and such other officers
with such other titles as the Board of Directors shall determine, who may
include without limitation a Chairman of the Board, a Vice-Chairman of the
Board and one or more Vice-Presidents, Assistant Treasurers or Assistant
Secretaries.
SECTION 2. Election and Term of Office. The officers of
the corporation shall be elected annually by the Board of Directors at its
first meeting following the annual meeting of the stockholders. Each officer
shall hold office until his or her successor is elected and qualified, unless a
different term is specified in the vote electing such officer, or until his or
her earlier death, resignation or removal.
SECTION 3. Qualification. Unless otherwise provided by
resolution of the Board of Directors, no officer, other than the Chairman or
Vice-Chairman of the Board, need be a director. No officer need be a
stockholder. Any number of offices may be held by the same person, as the
directors shall determine.
SECTION 4. Removal. Any officer may be removed, with or
without cause, at any time, by resolution adopted by the Board of Directors.
SECTION 5. Resignation. Any officer may resign by
delivering a written resignation to the corporation at its principal office or
to the Chairman of the Board, if any, the President or the Secretary. Such
resignation shall be effective upon receipt or at such later time as may be
specified therein.
SECTION 6. Vacancies. The Board of Directors may at any
time fill any vacancy occurring in any office for the unexpired portion of the
term and may leave unfilled for such period as it may determine any office
other than those of President, Treasurer and Secretary.
SECTION 7. Powers and Duties. The officers of the
corporation shall have such powers and perform such duties as are specified
herein and as may be conferred upon or assigned to them by the Board of
Directors and shall have such additional powers and duties as
- 8 -
<PAGE> 9
are incident to their office except to the extent that resolutions of the Board
of Directors are inconsistent therewith.
SECTION 8. President and Vice-Presidents. Except to the
extent that such duties are assigned by the Board of Directors to the Chairman
of the Board, or in the absence of the Chairman or in the event of his or her
inability or refusal to act, the President shall be the chief executive officer
of the corporation and shall have general and active management of the business
of the corporation and general supervision of its officers, agents and
employees, and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall preside at each meeting
of the stockholders and the Board of Directors unless a Chairman or
Vice-Chairman of the Board is elected by the Board and is present at such
meeting.
The Board of Directors may assign to any Vice-President the title of
Executive Vice-President, Senior Vice-President or any other title selected by
the Board of Directors. In the absence of the President or in the event of his
or her inability or refusal to act, the duties of the President shall be
performed by the Executive Vice-President, if any, Senior Vice President, if
any, or Vice President, if any, in that order (and, in the event there be more
than one person in any such office, in the order of their seniority), and when
so acting, such officer shall have all the powers of and be subject to all the
restrictions upon the President.
SECTION 9. Secretary and Assistant Secretaries. The
Secretary shall attend all meetings of the Board of Directors and of the
stockholders and record all the proceedings of such meetings in a book to be
kept for that purpose, shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, shall
maintain a stock ledger and prepare lists of stockholders and their addresses
as required and shall have custody of the corporate seal, which the Secretary
or any Assistant Secretary shall have authority to affix to any instrument
requiring it and attest by any of their signatures. The Board of Directors may
give general authority to any other officer to affix and attest the seal of the
corporation.
Any Assistant Secretary may, in the absence of the Secretary or in the
event of the Secretary's inability or refusal to act, perform the duties and
exercise the powers of the Secretary.
SECTION 10. Treasurer and Assistant Treasurers. The
Treasurer shall have the custody of the corporate funds and securities, shall
keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such depositories
as may be designated by or pursuant to resolution of the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be ordered by
the Board of Directors, the Chairman of the Board, if any, or the President,
taking proper vouchers for such disbursements, and shall render to the Chairman
of the Board, the President and the Board of Directors, at its regular meetings
or whenever they may require it, an account of all transactions and of the
financial condition of the corporation.
- 9 -
<PAGE> 10
Any Assistant Treasurer may, in the absence of the Treasurer or in the
event of his or her inability or refusal to act, perform the duties and
exercise the powers of the Treasurer.
SECTION 11. Bonded Officers. The Board of Directors may
require any officer to give the corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board of Directors upon such
terms and conditions as the Board of Directors may specify, including without
limitation a bond for the faithful performance of the duties of such officer
and for the restoration to the corporation of all property in his or her
possession or control belonging to the corporation.
SECTION 12. Salaries. Officers of the corporation shall be
entitled to such salaries, compensation or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors or any committee thereof
appointed for the purpose.
ARTICLE IV
STOCK
SECTION 1. Certificates of Stock. One or more stock
certificates, signed by the Chairman or Vice-Chairman of the Board of Directors
or by the President or a Vice-President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, shall be issued to each
stockholder certifying the number of shares owned by the stockholder in the
corporation. Any or all signatures on any such certificate may be facsimiles.
In case any officer, transfer agent or registrar who shall have signed or whose
facsimile signature shall have been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.
Each certificate for shares of stock that are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
by-laws, applicable securities laws, or any agreement among any number of
stockholders or among such holders and the corporation shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.
SECTION 2. Transfers of Shares of Stock. Subject to the
restrictions, if any, stated or noted on the stock certificates, shares of
stock may be transferred on the books of the corporation by the surrender to
the corporation or its transfer agent of the certificate representing such
shares properly endorsed or accompanied by a written assignment or power of
attorney properly executed, and with such proof of authority or the
authenticity of signature as the corporation or its transfer agent may
reasonably require. The corporation shall be entitled to treat the record
holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with
- 10 -
<PAGE> 11
respect to that stock, regardless of any transfer, pledge or other disposition
of that stock, until the shares have been transferred on the books of the
corporation in accordance with the requirements of these by-laws.
SECTION 3. Lost Certificates. A new stock certificate
may be issued in the place of any certificate theretofore issued by the
corporation and alleged to have been lost, stolen, destroyed or mutilated, upon
such terms in conformity with law as the Board of Directors shall prescribe.
The directors may, in their discretion, require the owner of the lost, stolen,
destroyed or mutilated certificate, or the owner's legal representatives, to
give the corporation a bond, in such sum as they may direct, to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, destruction or mutilation of any such certificate, or the
issuance of any such new certificate.
SECTION 4. Fractional Share Interests. The corporation
may, but shall not be required to, issue fractions of a share. If the
corporation does not issue fractions of a share, it shall (i) arrange for the
disposition of fractional interests by those entitled thereto, (ii) pay in cash
the fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined, or (iii) issue scrip or warrants in
registered or bearer form, which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. A certificate for a fractional share shall, but
scrip or warrants shall not unless otherwise provided therein, entitle the
holder to exercise voting rights, to receive dividends thereon, and to
participate in any of the assets of the corporation in the event of
liquidation. The Board of Directors may cause scrip or warrants to be issued
subject to the conditions that they shall become void if not exchanged for
certificates representing full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions that the Board of
Directors may impose.
SECTION 5. Dividends. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting, declare dividends upon
the capital stock of the corporation as and when they deem expedient.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification. The corporation shall, to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time, 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 or she is or was, or has agreed
- 11 -
<PAGE> 12
to become, a director or officer of the corporation, or is or was serving, or
has agreed to serve, at the request of the corporation, as a director, officer,
trustee, employee or agent of, or in a similar capacity with, another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
or on his or her behalf in connection with such action, suit or proceeding and
any appeal therefrom, provided that in the case of a settlement the payment and
indemnification thereof have been approved by the corporation, which approval
shall not unreasonably be withheld, or by a court of competent jurisdiction.
Such indemnification shall, subject to the conditions imposed by law, include
payment by the corporation of expenses in defending an action or proceeding in
advance of the final disposition of such action or proceeding upon receipt of
any undertaking by the person indemnified to repay such payment if it is
ultimately determined that such person is not entitled to indemnification under
this Section, which undertaking may be accepted without reference to the
financial ability of such person to make such repayments.
The corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved by the Board of
Directors of the corporation.
The indemnification rights provided in this Section (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, (ii) shall be a contract right inuring to the benefit of the
directors, officers and other persons entitled to be indemnified hereunder and
no amendment or repeal of this Section shall adversely affect any right of such
director, officer or other person existing at the time of such amendment or
repeal, and (iii) shall inure to the benefit of the heirs, executors and
administrators of such persons. Nothing contained in this Section shall affect
any rights to indemnification to which corporation employees or agents other
than directors and officers and other persons entitled to indemnification
hereunder may be entitled by contract or otherwise under law.
SECTION 2. Insurance. The corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, trustee, employee or
agent of another corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan against any liability asserted against such
person and incurred by such person in any such capacity or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of the
General Corporation Law of the State of Delaware.
- 12 -
<PAGE> 13
ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Fiscal Year. Except as otherwise designated
from time to time by the Board of Directors, the fiscal year of the corporation
shall begin on the first day of November and end on the last day of October.
SECTION 2. Corporate Seal. The corporate seal shall be in
such form as shall be approved by the Board of Directors. The Secretary shall
be the custodian of the seal, and a duplicate seal may be kept and used by each
Assistant Secretary and by any other officer the Board of Directors may
authorize.
SECTION 3. Certificate of Incorporation. All references in
these by-laws to the Certificate of Incorporation shall be deemed to refer to
the Certificate of Incorporation of the corporation, as in effect from time to
time.
SECTION 4. Execution of Instruments. The Chairman and Vice-
Chairman of the Board of Directors, if any, the President and the Treasurer
shall have power to execute and deliver on behalf and in the name of the
corporation any instrument requiring the signature of an officer of the
corporation, including deeds, contracts, mortgages, bonds, notes, debentures,
checks, drafts and other orders for the payment of money. In addition, the
Board of Directors, the Chairman and Vice Chairman of the Board of Directors,
if any, the President and the Treasurer may expressly delegate such powers to
any other officer or agent of the corporation.
SECTION 5. Voting of Securities. The Chairman and Vice
- -Chairman of the Board of Directors, if any, the President, the Treasurer, and
each other person authorized by the Board of Directors, each acting singly, may
waive notice of, and act as, or appoint any person or persons to act as, proxy
or attorney-in-fact for this corporation (with or without power of
substitution) at any meeting of stockholders or owners of other interests of
any other corporation or organization the securities of which may be held by
this corporation. In addition, the Board of Directors, the Chairman and Vice
Chairman of the Board of Directors, if any, the President and the Treasurer may
expressly delegate such powers to any other officer or agent of the
corporation.
SECTION 6. Evidence of Authority. A certificate by the
Secretary, an Assistant Secretary or a temporary secretary as to any action
taken by the stockholders, directors, a committee or any officer or
representative of the corporation shall, as to all persons who rely on the
certificate in good faith, be conclusive evidence of that action.
SECTION 7. Transactions with Interested Parties. No
contract or transaction between the corporation and one or more of the
directors or officers, or between the corporation and any other corporation,
partnership, association or other organization in which
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<PAGE> 14
one or more of the directors or officers are directors or officers or have a
financial interest, shall be void or voidable solely for that reason or solely
because the director or officer is present at or participates in the meeting of
the Board of Directors or a committee of the Board of Directors that authorizes
the contract or transaction or solely because the vote of any such director is
counted for such purpose, if:
(1) The material facts as to the relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or such committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a majority
of the disinterested directors, even though the disinterested directors be less
than a quorum; or
(2) The material facts as to the relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair to the corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
that authorizes the contract or transaction.
SECTION 8. Books and Records. The books and records of the
corporation shall be kept at such places within or without the State of
Delaware as the Board of Directors may from time to time determine.
ARTICLE VII
AMENDMENTS
SECTION 1. By the Board of Directors. These by-laws may be
altered, amended or repealed or new by-laws may be adopted by the affirmative
vote of a majority of the directors present at any regular or special meeting
of the Board of Directors at which a quorum is present.
SECTION 2. By the Stockholders. These by-laws may be
altered, amended or repealed or new by-laws may be adopted by vote of the
stockholders, at any regular meeting of stockholders, or at any special meeting
of stockholders, provided notice of such alteration, amendment, repeal or
adoption of new by-laws shall have been stated in the notice of such special
meeting.
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<PAGE> 1
EXHIBIT 4.1
<TABLE>
<S> <C>
CLASS A COMMON STOCK CLASS A COMMON STOCK
NUMBER SHARES
LAMAR
LAMAR ADVERTISING COMPANY
CUSIP 512815 10 1
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON ASSESSABLE SHARES OF CLASS A COMMON STOCK, $.001 PAR VALUE, OF
LAMAR ADVERTISING COMPANY (hereinafter called the "Corporation"), transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued and shall be held subject to all the provisions of the laws of
the State of Delaware, the Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws of the
Corporation and all amendments thereto, to which the holder of this certificate by acceptance hereof assents.
This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized
officers.
Dated:
SEAL
------------------------------ -----------------------------------------------
GENERAL COUNSEL AND SECRETARY CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Countersigned and Registered
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
New York, NY
Transfer Agent
and Registrar
By
---------------------------------------------
Authorized Signature
</TABLE>
<PAGE> 2
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES
OF STOCK. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO ANY STOCKHOLDER,
UPON REQUEST, A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C><C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____________ Custodian _____________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with
right of survivorship and under Uniform Gifts to Minors
not as tenants in common
Apt_______________________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, __________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
shares
- --------------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- ------------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
-------------------------
------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
- --------------------------------------------------------------------------------
THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION,
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 4.5
FIRST SUPPLEMENTAL INDENTURE, dated as of July 30, 1996, among LAMAR
ADVERTISING COMPANY a corporation duly organized and existing under the laws of
the State of Delaware (herein, with its successors and assigns, called the
"Company"), having its principal office at 5551 Corporate Boulevard, Baton
Rouge, Louisiana 70808, each of the Subsidiary Guarantors (as defined in the
Original Indenture, as hereinafter defined) and STATE STREET BANK AND TRUST
COMPANY, a banking corporation duly organized and existing under the laws of
the Commonwealth of Massachusetts and having its principal office at 225
Franklin Street, Boston, Massachusetts (herein called the "Trustee").
The Company has heretofore executed and delivered to the Trustee an
Indenture (hereinafter called the "Original Indenture" and as such Original
Indenture is amended by this First Supplemental Indenture and as it may be
amended hereafter by other supplemental indentures, the "Indenture") dated as
of May 15, 1993, providing for the issuance of $100,000,000 in principal amount
of 11% Senior Secured Notes due May 15, 2003 (the "Notes").
Section 902 of the Original Indenture provides, among other things,
that the Company, the Subsidiary Guarantors and the Trustee may enter into
indentures supplemental thereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions thereof (with
exceptions not applicable hereto) with the written consent of the holders of
not less than a majority in principal amount of the Outstanding Securities (as
defined therein).
1
<PAGE> 2
NOW, THEREFORE, in consideration of mutual agreements herein
contained, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the Company, the Subsidiary Guarantors and the Trustee
hereby agree as follows:
1. SECTION 1009. Limitation on Company Indebtedness.
Clauses (i) and (iii) of Section 1009 of the Indenture are
amended as follows and the remaining portions of Section 1009 shall remain
unchanged:
(i) Indebtedness in an aggregate principal amount at any one
time outstanding not to exceed $20,000,000 under (1) any Permitted
Working Capital Facility, (2) any term loan facility under the Bank
Credit Agreement or (3) any combination of the foregoing, excluding
from such outstanding Indebtedness any outstanding Indebtedness
Incurred pursuant to the first paragraph of this Section 1009 and
designated as such by the Company to the Trustee at the time of such
Incurrence or at any time thereafter (whether or not such Indebtedness
could at such later time have been so Incurred).
* * *
(iii) Indebtedness Incurred to renew, extend, refund,
restate, replace, refinance, substitute, restructure, supplement,
amend or modify any outstanding Indebtedness; provided, however, that
such Indebtedness does not exceed the principal amount of Indebtedness
so renewed, refunded, extended, restated, replaced, refinanced,
substituted, restructured, supplemented, amended or modified plus the
amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness refinanced or
the amount of any premium reasonably determined by the Company as
necessary to accomplish such refinancing by means of a tender offer or
privately negotiated repurchase, plus the expenses of the Company
incurred in connection with such refinancing; and provided, however,
that Indebtedness the proceeds of which are used to refinance or
refund Indebtedness which is pari passu to the Securities or
Indebtedness which is subordinate in right of payment to the
Securities shall only be permitted if (A) in the case of any
refinancing or refunding of Indebtedness which is pari passu to the
Securities, the refinancing or refunding Indebtedness is made pari
passu to the Securities or subordinated to the Securities, (B) in the
case of any refinancing or refunding of Indebtedness which is
subordinated to the Securities, the refinancing or refunding is made
subordinate to the Securities at least to the same extent as the
Indebtedness being refinanced, and (C) in the case of any refinancing
of pari passu or subordinate Indebtedness, other than any such
Indebtedness Incurred pursuant to Clause (i) of Section 1009, such
refinancing Indebtedness does not have an Average Life less than the
Average Life of the
2
<PAGE> 3
Indebtedness being refinanced and does not have a final scheduled
maturity earlier than the final scheduled maturity, or permit
redemption at the option of the holder earlier than the earliest date
of redemption at the option of the holder, of the Indebtedness being
refinanced;
2. SECTION 1010. Limitation on Restricted Subsidiary Indebtedness and
Preferred Stock.
Clauses (1) and (6) of Section 1010 of the Indenture are
amended as follows and the remaining portions of Section 1010 shall remain
unchanged:
(1) Guarantees by Subsidiary Guarantors of (a) the
Securities, (b) Indebtedness Incurred pursuant to Clause (i) of
Section 1009, (c) Indebtedness Incurred pursuant to the first
paragraph of Section 1009 in a maximum amount outstanding not in
excess of $58,250,000 minus (i) Indebtedness referred to in the
immediately preceding subclause (b) and (ii) principal payments
irrevocably and indefeasibly made in respect of Indebtedness incurred
after June 30, 1996 and guaranteed pursuant to this subclause (c) and
(d) obligations under any Interest Rate Protection Agreement (as
defined in the Bank Credit Agreement).
* * *
(6) Indebtedness or Preferred Stock that is exchanged
for, or the proceeds of which are used to refinance or refund, any
Indebtedness or Preferred Stock permitted to be outstanding pursuant
to Clauses (2), (4) and (5) of this Section 1010, and Guarantees by
Subsidiary Guarantors of Indebtedness that is exchanged for, or the
proceeds of which are used to refinance or refund, (A) any
Indebtedness referred to in Clause (1) of this Section 1010 or (B) any
Indebtedness Incurred pursuant to Clause (iii) of Section 1009 in
respect of any Indebtedness referred to in such Clause (1) in each
case with respect to Indebtedness or Preferred Stock in an aggregate
principal amount not to exceed the principal amount of the
Indebtedness, in the case of Indebtedness, or the liquidation
preference of the Preferred Stock, in the case of Preferred Stock,
plus the amount of any premium required to be paid in connection with
such refinancing or refunding pursuant to the terms of the
Indebtedness or Preferred Stock refinanced or refunded or the amount
of any premium reasonably determined by the Company as necessary to
accomplish such refinancing or refunding by means of a tender offer or
privately negotiated repurchase, plus the amount of expenses of the
Company and the Restricted Subsidiary incurred in connection with such
refinancing or refunding; provided, however, that in the case of any
refinancing of Preferred Stock, such Preferred Stock is exchanged for
or refinanced with Preferred Stock; provided, further, that such
Indebtedness, other than any such Indebtedness Incurred pursuant to
(y) subclause (A) of this Clause 6 in respect of Indebtedness referred
to in subclause (b) of Clause 1 of this Section 1010 and (z)
3
<PAGE> 4
subclause (B) of this Clause 6, or Preferred Stock does not have an
Average Life less than the Average Life of the Indebtedness or
Preferred Stock being refinanced and does not have a final scheduled
maturity earlier than the final scheduled maturity, or permit
redemption at the option of the holder earlier than the earliest date
of redemption at the option of the holder, of the Indebtedness or
Preferred Stock being refinanced;
3. SECTION 1012. Limitation on Liens.
Clause (a)(1) of Section 1012 of the Indenture is amended as
follows and the remaining portions of Section 1012 shall remain unchanged:
(1) Liens with respect to Collateral required to be
pledged pursuant to the Pledge Agreement and securing (a) Indebtedness
Incurred pursuant to Clause (i) of Section 1009, (b) Indebtedness
Incurred pursuant to the first paragraph of Section 1009 in a maximum
amount outstanding not in excess of $58,250,000 minus (i) Indebtedness
referred to in the immediately preceding subclause (a) and (ii)
principal payments irrevocably and indefeasibly made in respect of
Indebtedness secured by Liens Incurred pursuant to this subclause (b)
after June 30, 1996 and (c) obligations in respect of any Interest
Rate Protection Agreement (as defined in the Bank Credit Agreement);
4. SECTION 101. Definitions.
The following definitions in Section 101 of the Indenture are amended
as indicated and the remaining definitions shall remain unchanged:
"Bank Credit Agreement" means the Credit Agreement dated as of
May 19, 1993 and entered into by and among the Company, the Subsidiary
Guarantors, certain financial institutions parties thereto and The Chase
Manhattan Bank (National Association), as Agent Bank (the "Agent Bank") and any
credit or loan agreement which may be entered into subsequent to the date of
such Credit Agreement from time to time by and among the Company, the
Subsidiary Guarantors and any financial institution or institutions and Agent
Bank, or different lenders and a different agent for any purpose including,
without limitation, the refinancing or replacement of the full amount, or any
portion, of the credit (including unfunded commitments) extended under such
Credit Agreement, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, in each
case as the same may be amended, modified, supplemented, renewed, extended or
restated from time to time.
"Bank Obligations" means the obligations of the Company under
a Bank Credit Agreement.
4
<PAGE> 5
5. Miscellaneous
(a) This First Supplemental Indenture is expressly made
supplemental to and shall form a part of the Indenture and is made subject to
all of the conditions, covenants and warranties contained in the Original
Indenture, as supplemented hereby.
(b) All of the provisions of this First Supplemental
Indenture shall bind and inure to the benefit of the successors and assigns of
the Company, the Subsidiary Guarantors and the Trustee.
(c) The First Supplemental Indenture may be executed in
any number of counterparts, all of which taken together shall constitute one
and the same instrument and any of the parties hereto may execute this First
Supplemental Indenture by signing any such counterpart.
IN WITNESS WHEREOF, the parties have each caused this First
Supplemental Indenture to be duly executed and attested by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
LAMAR ADVERTISING COMPANY
By:
------------------------------
(Title)
Attest:
------------------------------
5
<PAGE> 6
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.
TLC PROPERTIES, INC.
MISSOURI LOGOS, INC.
NEBRASKA LOGOS, INC.
OKLAHOMA LOGO SIGNS, INC.
UTAH LOGOS, INC.
OHIO LOGOS, INC.
TEXAS LOGOS, INC.
MISSISSIPPI LOGOS, INC.
LAMAR TEXAS GENERAL
PARTNER, INC.
LAMAR TENNESSEE
LIMITED PARTNER, INC.
LAMAR TEXAS LIMITED
PARTNER, INC.
LAMAR TENNESSEE
LIMITED PARTNERSHIP
GEORGIA LOGOS, INC.
NEW JERSEY LOGOS, INC.
SOUTH CAROLINA LOGOS, INC.
VIRGINIA LOGOS, INC.
LAMAR TENNESSEE LIMITED
PARTNERSHIP, INC.
MICHIGAN LOGOS, INC.
LAMAR PENSACOLA TRANSIT, INC.
Each as a Subsidiary Guarantor
By:
------------------------------
(Title)
Attest:
- ------------------------------
6
<PAGE> 7
MINNESOTA LOGOS, a Partnership
By: Minnesota Logos, Inc., its
General Partner
By:
------------------------------
(Title)
Attest:
- ------------------------------
LAMAR TENNESSEE LIMITED
PARTNERSHIP
By: Lamar Tennessee Limited
Partner, Inc.,
its General Partner
By:
------------------------------
(Title)
Attest:
- ------------------------------
LAMAR TENNESSEE LIMITED
PARTNERSHIP II
By: Lamar Tennessee Limited
Partnership, Inc., its
General Partner
By:
------------------------------
(Title)
Attest:
- ------------------------------
7
<PAGE> 8
LAMAR TEXAS LIMITED PARTNERSHIP
By: Lamar Texas General Partner, Inc.
its General Partner
By:
------------------------------
(Title)
Attest:
- ------------------------------
STATE STREET BANK AND
TRUST COMPANY, as Trustee
By:
------------------------------
(Title)
Attest:
- ------------------------------
8
<PAGE> 1
EXHIBIT 4.7
SECOND AMENDMENT TO PLEDGE AGREEMENT
This SECOND AMENDMENT to Pledge Agreement is dated as of July 30, 1996
among LAMAR ADVERTISING COMPANY, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Company"), each of the
entities identified under the caption "Subsidiary Pledgors" on the signature
pages hereof (each such corporation being hereafter called a "Subsidiary
Pledgor"); STATE STREET BANK AND TRUST COMPANY, as trustee under the Indenture
(as defined below) (in such capacity, together with the successors in such
capacity, the "Trustee") and THE CHASE MANHATTAN BANK (as successor by merger
to The Chase Manhattan Bank (National Association)), as agent under the Credit
Agreement (as defined below) (in such capacity, together with its successors in
such capacity, the "Bank Agent") and as Collateral Agent for the Secured
Parties (as defined in the Pledge Agreement (as defined below)) (in such
capacity, together with its successors in such capacity, the "Collateral
Agent").
Reference is hereby made to (i) a Credit Agreement dated as of May 19,
1993 among the Company, certain subsidiaries of the Company (the "Subsidiary
Guarantors"), certain lenders and the Collateral Agent (as amended to date and
as modified and supplemented and in effect from time to time, the "Credit
Agreement"), (ii) an Indenture dated as of May 15, 1993 (as supplemented by the
First Supplemental Indenture of even date herewith and as further modified and
supplemented and in effect from time to time the "Indenture") among the
Company, the Subsidiary Guarantors and State Street Bank and Trust Company as
trustee, and (iii) a Pledge Agreement dated as of May 15, 1993 among the
parties hereto, as amended by Amendment No. 1 thereto dated May 31, 1995 (as
amended to date and as modified and supplemented and in effect from time to
time the "Pledge Agreement").
1
<PAGE> 2
Section 1406 of the Indenture provides, among other things, that with
the consent of the holders of not less than a majority in principal amount of
the Outstanding Securities (as defined therein) delivered to the Company, the
Subsidiary Guarantors and the Trustee, the Trustee may enter into an amendment
or amendments to the Pledge Agreement for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the Pledge
Agreement or modifying in any manner the rights of the Holders under the Pledge
Agreement.
NOW, THEREFORE, in consideration of mutual agreements herein
contained, and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. 6.11 Additional Secured Obligations.
Section 6.11(b) of the Pledge Agreement is amended as follows and the
remaining portions of Section 6.11 shall remain unchanged:
(b) It is acknowledged that the Company may from time to
time modify and supplement, including (without limitation) by means of amending
and restating the Credit Agreement or any Successor Credit Agreement (as
defined below), and may refinance or otherwise replace the Credit Agreement or
any Successor Credit Agreement, in which case: (i) all references herein to the
"Credit Agreement" shall be deemed to refer to the Successor Credit Agreement
in effect at the time of determination, (ii) all references herein to the "Bank
Agent" shall be deemed to refer to the Person designated as the agent for the
lenders under the Successor Credit Agreement, (iii) all references herein to
the "Banks" shall be deemed to refer to the lenders under the Successor Credit
Agreement and (iv) all references herein to "Letters of Credit" shall be deemed
to refer to the letters of credit, if any, issued or outstanding under the
Successor Credit Agreement. For purposes of this Section 6.11, a "Successor
Credit Agreement" shall mean (x) the Credit Agreement (including, a Successor
Credit Agreement) as modified and supplemented and from time to time in effect
and (y) any credit or loan agreement which may be entered into subsequent to
the date of the Credit Agreement from time to time by and among the Company,
the Subsidiary Guarantors (as defined in the Indenture) and the Bank Agent and
Banks for any purpose including, without limitation, the refinancing or
replacement of the full amount, or any portion, of the credit (including
unfunded commitments) extended under the Credit Agreement (including a
Successor Credit Agreement).
2
<PAGE> 3
2. Section 1 Definitions.
The following definition in the Pledge Agreement is amended as
indicated and the remaining definitions shall remain unchanged:
"Secured Obligations" shall mean (a) in the case of the
Company, (i) the principal of and interest on the loans made by the Banks to
the Company under the Credit Agreement, the principal of and interest on the
promissory notes evidencing such loans, all reimbursement obligations owing by
the Company in respect of Letters of Credit (including, without
limitation,obligations to provide cash cover for undrawn amounts of outstanding
Letters of Credit), interest on such reimbursement obligations and all other
amounts from time to time owing to the Banks or the Bank Agent by the Company
under the Credit Agreement (excluding, in the case of this clause (i),
obligations relating to the aforementioned principal and reimbursement
obligations to the extent that the aggregate amount of such principal and
reimbursement obligations exceeds $58,250,000), (ii) all Interest Rate
Protection Obligations, (iii) the principal of and interest and premium on the
Securities and all other amounts from time to time owing to the Noteholders or
the Trustee by the Company under the Indenture (excluding, in the case of this
clause (iii), obligations relating to the aforementioned principal to the
extent that the aggregate amount thereof exceeds $100,000,000) and (iv) all
Additional Obligations, (b) in the case of each Subsidiary Pledgor, its
guarantee of Secured Obligations of the Company, (c) in the case of the Voting
Trustees, the guarantees by TLC of Secured Obligations of the Company and (d)
in the case of each Pledgor, all obligations of such Pledgor hereunder.
3. Miscellaneous.
(a) This Second Amendment to Pledge Agreement is expressly made
supplemental to and shall become a part of the Pledge Agreement and is made
subject to all of the provisions of the Pledge Agreement as supplemented
hereby.
(b) All of the provisions of this Second Amendment to Pledge
Agreement shall bind and inure to the benefit of the successors and assigns or
the parties hereto.
(c) This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
LAMAR ADVERTISING COMPANY
By:
----------------------------
(Title)
3
<PAGE> 4
SUBSIDIARY PLEDGORS:
--------------------
THE LAMAR CORPORATION
NEBRASKA LOGOS, INC.
OKLAHOMA LOGOS SIGNS,INC.
MISSOURI LOGOS, INC.
OHIO LOGOS, INC.
UTAH LOGOS, INC.
TEXAS LOGOS, INC.
MISSISSIPPI 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 ADVERTISING OF SOUTH GEORGIA,
INC.
TLC PROPERTIES, INC.
LAMAR TEXAS GENERAL PARTNER, INC.
LAMAR TENNESSEE LIMITED PARTNER,
INC.
LAMAR TEXAS GENERAL PARTNERSHIP, INC.
LAMAR TEXAS LIMITED PARTNERSHIP, INC.
INTERSTATE LOGOS, INC.
For each of the above corporations:
By:
-----------------------------------
Keith A. Istre
Vice President
4
<PAGE> 5
BANK AGENT:
-----------
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Bank Agent
By:
------------------------------
Title:
COLLATERAL AGENT:
-----------------
THE CHASE MANHATTAN BANK,
as Collateral Agent
By:
------------------------------
Title:
TRUSTEE:
--------
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity but
as Trustee
By:
------------------------------
Title:
5
<PAGE> 1
EXHIBIT 4.8
FORM OF __% UNSECURED SUBORDINATED NOTE DUE 2006
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD
UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
No. $
---- -----
LAMAR ADVERTISING COMPANY
__% Unsecured Subordinated Note due 2006
LAMAR ADVERTISING COMPANY, a Delaware corporation (together
with its successors, "LAC"), for value received hereby promises to pay to
______________ and registered assigns the principal sum of $________ in one
hundred and twenty (120) equal consecutive monthly installments of $_________,
the first of which installments shall be due and payable on September 30, 1996
and subsequent installments shall be due on the last business day of each month
thereafter until and including July 31, 2006, and to pay interest thereon as
provided in paragraph 1 herein. The record date for any scheduled payment of
interest on or principal of this Note shall be the last business day of the
month next preceding the date such payment is due.
This Note is one of a duly authorized issue of Subordinated
Notes of LAC (the "Notes") referred to in the Agreement dated as of May 30,
1996 among LAC and the "Tendering Shareholders" (as defined therein) (as the
same may be amended from time to time hereafter, the "Agreement").
1. Interest. Interest shall accrue on the
outstanding principal of this Note at a rate of _____ percent (__%) per annum
and shall be due and payable together with the principal installments provided
for and on the dates specified in the first paragraph of this Note. Interest
on this Note will be calculated on the basis of a 365-day year and paid for the
actual number of days elapsed.
2. Subordination.
2.1. Agreement to Subordinate. The holder of this Note,
for itself and its successors, agrees that the payment of the principal of,
premium, if any, interest, penalties, damages, indemnities, fees and any other
amounts which may at any time be payable by or charged to LAC in connection
with or in respect of the loans evidenced by this Note (the "Subordinated
Obligations") are subordinated in right of payment, to the extent and in the
<PAGE> 2
manner stated in this Section 2, to the prior indefeasible payment in cash in
full of all Senior Debt. "Senior Debt" means any indebtedness of LAC
(including, without limitation, any principal of and interest (including any
interest accruing after commencement of a case under the Bankruptcy Code in
respect of LAC) or any indebtedness under, and all other amounts owing under,
(i) the Credit Agreement dated as of May 19, 1993 by and among LAC, certain of
its subsidiaries, Chase Manhattan (National Association), as Agent, and the
other lenders which are parties thereto, as such Credit Agreement has been
amended to date and as it may be amended hereafter, and the promissory notes
issued thereunder, (ii) the Credit Agreement dated as of December 22, 1995 by
and among LAC, certain of its subsidiaries, such Agent and the other lenders
which are paries thereto as such Credit Agreement may be amended hereafter, and
the promissory notes issued thereunder and (iii) in respect of the Indenture by
and among LAC, as issuer, certain of its subsidiaries and State Street Bank and
Trust Company, as Trustee, as such Indenture may be amended hereafter and the
11% Senior Secured Notes due 2003 issued thereunder) unless such indebtedness
expressly provides that it shall not be senior in right of payment to the
Notes. Notwithstanding the foregoing, Senior Debt shall not include (a)
indebtedness evidenced by the Notes, (b) indebtedness represented by the 8%
Series A Unsecured Subordinated Discount Debentures due 2001, (c) indebtedness
represented by the 10% to 12% Series A Unsecured Subordinated Debentures due
1996 and 1997, (d) indebtedness consisting of trade payables or other current
liabilities, (e) indebtedness for amounts owed by LAC to employees, (f) any
liability for federal, state, local, and other taxes owed or owing by LAC, (g)
indebtedness of LAC to any subsidiary of LAC, and (h) any obligation that by
operation of law is subordinate to any general unsecured obligation of LAC.
The Subordinated Obligations shall not be deemed to be "Senior Debt", as such
term is used in the agreement and instruments evidencing the Series A Unsecured
Subordinated Debentures referred to in clauses (b) and (c) of the immediately
preceding sentence, nor shall the Subordinated Obligations be deemed for any
purpose to be senior or junior in right of payment to such Debentures, it being
understood that the Subordinated Obligations shall be pari-passu and equal in
priority of payment to any and all obligations in respect of such Debentures.
This Section 2 shall constitute a continuing offer to all persons who,
in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt, and such provisions of this Section 2 are made for the benefit of
the holders of Senior Debt.
2.2. LAC Not to Make Payments With Respect to Subordinated
Obligations in Certain Circumstances.
(a) No direct or indirect payment will be made on account of the
Subordinated Obligations or to acquire any of the Notes for cash or property
(i) upon the maturity of any Senior Debt by lapse of time, acceleration or
otherwise, unless and until all
<PAGE> 3
such Senior Debt shall first be paid in full in cash or cash equivalents or
such payment duly provided for in a manner satisfactory to the holders of such
Senior Debt or (ii) upon the happening of any default or event of default (or
if a default or an event of default would result from any payment with respect
to the Subordinated Obligations) with respect to any Senior Debt.
(b) Upon the happening of any default or event of default (or if
an event of default would result upon any payment with respect to the
Subordinated Obligations) with respect to any instrument or other evidence of
Senior Debt, then, unless and until such default or event of default has been
cured or waived in writing or has ceased to exist, no direct or indirect
payment will be made with respect to the Subordinated Obligations or to acquire
any of the Notes for cash, property, or securities or with regard to redemption
of Notes.
(c) If any payment or distribution of assets of LAC is received by
any holder of the Notes in respect of the Subordinated Obligations at a time
when that payment or distribution should not have been made because of Sections
2.2(a) or 2.2(b), such payment or distribution will be received and held in
trust for and will be paid over to the holders of Senior Debt which is due and
payable and remains unpaid or unprovided for (pro rata as to each of such
holders on the basis of the respective amounts of Senior Debt which is due and
payable held by them) until all such Senior Debt has been paid in full in cash
or cash equivalents, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Debt.
2.3 Subordinated Obligations Subordinated to Prior Payment of all
Senior Debt on Dissolution, Liquidation or Reorganization of LAC. Upon any
distribution of assets of LAC in any dissolution, winding-up, liquidation or
reorganization of LAC (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):
(a) the holders of all Senior Debt shall first be entitled to
receive indefeasible payment thereof in cash in full, before the
holders of Subordinated Obligations are entitled to receive any
payment on account thereof;
(b) any payment or distribution of assets of LAC of any kind or
character, whether in cash, property or securities, to which the
holders of Subordinated Obligations would be entitled except for the
provisions of this Section 2, shall be paid by the liquidating trustee
or agent or other person making such payment or distribution directly
to the holders of the Senior Debt or their representatives, as their
respective interests may appear, for application to the payment of
Senior Debt until all Senior Debt shall have been indefeasibly paid in
cash in full, after giving effect to
<PAGE> 4
any concurrent cash payment or distribution to the holders of Senior
Debt; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 2.3, any payment or distribution of assets
of LAC of any kind or character, whether in cash, property or
securities, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any indebtedness of
LAC being subordinated to the payment of the Subordinated Obligations,
shall be received by holders of Subordinated Obligations on account of
Subordinated Obligations before all Senior Debt is indefeasibly paid
in cash in full, such payment or distribution shall be held in trust
for the benefit of holders of Senior Debt and shall be forthwith (and,
in any event, not later than three business days after such payment or
distribution is made) paid over and delivered to the holders of Senior
Debt or their representatives, for application to the payment of
Senior Debt until all Senior Debt shall have been indefeasibly paid in
cash in full in accordance with its terms, after giving effect to any
concurrent cash payment or distribution to the holders of Senior Debt.
2.4 Holders of Subordinated Obligations to be Subrogated to Rights
of Holders of Senior Debt. Subject to the indefeasible payment in cash in full
of all Senior Debt pursuant to this Section 2, the holders of Subordinated
Obligations shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of assets of LAC applicable to the Senior
Debt until all amounts owing on the Subordinated Obligations shall be paid in
full, and for the purpose of such subrogation no payments or distributions to
the holders of the Senior Debt by or on behalf of LAC or by or on behalf of the
holders of the Subordinated Obligations by virtue of this Section 2 which
otherwise would have been made to the holders of the Subordinated Obligations
shall, as among LAC, its creditors other than holders of Senior Debt and the
holders of Subordinated Obligations, be deemed to be a payment by LAC to or on
account of the Senior Debt, it being understood that the provisions of this
Section 2 are intended solely for the purpose of defining the relative rights
of the holders of Subordinated Obligations, on the one hand, and the holders of
Senior Debt, on the other hand.
2.5 Subordinated Rights Not Impaired by Acts or Omissions of LAC
or Holders of Senior Debt; Relative Rights. No right of any present or future
holders of any Senior Debt to enforce the provisions of Section 2 as against
LAC or any holder of Subordinated Obligations shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the LAC or
by any act or failure to act by any such holder, or by any noncompliance by the
LAC with the terms of this Section 2, regardless of any knowledge thereof which
any such holder may have or be otherwise charged with. This Section 2 defines
the
<PAGE> 5
relative rights of holders of the Note and Senior Debt. Nothing in this
Section 2 shall impair as between LAC and the holders of the Note, the
obligation of LAC, to pay principal of an interest on the Note in accordance
with its terms, which obligation is absolute and unconditional.
2.6. Repayments to LAC. If any payment by LAC with respect to
Senior Debt is repaid by any holder of Senior Debt to LAC as a result of the
preference or other avoidance provisions of any federal or state bankruptcy or
similar laws or otherwise, the holders of Subordinated Obligations will
forthwith return to LAC an amount equal to the lesser of (a) all amounts so
repaid with respect to Senior Debt and (b) all amounts received from LAC,
including by payment or set-off, with respect to Subordinated Obligations and
not previously so repaid by the holders of Subordinated Obligations.
3. Defaults.
3.1 Events of Default.
If one or more of the following events ("Events of Default") shall
have occurred and be continuing:
(a) LAC shall fail to pay when due all or any part of the
principal on the Note;
(b) LAC shall fail to pay within twenty (20) days of the due date
thereof any interest on the Note;
(c) an involuntary proceedings shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of LAC, or of a substantial part of the property
or assets of LAC under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal, state, or foreign bankruptcy,
insolvency, receivership, or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for LAC or
for a substantial part of the property or assets of LAC or (iii) the winding up
or liquidation of LAC; and such proceeding or petition shall continue
undismissed for sixty (60) days or an order or decree including or ordering any
of the foregoing shall be entered; or
(d) LAC shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state, or foreign
bankruptcy, insolvency, receivership, or similar law, (ii) consent to the
institution of or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in paragraph (c) above,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator, or similar official for LAC or for a
substantial part of the
<PAGE> 6
property or assets of LAC, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable to or admit
in writing its inability or fail generally to pay its debts if they become due
or (vii) take any action for the purpose of effecting any of the foregoing;
then, in every such event, the holder may, by notice to LAC and the other
holders, declare the Note to be forthwith due and payable in whole or in part,
whereupon the principal of the Note so declared to be due and payable, together
with accrued interest thereon, shall forthwith become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by LAC.
3.2 Other Remedies. If any Event of Default has occurred and is
continuing, irrespective of whether the Note has become or has been declared
immediately due and payable under the preceding Section 3.1, the holder of the
Note may proceed to protect and enforce the rights of such holder by an action
at law, including equity or other appropriate proceeding, whether for the
specific performance of the Note, or for an injunction against a violation of
any of the terms hereof or in aid of the exercise of any power granted hereby
or by law or otherwise.
3.3 No Waivers or Elections of Remedies. No course of dealing and
no delay on the part of the holder of the Note in exercising any right, power
or remedies shall operate as a waiver thereof or otherwise prejudice such
holder's rights, powers or remedies. No right, power, or remedy conferred by
the Note upon any holder hereof shall be exclusive of any other right, power,
or remedy referred to herein or therein or now or hereafter available at law,
in equity, by statute or otherwise.
4. Registration and Exchange of Notes.
4.1 Registration of Notes. LAC shall keep at its principal
executive office a register for the registration of transfers of the Notes.
The name and address of each holder of a Note, each transferor thereof, and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for a registration of transfer, the
person in whose name any Note shall be registered shall be deemed and treated
as the owner and holder hereof for all purposes hereof, and LAC shall not be
affected by any notice or knowledge to the contrary.
4.2 Transfer and Exchange of Notes. Upon surrender of any Note at
the principal executive office of LAC for a registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by
the registered
<PAGE> 7
holder of this Note or his attorney duly authorized in writing and accompanied
by the address for notices of each transferee of such Note or part thereof),
LAC shall execute and deliver one or more new Notes (as requested by the Holder
hereof) in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such person as such holder may request. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered note if no interest
shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such Note transfer. Notes shall not be transferred in denominations of
less than $100,000, provided that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000.
4.3 Replacement of Notes. Upon receipt by LAC of evidence
reasonably satisfactory to it of the ownership of, and the loss, theft,
destruction, or mutilation of the Note, and
(a) in case of loss, theft, or destruction, of indemnity
reasonably satisfactory to it, or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
LAC at its own expense shall execute and deliver in lieu thereof a new Note,
dated and bearing interest from the date to which interest has been paid on
such lost, stolen or mutilated note or dated the date of such lost, stolen, or
mutilated note if no interest shall have been paid thereon.
5. Waiver, Amendments and Remedies.
No delay or omission of the holder to exercise any right under this
Note shall impair any such right or be construed to be a waiver of any default
or an acquiescence therein, and any single or partial exercise or any such
right shall not preclude other or further exercise thereof or the exercise of
any other right, and no waiver, amendment or other variation of the terms,
conditions, or provisions of this Note whatsoever shall be valid unless in
writing signed by the holder, and then only to the extent in such writing
specifically set forth. All remedies contained in this Note or by law afforded
shall be cumulative and all shall be available to the holder until the
Subordinated Obligations have been paid in full.
The holder and LAC may, subject to the provisions of Section 2 and
this Section 5, from time to time enter into allonges and agreements
supplemental hereto for the purpose of amending any provisions of or adding any
provisions to this Note or changing in any manner the rights of the holder or
LAC hereunder or
<PAGE> 8
waiving any default or Event of Default hereunder. Any such supplemental
agreement, amendment or waiver is binding upon the holder of this Note and each
future holder of the Note and upon LAC, without regard to whether the Note has
been marked to indicate such supplemental agreement, amendment or waiver. The
holder of this Note and LAC shall be entitled to amend, add to or supplement
the terms of this Note without the necessity of receiving any consent or
approval of the holder of any of the other Notes.
6. Notices. All notices and communications provided for
hereunder shall be in writing and sent (a) by telecopy if the sender on the
same day sends a confirming copy of such notice by a recognized delivery
service (charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid) to the holder or LAC, as the case may be,
at their respective addresses set forth in the Agreement.
7. Miscellaneous. This Note shall be deemed to be a contract
under the laws of the State of Louisiana, and for all purposes shall be
construed in accordance with the laws of said State. The parties hereto,
including all guarantors or endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically provided herein, and assent to extensions of the time of payment,
or forbearance or other indulgence without notice. LAC hereby submits to the
nonexclusive jurisdiction of the United States District Court for the District
of Louisiana and of any Louisiana state court for purposes of all legal
proceedings arising out of or relating to this Note. LAC irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. LAC hereby irrevocably waives any and all
right to trial by jury in any legal proceeding arising out of or relating to
this Note.
The holder of this Note by acceptance of this Note agrees to be bound
by the provisions of this Note which are expressly binding on such holder.
LAMAR ADVERTISING COMPANY
By:
-------------------------------------
Title
Dated: May ____, 1996
<PAGE> 1
EXHIBIT 5.1
PALMER & DODGE LLP
One Beacon Street
Boston, Massachusetts 02108
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
July 31, 1996
Lamar Advertising Company
555 Corporate Boulevard
Baton Rouge, Louisiana 70808
We are rendering this opinion in connection with the Registration
Statement on Form S-1 (the "Registration Statement") filed by Lamar Advertising
Company (the "Company"), a Delaware corporation, with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, on June 7,
1996. The Registration Statement relates to up to 5,445,250 shares of shares
of the Company's Class A Common Stock, $0.001 par value (the "Shares"). We
understand that the Shares are to be offered and sold in the manner described
in the Registration Statement.
We have acted as your counsel in connection with the preparation of
the Registration Statement. We are familiar with the proceedings of the Board
of Directors of the Company in connection with the authorization, issuance and
sale of the Shares. We have examined such other documents as we consider
necessary to render this opinion.
Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and, when issued and delivered by the Company against
payment therefor at the price to be determined pursuant to the resolutions
adopted by the Board of Directors, will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference of our firm under the caption
"Certain Legal Matters" in the Prospectus filed as part thereof.
Very truly yours,
/s/ Palmer & Dodge LLP
<PAGE> 1
EXHIBIT 10.2
CONSULTATION AGREEMENT
This Consultation Agreement (the "Agreement") is made effective July
1, 1996, by and between Lamar Texas Limited Partnership, a Texas limited
partnership qualified to do and doing business in the State of Louisiana (the
"Company") and Reilly Consulting Company, L.L.C. (the "Consultant"),
represented herein by its Manager, Kevin P. Reilly, Sr. (the "Manager").
Recitals
The Company recognizes the experience and abilities of Consultant's
associates in the business of the Company and its subsidiaries and affiliates
(collectively, "Lamar") and has offered to engage it to render consulting and
advisory services. Consultant desires to accept such engagement, upon the
terms and conditions hereinafter set forth:
1. The Company hereby engages Consultant for a period of ten (10)
years, commencing on the effective date of this Agreement (the "Consultation
Term"), as a general advisor and consultant to management of Lamar on mergers,
acquisitions, financing and operational matters. Consultant has the authority
to select such of its associates to fulfill the consulting engagement as it
sees fit. Consultant's associates shall report and be responsible only to the
President and Chief Executive Officer of the Company but shall work with senior
level management of Lamar. Neither Consultant, nor Consultant's associates,
shall perform any services for Lamar which will create a violation by
Consultant, Consultant's associates, or Lamar of the rules and regulations of
the Louisiana Commission on Ethics for Public Employees or the Ethics Code for
Public Officials of the State of Louisiana.
2. During the Consultation Term, Consultant shall cause such of
its associates as it sees fit to devote such time as it feels is necessary and
use its best efforts to advance the business and welfare of Lamar. Consultant
shall not intentionally take any action against the best interests of Lamar.
The Company recognizes that Consultant's associates are engaged in other
business pursuits. Consequently, the unavailability of Consultant's associates
from time to time, as reasonably required by other commitments of its
associates, shall not constitute a failure to perform its obligations hereunder
and shall not be deemed a breach or default hereunder. The Company desires to
retain the services of Consultant and prevent them from being availed of
Lamar's competitors, under any circumstances.
3. The Company agrees to pay or cause to be paid to Consultant
for its services hereunder during the Consultation Term an annual consulting
retainer of one hundred twenty thousand dollars ($120,000), payable in twelve
(12) equal monthly installments. Consultant will be reimbursed for all
out-of-pocket expenses incurred in connection with service to the Company as
its Consultant up to a maximum of ten thousand dollars ($10,000) per year.
4. The Company may direct that Consultant's duties hereunder be
performed for and the fees of Consultant hereunder be paid by, and the Company
may assign this Agreement in its entirety to, one or more of the Company's
subsidiaries, parent or affiliates.
<PAGE> 2
If the Company is consolidated with or merged into, or if all or a part of its
assets are transferred to, another corporation carrying on all or a substantial
part of the business of the Company, this Agreement may be assigned to such
successor.
5. Consultant acknowledges that its promised services hereunder
are of special, unique, unusual and extraordinary character which gives them
peculiar value, the loss of which cannot be compensated adequately in damages
in an action at law, and Consultant further acknowledges that in its
consultative capacity hereunder it will be making use of, acquiring and adding
to confidential information of special and unique value relating to such
matters as lists of customers of Lamar and costs of providing the offered
services. In addition to and not in limitation of any other restrictive
covenants which may be binding upon Consultant, Consultant agrees that neither
the Consultant nor its associates will (except with respect to the ownership of
not more than 5% of publicly-traded companies):
(a) During or after the Consultation Term, disclose any of such
information to any person, firm or corporation for any purpose
whatsoever; or
(b) During the Consultation Term or within two (2) years
thereafter, engage (as an individual or as a stockholder,
trustee, partner, financier, agent, employee or representative
of any person, firm, corporation or association), or have any
interest, direct or indirect, in any business in competition
in North America with the business of Lamar as such business
is constituted at the date hereof nor engage in any other
business in North America which would be competitive with the
business conducted by Lamar on the date of this Agreement.
6. In the event of a breach of any covenant contained in
Paragraph 5 of this Agreement, the Company shall be entitled to an injunction
restraining such breach in addition to any other remedies provided by law.
7. The provisions of Paragraphs 5 and 6 hereof shall survive the
termination of the Agreement.
8. The provisions of this Agreement shall be deemed severable and
the invalidity of unenforceability of any provision shall not affect the
validity and enforceability of the other provisions hereof. If any provision
of this Agreement is unenforceable for any reason whatsoever, such provision
shall be appropriately limited and given effect to the extent that it may be
enforceable.
9. In the event of nonpayment of any consulting fee or benefit
due Consultant hereunder within thirty (30) days after the due date thereof,
such unpaid consulting fees shall bear interest at the prime rate of interest
charged The Chase Manhattan Bank, National Association, from the date of
default until paid.
2
<PAGE> 3
10. In the event a dispute arises under this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's fees
incurred in connection therewith.
11. This Agreement shall be construed and governed in accordance
with the internal laws of the State of Louisiana.
THUS DONE, READ AND SIGNED by the parties effective on the date set
forth above.
LAMAR TEXAS LIMITED PARTNERSHIP
BY: LAMAR TEXAS GENERAL PARTNER, INC.
By: /s/ Keith A. Istre
-------------------------------------------
Keith A. Istre
Vice President-Finance
CONSULTANT
REILLY CONSULTING COMPANY, L.L.C.
/s/ Kevin P. Reilly, Sr.
----------------------------------------------
Kevin P. Reilly, Sr., Manager
3
<PAGE> 1
EXHIBIT 10.10
SIXTH AMENDMENT
TO CREDIT AGREEMENT
SIXTH AMENDMENT dated as of July 12, 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 page hereof (the "Subsidiary Guarantors" and, together with the
Company, the "Obligors"); each of the financial institutions that is a party to
the Credit Agreement referred to below (the "Banks"); and THE CHASE MANHATTAN
BANK (NATIONAL ASSOCIATION), a national banking association, 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 amend the Credit Agreement in certain respects. Accordingly the
parties hereto hereby agree as follows:
Section 1. Definitions. Capitalized terms used but not
defined herein are used herein as defined in the Credit Agreement as amended
hereby.
Section 2. Amendments. Subject to Section 5 hereof, the
Credit Agreement is hereby amended as follows:
A. References in the Credit Agreement to the Credit Agreement
(including indirect references) shall be deemed to be references to the Credit
Agreement as amended hereby.
B. The definition of "New Logo Companies" in Section 1.01 of
the Credit Agreement shall be amended to read as follows:
"New Logo Companies" shall mean (i) Georgia Logos, Inc., a
Georgia corporation, (ii) South Carolina Logos, Inc., a South Carolina
corporation, (iii) Virginia Logos, Inc., a Virginia corporation, (iv)
Minnesota Logos, Inc., a Minnesota corporation, (v) all other
Subsidiaries of the Company created or acquired after October 31, 1995
whose principal business is logo signage and that are designated as
Subsidiary Guarantors under the Logo Credit Facility and (vi) all
Subsidiaries of New Logo Companies."
<PAGE> 2
C. The definition of "Subordinated Indebtedness" in Section
1.01 of the Credit Agreement shall be amended to read as follows:
"Subordinated Indebtedness" shall mean (i) the 8% Unsecured
Subordinated Debentures of the Company due September 24, 2001 in the
aggregate principal amount outstanding on the date hereof equal to
$3,679,272, (ii) the 8% Unsecured Subordinated Debentures of TLC due
September 24, 2001 in the aggregate principal amount outstanding on
the date hereof equal to $20,200 and (iii) the Subordinated Redemption
Notes, as the same shall be modified and supplemented and in effect
from time to time."
D. Section 1.01 of the Credit Agreement shall be amended
by inserting the following defined terms in the appropriate place such that,
after such insertion, it will appear in said Section in alphabetical order:
"Sixth Amendment" shall mean the Sixth Amendment dated as of
July 12, 1996 to this Agreement."
"Subordinated Redemption Notes" shall mean promissory notes of
the Company issued prior to October 31, 1996 to former holders of common stock
of the Company in an aggregate principal amount not to exceed $20,000,000 as a
deferred redemption payment, which promissory notes are unsecured, are not
guaranteed by any Subsidiary of the Company and are otherwise substantially in
the form of Exhibit A to the Sixth Amendment."
E. Section 9.05(f) of the Credit Agreement shall be amended
to read as follows:
"(f) the Company and its Restricted Subsidiaries may make
acquisitions in lines of business permitted by Section 9.15 hereof at
the respective times the Acquisitions are consummated so long as no
Default shall have occurred and be continuing or would result
therefrom."
F. Section 9.06(l) of the Credit Agreement shall be amended
by replacing "$7,500,000" with "$15,000,000".
G. Section 9.07 of the Credit Agreement shall be amended by
deleting the word "and" at the end of subsection (i), by relettering subsection
(j) to be subsection (k) and by adding a new subsection (j) and amending
subsection (k) (as so relettered) to read as follows:
"(j) the Subordinated Redemption Notes; and
"(k) additional indebtedness up to but not exceeding
$15,000,000 at any one time outstanding."
H. Section 9.08(k) of the Credit Agreement shall be amended
by replacing "$5,000,000" with "$10,000,000".
2
<PAGE> 3
I. Section 9.09 of the Credit Agreement shall be amended to
read as follows:
"9.09 Dividend Payments. The Company will not, nor will it
permit any of its Restricted Subsidiaries to, declare or make any
Dividend Payment at any time; provided, however, that the Company may
declare and make Dividend Payments in cash (including, without
limitation, Dividend Payments to Affiliates), subject to the
satisfaction of each of the following conditions on the date of such
Dividend Payment and after giving effect thereto:
(i) no Default shall have occurred and be continuing;
(ii) the aggregate amount of Dividend Payments made in any
fiscal year of the Company, together with any Dividend Payments made
pursuant to the first proviso below, shall not exceed $2,000,000,
except that on or before October 31, 1996, in addition to Dividend
Payments otherwise permitted by this clause (ii), the Company may
redeem a portion of its common stock for cash provided that the
aggregate amount of such cash paid by the Company may not exceed
$4,000,000;
(iii) the Fixed Charges Coverage Ratio (as defined below) on
the date such Dividend Payment is made (after the making of such
Dividend Payment) shall exceed 1.10 to 1; and
(iv) the Company shall have delivered to each Bank, at least
10 Business Days (but not more than 20 Business Days) prior to the
date of the proposed Dividend Payment, a certificate of the chief
financial officer of the Company setting forth computations in
reasonable detail demonstrating satisfaction of the foregoing
conditions as at the date of such certificate;
provided further that, notwithstanding the foregoing provisions of
this Section 9.09, the Company may declare and make Dividend Payments
in cash (including, without limitation, Dividend Payments to
Affiliates) in an aggregate amount up to but not exceeding $500,000 in
any fiscal year so long as at the time of any such Dividend Payment no
Event of Default (other than specified in Section 10.01(d)) hereof
shall have occurred and be continuing;
provided further that, notwithstanding the foregoing provisions of
this Section 9.09, the Company may declare and make a deferred
redemption payment in cash to former holders of common stock of the
Company in an aggregate amount up to but not exceeding $5,000,000 to
be paid from the proceeds of an initial public offering of the Company
of its common stock; and
provided further that, notwithstanding the foregoing provisions of
this Section 9.09, the Company may issue Subordinated Redemption
Notes.
3
<PAGE> 4
For purposes of this Section 9.09, "Fixed Charges Coverage Ratio"
shall mean, as at any date, the ratio of (a) Operating Cash Flow for
the period of four consecutive fiscal quarters of the Company ending
on or most recently ended prior to such date (the "calculation
period") to (b) the sum for the Company and its Consolidated
Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP), of the following: (i) all payments of
principal of Indebtedness scheduled to be made during such calculation
period plus (ii) all Interest Expense for such calculation period plus
(iii) Capital Expenditures (other than Logo Contract Expenditures) for
such calculation period plus (iv) income, franchise and like taxes for
the calculation period plus (v) Dividend Payments made at any time
during the period of four consecutive fiscal quarters of the Company
ending with the fiscal quarter during which such date falls, provided
that, for purposes of this clause (v) Dividend Payments shall exclude
(x) redemptions by the Company of a portion of its common stock for
cash paid by the Company in an aggregate amount up to but not
exceeding $5,000,000 in connection with an initial public offering by
the Company of its common stock and (y) Dividend Payments in
Subordinated Redemption Notes."
J. Section 9.13 of the Credit Agreement shall be amended by
replacing "$7,000,000" with "$10,000,000".
K. Section 9.15 of the Credit Agreement shall be amended by
adding a new sentence at the end thereof reading as follows:
"Notwithstanding the foregoing, the Company or any of its
Restricted Subsidiaries may, to the extent permitted by Section 9.08
hereof, make Investments in lines of business activity not otherwise
permitted by this Section 9.15 up to but not exceeding $10,000,000 at
any one time outstanding.
Section 3. New Subsidiary Guarantors. Subject to Section 5
hereof, each of the parties hereto, by its signature below, hereby agrees that,
from and after the date hereof, each of Lamar Pensacola Transit, Inc., Michigan
Logos, Inc. and New Jersey Logos, Inc. is and shall be a Restricted Subsidiary
and a party to, and a Subsidiary Guarantor under, the Credit Agreement.
Section 4. Transfer of Ownership. The Company hereby
notifies the Banks and the Agent that Lamar Advertising Company has transferred
all of its ownership interest in Lamar Air, L.L.C. to The Lamar Corporation.
Subject to the conditions precedent specified in Section 5 hereof, but
effective as of the date of said transfer of ownership, the Banks hereby
consent to such transfer of ownership.
4
<PAGE> 5
Section 5. Conditions Precedent. The amendments to the
Credit Agreement set forth in Section 2 hereof, and the provisions of Section 3
and Section 4 hereof, shall become effective, as of the date hereof (or on such
other date or dates, if any, specified by the respective Sections), upon the
receipt by the Agent not later than August 30, 1996 of the following documents
and evidence:
A. Counterparts of this Agreement, duly executed and
delivered by the Company, the Subsidiary Guarantors, the Majority
Banks and the Agent;
B. Evidence of the receipt by the Company of net proceeds of
not less than $60,000,000 from an initial public offering by the
Company of its common stock;
C. Satisfaction of the conditions precedent specified in
Section 7.01 with respect to each of Lamar Pensacola Transit, Inc.,
Michigan Logos, Inc. and New Jersey Logos, Inc. as though each had
been a Subsidiary Guarantor on the date of the Credit Agreement; and
D. Evidence that all the capital stock of Lamar Pensacola
Transit, Inc. has been pledged under the Pledge Agreement.
Section 6. 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
such agreement as amended by this Sixth Amendment.
Section 7. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Agreement 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 Agreement by signing any such counterpart.
This Agreement shall be governed by, and construed in accordance with, the law
of the State of New York.
Section 8. Modifications to the Indenture and Pledge
Agreement. Upon the execution and delivery of this Sixth Amendment by the
Majority Banks, the Company and its Subsidiary Guarantors are hereby authorized
to modify the Indenture as set forth in Exhibit B hereto. Upon the execution
and delivery of this Sixth Amendment by each Bank, the Agent is hereby
authorized to execute an amendment to the Pledge Agreement consisting of the
modifications as set forth in Exhibit B hereto.
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed and delivered as of the date first above written.
LAMAR ADVERTISING COMPANY
By:
-------------------------------------
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.
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.
6
<PAGE> 7
For each of the above Subsidiary
Guarantors
By:
-------------------------------------
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, its
general partner
By:
-------------------------------------
LAMAR AIR, L.L.C.
By The Lamar Corporation, its
manager
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:
-------------------------------------
Title:
FLEET BANK
By:
-------------------------------------
Title
7
<PAGE> 8
BANK ONE, LOUISIANA,
NATIONAL ASSOCIATION
By:
-------------------------------------
Title
FLEET BANK, N.A.
F/K/A NATWEST BANK N.A.
By:
-------------------------------------
Title
CIBC INC.
By:
-------------------------------------
Title
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By:
-------------------------------------
Title
8
<PAGE> 1
EXHIBIT 10.13
AMENDMENT NO. 1
TO CREDIT AGREEMENT
AMENDMENT NO. 1 dated as of July 12, 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 page hereof (the "Subsidiary Guarantors" and, together with the
Company, the "Obligors"); each of the financial institutions that is a party to
the Credit Agreement referred to below (the "Banks"); and THE CHASE MANHATTAN
BANK (NATIONAL ASSOCIATION), a national banking association, as agent for the
Banks (in such capacity, together with its successors in such capacity, the
"Administrative Agent").
The Company, the Subsidiary Guarantors, the Banks and the
Administrative Agent are parties to a Credit Agreement dated as of December 22,
1995 (the "Credit Agreement"). The Company, the Subsidiary Guarantors, the
Banks and the Administrative Agent wish to amend the Credit Agreement in
certain respects. Accordingly the parties hereto hereby agree as follows:
Section 1. Definitions. Capitalized terms used but not
defined herein are used herein as defined in the Credit Agreement as amended
hereby.
Section 2. Amendments. Subject to Section 5 hereof, the
Credit Agreement is hereby amended as follows:
A. References in the Credit Agreement to the Credit Agreement
(including indirect references) shall be deemed to be references to the Credit
Agreement as amended hereby.
B. The definition of "Subordinated Indebtedness" in Section
1.01 of the Credit Agreement shall be amended to read as follows:
"'Subordinated Indebtedness' shall mean (i) the 8% Unsecured
Subordinated Debentures of the Company due September 24, 2001 in the
aggregate principal amount outstanding on the date hereof equal to
$2,691,911, (ii) the 8% Unsecured Subordinated Debentures of TLC due
September 24, 2001 in the aggregate principal amount outstanding on
the date hereof equal to $14,200 and (iii) the Subordinated Redemption
Notes, as the same shall be modified and supplemented and in effect
from time to time."
<PAGE> 2
C. Section 1.01 of the Credit Agreement shall be amended
by inserting the following defined terms in the appropriate place such that,
after such insertion, it will appear in said Section in alphabetical order:
"'Amendment No. 1' shall mean Amendment No. 1 dated as of July
12, 1996 to this Agreement."
"Subordinated Redemption Notes" shall mean promissory notes of
the Company issued prior to October 31, 1996 to holders of common stock of the
Company in an aggregate principal amount not to exceed $20,000,000 as a
deferred redemption payment, which promissory notes are unsecured, are not
guaranteed by any Subsidiary of the Company and are otherwise substantially in
the form of Exhibit A to Amendment No. 1.
D. Section 9.05(e) of the Credit Agreement shall be amended
to read as follows:
"(e) the Company and its Restricted Subsidiaries may make
acquisitions in lines of business permitted by Section 9.15 hereof at
the respective times the Acquisitions are consummated so long as no
Default shall have occurred and be continuing or would result
therefrom."
E. Section 9.06(k) of the Credit Agreement shall be amended
by replacing "$7,500,000" with "$15,000,000".
F. Section 9.07 of the Credit Agreement shall be amended by
deleting the word "and" at the end of subsection (g), by relettering subsection
(h) to be subsection (i) and by adding a new subsection (h) and amending
subsection (i) (as so relettered) to read as follows:
"(h) the Subordinated Redemption Notes; and
"(i) additional indebtedness up to but not exceeding
$15,000,000 at any one time outstanding."
G. Section 9.08(j) of the Credit Agreement shall be
amended by replacing "$5,000,000" with "$10,000,000".
H. Section 9.09 of the Credit Agreement shall be amended to
read as follows:
"9.09 Dividend Payments. The Company will not, nor will it
permit any of its Restricted Subsidiaries to, declare or make any
Dividend Payment at any time; provided, however, that the Company may
declare and make Dividend Payments in cash (including, without
limitation, Dividend Payments to Affiliates), subject to the
satisfaction of each of the following conditions on the date of such
Dividend Payment and after giving effect thereto:
2
<PAGE> 3
(i) no Default shall have occurred and be
continuing;
(ii) the aggregate amount of Dividend Payments made
in any fiscal year of the Company, together with any Dividend Payments
made pursuant to the first proviso below, shall not exceed $2,000,000,
except that on or before October 31, 1996, in addition to Dividend
Payments otherwise permitted by this clause (ii), the Company may
redeem a portion of its common stock for cash provided that the
aggregate amount of such cash paid by the Company may not exceed
$4,000,000;
(iii) the Fixed Charges Coverage Ratio (as defined
below) on the date such Dividend Payment is made (after the making of
such Dividend Payment) shall exceed 1.10 to 1; and
(iv) the Company shall have delivered to each Bank,
at least 10 Business Days (but not more than 20 Business Days) prior
to the date of the proposed Dividend Payment, a certificate of the
chief financial officer of the Company setting forth computations in
reasonable detail demonstrating satisfaction of the foregoing
conditions as at the date of such certificate;
provided further that, notwithstanding the foregoing provisions of
this Section 9.09, the Company may declare and make Dividend Payments
in cash (including, without limitation, Dividend Payments to
Affiliates) in an aggregate amount up to but not exceeding $500,000 in
any fiscal year so long as at the time of any such Dividend Payment no
Event of Default (other than specified in Section 10.01(d)) hereof
shall have occurred and be continuing;
provided further that, notwithstanding the foregoing provisions of
this Section 9.09, the Company may declare and make a deferred
redemption payment in cash to former holders of common stock of the
Company in an aggregate amount up to but not exceeding $5,000,000 to
be paid from the proceeds of an initial public offering of the Company
of its common stock; and
provided further that, notwithstanding the foregoing provisions of
this Section 9.09, the Company may issue Subordinated Redemption
Notes.
For purposes of this Section 9.09, "Fixed Charges Coverage Ratio"
shall mean, as at any date, the ratio of (a) Operating Cash Flow for
the period of four consecutive fiscal quarters of the Company ending
on or most recently ended prior to such date (the "calculation
period") to (b) the sum for the Company and its Consolidated
Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP), of the following: (i) all payments of
principal of Indebtedness scheduled to be made during such calculation
period plus (ii) all Interest Expense for such calculation period plus
(iii) Capital Expenditures (other than Logo Contract Expenditures) for
such calculation period plus (iv) income, franchise and like taxes for
the calculation period plus (v) Dividend
3
<PAGE> 4
Payments made at any time during the period of four consecutive fiscal
quarters of the Company ending with the fiscal quarter during which
such date falls, provided that, for purposes of this clause (v)
Dividend Payments shall exclude (x) redemptions by the Company of a
portion of its common stock for cash paid by the Company in an
aggregate amount up to but not exceeding $5,000,000 in connection with
an initial public offering by the Company of its common stock and (y)
Dividend Payments in Subordinated Redemption Notes."
I. Section 9.13 of the Credit Agreement shall be amended by
replacing $7,000,000 with $10,000,000.
J. Section 9.15 of the Credit Agreement shall be amended by
adding a new sentence at the end thereof reading as follows:
"Notwithstanding the foregoing, the Company or any of its Restricted
Subsidiaries may, to the extent permitted by Section 9.08 hereof, make
Investments in lines of business activity not otherwise permitted by
this Section 9.15 up to but not exceeding $10,000,000 at any one time
outstanding."
Section 3. New Subsidiary Guarantors. Subject to Section 5
hereof, each of the parties hereto, by its signature below, hereby agrees that,
from and after the date hereof, each of Michigan Logos, Inc. and New Jersey
Logos, Inc. is and shall be a Restricted Subsidiary and a party to, and a
Subsidiary Guarantor under, the Credit Agreement and the Security Agreement.
Section 4. Amendment to Pledge Agreement. The Pledge
Agreement is hereby amended by revising Annex 1 thereto so that it reads as
Annex 1 to this Amendment No. 1.
Section 5. Modification to the Indenture. Upon execution and
delivery of this Amendment No. 1 by the Majority Banks, the Company and its
Subsidiary Guarantors are hereby authorized to modify the Indenture as set
forth in Exhibit B hereto.
Section 6. Conditions Precedent. The amendments to the
Credit Agreement set forth in Section 2 hereof, and the provisions of Section 3
and Section 4 hereof, shall become effective, as of the date hereof, upon the
receipt by the Administrative Agent not later than August 30, 1996 of the
following documents and evidence:
A. Counterparts of this Agreement, duly executed and
delivered by the Company, the Subsidiary Guarantors, the Majority
Banks and the Administrative Agent;
B. Evidence of the receipt by the Company of net proceeds of
not less than $60,000,000 from an initial public offering by the
Company of its common stock; and
4
<PAGE> 5
C. Satisfaction of the conditions precedent
specified in Section 7.01 with respect to each of Michigan Logos, Inc.
and New Jersey Logos, Inc. as though each had been a Subsidiary
Guarantor on the date of the Credit Agreement.
Section 7. Representations and Warranties. Each party hereto
(other than the Banks and the Administrative Agent) hereby represents and
warrants to the Banks and the Administrative 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 such agreement as amended by this Amendment No. 1.
Section 8. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Agreement 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 Agreement by signing any such counterpart.
This Agreement shall be governed by, and construed in accordance with, the law
of the State of New York.
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed and delivered as of the date first above written.
LAMAR ADVERTISING COMPANY
By:
-------------------------------------
Title:
SUBSIDIARY GUARANTORS
---------------------
GEORGIA LOGOS, INC.
MINNESOTA LOGOS, INC.
MICHIGAN LOGOS, INC.
NEW JERSEY LOGOS, INC.
SOUTH CAROLINA LOGOS, INC.
VIRGINIA LOGOS, INC.
For each of the above Subsidiary
Guarantors
By:
-------------------------------------
Title:
MINNESOTA LOGOS, A PARTNERSHIP
By Minnesota Logos, Inc., its
general partner
By:
-------------------------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:
-------------------------------------
Title:
6
<PAGE> 7
FLEET BANK
By:
-------------------------------------
Title:
BANK ONE, LOUISIANA,
NATIONAL ASSOCIATION
By:
-------------------------------------
Title:
FLEET BANK, N.A.
F/K/A NATWEST BANK N.A.
By:
-------------------------------------
Title:
CIBC INC.
By:
-------------------------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By:
-------------------------------------
Title:
7
<PAGE> 8
ANNEX 1
PLEDGED STOCK
<TABLE>
<CAPTION>
ISSUER CERTIFICATE NOS. NUMBER OF SHARES
------ ---------------- ----------------
<S> <C> <C>
Georgia Logos, Inc. 1 100 shares of common stock, par
value $1.00/share
South Carolina Logos, Inc. 1 100 shares of common stock, no
par value
Virginia Logos, Inc. 1 100 shares of common stock, no
par value
Michigan Logos, Inc. 2 100 shares of common stock, no
par value
New Jersey Logos, Inc. 1 100 shares of common stock, no
par value
</TABLE>
<PAGE> 1
EXHIBIT 10.14
LAMAR ADVERTISING COMPANY
1996 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of the Lamar Advertising Company 1996 Equity Incentive
Plan (the "Plan") is to attract and retain key employees and consultants of the
Company and its Affiliates, 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 by granting Awards with respect to the
Company's Class A Common Stock (the "Common Stock").
2. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
select the Participants to receive Awards and shall determine the terms and
conditions of the Awards. The Committee shall have authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, and to
interpret the provisions of the Plan. The Committee's decisions shall be final
and binding. To the extent permitted by applicable law, the Committee may
delegate to one or more executive officers of the Company the power to make
Awards to Participants who are not Reporting Persons or Covered Employees and
all determinations under the Plan with respect thereto, provided that the
Committee shall fix the maximum amount of such Awards for all such Participants
and a maximum for any one Participant.
3. ELIGIBILITY
All employees and consultants of the Company or any Affiliate capable
of contributing significantly to the successful performance of the Company,
other than a person who has irrevocably elected not to be eligible, are
eligible to be Participants in the Plan. Incentive Stock Options may be
granted only to persons eligible to receive such Options under the Code.
4. STOCK AVAILABLE FOR AWARDS
(a) AMOUNT. Subject to adjustment under subsection (b), Awards
may be made under the Plan for up to 2,000,000 shares of Common Stock. If any
Award expires or is terminated unexercised or is forfeited or settled in a
manner that results in fewer shares outstanding than were awarded, the shares
subject to such Award, to the extent of such expiration, termination,
forfeiture or decrease, shall again be available for award under the Plan.
Common Stock issued through the assumption or substitution of outstanding
grants from an acquired company shall not reduce the shares available for
Awards under the Plan. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.
<PAGE> 2
(b) ADJUSTMENT. In the event that the Committee determines that
any stock dividend, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination,
exchange of shares or other transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits intended to be
provided by the Plan, then the Committee (subject in the case of Incentive
Stock Options to any limitation required under the Code) shall equitably adjust
any or all of (i) the number and kind of shares in respect of which Awards may
be made under the Plan, (ii) the number and kind of shares subject to
outstanding Awards and (iii) the exercise price with respect to any of the
foregoing, and if considered appropriate, the Committee may make provision for
a cash payment with respect to an outstanding Award, provided that the number
of shares subject to any Award shall always be a whole number.
(c) LIMIT ON INDIVIDUAL GRANTS. The maximum number of shares of
Common Stock subject to Options and Stock Appreciation Rights that may be
granted to any Participant in the aggregate in any calendar year shall not
exceed 200,000 shares, subject to adjustment under subsection (b).
5. STOCK OPTIONS
(a) GRANT OF OPTIONS. Subject to the provisions of the Plan, the
Committee may grant options ("Options") to purchase shares of Common Stock (i)
complying with the requirements of Section 422 of the Code or any successor
provision and any regulations thereunder ("Incentive Stock Options") and (ii)
not intended to comply with such requirements ("Nonstatutory Stock Options").
The Committee shall determine the number of shares subject to each Option and
the exercise price therefor, which shall not be less than 100% of the Fair
Market Value of the Common Stock on the date of grant, provided that a
Nonstatutory Stock Option granted to a new employee or consultant within 90
days of the date of employment may have a lower exercise price so long as it is
not less than 100% of Fair Market Value on the date of employment. No
Incentive Stock Option may be granted hereunder more than ten years after the
effective date of the Plan.
(b) TERMS AND CONDITIONS. Each Option shall be exercisable at
such times and subject to such terms and conditions as the Committee may
specify in the applicable grant or thereafter. The Committee may impose such
conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.
(c) PAYMENT. Payment for shares to be delivered pursuant to any
exercise of an Option may be made in whole or in part in cash or, to the extent
permitted by the Committee at or after the grant of the Option, by delivery of
a note or other commitment satisfactory to the Committee or shares of Common
Stock owned by the optionee, including Restricted Stock, or by retaining shares
otherwise issuable pursuant to the Option, in each case valued at their Fair
Market Value on the date of delivery or retention, or such other lawful
consideration as the Committee may determine.
6. STOCK APPRECIATION RIGHTS
- 2 -
<PAGE> 3
(a) GRANT OF SARS. Subject to the provisions of the Plan, the
Committee may grant rights to receive any excess in value of shares of Common
Stock over the exercise price ("Stock Appreciation Rights" or "SARs") in tandem
with an Option (at or after the award of the Option), or alone and unrelated to
an Option. SARs in tandem with an Option shall terminate to the extent that
the related Option is exercised, and the related Option shall terminate to the
extent that the tandem SARs are exercised. The Committee shall determine at
the time of grant or thereafter whether SARs are settled in cash, Common Stock
or other securities of the Company, Awards or other property, and may define
the manner of determining the excess in value of the shares of Common Stock.
(b) EXERCISE PRICE. The Committee shall fix the exercise price of
each SAR or specify the manner in which the price shall be determined. An SAR
granted in tandem with an Option shall have an exercise price not less than the
exercise price of the related Option. An SAR granted alone and unrelated to an
Option may not have an exercise price less than 100% of the Fair Market Value
of the Common Stock on the date of the grant, provided that such an SAR granted
to a new employee or consultant within 90 days of the date of employment may
have a lower exercise price so long as it is not less than 100% of Fair Market
Value on the date of employment.
7. RESTRICTED STOCK
(a) GRANT OF RESTRICTED STOCK. Subject to the provisions of the
Plan, the Committee may grant shares of Common Stock subject to forfeiture
("Restricted Stock") and determine the duration of the period (the "Restricted
Period") during which, and the conditions under which, the shares may be
forfeited to the Company and the other terms and conditions of such Awards.
Shares of Restricted Stock may be issued for no cash consideration, such
minimum consideration as may be required by applicable law or such other
consideration as the Committee may determine.
(b) RESTRICTIONS. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted by
the Committee, during the Restricted Period. Shares of Restricted Stock shall
be evidenced in such manner as the Committee may determine. Any certificates
issued in respect of shares of Restricted Stock shall be registered in the name
of the Participant and unless otherwise determined by the Committee, deposited
by the Participant, together with a stock power endorsed in blank, with the
Company. At the expiration of the Restricted Period, the Company shall deliver
such certificates to the Participant or if the Participant has died, to the
Participant's Designated Beneficiary.
- 3 -
<PAGE> 4
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) REPORTING PERSON LIMITATIONS. Notwithstanding any other
provision of the Plan, to the extent required to qualify for the exemption
provided by Rule 16b-3 under the Exchange Act, Awards made to a Reporting
Person shall not be transferable by such person other than by will or the laws
of descent and distribution and are exercisable during such person's lifetime
only by such person or by such person's guardian or legal representative. If
then permitted by Rule 16b-3, such Awards, unless Incentive Stock Options, may
also be made transferable pursuant to a Qualified Domestic Relations Order as
defined in the Code or Title I of the Employee Retirement Income Security Act
or the rules thereunder.
(b) DOCUMENTATION. Each Award under the Plan shall be evidenced
by a writing delivered to the Participant specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent with
the provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or to comply with applicable tax and
regulatory laws and accounting principles.
(c) COMMITTEE DISCRETION. Each type of Award may be made alone,
in addition to or in relation to any other Award. The terms of each type of
Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of grant or at any time thereafter.
(d) DIVIDENDS AND CASH AWARDS. In the discretion of the
Committee, any Award under the Plan may provide the Participant with (i)
dividends or dividend equivalents payable currently or deferred with or without
interest and (ii) cash payments in lieu of or in addition to an Award.
(e) TERMINATION OF EMPLOYMENT. The Committee shall determine the
effect on an Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.
(f) CHANGE IN CONTROL. In order to preserve a Participant's
rights under an Award in the event of a change in control of the Company (as
defined by the Committee), the Committee in its discretion may, at the time an
Award is made or at any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period relating to the
exercise or payment of the Award, (ii) provide for payment to the Participant
of cash or other property with a Fair Market Value equal to the amount that
would have been received upon the exercise or payment of the Award had the
Award been exercised or paid upon the change in control, (iii) adjust the terms
of the Award in a manner determined by the Committee to reflect the change in
control, (iv) cause the Award to be assumed, or new rights substituted
therefor, by another entity, or (v) make such other provision as the Committee
may consider equitable to Participants and in the best interests of the
Company.
- 4 -
<PAGE> 5
(g) LOANS. The Committee may authorize the making of loans or
cash payments to Participants in connection with the grant or exercise any
Award under the Plan, which loans may be secured by any security, including
Common Stock, underlying or related to such Award (provided that the loan shall
not exceed the Fair Market Value of the security subject to such Award), and
which may be forgiven upon such terms and conditions as the Committee may
establish at the time of such loan or at any time thereafter.
(h) WITHHOLDING TAXES. The Participant shall pay to the Company,
or make provision satisfactory to the Committee for payment of, any taxes
required by law to be withheld in respect of Awards under the Plan no later
than the date of the event creating the tax liability. In the Committee's
discretion, such tax obligations may be paid in whole or in part in shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value on the date of delivery. The
Company and its Affiliates may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the Participant.
(i) FOREIGN NATIONALS. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee
considers necessary or advisable to achieve the purposes of the Plan or to
comply with applicable laws.
(j) AMENDMENT OF AWARD. The Committee may amend, modify or
terminate any outstanding Award, including substituting therefor another Award
of the same or a different type, changing the date of exercise or realization
and converting an Incentive Stock Option to a Nonstatutory Stock Option,
provided that the Participant's consent to such action shall be required unless
the Committee determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
9. CERTAIN DEFINITIONS
"Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right or Restricted Stock
granted under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor law.
"Committee" means one or more committees each comprised of not less
than two members of the Board appointed by the Board to administer the Plan or
a specified portion thereof. Unless otherwise determined by the Board, if a
Committee is authorized to grant Awards to a Reporting Person or a Covered
Employee, each member shall be a "non- employee
- 5 -
<PAGE> 6
director" or the equivalent within the meaning of applicable Rule 16b-3 under
the Exchange Act or an "outside director" within the meaning of Section 162(m)
of the Code, respectively.
"Common Stock" or "Stock" means the Class A Common Stock, $0.001 par
value, of the Company.
"Company" means Lamar Advertising Company, a Delaware corporation.
"Covered Employee" means a "covered employee" within the meaning of
Section 162(m) of the Code.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, "Designated
Beneficiary" means the Participant's estate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor law.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Participant" means a person selected by the Committee to receive an
Award under the Plan.
"Reporting Person" means a person subject to Section 16 of the
Exchange Act.
10. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT. No person shall have any claim or
right to be granted an Award. Neither the Plan nor any Award hereunder shall
be deemed to give any employee the right to continued employment or to limit
the right of the Company to discharge any employee at any time.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any
rights as a stockholder with respect to any shares of Common Stock to be
distributed under the Plan until he or she becomes the holder thereof. A
Participant to whom Common Stock is awarded shall be considered the holder of
the Stock at the time of the Award except as otherwise provided in the
applicable Award.
(c) EFFECTIVE DATE. Subject to the approval of the stockholders
of the Company, the Plan shall be effective on July 24, 1996.
- 6 -
<PAGE> 7
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate
the Plan or any portion thereof at any time, subject to such stockholder
approval as the Board determines to be necessary or advisable to comply with
any tax or regulatory requirement.
(e) GOVERNING LAW. The provisions of the Plan shall be governed
by and interpreted in accordance with the laws of Delaware.
----------------------------------
This Plan was approved by the Board of Directors on July 24, 1996.
This Plan was approved by the stockholders on July 30, 1996.
- 7 -
<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 Financial and Operating
Data" and "Experts" in the prospectus.
KPMG Peat Marwick LLP
New Orleans, Louisiana
July 30, 1996
