<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 1996
REGISTRATION NO. 333-12427
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
UNIVERSAL OUTDOOR, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
ILLINOIS 7312 36-2827496
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification No.)
</TABLE>
----------------
321 NORTH CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive office)
----------------
PAUL G. SIMON
GENERAL COUNSEL
UNIVERSAL OUTDOOR HOLDINGS, INC.
321 NORTH CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
WITH COPIES TO:
<TABLE>
<S> <C>
LELAND E. HUTCHINSON STACY J. KANTER
WINSTON & STRAWN SKADDEN, ARPS, SLATE, MEAGHER & FLOM
35 WEST WACKER DRIVE 919 THIRD AVENUE
CHICAGO, ILLINOIS 60601 NEW YORK, NEW YORK 10022
(312) 558-5600 (212) 735-3000
</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 of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Section 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) OFFERING PRICE FEE(2)
<S> <C> <C> <C>
Senior Subordinated Notes............. $25,000,000 $25,000,000 $7,575.76
</TABLE>
(1) Additional securities being registered with this amendment.
(2) Completed pursuant to Rule 457.
----------------
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
UNIVERSAL OUTDOOR, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING PROSPECTUS CAPTION OR PAGE
- ------------------------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front Registration Statement Cover; Outside Front Cover
Cover Page of Prospectus................................ Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside Front Cover Page; Available Information;
Prospectus.............................................. Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio of Earnings Prospectus Summary; Risk Factors; Business
to Fixed Charges........................................
4. Use of Proceeds......................................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price......................... Underwriting
6. Dilution................................................ Not Applicable
7. Selling Security Holders................................ Not Applicable
8. Plan of Distribution.................................... Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to Be Registered.............. Description of the Notes
10. Interest of Named Experts and Counsel................... Not Applicable
11. Information with Respect to the Registrant.............. Prospectus Summary; Risk Factors; The Transactions;
Use of Proceeds; Capitalization; Selected
Consolidated Financial and Operating Data;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business;
Management; Certain Transactions; Principal
Stockholders; Description of Notes; Description of
Indebtedness and Other Commitments; Validity of
Notes; Experts; Available Information; Consolidated
Financial Statements
12. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities.............................. Not Applicable
</TABLE>
<PAGE>
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 THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 10, 1996
$200,000,000
[LOGO]
UNIVERSAL OUTDOOR, INC.
% SENIOR SUBORDINATED NOTES DUE 2006
----------
Interest on the % Senior Subordinated Notes due 2006 (the "Notes") of
Universal Outdoor, Inc. (the "Company") is payable semi-annually on
and of each year, commencing , 1997. The
Notes are redeemable at the option of the Company, in whole or in part, on or
after , 2001 at the redemption prices set forth herein. Until
, 1999, up to $70 million aggregate principal amount of the Notes
will be redeemable, at the option of the Company, from the net proceeds of a
public equity offering or equity private placement of Universal Outdoor
Holdings, Inc., the parent of the Company ("Parent"), in each case resulting in
net proceeds of $100 million or more.
The Notes represent senior subordinated unsecured obligations of the Company
and will rank PARI PASSU in right of payment with all other senior subordinated
unsecured indebtedness of the Company. The Notes will be subordinated to all
existing and future Senior Debt (as defined) of the Company, including senior
indebtedness under a $300 million bank credit facility. The amount of Senior
Debt outstanding at June 30, 1996, after giving effect to the Transactions (as
defined), the Offerings (as defined) and the application of the proceeds
therefrom, would have been approximately $123.3 million.
Prior to the offering of the Notes (the "Offering"), there has been no
public market for the Notes. The Notes are not expected to be listed on any
securities exchange or to be quoted through any automatic quotation system.
Prior to the Offering, Parent offered 6,500,000 shares of its Common Stock
by a separate prospectus (the "Common Stock Offering", and together with the
Offering, the "Offerings").
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE PROCEEDS
TO UNDERWRITING TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
<S> <C> <C> <C>
Per Note................................................ % % %
Total (4)............................................... % % %
</TABLE>
(1) Plus accrued interest, if any, from , 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $750,000.
(4) The Company has granted the Underwriters a 30-day option to purchase up to
an additional $25,000,000 aggregate principal amount of the Notes solely to
cover over-allotments.
----------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject any order in whole or in part. It is expected that delivery of the Notes
will be made in New York, New York, on or about October , 1996.
----------------
BEAR, STEARNS & CO. INC. BT SECURITIES CORPORATION
The date of this Prospectus is , 1996.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED HEREIN, THE "COMPANY" MEANS
UNIVERSAL OUTDOOR, INC., TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES, UNLESS THE
CONTEXT OTHERWISE REQUIRES. "PARENT" REFERS TO UNIVERSAL OUTDOOR HOLDINGS, INC.
AND ITS CONSOLIDATED SUBSIDIARIES, WHICH CONSTITUTE THE OPERATING SUBSIDIARIES
OF PARENT. THE COMPANY IS A WHOLLY-OWNED SUBSIDIARY OF PARENT. UNLESS OTHERWISE
SPECIFIED, THE PROSPECTUS ASSUMES (I) THE COMPLETION OF THE TRANSACTIONS (AS
DEFINED) SCHEDULED OR ANTICIPATED TO OCCUR, (II) THE COMPLETION OF THE COMMON
STOCK OFFERING AT A PRICE OF $37.00 PER SHARE, AND (III) NO EXERCISE OF THE
UNDERWRITER'S OVER-ALLOTMENT OPTION IN THE COMMON STOCK OFFERING OR THIS
OFFERING. THE "TRANSACTIONS" CONSIST OF THE ACQUISITION OF OUTDOOR ADVERTISING
HOLDINGS, INC. BY A SUBSIDIARY OF THE COMPANY PURSUANT TO A MERGER OF SUCH
SUBSIDIARY WITH AND INTO OUTDOOR ADVERTISING HOLDINGS, INC. (THE "POA
ACQUISITION"), THE DEBT TENDER OFFERS (AS DEFINED), THE EXECUTION OF THE NEW
CREDIT FACILITY (AS DEFINED), THE MEMPHIS/TUNICA ACQUISITION (AS DEFINED), AND
THE ADDITIONAL ACQUISITIONS (AS DEFINED). SEE "TRANSACTIONS." "ACQUISITIONS"
MEANS, COLLECTIVELY, THE POA ACQUISITION, THE MEMPHIS/TUNICA ACQUISITION AND THE
ADDITIONAL ACQUISITIONS. "OPERATING CASH FLOW" HAS THE MEANING SET FORTH IN
FOOTNOTE 2 ON PAGE 8 HEREOF AND "OPERATING CASH FLOW MARGIN" HAS THE MEANING SET
FORTH IN FOOTNOTE 3 ON PAGE 8 HEREOF. THE TERM "MARKET" REFERS TO THE GEOGRAPHIC
AREA CONSTITUTING A DESIGNATED MARKET AREA AS DEFINED BY THE A.C. NIELSON
COMPANY.
THE COMPANY
The Company is a leading outdoor advertising company operating approximately
21,114 advertising display faces in two distinct regions: the Midwest (Chicago,
Minneapolis/St. Paul, Indianapolis, Milwaukee, Des Moines, Evansville (IN) and
Dallas) and the Southeast (Orlando, Jacksonville, Palm Beach, Ocala and the East
Coast and Gulf Coast areas of Florida, Memphis/Tunica and Chattanooga (TN), and
Myrtle Beach (SC)). After giving effect to the Acquisitions, the Company will be
the third largest pure-play outdoor advertising company in the United States on
the basis of net revenues. For the six months ended June 30, 1996, on a pro
forma basis the Company had net revenues and Operating Cash Flow of $65.1
million and $32.0 million, respectively, which compare favorably to the pro
forma results for the same period in 1995 of $56.7 million and $26.5 million,
respectively. For the fiscal year ended December 31, 1995, on a pro forma basis
the Company had net revenues and Operating Cash Flow of $121.0 million and $58.5
million, respectively. The Company believes that its 1995 Operating Cash Flow
Margin of 49.9%, or 48.3% on a pro forma basis after giving effect to the
Acquisitions, is among the highest in the industry.
3
<PAGE>
The Acquisitions will significantly expand and diversify the Company's
presence into new major metropolitan markets. The following table sets forth, as
of August 31, 1996, certain information with respect to the Company's outdoor
markets after giving effect to the Acquisitions:
<TABLE>
<CAPTION>
% OF 1995
PRO FORMA 30-SHEET 8-SHEET
MARKET NET REVENUES BULLETINS POSTERS POSTERS
- ------------------------------------------- 1995 --------------- ----------- ----------- -----------
PRO FORMA
NET REVENUES
-----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
MIDWEST:
Chicago.................................. $ 16,579 13.7% 653 -- 3,646
Minneapolis/St. Paul..................... 16,320 13.5 447 1,365 --
Indianapolis............................. 9,897 8.2 257 1,385 142
Milwaukee................................ 4,686 3.9 260 -- 321
Des Moines............................... 3,141 2.6 84 590 9
Evansville............................... 3,028 2.5 142 687 --
Dallas................................... 1,738 1.5 245 -- 1,201
SOUTHEAST:
Orlando.................................. 22,253 18.4 842 1,080 --
Jacksonville............................. 8,528 7.0 383 942 --
Palm Beach............................... 290 0.2 99 21 --
Ocala.................................... 5,011 4.1 879 199 --
Memphis/Tunica*.......................... 13,104 10.8 706 1,179 133
Chattanooga.............................. 4,582 3.8 359 663 --
Myrtle Beach............................. 7,931 6.6 729 455 --
East Coast area (FL)..................... 2,784 2.3 567 -- --
Gulf Coast area (FL)..................... 1,095 0.9 444 -- --
-------- ----- ----- ----- -----
Total.................................. $ 120,967 100.0% 7,096 8,566 5,452
-------- ----- ----- ----- -----
-------- ----- ----- ----- -----
<CAPTION>
TOTAL
DISPLAY
MARKET FACES
- ------------------------------------------- ---------
<S> <C>
MIDWEST:
Chicago.................................. 4,299
Minneapolis/St. Paul..................... 1,812
Indianapolis............................. 1,927
Milwaukee................................ 581
Des Moines............................... 683
Evansville............................... 829
Dallas................................... 1,446
SOUTHEAST:
Orlando.................................. 1,922
Jacksonville............................. 1,325
Palm Beach............................... 120
Ocala.................................... 1,078
Memphis/Tunica*.......................... 2,018
Chattanooga.............................. 1,022
Myrtle Beach............................. 1,184
East Coast area (FL)..................... 567
Gulf Coast area (FL)..................... 444
---------
Total.................................. 21,114**
---------
---------
</TABLE>
- ------------------------
* To be acquired in connection with the Memphis/Tunica Acquisition.
** Excludes 143 transit display faces located in Indianapolis.
OPERATING STRATEGY
The Company's objective is to be the leading provider of outdoor advertising
services in each of its two regional operating areas and to expand its presence
in attractive new markets. The Company believes that regional clusters provide
it with significant opportunities to increase revenue and achieve cost savings
by delivering to local and national advertisers efficient access to multiple
markets or highly targeted areas. Management intends to implement the following
operating strategy:
- MAXIMIZE RATES AND OCCUPANCY. Through continued emphasis on customer
sales and service, quality displays and inventory management, the Company seeks
to maximize advertising rates and occupancy levels in each of its markets. The
Company has recruited and trained a strong local sales staff supported by local
managers operating under specific, sales-based compensation targets designed to
obtain the maximum potential from the Company's display inventory.
- INCREASE MARKET PENETRATION. The Company seeks to expand operations
within its existing markets through new construction, with an emphasis on
painted bulletins, which generally command higher rates and longer term
contracts from advertisers than other types of display faces. In addition, the
Company historically has acquired, and intends to continue to acquire,
additional advertising display faces in its existing markets as opportunities
become available.
- PURSUE STRATEGIC ACQUISITIONS. In addition to improved penetration of
its existing markets, the Company also seeks to grow by acquiring additional
advertising display faces in new, closely proximate markets. Such new markets
allow the Company to capitalize on the operating efficiencies and cross-market
sales opportunities associated with operating in multiple markets within
distinct regions. The Company
4
<PAGE>
intends to develop new regional operating areas in regions where attractive
growth and consolidation opportunities exist.
- CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its ability to
effectively respond to its customers' needs. The Company's continued investment
in equipment and technology provides for greater ongoing benefits in the areas
of sales, production and operation.
- MAINTAIN LOW COST STRUCTURE. Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its Operating Cash Flow
Margin, which it believes to be among the highest in the industry. The Company
believes that its centralized administration provides opportunities for
significant operating leverage from further expansion in existing markets and
from future acquisitions.
- DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other
forms of out-of-home media such as bus shelter or transit advertising in order
to enhance revenues in existing markets or provide access to new markets.
The Company believes that its experienced senior management team is an
important asset in the successful implementation of its operating strategy.
Daniel L. Simon, President and Chief Executive Officer and the founder of the
Company, has spent his entire professional career of 23 years in the outdoor
advertising business. Brian T. Clingen, Vice President and Chief Financial
Officer, and Paul G. Simon, Vice President and General Counsel, together possess
over 24 years of experience in the industry. As of June 30, 1996, this
management team has successfully completed and integrated 16 acquisitions since
1989.
RECENT ACQUISITIONS
Consistent with its operating strategy, the Company has recently entered
into agreements to acquire the assets or capital stock of four outdoor
advertising companies. The Company believes that these acquisitions will
significantly strengthen its market presence in the midwest and southeast United
States and will allow the Company to capitalize on the operating efficiencies
and cross-market sales opportunities associated with operating in closely
proximate markets.
THE POA ACQUISITION. The Company has acquired the outstanding capital stock
of Outdoor Advertising Holdings, Inc. ("OAH"), pursuant to a merger of OAH with
and into a subsidiary of the Company for approximately $240 million in cash. As
a result of the POA Acquisition, the Company acquired a total of approximately
6,337 advertising display faces located in five markets in the southeast United
States.
The Company believes that the POA Acquisition will substantially strengthen
the Company's operations in the southeast United States, particularly in
Florida, where the Company believes it has the largest number of outdoor
advertising display faces and has the largest market share in each of its
markets, except Palm Beach. The Company believes that the southeast United
States is a particularly attractive region due to its (i) high concentration of
destination cities and resorts; (ii) above average population growth; (iii)
extensive highway/roadway systems; and (iv) temperate climate that promotes
outdoor lifestyles.
THE MEMPHIS/TUNICA ACQUISITION. The Company, through a newly-formed
subsidiary, has acquired the option (the "Memphis/Tunica Option") to purchase
during the period from December 1, 1996 to December 31, 1996 certain assets
located in and around Memphis, Tennessee and Tunica County, Mississippi (the
"Memphis/Tunica Acquisition"). The purchase price of the Memphis/Tunica Option
was $5 million. The purchase price of the Memphis/Tunica Acquisition is
approximately $71 million (inclusive of the price of the Memphis/Tunica Option)
plus 100,000 shares of Common Stock of Parent. Upon consummation of the
Memphis/Tunica Acquisition, the Company will acquire a total of approximately
2,018 advertising display faces located in and around Memphis, Tennessee. A
significant number of these display faces were previously owned by Naegele (as
defined).
The Company believes that the Memphis/Tunica Acquisition will complement the
Chattanooga operations which were acquired by the Company in the POA
Acquisition. This will give the Company a
5
<PAGE>
leading presence in two of the largest markets in Tennessee and strengthen its
presence in the southeast United States.
THE ADDITIONAL ACQUISITIONS. The Company has acquired certain assets of (i)
Iowa Outdoor Displays for approximately $1.8 million in cash (the "Iowa
Acquisition") and (ii) The Chase Company for approximately $5.8 million in cash
(the "Dallas Acquisition," and together with the Iowa Acquisition, the
"Additional Acquisitions"). As a result of the Additional Acquisitions, the
Company will acquire approximately 160 advertising display faces consisting
primarily of posters in and around Des Moines and approximately 245 advertising
display faces consisting primarily of bulletins in and around Dallas.
The Company believes that the Additional Acquisitions will further enhance
the Company's current presence in each of its Des Moines and Dallas markets and
provide increased revenue opportunities in its Midwest market cluster. As of the
date of this Prospectus, the Memphis/Tunica Acqusition has not been consummated.
See "Transactions" and "Description of Indebtedness and Other Committments--New
Credit Facility."
THE OFFERING
<TABLE>
<S> <C>
Issue........................... $200,000,000 principal amount of % Senior Subordinated
Notes due 2006 offered by the Company.
Maturity Date................... , 2006.
Interest Payment Dates.......... and of each year, commencing ,
1997.
Ranking......................... The Notes will be general unsecured obligations of the
Company and will be subordinated to all existing and
future Senior Debt, including indebtedness under the New
Credit Facility. The Company will have the ability,
subject to meeting certain financial ratios, to incur
additional Indebtedness (as defined), including Senior
Debt.
Mandatory Redemption............ The Company is not required to make mandatory redemption
or sinking fund payments prior to the maturity of the
Notes.
Optional Redemption............. The Notes will be redeemable at the option of the Company
in whole or in part at any time on or after ,
2001 at the redemption prices set forth herein plus
accrued and unpaid interest, if any, thereon to the date
of redemption. Until , 1999, up to $70 million
aggregate principal amount of the Notes will be redeemable
at the option of the Company from the net proceeds of a
public equity offering or equity private placement by
Parent, in each case resulting in net cash proceeds of
$100 million or more, at % of the principal amount plus
accrued and unpaid interest, if any, thereon to the date
of redemption. See "Description of Notes--Optional
Redemption."
Change of Control............... Upon a Change of Control (as defined), holders of the
Notes will have the right to require the Company to
purchase any or all of the Notes at a purchase price equal
to 101% of the aggregate principal amount of the Notes
plus accrued and unpaid interest thereon, if any, to the
date of purchase. See "Description of Notes--Certain
Covenants--Repurchase of Notes at the Option of the Holder
upon a Change of Control."
Certain Covenants............... The indenture governing the Notes (the "Indenture") will
contain covenants restricting or limiting the ability of
the Company and its Subsidiaries (which term, as defined
in the Indenture, does not
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
include any Unrestricted Subsidiaries) to, among other
things, (i) pay dividends or make other restricted
payments, (ii) incur additional indebtedness or issue
certain redeemable stock, (iii) create liens, (iv) create
dividend or other payment restrictions affecting
Subsidiaries, (v) enter into mergers or consolidations or
make sales of all or substantially all assets of the
Company, and (vi) enter into transactions with affiliates.
In addition, in the event of certain Asset Sales (as
defined), the Company will be required to use the proceeds
to reinvest in the Company's business, to repay Senior
Debt or to offer to purchase Notes at 100% of the
principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase. See
"Description of Notes--Certain Covenants."
Use of Proceeds................. To repay existing bank indebtedness, repurchase certain
outstanding notes of the Company and finance a portion of
the purchase price payable in connection with certain of
the Acquisitions. See "Use of Proceeds."
</TABLE>
RISK FACTORS
For a discussion of certain factors that should be considered in connection
with an investment in the Notes. See "Risk Factors."
7
<PAGE>
SUMMARY PRO FORMA FINANCIAL INFORMATION
The following sets forth summary unaudited consolidated pro forma financial
information derived from the information contained under the caption "Pro Forma
Financial Information" elsewhere in this Prospectus. The summary unaudited pro
forma consolidated statement of operations for the year ended December 31, 1995
and for the latest twelve month period ended June 30, 1996 give effect to (i)
the Transactions, (ii) the Offerings and the application of the estimated net
proceeds therefrom (assuming a Common Stock Offering price of $37.00 per share),
(iii) the acquisitions of NOA Holding Company ("Naegele"), Ad-Sign, Inc., Image
Media, Inc. and consummation of the IPO (as hereafter defined) and the
application of the estimated net proceeds therefrom, and (iv) the net reduction
in operating expenses of the businesses acquired as if each had occurred at the
beginning of the respective periods. The summary unaudited pro forma balance
sheet as of June 30, 1996 has been prepared as if the Transactions, the
Offerings and the IPO had occurred on June 30, 1996.
The summary unaudited consolidated pro forma financial information does not
purport to present the actual financial position or results of operations of the
Company had the transactions and events assumed therein in fact occurred on the
dates specified, nor are they necessarily indicative of the results of
operations that may be achieved in the future. The summary unaudited pro forma
consolidated financial information is based on certain assumptions and
adjustments described in the notes contained in "Pro Forma Financial
Information" and should be read in conjunction therewith. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition," the
Consolidated Financial Statements and the Notes thereto of the Company, the
Consolidated Financial Statements and the Notes thereto of NOA Holding Company,
the Statement of Revenues and Direct Expenses and the Notes thereto of Ad-Sign,
the Financial Statements and Notes thereto of POA Acquisition Corporation and
the Combined Financial Statements and Notes thereto of Tanner-Peck, L.L.C.
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA LATEST
PRO FORMA TWELVE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net revenues(1)........................................................... $ 120,967 $ 129,381
Direct cost of revenues................................................... 45,309 46,938
General and administrative expenses....................................... 17,189 18,476
Depreciation and amortization............................................. 36,271 35,786
Operating income.......................................................... 22,198 28,181
Interest expense.......................................................... 31,656 31,656
Other expense (income).................................................... (154) 1,552
Net loss.................................................................. (9,304) (5,027)
OTHER DATA:
Operating Cash Flow(2).................................................... $ 58,469 $ 63,967
Operating Cash Flow Margin(3)............................................. 48.3% 49.4%
Ratio of total indebtedness to Operating Cash Flow (4).................... 5.5x 5.1x
Ratio of Operating Cash Flow to total interest (5)........................ 1.8x 2.0x
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-----------------------------------
ACTUAL AS ADJUSTED
----------------- ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................... $ 8,122 $ 21,400
Total assets.............................................................. 177,372 519,355
Total long-term debt...................................................... 150,207 273,361
Common stockholders' equity............................................... 20,773 236,469
</TABLE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) "Operating Cash Flow" is operating income before depreciation and
amortization and other noncash charges. Operating Cash Flow is not intended
to represent net cash flow provided by operating activities as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income (loss) as an indicator of the Company's operating
performance or to net cash provided by operating activities as a measure of
liquidity. The Company believes Operating Cash Flow is a measure commonly
reported and widely used by analysts, investors and other interested
parties in the media industry. Accordingly, this information has been
disclosed herein to permit a more complete comparative analysis of the
Company's operating performance relative to other companies in the media
industry.
(3) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
(4) Amounts represent (i) total long-term debt divided by (ii) Operating Cash
Flow.
(5) Amounts represent the ratio of (i) the sum of income before income taxes and
minority interest plus interest expense on funded debt to (ii) interest
expense on funded debt.
8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- ---------
1991 1992 1993 1994 1995 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues............................................. $ 21,435 $ 27,896 $ 28,710 $ 33,180 $ 38,101 $ 18,292
Net revenues(1)............................................ 18,835 24,681 25,847 29,766 34,148 16,411
Direct advertising expenses................................ 7,638 10,383 10,901 11,806 12,864 6,266
General and administrative expenses........................ 3,515 3,530 3,357 3,873 4,244 2,150
Depreciation and amortization.............................. 5,530 7,817 8,000 7,310 7,402 3,538
Operating income........................................... 2,152 2,951 3,589 6,777 9,638 4,457
Interest expense........................................... 6,599 9,591 8,965 8,314 8,627 4,280
Income (loss) before extraordinary item(2)................. (4,500) (6,349) (5,727) (1,671) 969 156
Net income (loss).......................................... (4,500) (6,349) (8,987) (1,671) 969 156
OTHER DATA:
Operating Cash Flow(3)..................................... $ 7,682 $ 10,768 $ 11,589 $ 14,087 $ 17,040 $ 7,995
Operating Cash Flow Margin(4).............................. 40.8% 43.6% 44.8% 47.3% 49.9% 48.7%
Capital expenditures....................................... 2,047 2,352 2,004 4,668 5,620 2,521
Deficiency in coverage of earnings......................... 4,500 6,349 8,987 1,671 -- --
FINANCIAL RATIOS:
Ratio of earnings to fixed charges(5)...................... -- -- -- -- 1.1x 1.0x
Percentage of indebtedness to total capitalization(6)...... 102.2% 104.8% 116.1% 118.1% 115.8% 117.3%
Ratio of total indebtedness to Operating Cash Flow(7)...... 16.1x 5.5x 5.9x 5.2x 4.6x --
Ratio of Operating Cash Flow to total interest(8).......... 1.2x 1.1x 1.3x 1.7x 2.0x 1.9x
<CAPTION>
1996
---------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues............................................. $ 29,366
Net revenues(1)............................................ 26,239
Direct advertising expenses................................ 9,520
General and administrative expenses........................ 3,076
Depreciation and amortization.............................. 4,674
Operating income........................................... 8,969
Interest expense........................................... 6,086
Income (loss) before extraordinary item(2)................. 1,209
Net income (loss).......................................... 1,209
OTHER DATA:
Operating Cash Flow(3)..................................... $ 13,643
Operating Cash Flow Margin(4).............................. 52.0%
Capital expenditures....................................... 2,943
Deficiency in coverage of earnings......................... --
FINANCIAL RATIOS:
Ratio of earnings to fixed charges(5)...................... 1.2x
Percentage of indebtedness to total capitalization(6)...... 87.9%
Ratio of total indebtedness to Operating Cash Flow(7)...... --
Ratio of Operating Cash Flow to total interest(8).......... 2.2x
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------------
ACTUAL PRO FORMA(10) AS ADJUSTED(11)
--------- -------------- ---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................ $ 8,122 $ 21,400 $ 21,400
Total assets........................................................... 177,372 513,232 519,982
Total long-term debt(9)................................................ 150,207 425,188 273,361
Common stockholders' equity (deficit).................................. 20,773 77,892 236,469
</TABLE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary loss represents loss on early extinguishment of debt.
(3) "Operating Cash Flow" is operating income before depreciation and
amortization and other non cash charges. Operating Cash Flow is not intended
to represent net cash provided by operating activities as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income (loss) as an indicator of the Company's operating
performance or to net cash provided by operating activities as a measure of
liquidity. The Company believes Operation Cash Flow is a measure commonly
reported and widely used by analysts, investors and other interested parties
in the media industry. Accordingly, this information has been disclosed
herein to permit a more complete comparative analysis of the Company's
operating performance relative to other companies in the media industry.
(4) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
(5) Amounts represent the ratio of (i) the sum of income before income taxes
and minority interest plus interest expense less minority interest to (ii)
interest expense on funded debt.
(6) Amounts represent (i) total long-term debt divided by (ii) total long-term
debt plus common stockholders' equity (deficit).
(7) Amounts represent (i) total long-term debt divided by (ii) Operating Cash
Flow.
(8) Amounts represent the ratio of (i) the sum of income before income taxes
and minority interest plus interest expense on funded debt to (ii) interest
expense on funded debt.
(9) Long-term debt does not include current maturities.
(10) Represents actual amounts adjusted to give effect to the Transactions, and
the application of the net proceeds from the IPO of $62.4 million.
(11) Represents pro forma amounts adjusted to give effect to the Offerings.
9
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE NOTES
OFFERED BY THIS PROSPECTUS.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS. The Company has
substantial indebtedness. On a pro forma basis after giving effect to the
Acquisitions and indebtedness incurred as a result of the Acquisitions and the
Offering and the application of the net proceeds of the Offerings, as of June
30, 1996, the Company's total long-term debt was approximately $273.4 million,
and on a pro forma basis for the latest twelve months ended June 30, 1996
interest expense was approximately $27.4 million, or 21.2% of net revenues. The
Company's level of consolidated indebtedness could have important consequences
to the holders of the Notes, including the following: (i) a substantial portion
of the Company's cash flow from operations must be dedicated to the payment of
the principal of and interest on its indebtedness and will not be available for
other purposes; (ii) the ability of the Company to obtain financing in the
future for working capital needs, capital expenditures, acquisitions,
investments, general corporate purposes or other purposes may be materially
limited or impaired; and (iii) the Company's level of indebtedness may reduce
the Company's flexibility to respond to changing business and economic
conditions. Subject to certain limitations contained in its outstanding debt
instruments and the Notes, the Company or its subsidiaries may incur additional
indebtedness to finance working capital or capital expenditures, investments or
acquisitions or for other purposes. See "Description of Indebtedness and Other
Commitments" and "Description of the Notes." Although historically the Company's
Operating Cash Flow has been sufficient to service its fixed charges, there can
be no assurance that the Company's Operating Cash Flow will continue to exceed
its fixed charges. A decline in Operating Cash Flow could impair the Company's
ability to meet its obligations, including for debt service, and to make
scheduled principal repayments. See "Selected Consolidated Financial and
Operating Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
ACQUISITION STRATEGY. The Company's growth has been facilitated by
strategic acquisitions that have substantially increased the Company's inventory
of advertising display faces. One element of the Company's operating strategy is
to make acquisitions in new and existing 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. The Company is likely to face competition
from other outdoor advertising and media companies for acquisition opportunities
that are available. In addition, if the prices sought by sellers of outdoor
advertising display faces and companies continue to rise, 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 that
acquisitions can be completed on terms acceptable to the Company. Also, in the
Minneapolis/St. Paul market, the Company is subject to a consent judgment that
restricts the Company's ability to purchase outdoor advertising display faces
until February 1, 2001. See "Business -- Government Regulation." As part of its
regular on-going evaluation of strategic acquisition opportunities, the Company
may from time to time engage in discussions concerning possible acquisitions,
some of which may be material in size. The purchase price of such acquisitions
may require additional debt or equity financing on the part of the Company.
THE ACQUISITIONS; CHALLENGES OF INTEGRATION. With respect to the
Acquisitions, there can be no assurance that the Memphis/Tunica Acquisition will
be consummated. See "Transactions" and "Description of Indebtedness and Other
Committments -- New Credit Facility." In the event the Memphis/Tunica
Acquisition is not consummated, the Company will not be refunded the purchase
price of the Memphis/ Tunica Option. In addition, the Company will face
significant challenges in integrating the operations acquired in connection with
the Acquisitions with those of the Company. In particular, the Company has never
integrated an acquisition the size of the POA Acquisition. Integration of such
operations will require substantial attention from the Company's management.
Diversion of management attention from the Company's existing business could
have an adverse impact on the revenues and operating results of the Company.
There can be no assurance the Company will be able to integrate such operations
successfully.
10
<PAGE>
TOBACCO INDUSTRY REGULATION. On a pro forma basis taking into account the
Acquisitions, approximately 9.9% of the Company's net revenues in 1995 were
derived from tobacco advertising. In August 1996, the U.S. Food and Drug
Administration issued final regulations governing certain marketing practices in
the tobacco industry. Among other things, the regulations prohibit tobacco
product billboard advertisements within 1,000 feet of schools and playgrounds
and require that tobacco product advertisements on billboards be in black and
white and contain only text. In addition, one major tobacco manufacturer
recently proposed federal legislation banning 8-sheet billboard advertising and
transit advertising of tobacco products. There can be no assurance as to the
effect of these regulations or this legislation on the Company's business and on
its net revenues, Operating Cash Flow and financial position. A reduction in
billboard advertising by the tobacco industry could cause an immediate reduction
in the Company's direct revenue from such advertisers and would simultaneously
increase the available space on the existing inventory of billboards in the
outdoor advertising industry. This could in turn result in a lowering of rates
throughout the industry or limit the ability of industry participants to
increase rates for some period of time. Any such consequence could have the
effect of reducing the Company's Operating Cash Flow, which could in turn reduce
the Company's ability to meet its financial obligations under the Indenture and
the New Credit Facility (as defined in "Transactions"). See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Customers" and "-- Government Regulation."
PRIOR PERIOD LOSSES. The Company has historically had net losses which have
resulted in significant part from substantial depreciation and amortization
expenses relating to assets purchased in the Company's acquisitions, interest
expense associated with related indebtedness and deferred financing costs
charged to extraordinary losses. Moreover, additional acquisitions will result
in increased depreciation, amortization and interest expenses. There can be no
assurance that the Company will generate net income in the future.
RESTRICTIONS IMPOSED BY THE COMPANY'S INDEBTEDNESS. The banks under the New
Credit Facility have a lien on substantially all of the assets of the Company,
including the capital stock of its subsidiaries, to secure the indebtedness of
the Company under such credit facility. In the event the Company's subsidiaries
merge with and into the Company, the banks will have a lien on substantially all
of the assets of the Company previously held by such subsidiaries. The Company's
debt instruments contain restrictions on the Company's ability to incur
additional indebtedness, create liens, pay dividends, sell assets and make
acquisitions. Furthermore, the New Credit Facility contains certain maintenance
tests. There can be no assurance that the Company and its subsidiaries will be
able to comply with the provisions of their respective debt instruments,
including compliance by the Company with the financial ratios and tests
contained in the New Credit Facility. Breach of any of these covenants or the
failure to fulfill the obligations thereunder and the lapse of any applicable
grace periods would result in an event of default under the applicable debt
instruments, and the holders of such indebtedness could declare all amounts
outstanding under the applicable instruments to be due and payable immediately.
There can be no assurance that the assets or cash flow of the Company or the
Company's subsidiaries, as the case may be, would be sufficient to repay in full
borrowings under their outstanding debt instruments whether upon maturity or
earlier or if such indebtedness were to be accelerated upon an event of default
or certain repurchase events or that the Company would be able to refinance or
restructure its payments on such indebtedness or repurchase the Notes (or the
Existing Notes if not repurchased). If such indebtedness were not so repaid,
refinanced or restructured, the lenders could proceed to realize on their
collateral. In addition, any event of default or declaration of acceleration
under one debt instrument could also result in an event of default under one or
more of the Company's other debt instruments. See "-- Substantial Leverage;
Ability to Service Indebtedness" and "Description of Indebtedness and Other
Commitments."
SUBORDINATION OF NOTES. The Notes will be unsecured and subordinated to the
prior right of payment of all existing and future Senior Debt of the Company,
including obligations under the New Credit Facility. Subject to certain
limitations, the Indenture will permit the Company to incur additional
indebtedness, including Senior Debt. See "Description of Notes -- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock." In addition, the indebtedness under the New
11
<PAGE>
Credit Facility will become due prior to the maturity of the Notes. As a result
of the subordination provisions contained in the Indenture, in the event of a
liquidation or insolvency, the assets of the Company will be available to pay
obligations on the Notes only after all Senior Debt has been paid in full, and
there may not be sufficient assets remaining to pay amounts due on any or all of
the Notes then outstanding. See "Description of Indebtedness and Other
Commitments" and "Description of Notes."
REGULATION OF OUTDOOR ADVERTISING. Outdoor advertising displays are subject
to governmental regulation at the federal, state and local levels. These
regulations, in some cases, limit the height, size, location and operation of
billboards and, in limited circumstances, regulate the content of the
advertising copy displayed on the billboards. Some governmental regulations
prohibit the construction of new billboards or the replacement, relocation,
enlargement or upgrading of existing structures. Some cities have adopted
amortization ordinances under which, after the expiration of a specified period
of time, billboards must be removed at the owner's expense and without the
payment of compensation. Ordinances requiring the removal of a billboard without
compensation, whether through amortization or otherwise, are being challenged in
various state and federal courts with conflicting results. Other than in the
Company's newly acquired Jacksonville market, amortization ordinances have not
materially affected operations in the Company's markets. As a result of a
settlement of litigation related to certain assets in the Jacksonville market
prior to their acquisition, the Company has removed 165 outdoor advertising
structures in 1995 and is required to remove an additional 546 (of its total of
1,493) outdoor advertising structures over the next 19 years with 317 of such
structures to be removed between 1995 and 1998. There can be no assurance that
these removals will not adversely affect the Company's results of operations. In
addition, no assurance can be given as to the effect on the Company of existing
laws and regulations or of new laws and regulations that may be adopted in the
future. See "-- Tobacco Industry Regulation" and "Business -- Customers" and
"Business -- Government Regulation."
ECONOMIC CONDITIONS; ADVERTISING TRENDS. The Company relies on sales of
advertising space for its revenues and its operating results therefore are
affected by general economic conditions as well as trends in the advertising
industry. A reduction in advertising expenditures available for the Company's
displays could result from a general decline in economic conditions, a decline
in economic conditions in particular markets where the Company conducts business
or a reallocation of advertising expenditures to other available media by
significant users of the Company's displays.
COMPETITION. The Company faces competition for advertising revenues from
other outdoor advertising companies, as well as from other media such as radio,
television, print media and direct mail marketing. The Company also competes
with a wide variety of other out-of-home advertising media, the range and
diversity of which has increased substantially over the past several years,
including advertising displays in shopping centers and malls, airports,
stadiums, movie theaters and supermarkets, and on taxis, trains, buses and
subways. Some of the Company's competitors are substantially larger, better
capitalized and have access to greater resources than the Company. There can be
no assurance that outdoor advertising media will be able to compete with other
types of media, or that the Company will be able to compete either within the
outdoor advertising industry or with other media. See "Business -- Competition."
RELIANCE ON KEY EXECUTIVES. The Company's success depends to a significant
extent upon the continued services of its executive officers and other key
management and sales personnel, in particular its President and Chief Executive
Officer, Daniel L. Simon. Although the Company believes it has incentive and
compensation programs designed to retain key employees, the Company has few
employment contracts with its employees, and very few of its employees are bound
by non-competition agreements. The Company maintains key man insurance on Daniel
L. Simon. The unavailability of the continuing services of its executive
officers and other key management and sales personnel could have a material
adverse effect on the Company's business. See "Management."
ABSENCE OF PUBLIC MARKET. There is currently no established trading market
for the Notes and the Company does not intend to list the Notes on any
securities exchange or to arrange for their quotation on the Nasdaq National
Market. The Company has been advised by the Underwriters that the Underwriters
12
<PAGE>
presently intend to make a market in the Notes, although the Underwriters are
under no obligation to make such market and any such market making may be
discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the prices or the liquidity of the
trading market for the Notes or that an active public market for the Notes will
develop. If an active public market does not develop, the market prices and
liquidity of the Notes may be adversely affected.
NON-CONSUMMATION OF DEBT TENDER OFFERS. Although the Company expects the
Debt Tender Offers to be consummated, the Offerings are not conditioned upon
consummation of the Debt Tender Offers (or the obtaining of the requisite
consents required pursuant to the consent solicitations occurring in connection
therewith). In the event the Debt Tender Offers are not consummated, the
principal amounts outstanding under the Existing Notes (as defined herein) will
remain outstanding, the amount of the New Credit Facility will be reduced by a
corresponding amount (plus the premiums and costs in connection with the Debt
Tender Offers), and the Company and Parent will remain subject to the
restrictive covenants contained in the indentures relating to the Existing
Notes, including without limitation, the reduction under the debt incurrence
covenant of the Cash Flow Leverage Ratio (as defined in the indentures relating
to the Existing Notes) from 6.0:1 to 5.5:1 effective November 15, 1996.
Historically, the Company has financed its acquisitions primarily through the
incurrence of debt based upon a Cash Flow Leverage Ratio equal to 6.0:1.
Although there can be no assurances, the Company believes that the continued
application of the restrictive covenants under the Existing Notes will not
materially impair its ability to consummate future acquisitions. See "The
Transactions -- The Debt Tender Offers."
13
<PAGE>
THE TRANSACTIONS
THE ACQUISITIONS
THE POA ACQUISITION. On August 27, 1996, the Company entered into the
Agreement and Plan of Merger pursuant to which it agreed to acquire the
outstanding capital stock of OAH for approximately $240 million in cash. The POA
Acquisition was effectuated pursuant to a merger of a subsidiary of the Company
with and into OAH with OAH continuing as the surviving corporation following the
merger. As a result of the POA Acquisition, the Company acquired a total of
approximately 6,337 advertising display faces consisting of bulletins and
posters in five markets located in the southeast United States, including
Orlando, Ocala, Palm Beach, Myrtle Beach and Chattanooga, as well as the East
Coast and Gulf Coast areas of Florida.
The Company believes that the POA Acquisition will substantially strengthen
its operations in the southeast United States, particularly in Florida, where
the Company believes it has the largest number of outdoor advertising display
faces and has the largest market share in each of its markets, except Palm
Beach. The Company believes that the southeast United States is a particularly
attractive region due to its (i) high concentration of destination cities and
resorts; (ii) above average population growth; (iii) extensive highway/roadway
systems; and (iv) temperate climate that promotes outdoor lifestyles.
THE MEMPHIS/TUNICA ACQUISITION. On September 12, 1996, the Company entered
into the Option and Asset Purchase Agreement with Tanner-Peck, L.L.C., TOA
Enterprises, L.P., William B. Tanner, WBT Outdoor, Inc. and The Weatherley
Tanner Trust (collectively, the "Memphis/Tunica Sellers") pursuant to which a
newly-formed subsidiary of the Company acquired the Memphis/Tunica Option which
gives it the option to purchase certain assets of the Memphis/Tunica Sellers
during the period from December 1, 1996 to December 31, 1996. The purchase price
of the Memphis/Tunica Option was $5 million in cash (which is to be credited
against the purchase price of the assets) and is nonrefundable irrespective of
whether the Company shall exercise the Memphis/Tunica Option, subject to certain
limited exceptions. The Company intends to exercise the Memphis/Tunica Option.
The purchase price in connection with the purchase of the assets upon exercise
of the Memphis/Tunica Option is approximately $71 million plus 100,000 shares of
Common Stock of Parent.
As a result of the Memphis/Tunica Acquisition, the Company will acquire a
total of approximately 2,018 advertising display faces consisting of bulletins
and posters in and around Memphis, Tennessee and Tunica County, Mississippi. A
significant portion of these display faces were purchased by the Memphis/ Tunica
Sellers from Naegele in November, 1995. The Company believes that the
Memphis/Tunica Acquisition will complement the Chattanooga operations which are
being acquired by the Company in the POA Acquisition. This will give the Company
a leading presence in two of the largest markets in Tennessee and strengthen its
presence in the southeast United States.
In connection with the Memphis/Tunica Acquisition, the Company has entered
into a Joint Management Agreement with Tanner-Peck, L.L.C. pursuant to which the
Company shall provide management services to Tanner-Peck, L.L.C. during the
period beginning September 13, 1996 and ending concurrently with the closing of
the Memphis/Tunica Acquisition or the expiration of the Memphis/Tunica Option.
In exchange for such management services, the Company shall be paid a monthly
fee equal to $82,000.
The consummation of the Memphis/Tunica Acquisition will be subject to
certain conditions, including without limitation, the expiration or early
termination of the waiting period under the HSR Act and the consent of the banks
under the New Credit Facility.
THE ADDITIONAL ACQUISITIONS. On September 12, 1996, the Company entered
into the Asset Purchase Agreement with Iowa Outdoor Displays pursuant to which
the Company agreed to purchase certain assets of Iowa Outdoor Displays for
approximately $1.8 million in cash. The Iowa Acquisition was consummated on
September 16, 1996. On September 11, 1996, the Company entered into the Asset
Purchase Agreement with The Chase Company pursuant to which the Company agreed
to purchase certain assets of The Chase Company for approximately $5.8 million
in cash. The Dallas Acquisition was consummated on September 19, 1996.
14
<PAGE>
As a result of the Additional Acquisitions, the Company acquired
approximately 160 advertising display faces consisting primarily of posters in
and around Des Moines and approximately 245 advertising display faces consisting
primarily of bulletins in and around Dallas. The Company believes that the
Additional Acquisitions will further enhance its current presence in each of the
Des Moines and Dallas markets and provide increased revenue opportunities in the
midwest United States.
Following completion of the Acquisitions, the Company intends to merge each
of its subsidiaries with and into the Company.
THE NEW CREDIT FACILITY
The Company financed the purchase price of certain of the Acquisitions and
the related refinancing of certain existing bank indebtedness of the Company and
paid the fees and expenses associated with the Acquisitions in part through a
total commitment of $300 million under a new credit facility (the "New Credit
Facility").
THE DEBT TENDER OFFERS
THE COMPANY DEBT TENDER OFFER. In connection with the Acquisitions, the
Company commenced a tender offer and consent solicitation (the "Company Debt
Tender Offer") to purchase all of its outstanding 11% Senior Notes due 2003 (the
"Existing Company Notes") and obtain the consent of the holders of the Existing
Company Notes to modify or eliminate certain provisions of the indenture
governing the Existing Company Notes to permit, among other things, the
consummation of the Offerings, the Acquisitions and the execution of the New
Credit Facility. The Company Debt Tender Offer will expire on October 18, 1996,
unless extended, at which time the Company expects to purchase all the Existing
Company Notes tendered with consents. Upon receipt of consents from holders
representing not less than a majority of the Existing Company Notes, the Company
will execute a supplemental indenture reflecting the amendments. See "Use of
Proceeds." Based upon discussions with the holders of the Existing Company
Notes, the Company believes that holders representing more than 50% of the
aggregate outstanding principal amount of such notes will tender their notes and
consent to the proposed amendments.
THE PARENT DEBT TENDER OFFER. In connection with the Acquisitions, Parent
commenced a tender offer and consent solicitation (the "Parent Debt Tender
Offer," and together with the Company Debt Tender Offer, the "Debt Tender
Offers") to purchase all of its outstanding 14% Senior Secured Discount Notes
due 2004 (the "Existing Parent Notes," and together with the Existing Company
Notes, the "Existing Notes") and obtain the consent of the holders of the
Existing Parent Notes to modify or eliminate certain provisions of the indenture
governing the Existing Parent Notes to permit, among other things, the
consummation of the Offerings, the Acquisitions and the execution of the New
Credit Facility. The Parent Debt Tender Offer will expire on October 18, 1996,
unless extended, at which time Parent expects to purchase all the Existing
Parent Notes tendered with consents. Upon receipt of consents from holders
representing not less than a majority of the Existing Parent Notes, Parent will
execute a supplemental indenture reflecting the amendments. See "Use of
Proceeds." Based upon discussions with the holders of the Existing Parent Notes,
the Company believes that the holders representing more than 50% of the
aggregate outstanding principal amount of such notes will tender their notes and
consent to the proposed amendments.
15
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the Offering and to Parent from the
Common Stock Offering, are estimated to be approximately $193.3 million and
$202.1 million (or approximately $218.3 million and $236.5 million,
respectively, if the Underwriters' over-allotment options are exercised in
full), respectively, after deducting estimated underwriting discounts and
commissions and offering expenses.
The Company and Parent intend to use the net proceeds of the Offering and
the Common Stock Offering, together with borrowings under the New Credit
Facility, to refinance indebtedness outstanding under the Existing Credit
Facilities, to repurchase in full the Existing Notes, and to pay the purchase
price of certain of the Acquisitions. Specifically, the Company and Parent
intend to (i) repurchase all of the outstanding Existing Company Notes and pay
all fees and expenses incurred in connection with such repurchase; (ii)
repurchase all of the outstanding Existing Parent Notes and pay all fees and
expenses incurred in connection with such repurchase; (iii) repay approximately
$168 million (a portion of which will have been incurred to finance the POA
Acquisition) outstanding at the time of the consummation of the Offerings under
the New Credit Facility which initially bears interest at a rate of LIBOR plus
2.50% and terminates in full on September 30, 2004; and (iv) pay the purchase
price of the Memphis/Tunica Acquisition (excluding the option price) of
approximately $66 million. The indebtedness under the New Credit Facility was
incurred, in part, to refinance the Existing Credit Facilities and to finance
the POA Acquisition.
The estimated sources and uses of funds in connection with the Transactions
and the IPO, which took place subsequent to June 30, 1996, are set forth below:
<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
<S> <C>
Sources of Funds:
Gross proceeds of the Common Stock Offering........................... $ 212,750
Gross proceeds of the Offering........................................ 200,000
New Credit Facility................................................... 73,361
Net proceeds to Parent of the IPO (July 23, 1996)..................... 62,436
--------
Total sources....................................................... $ 548,547
--------
--------
Uses of Funds:
Repay Existing Credit Facilities(1)................................... $ 87,210
Repurchase 11% Senior Notes due 2003(2)............................... 64,197
Repurchase 14% Senior Secured Discount Notes due 2004 of
Parent(2)(3)........................................................ 31,266
Purchase price of the Acquisitions.................................... 328,400
Fees and expenses of the Offerings.................................... 29,524
Capitalized financing fees............................................ 6,750
Other costs related to the IPO........................................ 1,200
--------
Total uses.......................................................... $ 548,547
--------
--------
</TABLE>
- ------------------------
(1) Balance as of June 30, 1996, including $1,199 of other obligations of
Parent.
(2) Excludes fees and expenses related to prepayment.
(3) Includes repurchase of $7,816 with IPO proceeds and $23,450 with proceeds of
the Offerings.
The Existing Company Notes mature on July 1, 2004 and were issued in March,
1994 in an aggregate principal amount of $65 million. The Existing Company Notes
accrue interest at the rate of 11% per annum and mature on November 15, 2003.
The Existing Parent Notes were issued in June 1994 in an aggregate principal
amount of $50 million. The Existing Parent Notes accrete at the rate of 14% per
annum. No cash interest will accrue until July 1, 1999. See "Description of
Indebtedness and Other Commitments."
16
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
at June 30, 1996 and as adjusted to give effect to the Acquisitions, the Debt
Tender Offers, the New Credit Facility, the IPO and the Offerings. The table
should be read in conjunction with the Consolidated Financial Statements and
related notes included elsewhere herein.
<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------------------
AS
ADJUSTED
ACTUAL PRO FORMA (1) (2)
---------- ------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt:
Existing Credit Facilities:
Revolving Credit Loan................................................ $ -- $ -- $ --
Acquisition Credit Loan.............................................. 9,700 284,681 --
Acquisition Term Loan................................................ 75,000 75,000 --
New Credit Facility:
Revolving Credit Loan................................................ -- -- --
Acquisition Credit Loan.............................................. -- -- 73,361
11% Senior Notes due 2003.............................................. 64,197 64,197 --
New Notes.............................................................. -- -- 200,000
Other obligations...................................................... 1,310 1,310 --
---------- ------------- -----------
Total long-term debt and other obligations......................... 150,207 425,188 273,361
Common stockholders' equity.............................................. 20,773 77,265 235,842
---------- ------------- -----------
Total capitalization............................................... $ 170,980 $ 502,453 $ 509,203
---------- ------------- -----------
---------- ------------- -----------
</TABLE>
- ------------------------
(1) Represents actual amounts adjusted to give effect to the Transactions and
the application of the net proceeds from the IPO of $62.4 million.
(2) Represents pro forma amounts adjusted to give effect to the Offerings.
17
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following sets forth unaudited consolidated pro forma financial
information for the Company. The unaudited pro forma consolidated statement of
operations for the year ended December 31, 1995, the six month period ended June
30, 1996 and for the latest twelve month period ended June 30, 1996 give effect
to (i) the Transactions, (ii) the Offerings and the application of the estimated
net proceeds therefrom, (iii) the acquisitions of Naegele, Ad-Sign, Inc., Image
Media, Inc. and consummation of the IPO and the application of the estimated net
proceeds therefrom, and (iv) the net reduction in operating expenses of the
businesses acquired as if each had occurred at the beginning of the respective
periods. The unaudited pro forma balance sheet as of June 30, 1996 has been
prepared as if the Transactions, the Offerings and the IPO had occurred on June
30, 1996.
The unaudited consolidated pro forma financial information does not purport
to present the actual financial position or results of operations of the Company
had the transactions and events assumed therein in fact occurred on the dates
specified, nor are they necessarily indicative of the results of operations that
may be achieved in the future. The unaudited pro forma consolidated financial
information is based on certain assumptions and adjustments described in the
notes thereto and should be read in conjunction therewith. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition," the
Consolidated Financial Statements and the Notes thereto of the Company, the
Consolidated Financial Statements and the Notes thereto of NOA Holding Company,
the Statement of Revenues and Direct Expenses and the Notes thereto of Ad-Sign,
the Financial Statements and Notes thereto of POA Acquisition Corporation and
the Combined Financial Statements and Notes thereto of Tanner-Peck, L.L.C.
included elsewhere in this Prospectus.
18
<PAGE>
UNIVERSAL OUTDOOR INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
UNIVERSAL AD-SIGN, INC NOA JULY
OUTDOOR, AND IMAGE HOLDING ACQUISITION OFFERING
INC. MEDIA COMPANY ADJUSTMENTS ADJUSTMENTS
----------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net revenues....................................... $ 34,148 $ 3,367 $ 24,848 $ -- $ --
----------- ------------- ----------- ------------- -------------
Operating expenses:
Direct cost of revenues.......................... 12,864 1,286 10,285 -- --
General and administrative expenses.............. 4,244 402 5,378 (2,500)(1) --
Depreciation and amortization.................... 7,402 640 4,341 3,260(2) --
----------- ------------- ----------- ------------- -------------
24,510 2,328 20,004 760 --
----------- ------------- ----------- ------------- -------------
Operating income (loss)............................ 9,638 1,039 4,844 (760) --
Interest expense................................... 8,627 -- 2,503 3,569(3) (5,442)(4)
Other expense (income)............................. 42 -- -- -- --
----------- ------------- ----------- ------------- -------------
Net income (loss).................................. $ 969 $ 1,039 $ 2,341 $ (4,329) $ 5,442
----------- ------------- ----------- ------------- -------------
----------- ------------- ----------- ------------- -------------
Operating cash flow................................ $ 17,040 $ 1,679 $ 9,185 $ 2,500 $ --
----------- ------------- ----------- ------------- -------------
----------- ------------- ----------- ------------- -------------
<CAPTION>
MEMPHIS/ PRO FORMA
PRO FORMA POA TUNICA ADDITIONAL ACQUISITION
UNIVERSAL ACQUISITION ACQUISITION ACQUISITIONS ADJUSTMENTS
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C>
Net revenues....................................... $ 62,363 $ 43,946 $ 13,104 $ 1,554 $ --
----------- ----------- ----------- ------------- -------------
Operating expenses:
Direct cost of revenues.......................... 24,435 13,770 6,352 752 --
General and administrative expenses.............. 7,524 11,087 2,313 405 (4,140)(1)
Depreciation and amortization.................... 15,643 7,650 1,800 51 11,160(2)
----------- ----------- ----------- ------------- -------------
47,602 32,507 10,465 1,208 7,020
----------- ----------- ----------- ------------- -------------
Operating income (loss)............................ 14,761 11,439 2,639 346 (7,020)
Interest expense................................... 9,257 7,370 1,575 69 18,900(5 )
Other expense (income)............................. 42 (84) -- (112) --
----------- ----------- ----------- ------------- -------------
Net income (loss).................................. $ 5,462 $ 4,153 $ 1,064 $ 389 $ (25,920)
----------- ----------- ----------- ------------- -------------
----------- ----------- ----------- ------------- -------------
Operating cash flow................................ $ 30,404 $ 19,089 $ 4,439 $ 397 $ 4,140
----------- ----------- ----------- ------------- -------------
----------- ----------- ----------- ------------- -------------
<CAPTION>
PRO FORMA
PRO FORMA OFFERINGS AS
AS ADJUSTED ADJUSTMENTS ADJUSTED
------------ ------------- -----------
Net revenues....................................... $ 120,967 $ -- $ 120,967
------------ -----------
Operating expenses:
Direct cost of revenues.......................... 45,309 -- 45,309
General and administrative expenses.............. 17,189 -- 17,189
Depreciation and amortization.................... 36,304 -- 36,304
------------ ------------- -----------
98,802 -- 98,802
------------ ------------- -----------
Operating income (loss)............................ 22,165 -- 22,165
Interest expense................................... 37,171 (9,760)(6) 27,411
Other expense (income)............................. (154) -- (154)
------------ ------------- -----------
Net income (loss).................................. $ (14,852) $ 9,760 $ (5,092)
------------ ------------- -----------
------------ ------------- -----------
Operating cash flow................................ $ 58,469 $ -- $ 58,469
------------ ------------- -----------
------------ ------------- -----------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
19
<PAGE>
UNIVERSAL OUTDOOR INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
UNIVERSAL AD-SIGN, INC NOA JULY
OUTDOOR, AND IMAGE HOLDING ACQUISITION OFFERING
INC. MEDIA COMPANY ADJUSTMENTS ADJUSTMENTS
------------------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenues.............................. $ 26,239 $ 842 $ 5,832 $ -- $ --
-------- ----- ----------- ------------- -------------
Operating expenses:
Direct cost of revenues................. 9,520 322 2,616 -- --
General and administrative expenses..... 3,076 100 1,459 (676)(1) --
Depreciation and amortization........... 4,674 160 1,053 815(2) --
-------- ----- ----------- ------------- -------------
17,270 582 5,128 139 --
-------- ----- ----------- ------------- -------------
Operating income.......................... 8,969 260 704 (139) --
Interest expense.......................... 6,086 -- 468 863(3) (2,721)(4)
Other expense............................. 1,674 -- -- -- --
-------- ----- ----------- ------------- -------------
Net income (loss)......................... $ 1,209 $ 260 $ 236 $ (1,002) $ 2,721
-------- ----- ----------- ------------- -------------
-------- ----- ----------- ------------- -------------
Operating cash flow....................... $ 13,643 $ 420 $ 1,757 $ 676 $ --
-------- ----- ----------- ------------- -------------
-------- ----- ----------- ------------- -------------
<CAPTION>
MEMPHIS/ PRO FORMA
PRO FORMA POA TUNICA ADDITIONAL ACQUISITION PRO FORMA
UNIVERSAL ACQUISITION ACQUISITION ACQUISITIONS ADJUSTMENTS AS ADJUSTED
----------- ----------- ------------- --------------- ------------- ------------
<S> <C> <C>
Net revenues.............................. $ 32,913 $ 23,565 $ 7,717 $ 929 $ -- $ 65,124
----------- ----------- ------------- ----- ------------- ------------
Operating expenses:
Direct cost of revenues................. 12,458 7,241 3,956 343 -- 23,998
General and administrative expenses..... 3,959 6,305 599 313 (2,020)(1) 9,156
Depreciation and amortization........... 6,702 4,022 762 58 5,523(2) 17,067
----------- ----------- ------------- ----- ------------- ------------
23,119 17,568 5,317 714 3,503 50,221
----------- ----------- ------------- ----- ------------- ------------
Operating income.......................... 9,794 5,997 2,400 215 (3,503) 14,903
Interest expense.......................... 4,696 3,702 47 -- 10,208(5) 18,653
Other expense............................. 1,674 2 5 -- -- 1,681
----------- ----------- ------------- ----- ------------- ------------
Net income (loss)......................... $ 3,424 $ 2,293 $ 2,348 $ 215 $ (13,711) $ (5,431)
----------- ----------- ------------- ----- ------------- ------------
----------- ----------- ------------- ----- ------------- ------------
Operating cash flow....................... $ 16,496 $ 10,019 $ 3,162 $ 273 $ 2,020 $ 31,970
----------- ----------- ------------- ----- ------------- ------------
----------- ----------- ------------- ----- ------------- ------------
<CAPTION>
PRO FORMA
OFFERINGS AS
ADJUSTMENTS ADJUSTED
------------- -----------
Net revenues.............................. $ -- $ 65,124
------------- -----------
Operating expenses:
Direct cost of revenues................. -- 23,998
General and administrative expenses..... -- 9,156
Depreciation and amortization........... -- 17,067
------------- -----------
-- 50,221
------------- -----------
Operating income.......................... -- 14,903
Interest expense.......................... (4,947)(6) 13,706
Other expense............................. -- 1,681
------------- -----------
Net income (loss)......................... $ 4,947 $ (484)
------------- -----------
------------- -----------
Operating cash flow....................... $ -- $ 31,970
------------- -----------
------------- -----------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
20
<PAGE>
UNIVERSAL OUTDOOR INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
UNIVERSAL AD-SIGN, INC NOA JULY
OUTDOOR AND IMAGE HOLDING ACQUISITION OFFERING
INC. MEDIA COMPANY ADJUSTMENTS ADJUSTMENTS
----------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net revenues....................................... $ 43,976 $ 2,525 $ 19,953 $ -- $ --
----------- ------------- ----------- ------------- -------------
Operating expenses:
Direct cost of revenues.......................... 16,118 965 8,108 -- --
General and administrative expenses.............. 5,170 302 4,116 (1,875)(1) --
Depreciation and amortization.................... 8,538 480 3,695 2,445(2) --
----------- ------------- ----------- ------------- -------------
29,826 1,747 15,919 570 --
----------- ------------- ----------- ------------- -------------
Operating income................................... 14,150 778 4,034 (570) --
Interest expense................................... 10,433 -- 1,345 2,677(3) (5,442)(4)
Other expense...................................... 1,695 -- -- -- --
----------- ------------- ----------- ------------- -------------
Net income (loss).................................. $ 2,022 $ 778 $ 2,689 $ (3,247) $ 5,442
----------- ------------- ----------- ------------- -------------
----------- ------------- ----------- ------------- -------------
Operating cash flow................................ $ 22,688 $ 1,258 $ 7,729 $ 1,875 $
----------- ------------- ----------- ------------- -------------
----------- ------------- ----------- ------------- -------------
<CAPTION>
MEMPHIS/ PRO FORMA
PRO FORMA POA TUNICA ADDITIONAL ACQUISITION
UNIVERSAL ACQUISITION ACQUISITION ACQUISITIONS ADJUSTMENTS
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C>
Net revenues....................................... $ 66,454 $ 47,166 $ 14,207 $ 1,554 $ --
----------- ----------- ----------- ------------- -------------
Operating expenses:
Direct cost of revenues.......................... 25,191 14,477 6,518 752 --
General and administrative expenses.............. 7,713 12,279 2,219 405 (4,140)(1)
Depreciation and amortization.................... 15,158 7,967 1,732 51 10,911(2)
----------- ----------- ----------- ------------- -------------
48,062 34,723 10,469 1,208 6,771
----------- ----------- ----------- ------------- -------------
Operating income................................... 18,392 12,443 3,738 346 (6,771)
Interest expense................................... 9,013 7,519 350 69 19,976(5 )
Other expense...................................... 1,695 (143) -- -- --
----------- ----------- ----------- ------------- -------------
Net income (loss).................................. $ 7,684 $ 5,067 $ 3,388 $ 277 $ (26,747)
----------- ----------- ----------- ------------- -------------
----------- ----------- ----------- ------------- -------------
Operating cash flow................................ $ 33,550 $ 20,410 $ 5,470 $ 397 $ 4,140
----------- ----------- ----------- ------------- -------------
----------- ----------- ----------- ------------- -------------
<CAPTION>
PRO FORMA
PRO FORMA OFFERINGS AS
AS ADJUSTED ADJUSTMENTS ADJUSTED
------------ ------------- -----------
Net revenues....................................... $ 129,381 $ -- $ 129,381
------------ ------------- -----------
Operating expenses:
Direct cost of revenues.......................... 46,938 -- 46,938
General and administrative expenses.............. 18,476 -- 18,476
Depreciation and amortization.................... 35,819 -- 35,819
------------ ------------- -----------
101,233 -- 101,233
------------ ------------- -----------
Operating income................................... 28,148 -- 28,148
Interest expense................................... 36,927 (9,516)(6) 27,411
Other expense...................................... 1,552 -- 1,552
------------ ------------- -----------
Net income (loss).................................. $ (10,331) $ 9,516 $ (815)
------------ ------------- -----------
------------ ------------- -----------
Operating cash flow................................ $ 63,967 $ -- $ 63,967
------------ ------------- -----------
------------ ------------- -----------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
21
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995, FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND FOR THE TWELVE MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma results of operations
of the Company giving effect to the Transactions, the Offerings and the
application of the estimated net proceeds therefrom, the acquisitions of
Naegele, Ad-Sign, Image Media, Inc. and consummation of the IPO and the
application of the estimated net proceeds therefrom and the net reduction in
operating expenses of the businesses acquired as if each had occurred at the
beginning of the respective periods.
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, 1995 JUNE 30, 1996 JUNE 30, 1996
------------------- -------------- ---------------
<S> <C> <C> <C>
<CAPTION>
1. Entry records reduction in general and administrative
expenses relating to elimination of certain duplicate
corporate expenses, principally relating to employee costs
and costs relating to other corporate activities. Amounts
have been determined based upon specific employees
identified for termination plus actual benefits costs
incurred, and expenses associated with leased facilities
which will not be assumed or will be canceled upon
consummation of the acquisition.
<S> <C> <C> <C>
NOA Holding Company, Ad-Sign and Image Media.............. $ 2,500 $ 676 $ 1,875
-------- -------------- ---------------
-------- -------------- ---------------
POA Acquisition........................................... $ 2,800 $ 1,400 $ 2,800
Memphis/Tunica Acquisition................................ 1,000 500 1,000
Additional Acquisitions................................... 340 120 340
-------- -------------- ---------------
$ 4,140 $ 2,020 $ 4,140
-------- -------------- ---------------
-------- -------------- ---------------
2. Entry records the increase in depreciation and amortization
expense arising from purchase accounting adjustments to
advertising structures and goodwill amortized over a period
of 15 years:
NOA Holding Company, Ad-Sign and Image Media.............. $ 3,260 $ 815 $ 2,445
-------- -------------- ---------------
-------- -------------- ---------------
POA Acquisition........................................... $ 7,799 $ 3,703 $ 7,482
Memphis/Tunica Acquisition................................ 2,966 1,622 3,034
Additional Acquisitions................................... 395 198 395
-------- -------------- ---------------
$ 11,160 $ 5,523 $ 10,911
-------- -------------- ---------------
-------- -------------- ---------------
3. Entry records additional interest expense assumed to be
incurred in connection with the acquisition of NOA Holding
Company, Ad-Sign and Image Media............................ $ 3,569 $ 863 $ 2,677
4. Entry to record the reduction in interest expense from the
application of the net proceeds of the IPO to the repayment
of long-term debt........................................... $ 5,442 $ 2,721 $ 5,442
5. Entry to record additional interest expense at an assumed
rate of 8.5% per annum in connection with the Transactions:
POA Acquisition........................................... $ 21,250 $ 10,625 $ 21,250
Memphis/Tunica Acquisition................................ 6,018 3,009 6,018
Additional Acquisitions................................... 646 323 646
-------- -------------- ---------------
27,914 13,957 27,914
Actual interest expense for POA Acquisition,
Memphis/Tunica Acquisition and Additional
Acquisitions............................................ (9,014) (3,749) (7,938)
-------- -------------- ---------------
$ 18,900 $ 10,208 $ 19,976
-------- -------------- ---------------
-------- -------------- ---------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, 1995 JUNE 30, 1996 JUNE 30, 1996
------------------- -------------- ---------------
<S> <C> <C> <C>
6. Entry to record the changes in interest expense to reflect
the Offerings and the application of the net proceeds
therefrom:
Interest expense:
New Notes at an assumed rate of 10.25%.................. $ 20,500 $ 10,250 $ 20,500
New Credit Facility at an assumed rate of 8.5%.......... 6,236 3,118 6,236
Less pro forma, as adjusted interest expense............ (37,171) (18,653) (36,927)
Amortization of deferred financing costs.................. 675 338 675
-------- -------------- ---------------
$ (9,760) $ (4,947) $ (9,516)
-------- -------------- ---------------
-------- -------------- ---------------
</TABLE>
23
<PAGE>
UNIVERSAL OUTDOOR, INC.
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL MEMPHIS/
OUTDOOR JULY OFFERING POA TUNICA ADDITIONAL
INC. ADJUSTMENTS ACQUISITION ACQUISITION ACQUISITIONS
----------- --------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Current assets.............................. $ 14,514 $ -- $ 14,767 $ 4,294 $ 100
Property and equipment...................... 152,279 -- 23,433 20,727 50
Deferred taxes.............................. -- -- 11,835 -- --
Other assets................................ 10,579 -- 49,338 -- --
---------- --------------- ----------- ----------- -------
Total assets................................ $ 177,372 $ -- $ 99,373 $ 25,021 $ 150
---------- --------------- ----------- ----------- -------
---------- --------------- ----------- ----------- -------
Current liabilities, excluding current
maturities................................. $ 6,392 $ -- $ 3,419 $ 311 $ 30
Current maturities of long-term debt........ -- -- 9,110 52 --
Long-term debt.............................. 150,207 (53,419 )(1) 73,948 1,108 --
---------- --------------- ----------- ----------- -------
Total liabilities........................... 156,599 (53,419 ) 86,477 1,471 30
---------- --------------- ----------- ----------- -------
Stockholders' equity (deficit).............. 20,773 53,419 12,896 23,550 120
---------- --------------- ----------- ----------- -------
Total liabilities and stockholders'
equity..................................... $ 177,372 $ -- $ 99,373 $ 25,021 $ 150
---------- --------------- ----------- ----------- -------
---------- --------------- ----------- ----------- -------
<CAPTION>
PRO FORMA PRO FORMA
ACQUISITION PRO FORMA OFFERINGS AS
ADJUSTMENTS AS ADJUSTED ADJUSTMENTS ADJUSTED
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Current assets.............................. $ (2,123 (2) $ 31,552 $ -- $ 31,552
Property and equipment...................... 262,777 (2) 459,266 -- 459,266
Deferred taxes.............................. -- 11,835 -- 11,835
Other assets................................ (49,338 (2) 10,579 6,750 (4) 17,329
-------------- ------------- -------------- -------------
Total assets................................ $ 211,316 $ 513,232 $ 6,750 $ 519,982
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
Current liabilities, excluding current
maturities................................. $ -- $ 10,152 $ -- $ 10,152
Current maturities of long-term debt........ (9,162 (2) -- --
Long-term debt.............................. 253,344 (2) 425,188 (151,827 5) 273,361
--
-------------- ------------- -------------- -------------
Total liabilities........................... 244,182 435,340 (151,827 ) 283,513
-------------- ------------- -------------- -------------
Stockholders' equity (deficit).............. (32,866 )(3) 77,892 158,577 (6) 236,469
--
-------------- ------------- -------------- -------------
Total liabilities and stockholders'
equity..................................... $ 211,316 $ 513,232 $ 6,750 $ 519,982
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
</TABLE>
24
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AT JUNE 30, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma financial position of
the Company after giving effect to the Transactions, the Offerings and the
consummation of the IPO.
1. Entry records the proceeds of the IPO and the application of the net
proceeds therefrom:
<TABLE>
<S> <C>
Net proceeds of IPO........................................................ $ 62,436
Proceeds used to retire Holding Company long-term debt..................... (9,017)
---------
$ 53,419
---------
---------
</TABLE>
2. Entry records the effects of the Acquisitions.
<TABLE>
<CAPTION>
POA MEMPHIS/TUNICA ADDITIONAL
ACQUISITION ACQUISITION ACQUISITIONS TOTAL
----------- ---------------- ------------ ----------
<S> <C> <C> <C> <C>
Increase in long-term debt............................. $ 166,942 $ 69,640 $ 7,600 $ 244,182
Changes in assets and liabilities resulting from
allocation of purchase price:
Current assets....................................... (2,123) (2,123)
Property and equipment............................... 205,507 49,790 7,480 262,777
Other assets......................................... (49,338) (49,338)
Stockholders' equity................................. (12,896) (23,550) (120) (36,566)
----------- ------- ------------ ----------
$ 308,092 $ 95,880 $ 14,960 $ 418,932
----------- ------- ------------ ----------
----------- ------- ------------ ----------
</TABLE>
3. Entry to record 100,000 shares of common stock to be issued in connection
with the Memphis/Tunica acquisition at an assumed price of $32:
<TABLE>
<S> <C>
Stockholders' equity...................................................... $ 3,700
---------
---------
</TABLE>
4.
<TABLE>
<S> <C>
Entry to record capitalized financing fees................................ $ 6,750
---------
---------
</TABLE>
5. Entry to record net reduction in long-term debt.
<TABLE>
<S> <C>
Proceeds of the Common Stock Offering..................................... $ 212,750
Costs, expenses and other charges of the Offerings........................ (29,524)
Proceeds used to repay long-term debt of Parent........................... (24,649)
Capitalized financing fees................................................ (6,750)
---------
Net reduction in long-term debt........................................... $ 151,827
---------
---------
</TABLE>
6. Entry to record net increase in stockholders' equity from proceeds of the
Offerings.
<TABLE>
<S> <C>
Proceeds of the Common Stock Offering..................................... $ 212,750
Costs, expenses and other charges of the Offerings........................ (29,524)
Proceeds used to repay long-term debt of Parent........................... (24,649)
---------
Net increase in stockholders' equity...................................... $ 158,577
---------
---------
</TABLE>
25
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected financial data presented below as of and for the year ended
December 31, 1995 and the six months ended June 30, 1996 and 1995 are derived
from the Consolidated Financial Statements of the Company. The selected
financial data as of and for the years ended December 31, 1992, 1993, 1994 and
1995 are derived from the financial statements of the Company. Certain of such
financial statements were unaudited. The financial statements of the Company for
the three years in the period ended December 31, 1995 were audited by Price
Waterhouse LLP, independent accountants, as indicated in their report included
elsewhere in this Prospectus. The selected financial data as of and for the six
months ended June 30, 1995 and 1996 are derived from the combined financial
statements included herein and include all normal and recurring adjustments
necessary for a fair presentation of such data. The data set forth below should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements,
including the Notes thereto, appearing elsewhere in this Prospectus. Due to the
significant development and acquisition of additional structures, the data set
forth below is not necessarily comparable on a year-to-year basis and data set
forth for certain periods is not indicative of results for the full year.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue..................... $21,435 $27,896 $28,710 $33,180 $38,101
Net revenues (1).................. 18,835 24,681 25,847 29,766 34,148
Direct advertising expenses....... 7,638 10,383 10,901 11,806 12,864
General and administrative
expenses......................... 3,515 3,530 3,357 3,873 4,244
Depreciation and amortization..... 5,530 7,817 8,000 7,310 7,402
Operating income.................. 2,152 2,951 3,589 6,777 9,638
Interest expense.................. 6,599 9,591 8,965 8,314 8,627
Other (expense) income, net....... (53) 291 (351) (134) (42)
Income (loss) before extraordinary
item (2)......................... (4,500) (6,349) (5,727) (1,671) 969
Net income (loss)................. (4,500) (6,349) (8,987) (1,671) 969
Operating Cash Flow (3)........... $ 7,682 $10,768 $11,589 $14,087 $17,040
Operating Cash Flow Margin (4).... 40.8% 43.6% 44.8% 47.3% 50.0%
Capital expenditures.............. 2,047 2,352 2,004 4,668 5,620
Deficiency in coverage of
earnings......................... 4,500 6,349 8,987 1,671 --
FINANCIAL RATIOS:
Ratio of earnings to fixed
charges(5)....................... -- -- -- -- 1.1x
Percentage of indebtedness to
total capitalization(6).......... 102.2% 104.8% 116.1% 118.1% 115.8%
Ratio of total indebtedness to
Operating Cash Flow(7)........... 16.1x 5.5x 5.9x 5.2x 4.6x
Ratio of Operating Cash Flow to
total interest(8)................ 1.2x 1.1x 1.3x 1.7x 2.0x
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
---------------
1995 1996
------- ------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue..................... $18,292 $29,366
Net revenues (1).................. 16,411 26,239
Direct advertising expenses....... 6,266 9,520
General and administrative
expenses......................... 2,150 3,076
Depreciation and amortization..... 3,538 4,674
Operating income.................. 4,457 8,969
Interest expense.................. 4,280 6,086
Other (expense) income, net....... (21) (1,674)
Income (loss) before extraordinary
item (2)......................... 156 1,209
Net income (loss)................. 156 1,209
Operating Cash Flow (3)........... $ 7,995 $13,643
Operating Cash Flow Margin (4).... 48.7% 52.0%
Capital expenditures.............. 2,521 2,943
Deficiency in coverage of
earnings......................... -- --
FINANCIAL RATIOS:
Ratio of earnings to fixed
charges(5)....................... 1.0x 1.2x
Percentage of indebtedness to
total capitalization(6).......... 117.3% 87.9%
Ratio of total indebtedness to
Operating Cash Flow(7)........... -- --
Ratio of Operating Cash Flow to
total interest(8)................ 1.9x 2.2x
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
YEAR ENDED DECEMBER 31, ------------------------
----------------------------------------------------- PRO FORMA AS ADJUSTED
1991 1992 1993 1994 1995 (10) (11)
--------- --------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (9)................................ $ 2,365 $ 1,326 $ 1,730 $ 2,119 $ 3,961 $ 21,400 $ 21,400
Total assets....................................... 71,682 65,754 61,816 66,190 69,133 513,232 519,982
Total long-term debt and other obligations......... 65,076 59,363 68,054 73,304 76,079 425,188 273,361
Redeemable preferred stock......................... 13,442 15,055 -- -- -- -- --
Common stockholders' equity (deficit).............. (11,450) (17,799) (9,452) (11,243) (10,394) 77,892 236,469
</TABLE>
26
<PAGE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary loss represents loss on early extinguishment of debt.
(3) "Operating Cash Flow" is operating income before depreciation and
amortization and other non-cash charges. Operating Cash Flow is not
intended to represent net cash flow provided by operating activities as
defined by generally accepted accounting principles and should not be
considered as an alternative to net income (loss) as an indicator of the
Company's operating performance or to net cash provided by operating
activities as a measure of liquidity. The Company believes Operating Cash
Flow is a measure commonly reported and widely used by analysts, investors
and other interested parties in the media industry. Accordingly this
information has been disclosed herein to permit a more complete comparative
analysis of the Company's operating performance relative to other companies
in the media industry.
(4) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
(5) Amounts represent the ratio of (i) the sum of income before income taxes
and minority interest plus interest expense less minority interest to (ii)
interest expense.
(6) Amounts represent (i) total long-term debt divided by (ii) total long-term
debt plus common stockholders' equity (deficit).
(7) Amounts represent (i) total long-term debt divided by (ii) Operating Cash
Flow.
(8) Amounts represent the ratio of (i) the sum of income before income taxes
and minority interest plus interest expense on funded debt to (ii) interest
expense on funded debt.
(9) Working capital is current assets less current liabilities (excluding
current maturities of long-term debt and other obligations). Other
obligations totalled $2,850 at December 31, 1992.
(10) Represents actual amounts adjusted to give effect to the Transactions and
the application of the net proceeds from the IPO of $62.4 million.
(11) Represents pro forma amounts adjusted to give effect to the Offerings.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the consolidated results of operations of the
Company for the three years ended December 31, 1995 and financial condition at
December 31, 1995 should be read in conjunction with the Consolidated Financial
Statements of the Company and the related notes included elsewhere in this
Prospectus.
Except as otherwise indicated, the following discussion relates to the
Company on an historical basis, without giving effect to the Acquisitions or the
Offerings.
GENERAL
The Company has grown significantly since 1989 through the acquisition of
outdoor advertising businesses and individual display faces in specific markets,
improvements in occupancy and advertising rates, and the development of new
display faces in existing markets. Between January 1, 1989 and August 31, 1996,
the Company spent in excess of $160 million to acquire additional display faces,
increasing the number of its display faces from approximately 600 in 1989 to
approximately 12,500 at August 31, 1996. During this period, the Company's net
revenues increased from $10.3 million in 1989 to $34.1 million in 1995. The
following table lists the Company's acquisitions since January 1, 1989:
<TABLE>
<CAPTION>
APPROXIMATE NUMBER AND TYPE
OF DISPLAY FACES ACQUIRED
------------------------------------------------
30-SHEET 8-SHEET
YEAR OF ACQUISITION MARKETS BULLETINS POSTERS POSTERS TOTAL
- --------------------------- --------------------------------------------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1989....................... Milwaukee, Chicago 270 -- -- 270
1990....................... Chicago 12 -- -- 12
1991....................... Indianapolis, Des Moines, Evansville, Chicago 421 2,480 140 3,041
1994....................... Chicago, Milwaukee 20 -- 4,151 4,171
1995....................... Chicago, Dallas 9 -- 1,127 1,136
1996....................... Chicago, Minneapolis/St. Paul, Jacksonville 1,022 2,550 -- 3,572
----- ----- ----- ---------
Total....................................................................... 1,754 5,030 5,418 12,202
----- ----- ----- ---------
----- ----- ----- ---------
</TABLE>
The Company's acquisitions have been financed through bank borrowings and
the issuance of long-term debt, as well as with internally-generated funds. The
Acquisitions will be financed, in part, from the proceeds of the Offerings and
the New Credit Facility. All acquisitions (including the 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. As a result of these acquisitions and the effects
of consolidation of operations following each acquisition, the operating
performance of certain markets and of the Company as a whole reflected in the
Company's Consolidated Financial Statements and other financial and operating
data included herein are not necessarily comparable on a year-to-year basis.
CERTAIN EFFECTS OF THE ACQUISITIONS
The Company currently owns approximately 12,500 advertising display faces in
eight metropolitan markets. Following consummation of each of the Acquisitions,
the Company will own approximately
28
<PAGE>
21,114 advertising display faces located in 14 metropolitan markets. The
following table sets forth the number of display faces acquired or to be
acquired in connection with the Acquisitions:
<TABLE>
<CAPTION>
APPROXIMATE NUMBER AND TYPE OF DISPLAY FACES
ACQUIRED
--------------------------------------------------
30-SHEET 8-SHEET
MARKET BULLETINS POSTERS POSTERS TOTAL
- ----------------------------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
MIDWEST:
Des Moines................................................................. -- 160 -- 160
Dallas..................................................................... 245 -- -- 245
SOUTHEAST:
Orlando.................................................................... 842 1,080 -- 1,922
Memphis/Tunica............................................................. 706 1,179 133 2,018
Chattanooga................................................................ 359 663 -- 1,022
Myrtle Beach............................................................... 729 455 -- 1,184
Palm Beach................................................................. 99 21 -- 120
Ocala...................................................................... 879 199 -- 1,078
East Coast area (FL)....................................................... 567 -- -- 567
Gulf Coast area (FL)....................................................... 444 -- -- 444
----- ----- ----- -----
Total.................................................................... 4,870 3,757 133 8,760
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Taking into effect the consummation of the Acquisitions, approximately 84%
of the Company's gross revenues are contracted for directly from local
advertisers. If the Acquisitions would have occurred on January 1, 1995, the
Company would have had net revenues of $121.0 million and Operating Cash Flow of
$58.5 million in 1995. The Company would have had net operating loss
carryforwards and other tax-deductible items arising from the Transactions
aggregating in excess of approximately $15 million.
HISTORICAL RESULTS OF OPERATIONS
The following table presents certain operating statement items in the
Consolidated Statements of Operations as a percentage of net revenues:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
YEAR ENDED DECEMBER 31,
------------------------------------- ------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues................................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Direct advertising expenses................................. 42.2 39.7 37.7 38.2 36.3
General and administrative expenses......................... 13.0 13.0 12.4 13.1 11.7
----- ----- ----- ----- -----
Operating Cash Flow(1)...................................... 44.8 47.3 49.9 48.7 52.0
Depreciation and amortization............................... 30.9 24.5 21.7 21.5 17.8
----- ----- ----- ----- -----
Operating income............................................ 13.9 22.8 28.2 27.2 34.2
Other expense, primarily interest........................... 36.1 28.4 25.4 26.2 29.6
----- ----- ----- ----- -----
Net loss before extraordinary item.......................... (22.2) (5.6) 2.8 1.0 4.6
----- ----- ----- ----- -----
</TABLE>
- ------------------------
(1) As defined herein.
Revenues are a function of both the occupancy of the Company's display faces
and the rates that the Company charges for their use. The Company focuses its
sales effort on maximizing occupancy levels while maintaining rate integrity in
its markets. Additionally, the Company believes it is important to the overall
sales effort to continually attempt to develop new inventory in growth areas of
its existing markets in order to enhance overall revenues.
Net revenues represent gross revenues less commissions paid to advertising
agencies that contract for the use of advertising displays on behalf of
advertisers. Approximately 77% of the Company's gross revenues are contracted
for directly from local advertisers. Agency commissions on those revenues which
29
<PAGE>
are contracted through agencies are typically 15% of gross revenues on local
sales and 16 2/3% of gross revenues on national sales. The Company considers
agency commissions as a reduction in gross revenues, and measures its operating
performance based upon percentages of net revenues rather than gross revenues.
Direct advertising expenses consist of the following five categories: lease,
production, sales, maintenance and illumination. The lease expense consists
mainly of rental payments to owners of the land underlying the signs. The
production category consists of all of the costs to produce advertising copy and
install it on the display faces. Sales expense consists mainly of the cost of
staffing a sales force to sell within a specific market. The maintenance
category includes minor repair and miscellaneous maintenance of the sign
structures and the illumination category consists mainly of electricity costs to
light the display faces. The majority of these direct expenses are variable
costs (other than lease costs) that will fluctuate with the overall level of
revenues. In 1995, these expenses amounted to the following approximate
percentages of net revenues: lease 14.2%, production 11.3%, sales 6.8%,
maintenance 3.3% and illumination 2.1%.
General and administrative expenses occur at both the market and corporate
levels. At the market level these expenses contain various items of office
overhead pertaining to both the personnel and the facility required to
administer a given market. The corporate general and administrative costs
represent staff and facility expenses for the executive offices and the
centralized accounting function. Both types of general and administrative
expenses are primarily fixed expenses in the operation of the business.
The Company had federal income tax net operating losses ("NOLs") of
approximately $14.6 million as of December 31, 1995, which will expire over a
period of years beginning in 2005. Use of these NOLs is subject to an annual
limit of approximately $2.4 million under Section 382 of the Internal Revenue
Code of 1986, as amended, and may be subject to further restriction under the
rules applicable to corporations filing consolidated federal income tax returns.
Management believes that sufficient taxable income will be generated to use the
$15.5 million of NOLs prior to their expiration between 2005 and 2010. However,
there can be no assurance that sufficient taxable income will be generated in
the future.
COMPARISON OF SIX MONTH PERIODS ENDED JUNE 30, 1996 AND JUNE 30, 1995
Net revenues increased 59.9% to $26.2 million during the first six months of
1996 from $16.4 million in the corresponding 1995 period, reflecting higher
advertising rates and occupancy levels experienced primarily in the
Indianapolis, Des Moines and Evansville markets and the inclusion of the 1996
partial period of revenues from the acquisition of Ad-Sign, Inc. and Naegele.
Direct advertising expenses increased to $9.5 million in the first six
months of 1996 from $6.3 million in the 1995 period as a result of the higher
net revenues. As a percentage of net revenues, direct advertising expenses
decreased slightly to 36.3% in the first six months of 1996 compared to 38.2% in
the 1995 period as a result of economies of scale associated with increased
revenues.
General and administrative expenses increased to $3.1 million in the first
six months of 1996 from $2.2 million in the 1995 period primarily as a result of
increased payroll costs. As a percentage of net revenues, general and
administrative expenses decreased to 11.7% in the first six months of 1996 from
13.1% in the 1995 period as a result of economies of scale associated with
increased revenues.
As a result of the above factors, Operating Cash Flow increased by 70.6% to
$13.6 million in 1996 from $8.0 million in 1995.
Depreciation and amortization expense for the first six months of 1996
increased to $4.7 million from $3.5 million in 1995 due to large increases in
the fixed assets offset by reduced depreciation of certain older fixed assets.
Total interest expense in the first six months of 1996 increased to $6.1
million from $4.3 million in the 1995 period primarily as a result of larger
borrowings under an acquisition credit facility following the acquisition of
Ad-Sign, Inc. and Naegele.
30
<PAGE>
The foregoing factors contributed to the Company's $1.2 million net income
in the first six months of 1996 from a $0.2 million net income in the 1995
period.
COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1994
Net revenues increased 14.7% to $34.1 million during 1995 from $29.8 million
in 1994, reflecting higher advertising rates and occupancy levels particularly
in the Chicago and Indianapolis markets.
Direct advertising expenses increased to $12.9 million in 1995 from $11.8
million in 1994 as a result of higher sales during the 1995 period. As a
percentage of net revenues, however, direct advertising expenses decreased to
37.7% in 1995 as a result of economies of scale associated with increased
revenues.
General and administrative expenses in 1995 increased to $4.2 million from
$3.9 million in 1994 due to the incremental payroll costs associated with
additional employees and expenses related to acquisitions. As a percentage of
net revenues, general and administrative expenses decreased to 12.4%.
As a result of the above factors, Operating Cash Flows increased by 20.9% to
$17.0 million in 1995 from $14.1 million in 1994.
Depreciation and amortization expenses increased slightly to $7.4 million in
1995 from $7.3 million in 1994 due to large increases in the fixed assets offset
by reduced depreciation of the older fixed assets.
Total interest expense increased to $8.6 million in 1995 from $8.3 million
in 1994 due to interest expense associated with additional borrowings and the
accretion of interest due to a larger amount of principal outstanding, partially
offset by the elimination of the accretion of dividends on redeemable preferred
stock.
The foregoing factors contributed to the Company's $969,000 net income in
1995 compared to a net loss of $1.7 million in 1994. Because the Company
incurred net losses in 1995, 1994 and 1993, it had no provision for income taxes
in those years.
COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993
Net revenues increased 15.2% to $29.8 million during 1994 from $25.8 million
in 1993, reflecting higher advertising rates and occupancy levels and increased
sales to local advertisers. Increases in revenue from the advertising structures
acquired in certain acquisitions, offset by declines in revenues from the
January 1994 sale of the Company's 97 bulletin display faces in Jacksonville,
accounted for approximately $700,000 of the increased revenues in 1994.
Direct advertising expenses increased to $11.8 million in 1994 from $10.9
million in 1993 as a result of higher sales during the 1994 period. As a
percentage of net revenues, however, direct advertising expenses decreased to
39.7% in 1994 as a result of economies of scale associated with increased
revenues.
General and administrative expenses in 1994 increased to $3.9 million from
$3.4 million in 1993 due to the incremental payroll costs associated with
additional employees. As a percentage of net revenues, however, general and
administrative expenses remained flat at 13.0%.
As a result of the above factors, Operating Cash Flow increased by 21.6% to
$14.1 million in 1994 from $11.6 million in 1993.
Depreciation and amortization expenses decreased to $7.3 million (24.5% of
net revenues) in 1994 from $8.0 million (30.9% of the net revenues) in 1993 due
to scheduled depreciation of the fixed assets.
Total interest expense decreased to $8.3 million in 1994 from $9.0 million
in 1993 due to the elimination of the accretion of dividends on redeemable
prefered stock (which was assumed by Parent), which was partially offset by
interest associated with additional borrowings.
The foregoing factors contributed to the Company's $1.7 million net loss in
1994 compared to a net loss of $9.0 million in 1993 (which included a $3.3
million extraordinary charge recorded in the fourth
31
<PAGE>
quarter of 1993). Because the Company incurred net losses in 1994 and 1993, it
had no provision for income taxes in those years.
QUARTERLY COMPARISONS
The following table sets forth certain quarterly financial information of
the Company for each quarter of 1994 and 1995 and for the first and second
quarter of 1996. The information has been derived from the quarterly financial
statements of the Company which are unaudited but which, in the opinion of
management, have been prepared on the same basis as the financial statements
included herein and include all adjustments (consisting only of normal recurring
items) necessary for a fair presentation of the financial result for such
periods. This information should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto and the other financial information
appearing elsewhere in this Prospectus. The operating results for any quarter
are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1994 1994 1994 1994 1995 1995 1995 1995
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS
DATA:
Net revenues............... $ 6,102 $ 7,803 $ 7,973 $ 7,888 $ 7,236 $ 9,175 $ 8,940 $ 8,797
Operating income........... 924 2,333 2,002 1,518 1,348 3,109 2,674 2,507
Net income (loss).......... (1,276) 294 (141) (548) (747) 903 509 304
PERCENTAGE OF NET REVENUES:
Operating income........... 15.1% 29.9% 25.1% 19.2% 18.6% 33.9% 29.9% 28.5%
Net income (loss).......... (20.9) 3.8 (1.8) (6.9) (10.3) 9.8 5.7 3.5
OTHER DATA:
Operating Cash Flow(1)..... $ 2,709 $ 3,998 $ 3,885 $ 3,495 $ 3,085 $ 4,910 $ 4,524 $ 4,521
Operating Cash Flow
Margin(2)................ 44.4% 51.2% 48.7% 44.3% 42.6% 53.5% 50.6% 51.4%
<CAPTION>
MARCH 31, JUNE 30,
1996 1996
----------- -----------
<S> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues............... $ 8,427 $ 17,812
Operating income........... 1,670 7,299
Net income (loss).......... (757) 1,966
PERCENTAGE OF NET REVENUES:
Operating income........... 19.8% 41.0%
Net income (loss).......... (9.0) 11.0
OTHER DATA:
Operating Cash Flow(1)..... $ 3,702 $ 9,941
Operating Cash Flow
Margin(2)................ 43.9% 55.8%
</TABLE>
- ------------------------------
(1) Operating Cash Flow is operating income before depreciation and
amortization.Operating Cash Flow is not intended to represent net cash
provided by operating activities as defined by generally accepted
accounting principles and should not be considered as an alternative to net
income (loss) as an indicator of the Company's operating performance or to
net cash provided by operating activities as a measure of liquidity.The
Company believes Operating Cash Flow is a measure commonly reported and
widely used by analysts, investors and other interested parties in the
media industry.Accordingly, this information has been disclosed herein to
permit a more complete comparative analysis of the Company's operating
performance relative to other companies in the media industry.
(2) Operating Cash Flow Margin is Operating Cash Flow stated as a percentage of
net revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds and, to a lesser extent, with preferred
stock.
Parent completed its initial public offering ("IPO") of 4,630,000 shares of
its Common Stock (including 930,000 shares sold pursuant to exercise of the
Underwriters' over-allotment option) on July 26, 1996, resulting in proceeds to
Parent of $62.4 million. Parent intends to utilize a portion of the net proceeds
to redeem $9.5 million of the Existing Parent Notes prior to September 23, 1996
and has repaid a portion of the amounts outstanding under the Existing
Acquisition Credit Facility (as hereafter defined).
In connection with an acquisition consummated in April 1996, the Company,
its current lender, LaSalle National Bank ("LaSalle"), and an additional bank,
Bankers Trust Company ("Bankers Trust"; together with LaSalle, the "Lenders"),
agreed to (i) refinance the Company's existing credit facility with a revolving
credit facility (the "Existing Revolving Credit Facility") and (ii) provide an
additional extension of credit for purposes of acquisition financing (the
"Existing Acquisition Credit Facility", and together with
32
<PAGE>
the Existing Revolving Credit Facility, the "Existing Credit Facilities") and,
specifically, the financing, in part, of the Naegele Acquisition (as hereafter
defined). The Lenders extended an acquisition term loan in the amount of $75
million and an acquisition revolving credit line in the amount of $12.5 million
for a total commitment of $87.5 million, of which $84.5 million was drawn at the
closing of the Naegele Acquisition. In addition, the Lenders extended a working
capital revolving credit line in the amount of $12.5 million, of which no amount
has been drawn. In addition to the amounts drawn under the Existing Acquisition
Credit Facility, Parent sold a minority portion of its capital stock for $30
million in cash proceeds which was used to finance the remaining amount of the
Naegele Acquisition and to refinance existing indebtedness.
In October 1996, the Company amended and restated Existing Credit Facilities
which became the New Credit Facility. The New Credit Facility provides for a
total loan commitment of $300 million. Approximately $212.5 million of the New
Credit Facility matures on September 30, 2003 with the remaining amount maturing
on September 30, 2004. Upon the occurrence of certain triggering events, a
portion of the New Credit Facility will convert to a term loan. Such amounts may
not be reborrowed. See "Description of Indebtedness and Other Commitments"
Net cash provided by operating activities increased to $6.2 million for the
six months ended June 30, 1996 from $2.6 million for the 1995 period. Net cash
provided by operating activities increased to $7.0 million in 1995 from $5.8
million in 1994. Net cash provided by operating activities reflects the
Company's net loss adjusted for non-cash items and the use or source of cash for
the net change in working capital.
The Company's net cash used in investing activities of $110.1 million for
the six months ended June 30, 1996 includes cash used for acquisitions of $107.1
million and other capital expenditures of $2.9 million. The Company's net cash
used in investing activities of $9.1 million for the year ended December 31,
1995 includes cash used for acquisitions of $1.9 million and other capital
expenditures of $5.6 million. Capital expenditures have been made primarily to
develop new structures in each of its markets. The Company intends to continue
to develop new structures in its markets and to consider other potential
acquisitions. Management established the New Credity Facility for the purpose of
financing acquisitions and capital expenditures relating to the development and
improvement of advertising structures. The Company believes that its cash from
operations, together with available borrowings under the New Credit Facility,
will be sufficient to satisfy its cash requirements, including anticipated
capital expenditures, for the foreseeable future. However, in the event cash
from operations, together with available funds under the New Credit Facility are
insufficient to satisfy its cash requirements, the Company may incur additional
indebtedness to finance its operations including, without limitation, additional
acquisitions.
For the six months ended June 30, 1996, $104.0 million was provided by
financing activities primarily due to increased borrowings under the Existing
Credit Facilities and the sale of capital stock. For the six months ended June
30, 1995, net cash of $2.1 million was provided by financing activities,
primarily due to borrowings under the prior credit facility. For the years ended
December 31, 1995 and 1994, $2.0 million and $2.4 million, respectively, was
provided by financing activities, primarily as a result of additional borrowings
under the prior credit facility.
In March 1994, the Company completed an offering of $65 million of the
Existing Company Notes. The Existing Company Notes accrue interest at a rate of
11% per annum.
The Company intends to use a portion of the proceeds from the Offering to
repurchase in full the Existing Company Notes. As of the date of this
Prospectus, the aggregate principal amount of the outstanding Existing Company
Notes was approximately $65 million.
The Company expects to fund its capital expenditures primarily with cash
from operations and expects its capital expenditures to be primarily for
development of additional structures. The Company intends to utilize its cash
from operations to continue to develop new advertising structures in each of its
markets, and, as appropriate opportunities arise, to acquire additional outdoor
advertising operations in its existing markets, in geographically proximate
markets and in contiguous markets. The Company is also exploring the development
of other forms of out-of-home media, such as bus shelter advertising and transit
advertising that management believes would complement the Company's existing
outdoor operations. The
33
<PAGE>
restrictions imposed by the New Credit Facility and the Indenture may limit the
Company's use of cash from operations for these purposes.
INFLATION
Inflation has not had a significant impact on the Company over the past
three years. The floating rate on the New Credit Facility could increase in an
inflationary environment, but management believes that because a significant
portion of the Company's costs are fixed, inflation will not have a material
adverse effect on its operations. However, there can be no assurance that a high
rate of inflation in the future will not have an adverse effect on the Company's
operations.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS No. 121, ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF, which established a new accounting principle for accounting for the
impairment of certain loans, certain investments in debt and equity securities,
long-lived assets that will be held and used including certain identifiable
intangibles and goodwill related to those assets, and long-lived assets and
certain identifiable intangibles to be disposed of. 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.
34
<PAGE>
BUSINESS
GENERAL
The Company is a leading outdoor advertising company operating approximately
21,114 advertising display faces in two large, regional operating areas: the
Midwest (Chicago, Minneapolis/St. Paul, Indianapolis, Milwaukee, Des Moines,
Evansville and Dallas) and the Southeast (Orlando, Jacksonville, Palm Beach,
Ocala and the East Coast and Gulf Coast areas of Florida, Memphis/Tunica,
Chattanooga, and Myrtle Beach).
INDUSTRY OVERVIEW
The outdoor advertising industry has experienced increased advertiser
interest and revenue growth in recent years. 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, and the out-of-home
advertising industry generated revenues in excess of $3.0 billion in 1995,
according to estimates by the Outdoor Advertising Association of America (the
"OAAA"), the trade association for the outdoor advertising industry. Outdoor
advertising's 1995 revenue represent growth of approximately 8.2% over estimated
total revenues for 1994, which compares favorably to the growth of total U.S.
advertising expenditures of approximately 7.7% during the same period.
Advertisers purchase outdoor advertising for a number of reasons. Outdoor
advertising offers repetitive impact and a relatively low cost
per-thousand-impressions, a commonly used media measurement, as compared to
television, radio, newspapers, magazines and direct mail marketing. Accordingly,
because of its cost-effective nature, outdoor advertising is a good vehicle to
build mass market support. In addition, outdoor advertising can be used to
target a defined audience in a specific location and, therefore, can be relied
upon by local businesses concentrating on a particular geographic area where
customers have specific demographic characteristics. For instance, restaurants,
motels, service stations and similar roadside businesses may use outdoor
advertising to reach potential customers close to the point of sale and provide
directional information. Other local businesses such as television and radio
stations and consumer products companies may wish to appeal more broadly to
customers and consumers in the local market. National brand name advertisers may
use the medium to attract customers generally and build brand awareness. In all
cases, outdoor advertising can be combined with other media such as radio and
television to reinforce messages being provided to consumers.
The outdoor advertising industry has experienced significant change in
recent periods due to a number of factors. First, the entire "out-of-home"
advertising category has expanded to include, in addition to traditional
billboards and roadside displays, displays in shopping centers and malls,
airports, stadiums, movie theaters and supermarkets, as well as on taxis,
trains, buses, blimps and subways. Second, while the outdoor advertising
industry has experienced a decline in the use of outdoor advertising by tobacco
companies, it has increased its visibility with and attractiveness to local
advertisers as well as national retail and consumer product-oriented companies.
Third, the industry has benefitted significantly from improvements in production
technology, including the use of computer printing, vinyl advertising copy and
improved lighting techniques, which have facilitated a more dynamic, colorful
and creative use of the medium. This technological advance has permitted the
outdoor advertising industry to respond more promptly and cost effectively to
the changing needs of its advertising customers and make greater use of
advertising copy used in other media. Lastly, the outdoor advertising industry
has benefitted from the growth in automobile travel time for business and
leisure due to increased highway congestion and continued demographic shifts of
residences and businesses from the cities to outlying suburbs.
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 structures in a
single or few local markets. While the industry has experienced some
consolidation within the past few years, the OAAA estimates that there are still
approximately 1,000 companies in the outdoor advertising industry operating
approximately 396,000 billboard displays. The Company expects the trend of
consolidation in the outdoor advertising industry to continue.
35
<PAGE>
OPERATING STRATEGY
The Company's objective is to be the leading provider of outdoor advertising
services in each of its two regional operating areas and to expand its presence
in attractive new markets. The Company believes that regional clusters provide
it with significant opportunities to increase revenue and achieve cost savings
by delivering to local and national advertisers efficient access to multiple
markets or highly targeted areas.
Management intends to implement the following operating strategy:
- MAXIMIZE RATES AND OCCUPANCY. Through continued emphasis on customer
sales and service, quality displays and inventory management, the Company seeks
to maximize advertising rates and occupancy levels in each of its markets. The
Company has recruited and trained a strong local sales staff supported by local
managers operating under specific, sales-based compensation targets designed to
obtain the maximum potential from the Company's display inventory.
- INCREASE MARKET PENETRATION. The Company seeks to expand operations
within its existing markets through new construction, with an emphasis on
painted bulletins, which generally command higher rates and longer term
contracts from advertisers than other types of display faces. In addition, the
Company historically has acquired, and intends to continue to acquire,
additional advertising display faces in its existing markets as opportunities
become available.
- PURSUE STRATEGIC ACQUISITIONS. In addition to improved penetration of
its existing markets, the Company also seeks to grow by acquiring additional
display faces in closely proximate new markets. Such new markets allow the
Company to capitalize on the operating efficiencies and cross-market sales
opportunities associated with operating in multiple markets within distinct
regions. The Company intends to develop new regional operating areas in regions
where attractive growth and consolidation opportunities exist.
- CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its ability to
effectively respond to its customer's needs. The Company's continued investment
in equipment and technology provides for greater ongoing benefits in the areas
of sales, production and operation.
- MAINTAIN LOW COST STRUCTURE. Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its Operating Cash Flow
Margin, which it believes to be among the highest in the industry. The Company
believes that its centralized administration provides opportunities for
significant operating leverage from further expansion in existing markets and
from future acquisitions.
- DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other
forms of out-of-home media such as bus shelter or transit advertising in order
to enhance revenues in existing markets or provide access to new markets.
Through implementation of this business strategy, the Company has increased
its outdoor advertising presence from 500 display faces in a single market in
1988 to approximately 12,500 in its markets at August 31, 1996.
36
<PAGE>
ACQUISITIONS
Consistent with its operating strategy, the Company has recently acquired
the assets or capital stock of three outdoor advertising companies and has
entered into an agreement to purchase the assets of an additional outdoor
advertising company. The Company believes that these acquisitions will
significantly strengthen its market presence in the midwest and southeast United
States and will allow the Company to capitalize on the operating efficiencies
and cross-market sales opportunities associated with operating in closely
proximate markets.
THE POA ACQUISITION. In August 1996, the Company agreed to purchase OAH
pursuant to a merger of a subsidiary of the Company with and into OAH. As a
result of the POA Acquisition, the Company acquired a total of approximately
6,337 advertising display faces consisting of bulletins and posters in five
markets located in the southeast United States, including Orlando, Ocala and
Palm Beach, as well as the East Coast and Gulf Coast areas of Florida, and
Myrtle Beach and Chattanooga.
THE MEMPHIS/TUNICA ACQUISITION. In September 1996, the Company acquired the
Memphis/Tunica Option. Upon consummation of the Memphis/Tunica Acquisition, the
Company will acquire a total of approximately 2,018 advertising display faces
consisting of bulletins and posters in and around Memphis, Tennessee and Tunica
County, Mississippi.
THE ADDITIONAL ACQUISITIONS. In September 1996, the Company purchased
certain assets of Iowa Outdoor Displays and The Chase Company. As a result of
the Additional Acquisitions, the Company acquired approximately 160 advertising
display faces consisting primarily of posters in and around Des Moines and
approximately 245 advertising display faces consisting primarily of bulletins in
and around Dallas.
THE NAEGELE ACQUISITION. In April 1996, the Company acquired operations in
the Minneapolis/St. Paul and Jacksonville markets. In a stock purchase
transaction with NOA Holding Company (the "Naegele Acquisition"), the Company
acquired approximately 2,550 poster faces (of which approximately 1,455 are
located in the Minneapolis/St. Paul market and approximately 1,095 are located
in the Jacksonville market) and approximately 840 painted bulletin faces (of
which approximately 440 are located in the Minneapolis/ St. Paul market and
approximately 400 are located in the Jacksonville market).
THE OTHER ACQUISITIONS. In April 1996, the Company acquired 4 painted
bulletin faces in the Chicago market from Paramount Outdoor, Inc. in an asset
purchase transaction. In March 1996, through an asset purchase transaction with
Image Media, Inc., the Company acquired 18 painted bulletin and painted wall
faces in the Chicago market. In a transaction with Ad-Sign, Inc. in January
1996, the Company acquired approximately 160 painted bulletin faces in the
Chicago market. In April 1995, the Company acquired approximately 6 painted
bulletin faces in the Chicago market pursuant to a stock purchase transaction
with O&B Outdoor, Inc. The Company has integrated the newly acquired faces from
these acquisitions into its existing Chicago operations.
In March 1995, the Company completed two acquisitions in the Dallas market.
In a stock purchase transaction with Harrington Associates, Inc., the Company
acquired approximately 740 junior (8-sheet) poster faces located in the Dallas
market. In a stock purchase transaction with Best Outdoor, the Company acquired
approximately 387 junior (8-sheet) poster faces in the Dallas market.
MARKETS
Each of the Company's markets generally possess demographic characteristics
that are attractive to national advertisers, allowing the Company to package its
displays in several of its markets in a single contract for advertisers in
national and regional campaigns. Each market also has unique local industries,
businesses, sports franchises and special events that are frequent users of
outdoor advertising. The
37
<PAGE>
following sets forth certain information for each of the Company's markets as of
August 31, 1996 after giving effect to the Acquisitions:
<TABLE>
<CAPTION>
% OF 1995 TOTAL
PRO FORMA 30-SHEET 8-SHEET DISPLAY
MARKET NET REVENUES BULLETINS POSTERS POSTERS FACES
- ------------------------------------ 1995 -------------- ----------- ----------- ----------- ------------
PRO FORMA
NET REVENUES
--------------------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
MIDWEST:
Chicago........................... $ 16,579 13.7% 653 -- 3,646 4,299
Minneapolis/St. Paul.............. 16,320 13.5 447 1,365 -- 1,812
Indianapolis...................... 9,897 8.2 257 1,385 142 1,927
Milwaukee......................... 4,686 3.9 260 -- 321 581
Des Moines........................ 3,141 2.6 84 590 9 683
Evansville........................ 3,028 2.5 142 687 -- 829
Dallas............................ 1,738 1.5 245 -- 1,201 1,446
SOUTHEAST:
Orlando........................... 22,253 18.4 842 1,080 -- 1,922
Jacksonville...................... 8,528 7.0 383 942 -- 1,325
Palm Beach........................ 290 0.2 99 21 -- 120
Ocala............................. 5,011 4.1 879 199 -- 1,078
Memphis/Tunica*................... 13,104 10.8 706 1,179 133 2,018
Chattanooga....................... 4,582 3.8 359 663 -- 1,022
Myrtle Beach...................... 7,931 6.6 729 455 -- 1,184
East Coast area (FL).............. 2,784 2.3 567 -- -- 567
Gulf Coast area (FL).............. 1,095 0.9 444 -- -- 444
-------- ----- ----- ----- ----- ------
Total........................... $ 120,967 100.0% 7,096 8,566 5,452 21,114**
-------- ----- ----- ----- ----- ------
-------- ----- ----- ----- ----- ------
</TABLE>
- ------------------------
* To be acquired in connection with the Memphis/Tunica Acquisition.
** Excludes 143 transit display faces located in Indianapolis.
INVENTORY
The Company operates three standard types of outdoor advertising display
faces and also has transit advertising as follows:
- 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 hand painted onto the panels at the facilities of the outdoor
advertising company in accordance with design specifications supplied by the
advertiser and attached to the outdoor advertising structure, or is printed with
the 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.
- 30-SHEET POSTERS generally are 12 feet high by 25 feet wide (300 square
feet) and are the most common type of billboard. Advertising copy for 30-sheet
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. Thirty-sheet posters are concentrated on major
traffic arteries.
- JUNIOR (8-SHEET) POSTERS usually are 6 feet high by 12 feet wide (72
square feet). Displays are prepared and mounted in the same manner as 30-sheet
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.
- TRANSIT ADVERTISING consists generally of posters and frames displayed on
the sides of public buses operating on city streets.
38
<PAGE>
Billboards generally are mounted on structures owned by the outdoor
advertising company and located on sites that are either owned or leased by it
or on which it has acquired a permanent easement. Billboard structures are
durable, have long useful lives and do not require substantial maintenance. When
disassembled, they typically can be moved and relocated at new sites. The
Company's outdoor advertising structures are made of steel and other durable
materials built to withstand variable climates, including the rigors of the
midwestern climate. The Company expects its structures to last 15 years or more
without significant refurbishment.
LOCAL MARKET OPERATIONS
In each of its principal markets except Palm Beach, the Company maintains a
complete outdoor advertising operation including a sales office, a production,
construction and maintenance facility, a creative department equipped with
advanced technology, a real estate unit and support staff. The Company conducts
its outdoor advertising operations through these local offices, consistent with
senior management's belief that an organization with decentralized sales and
operations is more responsive to local market demand and provides greater
incentives to employees. At the same time, the Company maintains centralized
accounting and financial controls to allow it to closely monitor the operating
and financial performance of each market. Local general managers, who report
directly to the Company's President or a regional manager, are responsible for
the day-to-day operations of their respective markets and are compensated
according to the financial performance of such markets. In general, these local
managers oversee market development, production and local sales. The Company
intends to incorporate the operations acquired in the Acquisitions into this
operational structure with local offices handling the day-to-day operations and
centralized accounting and financial controls.
Although site leases (for land underlying an advertising structure) are
administered from the Company's headquarters in Chicago, each local office is
responsible for locating and ultimately procuring leases for appropriate sites
in its market. Site lease contracts vary in term but typically run from 10 to 20
years with various termination and renewal provisions. Each office maintains a
leasing department, with an extensive database containing information on local
property ownership, lease contract terms, zoning ordinances and permit
requirements. The Company has been very successful in developing new advertising
display face inventory in each of its markets based on utilizing these databases
and developing an experienced staff of lease teams. Each such team's sole
responsibility is the procurement of sites for new locations in each of the
Company's markets.
SALES AND SERVICE
The Company's sales strategy is to maximize revenues from local advertisers.
Accordingly, it maintains a team of sales representatives headed by a sales
manager in each of its markets. The Company devotes considerable time and
resources to recruiting, training and coordinating the activities of its sales
force. A sales representative's compensation is heavily weighted to individual
performance, and the local sales manager's compensation is tied to the
performance of his or her sales team. One sales representative, based in
Chicago, manages sales to national advertisers. In total, approximately 59 of
the Company's employees are significantly involved in sales and marketing
activities.
In addition to the sales staff, the Company has established fully staffed
and equipped creative departments in each of its principal markets except Palm
Beach. Utilizing technologically advanced computer hardware and software, the
staff is able to create original design copy for both local and national
accounts which has allowed the various creative departments to exchange work via
modem or over the Internet with each other or directly with clients or their
agencies. This ability has resulted in many fully staffed advertising agencies
turning to the Company for the creation of their outdoor campaigns. The Company
believes that its creative department's implementation of continuing
technological advances provides a significant competitive advantage in its sales
and service area.
39
<PAGE>
CUSTOMERS
Advertisers usually contract for outdoor displays through advertising
agencies, which are responsible for the artistic design and written content of
the advertising as well as the choice of media and the planning and
implementation of the overall campaign. The Company pays commissions to the
agencies for advertising contracts that are procured by or through those
agencies. Advertising rates are based on a particular display's exposure (or
number of "impressions" delivered) in relation to the demographics of the
particular market and its location within that market. The number of
"impressions" delivered by a display is measured by the number of vehicles
passing the site during a defined period and is weighted to give effect to such
factors as its proximity to other displays, the speed and viewing angle of
approaching traffic, the national average of adults riding in vehicles and
whether the display is illuminated. The number of impressions delivered by a
display is verified by independent auditing companies.
The size and geographic diversity of the Company's markets allow it to
attract national advertisers, often by packaging displays in several of its
markets in a single contract to allow a national advertiser to simplify its
purchasing process and present its message in several markets. National
advertisers generally seek wide exposure in major markets and therefore tend to
make larger purchases. The Company competes for national advertisers primarily
on the basis of price, location of displays, availability and service.
The Company also focuses efforts on local sales, and approximately 84% of
the Company's gross revenues in 1995, after giving effect to the Acquisitions,
were generated from local advertisers. Local advertisers tend to have smaller
advertising budgets and require greater assistance from the Company's production
and creative personnel to design and produce advertising copy. In local sales,
the Company often expends more sales efforts on educating customers regarding
the benefits of outdoor media and helping potential customers develop an
advertising strategy using outdoor advertising. While price and availability are
important competitive factors, service and customer relationships are also
critical components of local sales.
Tobacco revenues have historically accounted for a significant portion of
outdoor advertising revenues. Beginning in 1993, the leading tobacco companies
substantially reduced their expenditures for outdoor advertising due to a
declining population of smokers, societal pressures, consolidation in the
tobacco industry and price competition from generic brands. Since tobacco
advertisers often utilized some of the industry's prime inventory, the decline
in tobacco-related advertising expenditures made this space available for other
advertisers, including those that had not traditionally utilized outdoor
advertising. As a result of this decline in tobacco-related advertising revenues
and the increased use of outdoor advertising by other advertisers, the range of
the Company's advertisers has become quite diverse. The following table
illustrates the diversity of the Company's advertising base giving effect to the
Acquisitions:
1995 PRO FORMA NET REVENUES BY CATEGORY
<TABLE>
<CAPTION>
PERCENTAGE OF
NET REVENUES
--------------
<S> <C>
Travel/Entertainment............................................................ 14.4%
Restaurant...................................................................... 9.9
Tobacco......................................................................... 9.9
Retail/Consumer Products........................................................ 9.8
Automotive & Related............................................................ 8.0
Home Developer/Real Estate...................................................... 6.0
Advertising/Media............................................................... 4.0
Alcohol......................................................................... 3.6
Hotels/Motels................................................................... 3.0
Other........................................................................... 31.4
-----
Total....................................................................... 100.0%
-----
-----
</TABLE>
40
<PAGE>
PRODUCTION
The Company has internal production facilities and staff to perform the full
range of activities required to develop, 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 its displays. In addition, the Company's substantial
new development activity has allowed it to vertically integrate its own sign
fabrication ability so that new signs are fabricated and erected in-house. The
Company usually provides its full range of production services to local
advertisers and to advertisers that are not represented by advertising agencies,
since national advertisers and advertisers represented by advertising agencies
often use preprinted designs that require only installation. However, the
Company's creative and production personnel frequently are involved in
production activities even when advertisers are represented by agencies due to
the development of new designs or adaptation of copy from other media for use on
billboards. The Company's artists also 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 are becoming less responsible for labor-intensive
production work since vinyl and pre-printed copy can be installed quickly. The
vinyl sheets are reusable, thereby reducing the Company's production costs, and
are easily transportable. Due to the geographic proximity of the Company's
principal markets and the transportability of vinyl sheets, the Company can
shift materials among markets to promote efficiency. The Company believes that
this trend over time will reduce operating expenses associated with production
activities.
COMPETITION
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
and malls, airports, stadiums, movie theaters and supermarkets, as well as on
taxis, trains, buses and subways. 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 low
cost-per-thousand-impressions and its ability to repetitively reach a broad
segment of the population in a specific market or to target a particular
geographic area or population with a particular set of demographic
characteristics within that market.
The outdoor advertising industry is highly fragmented, consisting of several
large outdoor advertising and media companies with operations in multiple
markets as well as smaller and local companies operating a limited number of
structures in single or a few local markets. Although some consolidation has
occurred over the past few years, according to the OAAA there are approximately
1,000 companies in the outdoor advertising industry operating approximately
396,000 billboard displays. In several of its markets, the Company encounters
direct competition from other major outdoor media companies, including Outdoor
Systems, Inc., Eller Media, Inc. (formerly Patrick Media Group) and 3M National
Advertising Co. (a division of Minnesota Mining and Manufacturing Company), each
of which has a larger national network and greater total resources than the
Company. The Company believes that its emphasis on local advertisers and its
position as a major provider of advertising services in each of its markets and
in the midwest enable it to compete effectively with the other outdoor media
operators, as well as other media, both within those markets and in the midwest
region. The Company also competes with other outdoor advertising companies for
sites on which to build new structures. See "Risk Factors -- Competition."
GOVERNMENT REGULATION
The outdoor advertising industry is subject to governmental regulation at
the federal, state and local level. Federal law, principally the Highway
Beautification Act of 1965, encourages states, by the threat of withholding
federal appropriations for the construction and improvement of highways within
such states, to implement legislation to restrict billboards located within 660
feet of, or visible from, interstate and primary highways except in commercial
or industrial areas. All of the states have implemented regulations
41
<PAGE>
at least as restrictive as the Highway Beautification Act, including the
prohibition on the construction of new billboards adjacent to federally-aided
highways and the removal at the owner's expense and without any compensation of
any illegal signs on such highways. The Highway Beautification Act, and the
various state statutes implementing it, require the payment of just compensation
whenever governmental authorities require legally erected and maintained
billboards to be removed from federally-aided highways.
The states and local jurisdictions have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify minimum standards for the height,
size and location of billboards. In some cases, the construction of new
billboards or relocation of existing billboards is prohibited. Some
jurisdictions also have restricted the ability to enlarge or upgrade existing
billboards, such as converting from wood to steel or from non-illuminated to
illuminated structures. From time to time governmental authorities order the
removal of billboards by the exercise of eminent domain. Thus far, the Company
has been able to obtain satisfactory compensation for any of its structures
removed at the direction of governmental authorities, although there is no
assurance that it will be able to continue to do so in the future.
In recent years, there have been movements to restrict billboard advertising
of certain products, including tobacco and alcohol. No bills have become law at
the federal level except those requiring health hazard warnings similar to those
on cigarette packages and print advertisements. It is uncertain whether
additional legislation of this type will be enacted on the national level or in
any of the Company's markets.
In August 1996, the U.S. Food and Drug Administration issued final
regulations governing certain marketing practices in the tobacco industry. Among
other things, the regulations prohibit tobacco product billboard advertisements
within 1,000 feet of schools and playgrounds and require that tobacco product
advertisements on billboards be in black and white and contain only text. In
addition, one major tobacco manufacturer recently proposed federal legislation
banning 8-sheet billboard advertising and transit advertising of tobacco
products. A reduction in billboard advertising by the tobacco industry could
cause an immediate reduction in the Company's direct revenue from such
advertisers and would simultaneously increase the available space on the
existing inventory of billboards in the outdoor advertising industry. See
"Business--Customers" and "Risk Factors--Tobacco Industry Regulations."
Amortization of billboards has also been adopted in varying forms in certain
jurisdictions. Amortization permits the billboard owner to operate its billboard
as a non-conforming use for a specified period of time until it has recouped its
investment, after which it must remove or otherwise conform its billboard to the
applicable regulations at its own cost without any compensation. Amortization
and other regulations requiring the removal of billboards without compensation
have been subject to vigorous litigation in state and federal courts and cases
have reached differing conclusions as to the constitutionality of these
regulations. To date, regulations in the Company's markets have not materially
adversely affected its operations, except in the Jacksonville market, where the
Company has been subject to regulatory efforts and recently agreed to city
ordinances to remove a number of faces. On March 22, 1995, following litigation
over an ordinance and a municipal charter amendment, Naegele entered into an
agreement with the City of Jacksonville to remove 711 billboard faces over a
twenty year period starting January 1, 1995 and ending December 31, 2014. The
resolution specifies the following removal schedule:
<TABLE>
<CAPTION>
30-SHEET 8-SHEET
CALENDAR YEARS BULLETINS POSTERS POSTERS TOTAL
- --------------------------------------------------------- ------------- ----------- ----------- -----
<S> <C> <C> <C> <C>
1995-1998................................................ 73 242 167 482
1999-2004................................................ 23 87 -- 110
2005-2014................................................ 23 96 -- 119
--- --- --- ---
119 425 167 711
--- --- --- ---
--- --- --- ---
</TABLE>
Under the agreement, Naegele and the City of Jacksonville have agreed on the
removal of 445 pre-selected faces, including 167 (100%) of its 8-sheet faces.
Management of the Company has control over the
42
<PAGE>
selection and removal of an additional 155 faces. The remaining 111 faces to be
removed will be selected by the Company from a pool of faces identified by the
City. While the number of signs being taken down represents a large percentage
of Naegele's plant in the Jacksonville market, the Company believes that
Jacksonville has been overbuilt for a number of years, leading to low occupancy
levels and low advertising rates. The removal of a number of marginally
profitable boards is expected to put upward pressure on rates. Additionally, the
removals are staggered over 20 years, with management having substantial input
on which signs are removed and some rights of substitution and rebuilding of
outdoor advertising structures in the Jacksonville market.
On February 1, 1991, Naegele entered into a consent judgment to settle a
complaint brought by the Minnesota Attorney General under Minnesota anti-trust
laws pursuant to which Naegele and its successors are prohibited from purchasing
outdoor advertising displays in the Minneapolis/St. Paul market from other
operators of outdoor advertising displays until February 1, 2001. The consent
judgment also prohibits the Company from enforcing certain covenants not to
compete and from entering into property leases in excess of 15 years. The
consent judgment does not affect the Company's ability to continue to develop
and build new advertising displays in the Minneapolis/St. Paul market.
Additionally, the Company can purchase displays from brokers or other
non-operators.
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 has not adversely impacted the Company's business, other than in the
newly acquired Jacksonville market, no assurance can be given that existing or
future laws or regulations will not materially adversely affect the Company at
some time in the future.
OUTDOOR ADVERTISING PROPERTIES; OFFICE AND PRODUCTION FACILITIES
OUTDOOR ADVERTISING SITES. Giving effect to the Acquisitions, the Company
owns or has permanent easements on approximately 337 parcels of real property
that serve as the sites for its outdoor displays. The Company's remaining
approximately 12,376 advertising display sites are leased or licensed.
The Company's leases are for varying terms ranging from month-to-month or
year-to-year to terms of ten years or longer, and many provide for renewal
options. There is no significant concentration of displays under any one lease
or subject to negotiation with any one landlord. The Company believes that an
important part of its management activity is to manage its lease portfolio and
negotiate suitable lease renewals and extensions.
OFFICE AND PRODUCTION FACILITIES. The Company's principal executive and
administration offices are located in Chicago, Illinois in a 6,956-square foot
space leased by the Company. In addition, after giving effect to the
Acquisitions, the Company has an office and complete production and maintenance
facility in each of Addison, Illinois (40,000 square feet); Orlando (20,500
square feet); Memphis (24,844 square feet); Chattanooga (14,580 square feet);
Ocala (11,700 square feet); Myrtle Beach (14,792 square feet); Milwaukee (18,367
square feet); Indianapolis (23,648 square feet); Des Moines (15,320 square
feet); Minneapolis/ St. Paul (82,547 square feet); Jacksonville (16,000 square
feet); and Evansville (16,000 square feet) and a sales, real estate and
administration office in Dallas (2,000 square feet). The Indianapolis, Addison,
Orlando, Milwaukee, Jacksonville, Myrtle Beach, Chattanooga, Ocala and
Evansville facilities are owned and all other facilities are leased. The Company
considers its facilities to be well maintained and adequate for its current and
reasonably anticipated future needs.
EMPLOYEES
At June 30, 1996, the Company employed approximately 330 people, of whom
approximately 59 were primarily engaged in sales and marketing, 209 were engaged
in painting, bill posting and construction and maintenance of displays and the
balance were employed in financial, administrative and similar capacities. The
Milwaukee market has 15 employees who belong to a union and the Minneapolis/St.
Paul market has 29 employees who belong to unions. The Company considers its
relations with the unions and with its employees to be good.
43
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The table below sets forth certain information with respect to the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
YEARS WITH THE
NAME AGE POSITION COMPANY
- ------------------------------- --- ------------------------------------------------------------- -----------------
<S> <C> <C> <C>
Daniel L. Simon*............... 45 Chief Executive Officer, President and Director 23
Brian T. Clingen............... 36 Vice President, Chief Financial Officer and Director 8
Paul G. Simon*................. 43 Vice President, Secretary and General Counsel 6
Michael J. Roche............... 45 Director 2
Michael B. Goldberg............ 49 Director **
Frank K. Bynum, Jr............. 33 Director **
</TABLE>
- ------------------------
* Daniel L. and Paul G. Simon are brothers.
** Became a director in 1996.
Mr. Daniel Simon, a founder and a principal beneficial stockholder of the
Company, has been the President of the Company since 1989 and a director since
its formation. Mr. Simon has 23 years of experience in the outdoor advertising
industry and serves on the executive and legislative committees of the Outdoor
Advertising Association of America. Mr. Simon is a director of Parent.
Mr. Clingen has served as Vice President and Chief Financial Officer of the
Company since December 1987 and as a director since 1990. From 1983 to 1987, Mr.
Clingen worked for Elmore Group ("Elmore"), a diversified property and service
company, and served as Chief Financial Officer of an Elmore subsidiary. Mr.
Clingen is a certified public accountant. Mr. Clingen is a director of Parent.
Mr. Paul Simon has been Vice President and General Counsel of the Company
since 1989 and has served as Secretary of the Company since July 1991. Mr. Simon
was in the private practice of law in Illinois from 1978 to 1989, specializing
in commercial litigation, general corporate matters, real estate and mergers and
acquisitions. Mr. Simon represented the Company as outside counsel from 1981 to
1989.
Mr. Roche has been National Marketing Manager (Licensed Businesses) for
Sears, Roebuck and Co. since 1985. Prior thereto, he was an Assistant Marketing
Manager from 1984 to 1985 and a National Sales Promotion Manager from 1980 to
1984 for Sears, Roebuck and Co. Mr. Roche has been a director of the Company
since November 1993. Mr. Roche is a director of Parent.
Mr. Goldberg has been a director of the Company since April 5, 1996. Mr.
Goldberg has been a Managing Director of Kelso & Company, L.P. since October
1991. Mr. Goldberg served as a Managing Director and jointly managed the merger
and acquisitions department at The First Boston Corporation from 1989 to May
1991. Mr. Goldberg was a partner at the law firm of Skadden, Arps, Slate,
Meagher & Flom from 1980 to 1989. Mr. Goldberg is a director of General Medical
Corporation, Hosiery Corporation of America, Inc., United Refrigerated Services,
Inc. and Parent.
Mr. Bynum has been a director of the Company since July, 1996. Mr. Bynum has
been a Vice President of Kelso & Company, L.P. since July 1991, and was an
Associate of Kelso & Company, L.P. from October 1987 to July 1991. He is a
director of Hosiery Corporation of America, Inc., IXL Holdings, Inc., United
Refrigerated Services, Inc. and Parent.
For their services as directors, the members of the Board of Directors who
are not employees of the Company or affiliates of Kelso & Company, L.P. are paid
an aggregate of $10,000 annually. All directors are reimbursed for reasonable
expenses associated with their attendance at meetings of the respective Boards
of Directors.
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.
44
<PAGE>
On December 23, 1992, Kelso & Companies, Inc., the general partner of Kelso
& Company, L.P., and its chief executive officer, without admitting or denying
the findings contained therein, consented to an administrative order in respect
of an inquiry by the Securities and Exchange Commission (the "Commission")
relating to the 1990 acquisition of a portfolio company by an affiliate of Kelso
& Companies, Inc. The order found that the tender offer filing by Kelso &
Companies, Inc. in connection with the acquisition did not comply fully with the
Commission's tender offer reporting requirements, and required Kelso &
Companies, Inc. and its chief executive officer to comply with these
requirements in the future.
Pursuant to the Articles of Incorporation of the Company, the Board of
Directors of the Company shall have the same members as the Board of Directors
of Parent. Parent has an agreement with Kelso & Company, L.P. that permits Kelso
& Company, L.P. to nominate two persons for the Board of Directors to be voted
upon by the shareholders. Messrs. Goldberg and Bynum have been retained as
directors of Parent as a result of such agreement. The agreement also provides
that at least one of such nominees, if elected to the Board of Directors, will
also serve on Parent's compensation committee. See "Certain Transactions."
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation paid during 1993, 1994 and 1995 to the Company's Chief Executive
Officer and each other executive officer whose total annual salary and bonus
that year exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1)
- ------------------------------------------------------------------- --------- ---------- ----------- -----------------
<S> <C> <C> <C> <C>
Daniel L. Simon ................................................... 1995 $ 224,379 $ 0 $ 1,000
President and Chief Executive Officer 1994 249,250 0 500
1993 187,439 0 0
Brian T. Clingen .................................................. 1995 $ 145,128 $ 0 $ 1,000
Chief Financial Officer and Vice President 1994 145,852 0 500
1993 122,742 0 0
Paul G. Simon ..................................................... 1995 $ 158,176 $ 0 $ 1,000
Vice President, Secretary and General Counsel 1994 158,968 0 500
1993 167,125 0 0
</TABLE>
- ------------------------
(1) Represents contributions made by the Company on behalf of the named
executive officers to a 401(k) plan.
The Company currently maintains two life insurance policies covering Daniel
L. Simon, each in the amount of $2.5 million. The Company is the sole
beneficiary under each policy. Pursuant to a buy-sell agreement between the
Company and Mr. Simon, the Company has agreed to use up to $3.5 million of the
proceeds from these policies to purchase a portion of Mr. Simon's shares of
Common Stock of the Company from his estate.
AUDIT COMMITTEE; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of Parent formed an Audit Committee in July 1996
which is responsible for reviewing Parent's accounting controls and recommending
to the Board of Directors the engagement of Parent's outside auditors. The
members of Parent's Audit Committee are Daniel L. Simon, Michael J. Roche and
Frank K. Bynum. The Company has no Audit Committee.
The Board of Directors of Parent formed a Compensation Committee in July
1996 which is responsible for reviewing and approving the amount and type of
consideration to be paid to senior management. The members of Parent's
Compensation Committee are Daniel L. Simon, Brian T. Clingen and Michael B.
Goldberg. Parent has agreed that a KIA V (as defined below) designee will be on
the Compensation Committee so long as there is such a designee on the Board of
Directors. The Company has no Compensation Committee.
45
<PAGE>
CERTAIN TRANSACTIONS
On April 5, 1996, Parent issued to Kelso Investment Associates V, L.P. ("KIA
V") and Kelso Equity Partners V, L.P. ("KEP V") and certain individuals
designated by Kelso & Company, L.P. (the "Kelso Designees") 186,500 shares of
Class B Common Stock and 188,500 shares of Class C Common Stock (prior to a
subsequent 16 for 1 stock split) in exchange for $30,000,000. At such time,
Parent also agreed to pay a one-time fee of $1,250,000 in cash and an annual fee
of $150,000 to Kelso & Company, L.P., an affiliate of KIA V and KEP V, for
consulting and advisory services to Parent. Messrs. Goldberg and Bynum,
directors of the Company, are Managing Director and Vice President,
respectively, of Kelso & Company, L.P., limited partners of the general partner
of KIA V and limited partners of KEP V.
In July 1996, Parent entered into agreements with KIA V, KEP V and certain
individual shareholders relating to certain rights of KIA V, KEP V and such
individual shareholders as holders of Class B Common Stock and Class C Common
Stock of Parent. Pursuant to such agreements, Parent agreed to reclassify the
shares of Class B Common Stock and Class C Common Stock into a total of
6,000,000 shares of Common Stock, of which 2,500,000 were sold in the IPO. See
"Principal Shareholders." Pursuant to such agreements, the annual consulting and
advisory fee of $150,000 payable to Kelso & Company, L.P. was terminated but
Kelso & Company, L.P.'s reimbursement of expenses and indemnification rights in
connection therewith remained in effect. In connection with the IPO, Kelso &
Company, L.P. received a one-time fee of $650,000. In addition, as a result of
the reclassification, KIA V, KEP V and such individual shareholders have the
same rights as holders of Parent's Common Stock. In connection with the
reclassification, KIA V was granted the right to nominate two persons for seats
on the Board of Directors of Parent and of the Company to be voted upon by the
stockholders, with one of such directors, if elected, to be a member of the
Compensation Committee. The Company's Articles of Incorporation provide that the
members of its Board of Directors shall be identical to those of Parent's Board
of Directors.
As a component of its growth strategy, in July 1995, the Company entered
into a consulting agreement with Urban Development, L.L.C. ("Urban") whereby
Urban shall consult with, and develop new sign locations in the Milwaukee and
Chicago markets for, the Company. Urban agreed to provide consulting services to
the Company over a period of 10 years in consideration of $1,400,000 which was
paid on such date. The managing member of Urban is Lawrence J. Simon, a former
officer and director of the Company and the brother of Daniel L. Simon and Paul
G. Simon. Lawrence J. Simon resigned as a director and an executive vice
president of the Company on October 4, 1995.
In April 1996, the Company acquired four painted bulletin faces in Chicago
from Paramount Outdoor, Inc. ("Paramount") in an asset purchase transaction.
Messrs. Quas and Sauber are the owners of Paramount. In exchange for the four
painted bulletin faces, the Company agreed to pay $500,000 in cash at the time
of purchase, $1,400 monthly for the next 24 months and an additional $168,000
payable two years after such purchase date, provided, the gross revenues
received by the Company from the purchased assets equal or exceed $333,600. In
1993, Paramount had purchased the Chicago sites (including the lease rights,
permits and structures) from a joint venture between the Company and HMS, Inc.,
an unaffiliated entity, for $100,000, which the Company believes represented
market price.
All of the transactions described above were approved by the Company's
independent outside director. The Company will not engage in transactions with
its affiliates in the future unless the terms of such transactions are approved
by a majority of its independent outside directors. In addition, the Existing
Company Indenture and Existing Parent Indenture impose limitations on the
Company's ability to engage in such transactions. See "Description of
Indebtedness and Other Commitments."
46
<PAGE>
PRINCIPAL STOCKHOLDERS
Parent owns 100% of the issued and outstanding capital stock of the Company.
The table below sets forth the number and percentage of outstanding shares of
Parent's Common Stock that will be beneficially owned by (i) each director of
the Company, (ii) each executive officer identified under "Management --
Executive Compensation," (iii) all directors and executive officers of the
Company as a group and (iv) each person known by the Company to own beneficially
more than 5% of Parent's Common Stock. The Company believes that each individual
or entity named has sole investment and voting power with respect to shares of
Common Stock indicated as beneficially owned by them, except as otherwise noted.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
BENEFICIAL OWNERSHIP OF
COMMON STOCK PRIOR TO THE COMMON STOCK AFTER THE
COMMON STOCK OFFERING COMMON STOCK OFFERING
---------------------------- SHARES ----------------------------
NUMBER OF PERCENT OF BEING NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS OFFERED SHARES CLASS
- --------------------------------------------------- -------------- ------------ --------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Daniel L. Simon.................................... 9,334,008(1) 45.1% 500,000 8,584,008(2) 33.4%
321 North Clark Street
Chicago, Illinois 60610
Brian T. Clingen................................... --(3) -- 250,000 --(4) --
321 North Clark Street
Chicago, Illinois 60610
Paul G. Simon...................................... --(5) -- -- --(5) --
321 North Clark Street
Chicago, Illinois 60610
Michael J. Roche................................... 2,000 --(6) -- 2,000 --(6)
333 Beverly Road, E5-312A
Hoffman Estates, Illinois 60179
Michael B. Goldberg(7)............................. 55,460 --(6) -- 55,460 --(6)
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Frank K. Bynum, Jr.(7)............................. 30,688 --(6) -- 30,688 --(6)
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Kelso Investment Associates V, L.P.(8)(9).......... 2,847,871 15.6 -- 2,847,871 12.3
Kelso Equity Partners V, L.P.(8)(9)................ 151,779 --(6) -- 151,779 --(6)
Joseph N. Schuchert(8)(10)......................... 2,999,650 16.4 -- 2,999,650 12.9
Frank T. Nickell(8)(10)............................ 3,134,879 17.2 -- 3,134,879 13.5
George E. Matelich(8)(10).......................... 3,063,293 16.8 -- 3,063,293 13.2
Thomas R. Wall, IV(8)(10).......................... 3,080,072 16.9 -- 3,080,072 13.3
All directors and executive officers as a group (6
persons)......................................... 9,422,156 45.5 750,000 8,672,156 33.7
</TABLE>
- ------------------------
(1) Daniel L. Simon's beneficial ownership includes 5,596,540 shares that he
owns directly, 88,000 shares held by The Simon Family Limited Partnership,
of which he is a general partner, 1,995,000 shares issuable to him upon
exercise of the Management Warrants, 1,178,860 shares over which he has
voting control pursuant to certain voting trust agreements with Brian T.
Clingen and Paul G. Simon, and
47
<PAGE>
475,608 shares issuable to Brian T. Clingen and Paul G. Simon upon exercise
of the Management Warrants over which Daniel L. Simon has voting control
pursuant to certain voting trust agreements.
(2) Daniel L. Simon's beneficial ownership includes 5,096,540 shares that he
owns directly, 88,000 shares held by The Simon Family Limited Partnership of
which he is a general partner, 1,995,000 shares issuable to him upon
exercise of the Management Warrant, 928,860 shares over which he has voting
control pursuant to certain voting trust agreement with Brian T. Clingen and
Paul G. Simon, and 475,608 shares issuable to Brian T. Clingen and Paul G.
Simon upon exercise of the Management Warrants over which Daniel L. Simon
has voting control pursuant to certain voting trust agreement.
(3) Brian T. Clingen owns 1,052,852 shares directly, 352,078 shares issuable to
him upon exercise of the Management Warrants, and 125,008 shares held by The
Clingen Family Limited Partnership of which he is a general partner, which
represent 8.2% of the Common Stock. The voting rights for such shares have
been granted to Daniel L. Simon pursuant to a voting trust agreement.
(4) Brian T. Clingen owns 802,852 shares directly, 352,078 shares issuable to
him upon exercise of the Management Warrants, and 125,008 shares held by The
Clingen Family Limited Partnership of which he is a general partner, which
represent 5.4% of the Common Stock. The voting rights for such shares have
been granted to Daniel L. Simon pursuant to a voting trust agreement.
(5) Paul G. Simon owns 1,000 shares directly and 123,530 shares issuable to him
upon exercise of the Management Warrants which represent less than 1% of the
Common Stock, the voting rights of which have been granted to Daniel L.
Simon pursuant to a voting trust agreement.
(6) Represents less than 1% of the Common Stock.
(7) Messrs. Goldberg and Bynum may be deemed to share beneficial ownership of
shares of Common Stock owned of record by KIA V by virtue of their status as
limited partners of the general partner of KIA V and as limited partners of
KEP V. Messrs. Goldberg and Bynum disclaim beneficial ownership of such
securities. Mr. Goldberg has been a director of Parent since April 1996 and
Mr. Bynum became a director of Parent following consummation of the IPO.
(8) The business address for such person(s) is c/o Kelso & Company, 320 Park
Avenue, 24th Floor, New York, New York 10022.
(9) KIA V and KEP V due to their common control, could be deemed to
beneficially own each others shares, but each disclaims such beneficial
ownership.
(10) Messrs. Schuchert, Nickell, Matelich and Wall may be deemed to share
beneficial ownership of shares of Common Stock owned of record by KIA V and
KEP V, by virtue of their status as general partners of the general partner
of KIA V and as general partners of KEP V. Mssrs. Schuchert, Nickell,
Matelich and Wall share investment and voting power with respect to
securities owned by KIA V and KEP V, but disclaim beneficial ownership of
such securities.
48
<PAGE>
DESCRIPTION OF NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
will be issued pursuant to an indenture (the "Indenture") to be dated as of
, by and among the Company and United States Trust Company of New
York, as trustee (the "Trustee"). The following summaries of certain provisions
of the Indenture are summaries only, do not purport to be complete and are
qualified in their entirety by reference to all of the provisions of the
Indenture. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Indenture. Wherever particular provisions
of the Indenture are referred to in this summary, such provisions are
incorporated by reference as a part of the statements made and such statements
are qualified in their entirety by such reference.
GENERAL
The Notes will be senior subordinated, unsecured, general obligations of the
Company, limited in aggregate principal amount to $225 million. The Notes will
be subordinate in right of payment to certain other debt obligations of the
Company. The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
The Notes will mature on , 2006. The Notes will bear interest
at the rate per annum stated on the cover page hereof from the date of issuance
or from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semi-annually on and of each year,
commencing , 1997, to the persons in whose names such Notes are
registered at the close of business on the or immediately
preceding such Interest Payment Date. Interest will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be presented for registration of transfer or exchange, at the
office or agency of the Company maintained for such purpose, which office or
agency shall be maintained in the Borough of Manhattan, The City of New York. At
the option of the Company, payment of interest may be made by check mailed to
the Holders of the Notes at the addresses set forth upon the registry books of
the Company. No service charge will be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Until otherwise designated by the Company, the Company's office or agency will
be the corporate trust office of the Trustee presently located at the office of
the Trustee in the Borough of Manhattan, The City of New York.
SUBORDINATION
The Notes will be general, unsecured obligations of the Company,
subordinated in right of payment to all Senior Debt of the Company. On a pro
forma basis, as of June 30, 1996, after giving effect to the Transactions, the
Offerings and the application of the proceeds therefrom, the Company would have
had outstanding an aggregate of approximately $123.3 million of Senior Debt.
The Indenture provides that no payment (by set-off or otherwise) may be made
by or on behalf of the Company on account of the principal of, premium, if any,
or interest on the Notes (including any repurchases of Notes), or on account of
the redemption provisions of the Notes, for cash or property (other than Junior
Securities), (i) upon the maturity of any Senior Debt of the Company by lapse of
time, acceleration (unless waived) or otherwise, unless and until all principal
of, premium, if any, and the interest on such Senior Debt are first paid in full
in cash or Cash Equivalents (or such payment is duly provided for) or otherwise
to the extent holders accept satisfaction of amounts due by settlement in other
than cash or Cash Equivalents, or (ii) in the event of default in the payment of
any principal of, premium, if any, or interest on Senior Debt of the Company
when it becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise (a "Payment Default"), unless and
until such Payment Default has been cured or waived or otherwise has ceased to
exist.
49
<PAGE>
Upon (i) the happening of an event of default (other than a Payment Default)
that permits the holders of Senior Debt to declare such Senior Debt to be due
and payable and (ii) written notice of such event of default given to the
Company and the Trustee by the agent under the Credit Agreement or the
representative of the holders of an aggregate of at least $10 million principal
amount outstanding of any other Senior Debt (each, a "Senior Debt
Representative") (a "Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment
(by set-off or otherwise) may be made by or on behalf of the Company which is an
obligor under such Senior Debt on account of the principal of, premium, if any,
or interest on the Notes (including any repurchases of any of the Notes), or on
account of the redemption provisions of the Notes, in any such case, other than
payments made with Junior Securities. Notwithstanding the foregoing, unless the
Senior Debt in respect of which such event of default exists has been declared
due and payable in its entirety within 179 days after the Payment Notice is
delivered as set forth above (the "Payment Blockage Period") (and such
declaration has not been rescinded or waived), at the end of the Payment
Blockage Period, the Company shall, unless a Payment Default exists, be required
to pay all sums not paid to the Holders of the Notes during the Payment Blockage
Period due to the foregoing prohibitions and to resume all other payments as and
when due on the Notes. Any number of Payment Notices may be given; PROVIDED,
HOWEVER, that (i) not more than one Payment Notice shall be given within a
period of any 360 consecutive days, and (ii) no default that existed upon the
date of such Payment Notice or the commencement of such Payment Blockage Period
(whether or not such event of default is on the same issue of Senior Debt) shall
be made the basis for the commencement of any other Payment Blockage Period.
Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar
proceeding or upon assignment for the benefit of creditors or any marshalling of
assets or liabilities, (i) the holders of all Senior Debt of the Company will
first be entitled to receive payment in full in cash or Cash Equivalents (or
have such payment duly provided for) before the Holders are entitled to receive
any payment on account of principal of, premium, if any, and interest on the
Notes (other than Junior Securities) and (ii) any payment or distribution of
assets of the Company of any kind or character from any source, whether in cash,
property or securities (other than Junior Securities) to which the Holders or
the Trustee on behalf of the Holders would be entitled (by set-off or
otherwise), except for the subordination provisions contained in the Indenture,
will be paid by the liquidating trustee or agent or other person making such a
payment or distribution directly to the holders of such Senior Debt or their
representative to the extent necessary to make payment in full (or have such
payment duly provided for) on all such Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee at a time when such payment or distribution is
prohibited by the foregoing provisions, such payment or distribution shall be
held in trust for the benefit of the holders of such Senior Debt, and shall be
paid or delivered by the Trustee to the holders of such Senior Debt remaining
unpaid or unprovided for or to their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Debt may have been issued, ratably according to
the aggregate principal amounts remaining unpaid on account of such Senior Debt
held or represented by each, for application to the payment of all such Senior
Debt remaining unpaid, to the extent necessary to pay or to provide for the
payment of all such Senior Debt in full in cash or Cash Equivalents after giving
effect to any concurrent payment or distribution to the holders of such Senior
Debt.
No provision contained in the Indenture or the Notes will affect the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, and interest on the Notes. The subordination
provisions of the Indenture and the Notes will not prevent the occurrence of any
Default or Event of Default under the Indenture or limit the rights of the
Trustee or any Holder to pursue any other rights or remedies with respect to the
Notes.
50
<PAGE>
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors or the Company or a
marshalling of assets or liabilities of the Company, holders of the Notes may
receive ratably less than other creditors.
OPTIONAL REDEMPTION
The Company will not have the right to redeem any Notes prior to
, 2001 (other than out of the Net Cash Proceeds of a Public
Equity Offering or an Equity Private Placement, as described in the next
following paragraph). The Notes will be redeemable for cash at the option of the
Company, in whole or in part, at any time on or after , 2001,
upon not less than 30 days nor more than 60 days notice to each holder of Notes,
at the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing of the years
indicated below, in each case (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date) together with accrued and unpaid interest thereon
to the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2001............................................................................. %
2002............................................................................. %
2003............................................................................. %
2004 and thereafter.............................................................. 100.000%
</TABLE>
Until , 1999, upon any Public Equity Offering or Equity
Private Placement, in each case resulting in Net Cash Proceeds of $100 million
or more which are then contributed in full to the Company, up to $70 million
aggregate principal amount of the Notes may be redeemed at the option of the
Company within 120 days of such Public Equity Offering or Equity Private
Placement, on not less than 30 days, but not more than 60 days, notice to each
holder of the Notes to be redeemed, with cash from the Net Cash Proceeds of such
Public Equity Offering or Equity Private Placement, at % of principal,
(subject to the right of Holders of record on a Record Date to receive interest
due on an Interest Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest to the date of redemption; PROVIDED,
HOWEVER, that immediately following such redemption not less than $130 million
aggregate principal amount of the Notes are outstanding.
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a PRO RATA basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption to the Holder
of each Note to be redeemed to such Holder's last address as then shown upon the
registry books of the Registrar. Any notice which relates to a Note to be
redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the date of
redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date of redemption, interest will cease to accrue on the Notes or portions
thereof called for redemption, unless the Company defaults in the payment
thereof.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture will provide that in the event that a Change of Control has
occurred, each holder of Notes will have the right, at such holder's option,
pursuant to an offer by the Company (the "Change of Control Offer"), to require
the Company to repurchase all or any part of such holder's Notes (PROVIDED, that
the principal amount of such Notes must be $1,000 or an integral multiple
thereof) on a date (the
51
<PAGE>
"Change of Control Purchase Date") that is no later than 35 Business Days after
the occurrence of such Change of Control, at a cash price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof, together
with accrued interest to the Change of Control Purchase Date. The Change of
Control Offer shall be made within 10 Business Days following a Change of
Control and shall remain open for 20 Business Days following its commencement
(the "Change of Control Offer Period"). Upon expiration of the Change of Control
Offer Period, the Company promptly shall purchase all Notes properly tendered in
response to the Change of Control Offer.
If the terms of any outstanding Senior Debt prohibit the Company from
repurchasing Notes in accordance with the terms of this covenant, then prior to
the making of the offer, but in any event within 10 Business Days following any
Change of Control, the Company covenants to (i) repay in full such Senior Debt
or offer to repay in full such Senior Debt and repay such Senior Debt of each
holder thereof who has accepted such offer or (ii) obtain the requisite consent
under such Senior Debt to permit the repurchase of Notes in accordance with the
terms of this covenant. The Company shall first comply with the preceding
sentence before it shall be required to repurchase Notes pursuant to this
covenant.
As used herein, a "Change of Control" means (i) any merger or consolidation
of the Company or the Parent with or into any person or any sale, transfer or
other conveyance, whether direct or indirect, of all or substantially all of the
assets of the Company or the Parent, on a consolidated basis, in one transaction
or a series of related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than the Parent in the case of the Company or a Permitted Holder or Holders, is
or becomes the "beneficial owner," directly or indirectly, of more than 50% of
the total voting power in the aggregate normally entitled to vote in the
election of directors, managers, or trustees, as applicable, of the
transferee(s) or surviving entity or entities, (ii) any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than the Parent in the case of the
Company or a Permitted Holder or Holders, is or becomes the "beneficial owner,"
directly or indirectly, of more than 50% of the total voting power in the
aggregate of all classes of Capital Stock of the Company or the Parent, as the
case may be, then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of the Company or the Parent (together with any new
directors whose election by such Board or whose nomination for election by the
shareholders of the Company or the Parent, as the case may be, was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of the Company or the Parent, as the case may
be, then in office.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest) of all Notes so tendered and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Company. The Paying Agent promptly will pay the
Holders of Notes so accepted an amount equal to the Change of Control Purchase
Price (together with accrued and unpaid interest), and the Trustee promptly will
authenticate and deliver to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered. Any Notes not so accepted will
be delivered promptly by the Company to the Holder thereof. The Company publicly
will announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company and the Parent, and, thus, the removal
of incumbent management.
The phrase "all or substantially all" of the assets of the Company or the
Parent will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. As a
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result, there may be a degree of uncertainty in ascertaining whether a sale or
transfer of "all or substantially all" of the assets of the Company or the
Parent has occurred. In addition, no assurances can be given that the Company
will be able to acquire Notes tendered upon the occurrence of a Change of
Control.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL
STOCK
The Indenture will provide that, except as set forth below in this covenant,
the Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, issue, assume, guaranty, incur, become directly or indirectly
liable with respect to (including as a result of an Acquisition), or otherwise
become responsible for, contingently or otherwise (individually and
collectively, to "incur" or, as appropriate, an "incurrence"), any Indebtedness
or any Disqualified Capital Stock (including Acquired Indebtedness).
Notwithstanding the foregoing:
(a) if (i) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a PRO FORMA
basis to, such incurrence of Indebtedness or Disqualified Capital Stock and
(ii) on the date of such incurrence (the "Incurrence Date"), the
Consolidated Leverage Ratio of the Company as of the end of the Reference
Period immediately preceding the Incurrence Date, after giving effect on a
PRO FORMA basis to such incurrence of such Indebtedness or Disqualified
Capital Stock and, to the extent set forth in the definition of Consolidated
Leverage Ratio, the use of proceeds thereof, would not exceed 6.5 to 1 from
the Issue Date to and including the third anniversary of the Issue Date,
6.25 to 1 from the third anniversary of the Issue Date to and including the
fifth anniversary thereof, and 6.0 to 1 thereafter (each a "Debt Incurrence
Ratio"), then the Company may incur such Indebtedness or Disqualified
Capital Stock;
(b) the Company and the Subsidiaries may incur Indebtedness evidenced by
the Notes and represented by the Indenture up to the amounts specified
therein as of the date thereof;
(c) the Company and the Subsidiaries may incur Purchase Money
Indebtedness (including any Indebtedness issued to refinance, replace or
refund such Indebtedness) on or after the Issue Date, PROVIDED, that (i) the
aggregate amount of such Indebtedness incurred on or after the Issue Date
and outstanding at any time pursuant to this paragraph (c) shall not exceed
$10 million, and (ii) in each case, such Indebtedness shall not constitute
more than 100% of the cost (determined in accordance with GAAP) to the
Company or such Subsidiary, as applicable, of the property so purchased or
leased;
(d) the Company and the Subsidiaries, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (a), (b) and (c) of this
covenant or which is outstanding on the Issue Date so long as, in the case
of Refinancing Indebtedness which is not Senior Debt, such Refinancing
Indebtedness is secured only by the assets that secured the Indebtedness so
refinanced;
(e) the Company and the Subsidiaries may incur Permitted Indebtedness;
(f) Indebtedness incurred pursuant to the Credit Agreement up to an
aggregate amount outstanding (including any Indebtedness issued to
refinance, refund or replace such Indebtedness) at any time not to exceed
$300 million minus the amount of any such Indebtedness retired with Net Cash
Proceeds from any Asset Sale and plus any such Indebtedness constituting
Interest Swap and Hedging Obligations;
(g) other Indebtedness of the Company or its Subsidiaries not to exceed
$25 million at any time outstanding, of which only $10 million may be
incurred by the Subsidiaries.
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other person as a
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Subsidiary) or is merged with or into or consolidated with the Company or a
Subsidiary of the Company shall be deemed to have been Incurred at the time such
Person becomes such a Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Subsidiary of the Company, as applicable. For
purposes of determining amounts of Indebtedness under this covenant, (i)
Indebtedness resulting from security interests granted with respect to
Indebtedness otherwise included in the determination of Indebtedness, and
guarantees (and security interests with respect thereof) of, or obligations with
respect to letters of credit supporting, Indebtedness otherwise included in the
determination of Indebtedness shall not be included in the determination of
Indebtedness, (ii) any Liens permitted hereunder supporting Indebtedness
otherwise included in the determination of Indebtedness shall not be included in
the determination of Indebtedness and (iii) Indebtedness permitted under this
covenant need not be permitted solely by reference to one provision permitting
such Indebtedness but may be permitted in part by reference to one such
provision and in part by reference to one or more other provisions of this
covenant. For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness described above, the Company in its sole discretion shall
classify such item of Indebtedness and shall only be required to include the
amount and type of Indebtedness in one of such categories.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, make any Restricted Payment
if, after giving effect to such Restricted Payment on a PRO FORMA basis, (1) a
Default or an Event of Default shall have occurred and be continuing, (2) the
Company is not permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio in paragraph (a) of the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock," or (3) the aggregate amount of all Restricted Payments made by the
Company and its Subsidiaries, including after giving effect to such proposed
Restricted Payment, from and after the Issue Date, would exceed the sum of (a)
Consolidated EBITDA of the Company and its Consolidated Subsidiaries for the
period (taken as one accounting period), commencing on the first day of the
first full fiscal quarter commencing after the Issue Date, to and including the
last day of the fiscal quarter ended immediately prior to the date of each such
calculation (or, in the event Consolidated EBITDA for such period is a deficit,
then minus 100% of such deficit), minus (b) 1.5 times the Consolidated Fixed
Charges over such period, plus (c) the aggregate Net Cash Proceeds received by
the Company from the sale of its Qualified Capital Stock or Indebtedness to the
extent subsequently converted into Qualified Capital Stock (other than (i) to a
Subsidiary of the Company and (ii) to the extent applied in connection with a
Qualified Exchange) or the fair market value (as determined by the Board of
Directors reasonably and in good faith) of securities of the Parent issued in
connection with an acquisition by the Company or any of its Subsidiaries, in
each case after the Issue Date, plus (d) the net reductions in Investments
(other than reductions in Permitted Investments) in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of loans or from
designations of Unrestricted Subsidiaries as Subsidiaries, valued in each case
as provided in the definition of "Investment", not to exceed the amount of
Investments previously made by the Company and its Subsidiaries in such Person,
plus (e) $15 million.
The preceding paragraph, however, will not prohibit (w) payments made in
accordance with the "Use of Proceeds", (x) repurchases of Capital Stock out of
the proceeds of any "key man" life insurance policies on Daniel L. Simon
existing on the Issue Date and described in this Prospectus and additional
repurchases of Capital Stock from employees of the Company or its Subsidiaries
upon the death, disability or termination of employment in an aggregate amount
to all employees not to exceed $1 million per year or $2 million in the
aggregate on and after the Issue Date, (y) a Qualified Exchange, or (z) the
payment of any dividend on Qualified Capital Stock within 60 days after the date
of its declaration if such dividend could have been made on the date of such
declaration in compliance with the foregoing provisions. The full amount of any
Restricted Payment made pursuant to the foregoing clauses (x) and (z) of the
immediately preceding sentence, however, will be deducted in the calculation of
the aggregate amount of
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Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, assume or suffer to
exist any consensual restriction on the ability of any Subsidiary of the Company
to pay dividends or make other distributions to or on behalf of, or to pay any
obligation to or on behalf of, or otherwise to transfer assets or property to or
on behalf of, or make or pay loans or advances to or on behalf of, the Company
or any Subsidiary of the Company, except (a) restrictions imposed by the Notes
or the Indenture, (b) restrictions imposed by applicable law, (c) restrictions
under any Acquired Indebtedness not incurred in violation of the Indenture or
any agreement relating to any property, asset, or business acquired by the
Company or any of its Subsidiaries, which restrictions in each case existed at
the time of acquisition, were not put in place in connection with or in
anticipation of such acquisition and are not applicable to any person, other
than the person acquired, or to any property, asset or business, other than the
property, assets and business so acquired, (d) any such restriction or
requirement imposed by Indebtedness incurred under paragraph (f) of the covenant
"Limitation of Incurrence of Additional Indebtedness and Disqualified Capital
Stock," (e) restrictions with respect solely to a Subsidiary of the Company
imposed pursuant to a binding agreement which has been entered into for the sale
or disposition of all or substantially all of the Equity Interests or of any
assets of such Subsidiary, provided such restrictions apply solely to the Equity
Interests or assets of such Subsidiary, (f) restrictions on transfer contained
in Purchase Money Indebtedness incurred pursuant to paragraph (c) of the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock," provided such restrictions relate only to the transfer of the
property acquired with the proceeds of such Purchase Money Indebtedness, and (g)
in connection with and pursuant to permitted Refinancing Indebtedness,
replacements of restrictions imposed pursuant to clause (a) or (f) of this
paragraph that are not more restrictive than those being replaced and do not
apply to any other person or assets than those that would have been covered by
the restrictions in the Indebtedness so refinanced. Notwithstanding the
foregoing, neither (a) customary provisions restricting subletting or assignment
of any lease entered into in the ordinary course of business, consistent with
industry practice, nor (b) Liens permitted under the terms of the Indenture
shall in and of themselves be considered a restriction on the ability of the
applicable Subsidiary to transfer such agreement or assets, as the case may be.
LIMITATIONS ON LAYERING INDEBTEDNESS
The Indenture will provide that the Company will not, directly or
indirectly, incur, or suffer to exist any Indebtedness that is expressly
subordinate in right of payment to any other Indebtedness of the Company unless,
by its terms, such Indebtedness is subordinate in right of payment to, or ranks
PARI PASSU with, the Notes.
LIMITATION ON LIENS SECURING INDEBTEDNESS
The Company will not, and will not permit any Subsidiary to, create, incur,
assume or suffer to exist any Lien of any kind, other than Permitted Liens, upon
any of their respective assets now owned or acquired on or after the date of the
Indenture or upon any income or profits therefrom securing any Indebtedness of
the Company other than Senior Debt of the Company, unless the Company provides,
and causes its Subsidiaries to provide, concurrently or immediately thereafter,
that the Notes are equally and ratably so secured so long as such Lien exists,
PROVIDED that, if such Indebtedness is Subordinated Indebtedness, the Lien
securing such Subordinated Indebtedness shall be subordinate and junior to the
Lien securing the Notes with the same relative priority as such Subordinated
Indebtedness shall have with respect to the Notes.
LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, in one or a series of related transactions, convey,
sell, transfer, assign or otherwise dispose of, directly or
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indirectly, any of its property, business or assets, including by merger or
consolidation (other than a merger or consolidation of the Company), and
including any sale or other transfer or issuance of any Equity Interests of any
Subsidiary of the Company, whether by the Company or a Subsidiary of either or
through the issuance, sale or transfer of Equity Interests by a Subsidiary of
the Company (an "Asset Sale"), unless (l)(a) within 210 days after the date of
such Asset Sale, the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount")
are applied to the optional redemption of the Notes in accordance with the terms
of the Indenture or to the repurchase of Notes pursuant to a cash offer (the
"Asset Sale Offer") to repurchase Notes at a purchase price (the "Asset Sale
Offer Price") of 100% of principal amount, plus accrued interest to the date of
payment, made within 180 days of such Asset Sale or (b) within 180 days
following such Asset Sale, the Asset Sale Offer Amount is (i) invested (or
committed to be invested, and in fact is so invested, within an additional 90
days) in assets and property other than notes, bonds, obligation and securities
(except in connection with the acquisition of a wholly owned Subsidiary) which
in the good faith reasonable judgment of the Board will immediately constitute
or be a part of a Related Business of the Company or such Subsidiary immediately
following such transaction or (ii) used to permanently reduce Senior Debt
(PROVIDED that in the case of a revolver or similar arrangement that makes
credit available, such commitment is also permanently reduced by such amount),
(2) at least 75% of the consideration for such Asset Sale or series of related
Asset Sales consists of Cash, Cash Equivalents or Permitted Investments, (3) no
Default or Event of Default shall have occurred and be continuing at the time
of, or would occur after giving effect, on a PRO FORMA basis, to, such Asset
Sale, and (4) the Board of Directors of the Company determines in good faith
that the Company or such Subsidiary, as applicable, receives fair market value
for such Asset Sale.
The Indenture will provide that an acquisition of Notes pursuant to an Asset
Sale Offer may be deferred until the accumulated Net Cash Proceeds from Asset
Sales not applied to the uses set forth in (l) in the preceding paragraph (the
"Excess Proceeds") exceeds $15 million and that each Asset Sale Offer shall
remain open for 20 Business Days following its commencement (the "Asset Sale
Offer Period"). Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount plus an amount equal to accrued interest
to the purchase of all Notes properly tendered (on a PRO RATA basis if the Asset
Sale Offer Amount is insufficient to purchase all Notes so tendered) at the
Asset Sale Offer Price (together with accrued interest). To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than
the Asset Sale Offer Amount, the Company may use any remaining Net Cash Proceeds
for general corporate purposes as otherwise permitted by the Indenture and
following each Asset Sale Offer the Excess Proceeds amount shall be reset to
zero. For purposes of (2) in the preceding paragraph, total consideration
received means the total consideration received for such Asset Sales minus the
amount of (a) Senior Debt assumed by a transferee and (b) property that within
30 days of such Asset Sale is converted into Cash or Cash Equivalents.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Subsidiaries may, in the ordinary course of
business, convey, sell, transfer, assign or otherwise dispose of inventory
acquired and held for resale in the ordinary course of business;
(ii) the Company and its Subsidiaries may convey, sell, transfer, assign
or otherwise dispose of assets pursuant to and in accordance with the
limitation on mergers, sales or consolidations provisions in the Indenture;
(iii) the Company and its Subsidiaries may sell or dispose of damaged,
worn out or other obsolete property in the ordinary course of business so
long as such property is no longer necessary for the proper conduct of the
business of the Company or such Subsidiary, as applicable;
(iv) the Subsidiaries may convey, sell, transfer, assign or otherwise
dispose of assets to the Company or any of its wholly owned Subsidiaries;
and
(v) the Company and its Subsidiaries may convey, sell, transfer, assign
or otherwise dispose of assets (in addition to those transactions described
in clauses (i) through (iv) above) with an aggregate fair market value of $5
million in any fiscal year.
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All Net Cash Proceeds from an Event of Loss shall be invested, used for
prepayment of Senior Debt, or used to repurchase Notes, all within the period
and as otherwise provided above in clause 1(a) or 1(b) of the first paragraph of
this covenant.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Indenture will provide that neither the Company nor any of its
Subsidiaries will be permitted after the Issue Date to enter into or suffer to
exist any contract, agreement, arrangement or transaction (other than guarantees
of the Credit Agreement by the Company's Subsidiaries) with any Affiliate (an
"Affiliate Transaction"), or any series of related Affiliate Transactions, (i)
unless it is determined that the terms of such Affiliate Transaction are fair
and reasonable to the Company, and no less favorable to the Company than could
have been obtained in an arm's length transaction with a non-Affiliate and, (ii)
if involving consideration to either party in excess of $1 million, unless such
Affiliate Transaction(s) is evidenced by an Officers' Certificate addressed and
delivered to the Trustee certifying that such Affiliate Transaction (or
Transactions) has been approved by a majority of the members of the Board of
Directors that are disinterested in such transaction and (iii) if involving
consideration to either party in excess of $10 million, unless in addition the
Company, prior to the consummation thereof, obtains a written favorable opinion
as to the fairness of such transaction to the Company from a financial point of
view from an independent investment banking firm of national reputation.
The foregoing limitation shall not apply to (i) any transaction between the
Company and any of its Subsidiaries or between Subsidiaries, (ii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company and any employment agreement entered into by the
Company or any Subsidiary in the ordinary course of business and (iii) any tax
sharing arrangement between the Company and Parent.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture will provide that the Company will not, directly or
indirectly, consolidate with or merge with or into another person or sell,
lease, convey or transfer all or substantially all of its assets (computed on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another Person or group of affiliated Persons, unless (i)
either (a) the Company is the continuing entity or (b) the resulting, surviving
or transferee entity is a corporation organized under the laws of the United
States, any state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations of the Company in connection with
the Notes and the Indenture; (ii) no Default or Event of Default shall exist or
shall occur immediately after giving effect on a PRO FORMA basis to such
transaction; (iii) immediately after giving effect to such transaction on a PRO
FORMA basis, the Consolidated Net Worth of the consolidated resulting, surviving
or transferee entity is at least equal to the Consolidated Net Worth of the
Company immediately prior to such transaction; and (iv) immediately after giving
effect to such transaction on a PRO FORMA basis, the consolidated resulting,
surviving or transferee entity would immediately thereafter be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence
Ratio set forth in paragraph (a) of the covenant "Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock."
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture with the same
effect as if such successor corporation had been named therein as the Company,
and the Company shall be released from the obligations under the Notes and the
Indenture except with respect to any obligations that arise from, or are related
to, such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, the Company's interest in which
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constitutes all or substantially all of the properties and assets of the Company
shall be deemed to be the transfer of all or substantially all of the properties
and assets of the Company.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture will prohibit the Company and its Subsidiaries from being
required to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or from otherwise becoming subject
to regulation under the Investment Company Act.
LIMITATION ON LINES OF BUSINESS
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, engage to any substantial
extent in any line or lines of business activity other than that which, in the
reasonable good faith judgment of the Board of Directors of the Company, is a
Related Business.
PAYMENTS FOR CONSENT
Neither the Company nor any of its Subsidiaries or Unrestricted Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of any Notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered to
be paid or agreed to be paid to all holders of the Notes which so consent, waive
or agree to amend in the time frame set forth in solicitation documents relating
to such consent, waiver or agreement.
REPORTS
The Indenture will provide that whether or not the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall file with the Commission, and deliver to the Trustee and to each Holder
within 15 days after it has filed such with the Commission (if the Commission
will accept such filing), annual, quarterly and other reports required by
Section 13 or 15(d) of the Exchange Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will define an Event of Default as (i) the failure by the
Company to pay any installment of interest on the Notes as and when the same
becomes due and payable and the continuance of any such failure for 30 days,
(ii) the failure by the Company to pay all or any part of the principal, or
premium, if any, on the Notes when and as the same becomes due and payable at
maturity, redemption, by acceleration or otherwise, including, without
limitation, payment of the Change of Control Purchase Price or the Asset Sale
Offer Price, or otherwise, (iii) the failure by the Company or any Subsidiary to
observe or perform any other covenant or agreement contained in the Notes or the
Indenture and, subject to certain exceptions, the continuance of such failure
for a period of 30 days after written notice is given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Notes outstanding (PROVIDED, HOWEVER, that the
grace period after notice for an Event of Default arising as a result of the
Company's inability to repay Senior Debt in full, or to obtain requisite
consents from holders of Senior Debt to repurchase Notes, following a Change of
Control, or to make a Change of Control Offer, as described in " -- Repurchase
of Notes at the Option of Holders Upon a Change of Control", shall be five
days), (iv) certain events of bankruptcy, insolvency or reorganization in
respect of the Company or any of its Significant Subsidiaries, (v) a default in
the payment of principal on any issue of Indebtedness of the Company or any of
its Subsidiaries at final stated maturity or any acceleration for any other
reason of the stated maturity of any Indebtedness of the Company or any of its
Subsidiaries in each case with an aggregate principal amount in excess of $10
million and (vi) final unsatisfied judgments not covered by insurance
aggregating in excess of $10 million, at any one time rendered against the
Company or any of its Subsidiaries and either (a) the commencement by any
creditor of any enforcement proceeding upon any such judgment or order or (b)
such judgment or order is not stayed, bonded or discharged within 60 days. The
Indenture provides that if a Default occurs and is continuing, the Trustee must,
within 90 days after the occurrence of such default, give to the Holders notice
of such default.
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If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv), above, relating to the Company only) then in
every such case, unless the principal of all of the Notes shall have already
become due and payable, either the Trustee or the Holders of 25% in aggregate
principal amount of the Notes then outstanding, by notice in writing to the
Company (and to the Trustee if given by Holders) (an "Acceleration Notice"), may
declare all principal, determined as set forth below, and accrued interest
thereon to be due and payable immediately; PROVIDED, HOWEVER, that if any Senior
Debt is outstanding pursuant to the Credit Agreement, upon a declaration of such
acceleration, such principal and interest shall be due and payable upon the
earlier of (x) the third Business Day after the sending to the Company and the
Senior Debt Representatives of such written notice, unless such Event of Default
is cured or waived prior to such date and (y) the date of acceleration of any
Senior Debt under the Credit Agreement. If an Event of Default specified in
clause (iv), above, relating to the Company only occurs, all principal and
accrued interest thereon will be immediately due and payable on all outstanding
Notes without any declaration or other act on the part of Trustee or the
Holders. The Holders of a majority in aggregate principal amount of Notes
generally are authorized to rescind such acceleration if all existing Events of
Default, other than the non-payment of the principal of, premium, if any, and
interest on the Notes which have become due solely by such acceleration, have
been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a default
in the payment of principal of or interest on any Note not yet cured or a
default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Note affected.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture will provide that the Company may, at its option and at any
time, elect to have its obligations discharged with respect to the outstanding
Notes ("Legal Defeasance"). Such Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire indebtedness represented, and
the Indenture shall cease to be of further effect as to all outstanding Notes,
except as to (i) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due from the trust funds; (ii) the Company's obligations with respect to such
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes, and the maintenance of an office or agency for
payment and money for security payments held in trust; (iii) the rights, powers,
trust, duties, and immunities of the Trustee, and the Company's obligations in
connection therewith; and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Notes, U.S. legal tender, U.S. Government Obligations or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Notes on the stated date for
payment thereof or on the redemption date of such principal or installment of
principal of, premium, if any, or interest on such Notes, and the
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holders of Notes must have a valid, perfected, exclusive security interest in
such trust; (ii) in the case of the Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to Trustee confirming that (A) the Company has received from, or
there has been published by the Internal Revenue Service, a ruling or (B) since
the date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the holders of such Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to such Trustee confirming
that the holders of such Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred; (iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a default
under the Indenture or any other material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee
an Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the holders of such Notes over any other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and (vii) the Company
shall have delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that the conditions precedent provided for in, in the case
of the officers' certificate, (i) through (vi) and, in the case of the opinion
of counsel, clauses (i) (with respect to the validity and perfection of the
security interest), (ii), (iii) and (v) of this paragraph have been complied
with.
If the funds deposited with the Trustee to effect Legal Defeasance or
Covenant Defeasance are insufficient to pay the principal of premium, if any,
and interest on the Notes when due, then the obligations of the Company under
the Indenture will be revived and no such defeasance will be deemed to have
occurred.
AMENDMENTS AND SUPPLEMENTS
The Indenture will contain provisions permitting the Company and the Trustee
to enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, the
Company and the Trustee are permitted to amend or supplement the Indenture or
any supplemental indenture or modify the rights of the Holders; provided that no
such modification may, without the consent of each Holder affected thereby: (i)
change the Stated Maturity on any Note, or reduce the principal amount thereof
or the rate (or extend the time for payment) of interest thereon or any premium
payable upon the redemption thereof, or change the place of payment where, or
the coin or currency in which, any Note or any premium or the interest thereon
is payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or reduce the Change of Control
Purchase Price or the Asset Sale Offer Price or alter the provisions (including
the defined terms used therein) regarding the right of the Company to redeem the
Notes in a manner adverse to the Holders, or (ii) reduce the percentage in
principal amount of the outstanding Notes, the consent of whose Holders is
required for any such amendment, supplemental indenture or waiver provided for
in the Indenture, or (iii) modify any of the waiver provisions, except to
increase any required percentage or to provide that certain other provisions of
the Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Note affected thereby.
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NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture will provide that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of the Company or any
successor entity shall have any personal liability in respect of the obligations
of the Company under the Indenture or the Notes by reason of his or its status
as such stockholder, employee, officer or director, except to the extent such
person is an Issuer.
CERTAIN DEFINITIONS
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of the Company,
including by designation, or is merged or consolidated into or with the Company
or one of its Subsidiaries.
"ACQUISITION" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, PROVIDED, THAT, with respect to ownership interest in the Company
and its Subsidiaries a Beneficial Owner of 10 % or more of the total voting
power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to constitute
control.
"AVERAGE LIFE" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of (a) the
product of the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"BENEFICIAL OWNER" or "BENEFICIAL OWNER" for purposes of the definition of
Change of Control has the meaning attributed to it in Rules 13d-3 and 13d-5
under the Exchange Act (as in effect on the Issue Date), whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CAPITALIZED LEASE OBLIGATION" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person, as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
"CASH EQUIVALENT" means (a)(i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit issued by any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million or (iii)
commercial paper issued by others rated at least A-1 or the equivalent thereof
by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing within one year after
the date of acquisition or (b) shares of money market mutual funds or similar
funds having assets in excess of $500,000,000.
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"CONSOLIDATED EBITDA" means, with respect to any person, for any period, the
Consolidated Net Income of such person for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication, the sum of (i) consolidated income tax expense,
(ii) consolidated depreciation and amortization expense, PROVIDED that
consolidated depreciation and amortization of a Subsidiary that is a less than
wholly owned Subsidiary shall only be added to the extent of the equity interest
of the Company in such Subsidiary and only to the extent that dividends in
excess of such Person's PRO RATA share of net income are paid, and (iii)
Consolidated Fixed Charges, less the amount of all cash payments made by such
person or any of its Subsidiaries during such period to the extent such payments
relate to non-cash charges that were added back in determining Consolidated
EBITDA for such period or any prior period.
"CONSOLIDATED FIXED CHARGES" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of preferred stock (other than
by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such person or a
Subsidiary of such person of an obligation of another person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed.
"CONSOLIDATED LEVERAGE RATIO" of any person on any date of determination
(the "Transaction Date") means the ratio, on a PRO FORMA basis after giving
effect to the application of any proceeds of Indebtedness, of (a) Indebtedness
as of the end of the Reference Period to (b) the aggregate amount of
Consolidated EBITDA of such person attributable to continuing operations and
businesses (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of) for the Reference Period; PROVIDED,
that for purposes of such calculation, (i) Acquisitions which occurred during
the Reference Period or subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the first day of the
Reference Period and (ii) the incurrence of any Indebtedness or issuance of any
Disqualified Capital Stock subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the last day of the
Reference Period.
"CONSOLIDATED NET INCOME" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains or losses which are either
extraordinary, unusual (as determined in accordance with GAAP) or are
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock or losses in connection with the Transactions), (b) the net
income, if positive, of any person, other than a wholly owned Consolidated
Subsidiary, in which such person or any of its Consolidated Subsidiaries has an
interest, except to the extent of the amount of any dividends or distributions
actually paid in cash to such person or a wholly owned Consolidated Subsidiary
of such person during such period, but in any case not in excess of such
person's PRO RATA share of such person's net income for such period and (c) the
net income, if positive, of any of such person's Consolidated Subsidiaries to
the extent that the declaration or payment of dividends or similar distributions
is not at the time permitted by operation of the terms of its charter or bylaws
or any other agreement, instrument, judgment, decree, order, or governmental
regulation applicable to such Consolidated Subsidiary.
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"CONSOLIDATED NET WORTH" of any person at any date means the aggregate
consolidated stockholders' equity of such person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such person or a Consolidated Subsidiary of such person
subsequent to the Issue Date, and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in persons that are not Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such person in accordance with GAAP.
"CREDIT AGREEMENT" means the credit agreement dated October 8, 1996 by and
among the Company, certain of its subsidiaries, certain financial institutions
and Bankers Trust Company, as agent, providing for (A) an aggregate $75 million
term loan facility, and (B) an aggregate $225 million revolving credit facility,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, as such credit agreement and/or
related documents may be amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time whether or not with the same agent,
trustee, representative lenders or holders, and, subject to the proviso to the
next succeeding sentence, irrespective of any changes in the terms and
conditions thereof. Without limiting the generality of the foregoing, the term
"Credit Agreement" shall include agreements in respect of Interest Swap and
Hedging Obligations with lenders party to the Credit Agreement and shall also
include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any Credit Agreement and all
refundings, refinancings and replacements of any Credit Agreement, including any
agreement (i) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or more of the Company
and its Subsidiaries and their respective successors and assigns, (iii)
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder, PROVIDED that on the date such Indebtedness is incurred it
would not be prohibited by clause (f) of the covenant "Limitation on Incurrence
of Additional Indebtedness and Disqualified Capital Stock," or (iv) otherwise
altering the terms and conditions thereof in a manner not expressly prohibited
by the terms hereof.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b), with
respect to any person, an Equity Interest of such person that, by its terms or
by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Notes and (b) with respect to any
Subsidiary of such person (including with respect to any Subsidiary of the
Company), any Equity Interest other than any common equity with no preference,
privileges, or redemption or repayment provisions.
"EQUITY INTEREST" of any Person means any shares, interests, participations
or other equivalents (however designated) in such Person's equity, and shall in
any event include any Capital Stock issued by, or partnership interests in, such
Person. Convertible or exchangeable Indebtedness shall not be deemed to be an
Equity Interest for purposes of clause (b) of the definition of Restricted
Payments to the extent acquired at any time the conversion or exchange feature
is not "in-the-money".
"EQUITY PRIVATE PLACEMENT" means any sale by the Parent of its Capital Stock
(other than Disqualified Capital Stock) not requiring registration under the
Securities Act.
"EVENT OF LOSS" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
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"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
"INDEBTEDNESS" of any person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of such any person, (i) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, (except
for balances incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors and except for balances
due and actually paid within six months of the date property is delivered or
services are rendered or, if not actually paid within six months, being
contested in good faith), (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) under any Capitalized Lease
Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such person with respect to any letter of credit; (b) all net
obligations of such person under Interest Swap and Hedging Obligations; (c) all
liabilities and obligations of others of the kind described in the preceding
clause (a) or (b) that such person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such person; (d) any
and all deferrals, renewals, extensions, refinancing and refundings (whether
direct or indirect) of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (a), (b) or (c),
or this clause (d), whether or not between or among the same parties, and (e)
all Disqualified Capital Stock of such Person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified
Capital Stock, such Fair Market Value to be determined in good faith by the
board of directors of the issuer (or managing general partner of the issuer) of
such Disqualified Capital Stock. For purposes hereof, the amount of any
Indebtedness issued with original issue discount shall be the original purchase
price plus accreted interest, PROVIDED, HOWEVER, that such accretion shall not
be deemed an incurrence of Indebtedness.
"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"INVESTMENT" by any person in any other person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
person or any agreement obligating a person to make any such acquisition; (b)
the making by such person of any deposit (in excess of $5 million in any one
transaction) with, or advance, loan or other extension of credit to, such other
person (including the purchase of property from another person subject to an
understanding or agreement, contingent or otherwise, obligating such Person to
resell such property to such other person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable or deposits
arising in the ordinary course of business); (c) other than guarantees of
Indebtedness of the Company or
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any Subsidiary to the extent permitted by the covenant "Limitation on Incurrence
of Additional Indebtedness and Disqualified Capital Stock," the entering into by
such person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
person; (d) the making of any capital contribution by such person to such other
person, other than to the Company or a Subsidiary of the Company; and (e) the
designation by the Board of Directors of the Company of any person to be an
Unrestricted Subsidiary. The Company shall be deemed to make an Investment in an
amount equal to the fair market value of the net assets of any subsidiary (or,
if neither the Company nor any of its Subsidiaries has theretofore made an
Investment in such subsidiary, in an amount equal to the Investments being
made), at the time that such subsidiary is designated an Unrestricted
Subsidiary, and any property transferred to an Unrestricted Subsidiary from the
Company or a Subsidiary shall be deemed an Investment valued at its fair market
value at the time of such transfer.
"ISSUE DATE" means the date of first issuance of the Notes under the
Indenture.
"JUNIOR SECURITY" means any Qualified Capital Stock and any Indebtedness of
the Company that is subordinated in right of payment to Senior Debt at least to
the same extent as the Notes, and has no scheduled installment of principal due,
by redemption, sinking fund payment or otherwise, on or prior to the Stated
Maturity of the Notes.
"LIEN" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"NET CASH PROCEEDS" means the aggregate amount of Cash or Cash Equivalents
received by the Company in the case of a sale of Qualified Capital Stock and by
the Parent in the case of a Public Equity Offering or an Equity Private
Placement and by the Company and its Subsidiaries in respect of an Asset Sale
plus, in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Company (to
the extent not previously included in the calculation of Net Cash Proceeds) upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and expenses (including, without limitation, the fees and
expenses of legal counsel and investment banking fees and expenses) incurred in
connection with such Asset Sale or sale of Qualified Capital Stock or Public
Equity Offering or Equity Private Placement, and, in the case of an Asset Sale
only, less (i) the amount (estimated in good faith by the Company) of income,
franchise, sales and other applicable taxes required to be paid by the Company
or any of its respective Subsidiaries in connection with such Asset Sale, (ii)
payments made to repay Indebtedness or any other obligation outstanding at the
time of such Asset Sale that either (A) is secured by a Lien on the property or
assets sold or (B) is required to be paid as a result of such sale, and (iii)
appropriate amounts to be provided by the Company or any Subsidiary of the
Company as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP.
"OBLIGATION" means any principal, premium or interest payment, or monetary
penalty, or damages, due by the Company under the terms of the Notes or the
Indenture.
"PERMITTED HOLDER" means Daniel L. Simon, Brian T. Clingen or Kelso &
Company, L.P. or any of their respective affiliates (as such term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934).
"PERMITTED INDEBTEDNESS" means the Indebtedness of the Company to any wholly
owned Subsidiary, and Indebtedness of any wholly owned Subsidiary to any other
wholly owned Subsidiary or to the Company; PROVIDED, that, in the case of
Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Company's obligations pursuant to the Notes
and the date of any event that causes such Subsidiary to no longer be a wholly
owned Subsidiary shall be an Incurrence Date.
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"PERMITTED INVESTMENT" means (a) Investments in any of the Notes; (b) Cash
Equivalents; (c) Permitted Indebtedness; (d) Investments in Persons who, after
such Investments, will become Subsidiaries of the Company; (e) other Investments
not to exceed $25 million in aggregate at any time outstanding; and (f)
Investments in any property or assets to be used in a business in which the
Company was engaged on the date of the Indenture.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days, or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property is used by the Company or any of its Subsidiaries) or interfere with
the ordinary conduct of the business of the Company or any of its Subsidiaries;
(f) Liens arising by operation of law in connection with judgments, only to the
extent, for an amount and for a period not resulting in an Event of Default with
respect thereto; (g) pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security legislation; (h) Liens securing the Notes; (i) Liens securing
Indebtedness of a Person existing at the time such Person becomes a Subsidiary
or is merged with or into the Company or a Subsidiary or Liens securing
Indebtedness incurred in connection with an Acquisition, PROVIDED that such
Liens were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to
any other assets; (j) Liens arising from Purchase Money Indebtedness permitted
to be incurred under clause (c) of the covenant "Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock" provided such Liens
relate to the property which is subject to such Purchase Money Indebtedness; (k)
leases or subleases granted to other persons in the ordinary course of business
not materially interfering with the conduct of the business of the Company or
any of its Subsidiaries or materially detracting from the value of the relative
assets of the Company or any Subsidiary; (l) Liens arising from precautionary
Uniform Commercial Code financing statement filings regarding operating leases
entered into by the Company or any of its Subsidiaries in the ordinary course of
business; and (m) Liens securing Refinancing Indebtedness incurred to refinance
any Indebtedness that was previously so secured in a manner no more adverse to
the Holders of the Notes than the terms of the Liens securing such refinanced
Indebtedness provided that the Indebtedness secured is not increased and the
lien is not extended to any additional assets or property.
"PUBLIC EQUITY OFFERING" means an underwritten offering of Common Stock of
the Parent pursuant to an effective registration statement under the Securities
Act.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness of such person to any
seller or other person incurred to finance the acquisition (including in the
case of a Capitalized Lease Obligation, the lease) of any real or personal
tangible property which, in the reasonable good faith judgment of the Board of
Directors of the Company, is directly related to a Related Business of the
Company and which is incurred substantially concurrently with such acquisition
and is secured only by the assets so financed.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Company that is not
Disqualified Capital Stock.
"QUALIFIED EXCHANGE" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of the Company
issued on or after the Issue Date with the Net Cash Proceeds received by the
Company from the substantially concurrent sale of Qualified Capital Stock
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or any exchange of Qualified Capital Stock for any Capital Stock or Indebtedness
issued on or after the Issue Date.
"REFERENCE PERIOD" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
for which financial statements are available ended immediately preceding any
date upon which any determination is to be made pursuant to the terms of the
Notes or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing,
plus, in each case, premium and fees and expenses; PROVIDED, that (A) such
Refinancing Indebtedness of any Subsidiary of the Company shall only be used to
Refinance outstanding Indebtedness or Disqualified Capital Stock of such
Subsidiary, (B) such Refinancing Indebtedness shall (x) not have an Average Life
shorter than the Indebtedness or Disqualified Capital Stock to be so refinanced
at the time of such Refinancing and (y) in all respects, be no less subordinated
or junior, if applicable, to the rights of Holders of the Notes than was the
Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have a final stated maturity or redemption date,
as applicable, no earlier than the final stated maturity or redemption date, as
applicable, of the Indebtedness or Disqualified Capital Stock to be so
refinanced.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
"RESTRICTED PAYMENT" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such person or any parent of such person, (b) any payment on account of the
purchase, redemption or other acquisition or retirement for value of Equity
Interests of such person or parent of such person, (c) other than with the
proceeds from the substantially concurrent sale of, or in exchange for,
Refinancing Indebtedness any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms of
or any defeasance of, any Subordinated Indebtedness, directly or indirectly, by
such person or Subsidiary of such person prior to the scheduled maturity, any
scheduled or required repayment of principal, or scheduled sinking fund payment,
as the case may be, of such Indebtedness and (d) any Investment by such person,
other than a Permitted Investment; PROVIDED, HOWEVER, that the term "Restricted
Payment" does not include (i) any dividend, distribution or other payment on or
with respect to Capital Stock of an issuer to the extent payable solely in
shares of Qualified Capital Stock of such issuer; or (ii) any dividend,
distribution or other payment to the Company, or to any of its wholly owned
Subsidiaries, by the Company or any of its Subsidiaries.
"SENIOR DEBT" of the Company means Indebtedness (including any monetary
obligation in respect of the Credit Agreement, and interest, whether or not
allowable, accruing on Indebtedness incurred pursuant to the Credit Agreement
after the filing of a petition initiating any proceeding under any bankruptcy,
insolvency or similar law) of the Company arising under the Credit Agreement or
that, by the terms of the instrument creating or evidencing such Indebtedness,
is expressly designated Senior Debt or made senior in right of payment to the
Notes; provided, that in no event shall Senior Debt include (a) Indebtedness to
any Subsidiary of the Company or any officer, director or employee of the
Company or any Subsidiary of the Company, (b) Indebtedness incurred in violation
of the terms of the Indenture, (c) Indebtedness consisting of trade payables,
(d) Disqualified Capital Stock and (e) Capitalized Lease Obligations.
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"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any Subsidiary
of the Company that, together with its Subsidiaries, (i) for the most recent
fiscal year of the Company, accounted for more than 10% of the consolidated
revenues of the Company and its Subsidiaries or (ii) as of the end of such
fiscal year, was the owner of more than 10% of the consolidated assets of the
Company and its Subsidiaries, all as set forth on the most recently available
consolidated financial statements of the Company for such fiscal year.
"STATED MATURITY," when used with respect to any Note, means ,
2006.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company that is
expressly subordinated in right of payment to the Notes in any respect or, for
purposes of the definition of Restricted Payments only, has a stated maturity on
or after the Stated Maturity.
"SUBSIDIARY," with respect to any person, means (i) a corporation a majority
of whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such person, by such
person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person, (ii) any other person (other than a corporation or
partnership) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Company or of any Subsidiary of the
Company. Unless the context requires otherwise, Subsidiary means each direct and
indirect Subsidiary of the Company.
"UNRESTRICTED SUBSIDIARY" means any subsidiary of the Company that does not
own any Capital Stock of, or own or hold any Lien on any property of, the
Company or any other Subsidiary of the Company and that shall be designated an
Unrestricted Subsidiary by the Board of Directors of the Company; PROVIDED, that
(i) such subsidiary shall not engage, to any substantial extent, in any line or
lines of business activity other than a Related Business and (ii) neither
immediately prior thereto nor after giving pro forma effect to such designation
would there exist a Default or Event of Default. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Subsidiary, PROVIDED,
that (i) no Default or Event of Default is existing or will occur as a
consequence thereof and (ii) immediately after giving effect to such
designation, on a PRO FORMA basis, the Company could incur at least $1.00 of
Indebtedness pursuant to the Debt Incurrence Ratio in paragraph (a) of the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock." Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Equity Interests of
which are owned by the Company or one or more wholly owned Subsidiaries of the
Company.
DESCRIPTION OF INDEBTEDNESS AND OTHER COMMITMENTS
The following is a description of the principal agreements which will govern
the Company following the consummation of the Transactions. The following
summaries are qualified in their entirety by reference to the agreement to which
such summary relates. See "Available Information." Defined terms used below and
not defined have the meanings set forth in the respective agreements.
THE EXISTING COMPANY NOTES
On March 2, 1994, the Company issued $65 million aggregate principal amount
of the Existing Company Notes pursuant to an indenture between the Company and
the United States Trust Company of New York, as trustee (the "Existing Company
Indenture"). The Existing Company Notes mature on November 15, 2003 and are
senior unsecured obligations of the Company ranking on a parity with all
existing and future indebtedness of the Company that is not expressly
subordinated to the Existing Company Notes.
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INTEREST. The Existing Company Notes bear interest at the rate of 11% per
annum.
SECURITY. The obligations under the Existing Company Notes are not secured.
REDEMPTION. The Existing Company Notes may be redeemed at the option of the
Company commencing November 15, 1998 in whole or in part, at any time and from
time to time, at the redemption prices (expressed as a percentage of principal
amount) set forth in the Existing Company Indenture.
COVENANTS. The Existing Company Indenture restricts the Company and its
subsidiaries from, among other things: (i) incurring indebtedness and allowing
subsidiaries to issue preferred stock; (ii) incurring liens or guaranteeing
obligations except for certain permitted liens with certain exceptions; (iii)
entering into mergers or consolidations; (iv) selling or otherwise disposing of
property, business or assets; (v) with certain exceptions, making loans or
investments; (vi) making optional payments or prepayments of indebtedness; (vii)
entering into transactions with affiliates; (viii) with certain exceptions,
entering into agreements prohibiting or limiting the ability of the Company or
its subsidiaries to create liens upon its property, assets or revenues in favor
of the holders of the Existing Company Notes or pay dividends or indebtedness to
the Company or its subsidiaries; and (ix) engaging in any businesses other than
the business of outdoor advertising.
THE COMPANY DEBT TENDER OFFER. Pursuant to the Company Debt Tender Offer,
the Company intends to solicit consents to modify or eliminate certain of the
above-described covenants.
CHANGE IN CONTROL. Upon a "change of control" (as defined in the Existing
Company Indenture), each holder of the Existing Company Notes may require the
Company to repurchase all or a portion of such holder's Existing Company Notes
at a purchase price equal to 101% of their accreted value on the date of
purchase.
THE EXISTING PARENT NOTES
On June 23, 1994, Parent issued $50 million aggregate principal amount of
the Existing Parent Notes and 50,000 Warrants to purchase 1,000,000 shares of
Common Stock pursuant to an indenture (the "Existing Parent Indenture") between
Parent and the United States Trust Company of New York, as trustee. The Existing
Parent Notes mature on July 1, 2004 and are senior secured obligations of Parent
secured by a pledge of all of the common stock of the Company issued to the
Parent. The Existing Parent Notes rank on a parity in right of payment with all
existing and future indebtedness of Parent that is not expressly subordinated to
the Existing Parent Notes.
INTEREST. The Existing Parent Notes were offered at a substantial discount
from their principal amount. From the date of issuance, the Existing Parent
Notes accrete at the rate of 14% per annum although no cash interest will accrue
until July 1, 1999. The first interest payment date will be January 1, 2000.
SECURITY. The obligations under the Existing Parent Notes are secured by a
pledge of all of the issued and outstanding shares of common stock of the
Company.
REDEMPTION. The Existing Parent Notes may be redeemed at the option of
Parent, in whole or in part, at any time and from time to time, at the
redemption prices (expressed as a percentage of principal amount) set forth in
the Existing Parent Indenture.
COVENANTS. The Existing Parent Indenture restricts Parent and its
subsidiaries from, among other things: (i) incurring indebtedness and allowing
subsidiaries to issue preferred stock; (ii) incurring liens or guaranteeing
obligations except for certain permitted liens with certain exceptions; (iii)
entering into mergers or consolidations; (iv) selling or otherwise disposing of
property, business or assets; (v) with certain exceptions, making loans or
investments; (vi) making optional payments or prepayments of indebtedness; (vii)
entering into transactions with affiliates; (viii) with certain exceptions,
entering into agreements prohibiting or limiting the ability of Parent to create
liens upon its property, assets or revenues in favor of the Existing Parent
Notes or pay dividends or indebtedness to Parent; and (ix) engaging in any
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businesses other than ownership of the capital stock of the Company and, with
respect to the Company and its subsidiaries, the business of outdoor
advertising.
THE PARENT DEBT TENDER OFFER. Pursuant to the Parent Debt Tender Offer,
Parent intends to solicit consents to modify or eliminate certain of the
above-described covenants.
CHANGE IN CONTROL. Upon a "change of control" (as defined in the Existing
Parent Indenture), each holder of the Existing Parent Notes may require Parent
to repurchase all or a portion of such holder's Existing Parent Notes at a
purchase price equal to 101% of their accreted value on the date of purchase.
NEW CREDIT FACILITY
On October 8, 1996, the Company entered into the New Credit Facility, the
terms and conditions of which are as set forth below:
REVOLVING CREDIT FACILITY
COMMITMENT; INTEREST. The Revolving Credit Facility is a revolving line of
credit facility providing for borrowings of up to $12.5 million that may be used
for general corporate purposes including working capital requirements.
Borrowings under the Revolving Credit Facility may be in the form of eurodollar
loans or announced base rate loans as determined by the Company. The Company may
prepay borrowings under the Revolving Credit Facility, and may reborrow (up to
the amount of the commitment then in effect) any amounts that are repaid or
prepaid.
TERMINATION OF COMMITMENT. The initial commitment of $12.5 million
terminates on September 30, 2004, unless extended, or upon the occurrence of a
"change of control" (as defined in the Credit Agreements). On each of these
dates, the Company is required to repay borrowings (together with fees and
interest accrued thereon and any additional amounts owing under the Revolving
Credit Facility) in excess of the commitment as reduced.
SECURITY. The Company's obligations under the Revolving Credit Facility are
secured by first priority liens (subject to certain permitted encumbrances) on
substantially all of the assets of the Company. In addition, management of
Parent will pledge its Common Stock to the banks as security for the Company's
obligations until such time as the banks receive a pledge of the stock of the
Company after the Existing Parent Notes are repurchased in full.
COVENANTS. The Revolving Credit Facility restricts the Company and its
subsidiaries from, among other things: (i) changes in business; (ii) with
certain exceptions, consolidation, mergers, sales or purchases of assets; (iii)
with certain exceptions, incurring, creating, assuming or suffering to exist any
liens or encumbrances upon property of the Company or assigning any right to
receive income; (iv) with certain exceptions, creating, incurring, assuming or
suffering to exist any indebtedness; (v) making investments or loans in any
other person or entity or acquiring or establishing any subsidiaries except for
investments and subsidiaries permitted under the Revolving Credit Facility; (vi)
selling, assigning or otherwise encumbering or disposing of the capital stock or
other securities of any subsidiary; (vii) making any optional or voluntary
prepayments on indebtedness; (viii) with certain exceptions, redeeming, retiring
or purchasing capital stock of the Company or declaring or paying dividends on
the capital stock of the Company; and (ix) except as to certain transactions
that comply with the terms of the Revolving Credit Agreement, entering into
transactions with affiliates. With respect to additional acquisitions, such
additional acquisitions require the consent of the lenders unless such
acquisitions do not exceed $50,000,000 in the aggregate or the Holdings Leverage
Ratio (as defined in the Credit Agreements) is less than 5.50 to 1.0. In
addition, the Revolving Credit Facility also requires the Company to maintain
certain levels of Operating Cash Flow and interest expense coverage, and limits
the Company's capital expenditures to $10 million each fiscal year (in addition
to additional permitted expenditures not in excess of the "basket" amount set
forth therein), which amount is increased annually to 105% of the maximum amount
for the immediately preceding twelve-month period.
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CHANGE OF CONTROL. A change of control (as defined in the Credit
Agreements) of the Company constitutes an event of default permitting the
lenders to accelerate indebtedness under and terminate the Revolving Credit
Facility.
ACQUISITION CREDIT FACILITY
COMMITMENT; INTEREST. The Acquisition Credit Facility consists of an
acquisition credit line in the amount of $287.5 million pursuant to which $75
million is available under a term loan facility available on the closing date
and $212.5 million which is available under a revolving/term loan facility. The
Company drew an amount equal to approximately $285 million to finance the POA
Acquisition and for other corporate purposes. The $212.5 million revolving/term
loan facility may be reborrowed from time to time; the $75 million term loan may
not be reborrowed. Borrowings under the Acquisition Credit Facility may be in
the form of eurodollar loans or announced base rate loans as determined by the
Company. See "Use of Proceeds."
TERMINATION OF COMMITMENT. Upon the failure of certain events to occur
prior to October 1997, a total of $100 million under the $212.5 million
revolving/term loan may be converted to a term facility which may not be
reborrowed. The $212.5 million revolving/term loan matures on September 30, 2003
and the $75 million term loan matures on September 30, 2004, or upon the
occurrence of a "change of control" (as defined in the Credit Agreements). The
availability under the $212.5 million revolving/term loan terminates in
September, 1999.
SECURITY. The Company's obligations under the Acquisition Credit Facility
are secured by first priority liens (subject to certain permitted encumbrances)
on substantially all of the assets of the Company. In addition, management of
Parent will pledge its Common Stock of Parent to the banks as security for the
Company's obligations until such time as the banks receive a pledge of the stock
of the Company and its subsidiaries after the Existing Parent Notes are repaid
in full.
COVENANTS. Except to the extent any of such covenants conflict with the
terms of the Existing Company Notes or the Existing Parent Notes, the
Acquisition Credit Facility restricts the Company and its subsidiaries from,
among other things: (i) changes in business; (ii) with certain exceptions,
consolidation, mergers, sales or purchases of assets; (iii) with certain
exceptions, incurring, creating, assuming or suffering to exist any liens or
encumbrances upon property of the Company or assigning any right to receive
income; (iv) with certain exceptions, creating, incurring, assuming or suffering
to exist any indebtedness; (v) making investments or loans in any other person
or entity or acquiring or establishing any subsidiaries except for investments
and subsidiaries permitted under the Acquisition Credit Facility; (vi) selling,
assigning or otherwise encumbering or disposing of the capital stock or other
securities of any subsidiary; (vii) making any optional or voluntary prepayments
on indebtedness; (viii) with certain exceptions, redeeming, retiring or
purchasing capital stock of the Company or declaring or paying dividends on the
capital stock of the Company; and (ix) except as to certain transactions that
comply with the terms of the Acquisition Credit Agreement, entering into
transactions with affiliates. With respect to additional acquisitions, such
additional acquisitions require the consent of the lenders unless such
acquisitions do not exceed $50,000,000 in the aggregate or the Holdings Leverage
Ratio (as defined in the Credit Agreements) is less than 5.50 to 1.0. In
addition, the Acquisition Credit Facility also requires the Company to maintain
certain levels of Operating Cash Flow and interest expense coverage, and limits
the Company's capital expenditures to $10 million in each fiscal year (in
addition to additional permitted expenditures not in excess of the "basket"
amount set forth therein), which amount is increased to 105% of the maximum
amount for the immediately preceding twelve-month period.
CHANGE OF CONTROL. A "change of control" (as defined in the Credit
Agreements) of the Company constitutes an event of default permitting the
lenders to accelerate indebtedness under and terminate the Acquisition Credit
Facility.
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the underwriters named below (the
"Underwriters"), and each of the Underwriters has severally agreed to pruchase,
the principal amount of the Notes set forth opposite its name below. The
Underwriters have agreed to purchase all the Notes if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
--------------
<S> <C>
Bear, Stearns & Co. Inc........................................................................... $
BT Securities Corporation.........................................................................
--------------
Total........................................................................................... $ 200,000,000
--------------
--------------
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes directly to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of % of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of % of the principal amount of the Notes to certain other dealers. After the
initial public offering, the public offering price, concession and reallowance
may be changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to an additional
$25,000,000 aggregate principal amount of the Notes at the public offering price
less the underwriting discounts and commissions set forth on the cover page of
this Prospectus. To the extent that the Underwriters exercise such option, each
of the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the aggregate principal amount of the Notes to be
purchased by it shown in the above table bears to $250,000,000, and the Company
will be obligated, pursuant to the option, to sell such Notes to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the Notes offered hereby. If
purchased, the Underwriters will offer such additional Notes on the same terms
as those on which the $200,000,000 aggregate principal amount of the Notes are
being offered.
There is no public market for the Notes. The Company does not intend to list
the Notes on any securities exchange or to arrange for their quotation on the
Nasdaq National Market. The Company has been advised by the Underwriters that
they presently intend to make a market in the Notes after the consummation of
the Offering, although they are under no obligation to do so and any such market
making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of the
trading market for the Notes or that an active public market for the Notes will
develop. If an active public market does not develop, the market prices and
liquidity of the Notes may be adversely affected.
Based on information provided by the Company, more than 10% of the net
proceeds of the Offering will be used to repay a loan to Bankers Trust Company,
an affiliate of BT Securities Corporation. The Offering therefore is being
conducted in accordance with the applicable provisions of Rule 2720 to the
Conduct Rules of the National Association of Securities Dealers, Inc. Rule 2720
requires that the price to public of the Notes not be higher than that
recommended by a "qualified independent underwriter" meeting certain standards.
Accordingly, Bear, Stearns & Co. Inc. is assuming the responsibilities of acting
as the qualified independent underwriter in pricing the Offering and conducting
due diligence. In connection with the Offering, Bear, Stearns & Co. Inc. in its
role as qualified independent underwriter has performed due diligence
investigations and reviewed and participated in the preparation of this
Prospectus and the Registration Statement of which this Prospectus forms a part.
The price to public of the Notes set forth on the cover page of this Prospectus
is no higher than the price recommended by Bear, Stearns & Co. Inc.
Bear, Stearns & Co. Inc has in the past provided and may continue to provide
investment banking services to the Company and Kelso & Company, L.P. and its
affiliates. Bankers Trust Company, an affiliate
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of BT Securities Corporation, is the administrative agent and a lender under the
Company's New Credit Facility. See "Description of Indebtedness and Other
Commitments -- New Credit Facility." BT Securities Corporation has, from time to
time, provided investment banking services to the Company and Kelso & Company,
L.P. and its affiliates.
In connection with this Offering, the Company has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by Winston &
Strawn, Chicago, Illinois. Skadden, Arps, Slate, Meagher & Flom, New York, New
York will pass on certain legal matters for the Underwriters in connection with
this Offering. Skadden, Arps, Slate, Meagher & Flom has from time to time
represented Kelso & Company, L.P. and KIA V and KEP V, including with respect to
the purchase by KIA V and KEP V from Parent of Class B Common Stock and Class C
Common Stock of the Parent in April 1996, and may continue to represent Kelso &
Company, L.P., KIA V and KEP V. Skadden, Arps, Slate, Meagher & Flom has been
engaged by the Company to represent it in connection with the Acquisitions.
EXPERTS
The Consolidated Financial Statements of the Company as of December 31, 1994
and 1995 and for each of the three years in the period ended December 31, 1995
in this Prospectus have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The Consolidated Financial Statements of NOA Holding Company at May 31, 1995
and 1994, and for each of the three years in the period ended May 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
The combined financial statements of Tanner-Peck, LLC included in this
Propsectus and Registration Statement have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the periods set
forth in their report appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of said firm as experts in auditing
and accounting.
The Financial Statements of POA Acquisition Corporation at December 31, 1995
and 1994, and for each of the three years in the period ended December 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith files reports and other information with the Commission.
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 Notes offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement, 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
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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 and reports and other information filed by the Company 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. The Commission maintains a World Wide Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission and the
address of such site is http://www.sec.gov.
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INDEX TO FINANCIAL STATEMENTS
UNIVERSAL OUTDOOR, INC.
<TABLE>
<S> <C>
Report of Independent Accountants of Price Waterhouse LLP............................ F-2
Consolidated Balance Sheets.......................................................... F-3
Consolidated Statements of Operations................................................ F-4
Consolidated Statements of Cash Flow................................................. F-5
Consolidated Statements of Changes in Common Stockholders' Deficit................... F-6
Notes to Consolidated Financial Statements........................................... F-7
NOA HOLDING COMPANY
Report of Independent Auditors of Ernst & Young LLP.................................. F-15
Consolidated Balance Sheets.......................................................... F-16
Consolidated Statements of Operations................................................ F-17
Consolidated Statements of Stockholders' Equity...................................... F-18
Consolidated Statements of Cash Flows................................................ F-19
Notes to Consolidated Financial Statements........................................... F-20
AD-SIGN
Report of Independent Accountants of Price Waterhouse LLP............................ F-26
Statement of Revenues and Direct Expenses............................................ F-27
Notes to the Statement of Revenues and Direct Expenses............................... F-28
POA ACQUISITION CORPORATION
Report of Independent Accountants of Ernst & Young LLP............................... F-29
Balance Sheets....................................................................... F-30
Statements of Operations............................................................. F-31
Statements of Shareholders Equity.................................................... F-32
Statements of Cash Flows............................................................. F-33
Notes to Financial Statements........................................................ F-34
TANNER-PECK, L.L.C.
Report of Independent Certified Public Accountants of BDO Seidman, LLP............... F-41
Combined Balance Sheets.............................................................. F-42
Combined Statements of Income........................................................ F-43
Combined Statements of Changes in Members' Equity.................................... F-44
Combined Statements of Cash Flows.................................................... F-45
Summary of Accounting Policies....................................................... F-46
Notes to Combined Financial Statements............................................... F-48
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Universal Outdoor, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in common stockholders'
deficit and of cash flows present fairly, in all material respects, the
financial position of Universal Outdoor Holdings, Inc. and its subsidiary at
December 31, 1994 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of Universal's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 23, 1996
F-2
<PAGE>
UNIVERSAL OUTDOOR, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------ JUNE 30,
1996
-----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash.................................................................. $ 11 $ 19 $ 59
Accounts receivable, less allowance for doubtful accounts of $106 in
1994 and 1995....................................................... 4,313 5,059 9,654
Other receivables..................................................... 185 201 563
Prepaid land rents.................................................... 822 1,043 2,644
Prepaid insurance and other........................................... 859 1,029 1,594
------------ ------------ -----------
Total current assets.............................................. 6,190 7,351 14,514
------------ ------------ -----------
Property and equipment, net............................................. 53,651 55,346 152,279
------------ ------------ -----------
Other assets:
Noncompete agreements, net of accumulated amortization of $4,711 and
$4,505.............................................................. 1,615 1,995 1,426
Finance costs, net of accumulated amortization of $511 and $1,171..... 3,378 3,196 5,631
Excess of cost over fair value assets acquired, net of accumulated
amortization of $184 and $230....................................... 746 700 2,952
Other costs associated with acquisitions, net of accumulated
amortization of $569 and $686....................................... 584 525 548
Deposits.............................................................. 26 20 22
------------ ------------ -----------
Total other assets................................................ 6,349 6,436 10,579
------------ ------------ -----------
$ 66,190 $ 69,133 $ 177,372
------------ ------------ -----------
------------ ------------ -----------
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-term debt.................................. $ 58 $ 58 $ --
Accounts payable...................................................... 1,469 1,225 1,285
Accounts payable -- parent............................................ 722 234 220
Accrued interest...................................................... 998 1,054 998
Deferred revenue...................................................... 400 468 487
Accrued expenses...................................................... 482 409 3,402
------------ ------------ -----------
Total current liabilities......................................... 4,129 3,448 6,392
------------ ------------ -----------
Long-term debt, less current maturities................................. 73,304 76,079 150,207
------------ ------------ -----------
Common stockholders' deficit:
Common stock, $.01 par value, 1,500,000 shares authorized; 7,000,000
shares issued and outstanding at December 31, 1994 and 1995,
13,000,000 shares issued and outstanding at June 30, 1996........... -- -- --
Additional paid in capital............................................ 22,535 22,535 52,524
Accumulated deficit................................................... (33,778) (32,929) (31,751)
------------ ------------ -----------
Total common stockholders' deficit................................ (11,243) (10,394) 20,773
------------ ------------ -----------
Commitment and contingencies (Notes 5 and 9)............................ -- -- --
------------ ------------ -----------
$ 66,190 $ 69,133 $ 177,372
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
UNIVERSAL OUTDOOR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, FOR THE SIX MONTHS ENDED
JUNE 30,
---------------------------------- ------------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross revenues.................................. $ 28,710 $ 33,180 $ 38,101 $ 18,292 $ 29,366
Less agency commissions......................... 2,863 3,414 3,953 1,881 3,127
---------- ---------- ---------- ---------- ------------
Net revenues................................ 25,847 29,766 34,148 16,411 26,239
---------- ---------- ---------- ---------- ------------
Operating expenses:
Direct advertising expenses................... 10,901 11,806 12,864 6,266 9,520
General and administrative expenses........... 3,357 3,873 4,244 2,150 3,076
Depreciation and amortization................. 8,000 7,310 7,402 3,538 4,674
---------- ---------- ---------- ---------- ------------
22,258 22,989 24,510 11,954 17,270
---------- ---------- ---------- ---------- ------------
Operating income................................ 3,589 6,777 9,638 4,457 8,969
---------- ---------- ---------- ---------- ------------
Other (income) expense:
Interest expense, including amortization of
bond discount of $162, $61 and $63.......... 6,610 7,959 8,195 4,059 5,871
Interest expense -- amortization of deferred
financing costs............................. 511 355 432 221 215
Interest expense -- accretion of dividends on
redeemable preferred stock.................. 1,844 -- -- -- --
Miscellaneous Acquisition related
expenditures................................ -- -- -- -- 1,750
(Gain) loss on disposal of assets and other
expenses.................................... 351 134 42 21 (76)
---------- ---------- ---------- ---------- ------------
Total other expense......................... 9,316 8,448 8,669 4,301 7,760
---------- ---------- ---------- ---------- ------------
Net income (loss) before extraordinary item..... (5,727) (1,671) 969 156 1,209
Extraordinary loss on early extinguishment of
debt........................................... (3,260) -- -- -- --
---------- ---------- ---------- ---------- ------------
Net income (loss)............................... $ (8,987) $ (1,671) $ 969 $ 156 $ 1,209
---------- ---------- ---------- ---------- ------------
---------- ---------- ---------- ---------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
UNIVERSAL OUTDOOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
---------- ---------- --------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................................... $ (8,987) $ (1,671) $ 969 $ 156 $ 1,209
Depreciation and amortization......................... 8,673 7,726 7,897 3,790 3,896
Costs related to acquisitions......................... -- -- -- -- 1,750
Extraordinary loss.................................... 3,260 -- -- -- --
(Gain) loss on sale of property and equipment......... 69 90 -- -- --
Accretion of preferred stock dividends................ 1,844 -- -- -- --
Changes in assets and liabilities:
Accounts receivable and other receivables........... (728) (1,278) (762) (672) (1,254)
Prepaid land rents, insurance and other............. (262) (223) (391) (73) (209)
Accounts payable and accrued expenses............... 741 (156) (317) (407) 866
Accounts payable -- parent.......................... -- 722 (488) (146) (10)
Accrued interest.................................... (253) 140 56 (44) (72)
Deferred revenue.................................... -- 400 68 -- --
Other............................................... (235) -- 6 15 --
---------- ---------- --------- --------- ----------
Net cash from operating activities................ 4,122 5,750 7,038 2,619 6,176
---------- ---------- --------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gross capital expenditures............................ (2,862) (5,671) (5,620) (2,521) (2,943)
Payments for acquisitions............................. -- (3,355) (1,925) (2,164) (107,106)
Proceeds from sale of property and equipment.......... 858 1,003 -- --
Payment for consulting agreement...................... -- -- (1,400) --
Other payments........................................ (32) (160) (124) -- (76)
---------- ---------- --------- --------- ----------
Net cash used in investing activities............. (2,036) (8,183) (9,069) (4,685) (110,125)
---------- ---------- --------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt.............. 64,037 -- -- -- 75,000
Principal payments of long-term debt.................. (64,505) (272) (262) (52) (1,173)
Deferred financing costs.............................. (3,560) (221) (250) --
Net borrowings under credit agreements................ 3,950 3,040 2,671 -- 222
Additional paid in capital............................ -- -- -- -- 30,000
Payment of prepayment fees............................ (1,272) -- -- -- --
Payment for redemption of preferred stock............. -- -- -- -- --
Payment for cancellation of outstanding warrants...... (750) -- -- -- --
Dividends paid to parent............................ -- (120) (120) (60) --
Other................................................. -- -- -- 2,183 (60)
---------- ---------- --------- --------- ----------
Net cash from (used in) financing activities.......... (2,100) 2,427 2,039 2,071 103,989
---------- ---------- --------- --------- ----------
NET INCREASE (DECREASE) IN CASH......................... (14) (6) 8 5 40
CASH, at beginning of period............................ 31 17 11 11 19
---------- ---------- --------- --------- ----------
CASH, at end of period.................................. $ 17 $ 11 $ 19 $ 16 $ 59
---------- ---------- --------- --------- ----------
---------- ---------- --------- --------- ----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid during the period....................... $ 7,701 $ 7,765 $ 8,676 $ 4,035 $ 5,815
---------- ---------- --------- --------- ----------
---------- ---------- --------- --------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
UNIVERSAL OUTDOOR, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' DEFICIT
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADDITIONAL COMMON
PAID IN ACCUMULATED STOCKHOLDERS'
CAPITAL DEFICIT DEFICIT
----------- ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1993............................................. $ 22,135 ($ 31,987) ($ 9,852)
Reclassification of redeemable common stock reflecting termination of
stockholder agreement which may have required Universal Outdoor II
Holding Company to purchase up to 20% of its outstanding Class A common
stock................................................................... 400 -- 400
Dividends declared to parent............................................. (120) (120)
Net loss................................................................. -- (1,671) (1,671)
----------- ------------ ------------
Balance at December 31, 1994............................................. 22,535 (33,778) (11,243)
Dividends declared to parent............................................. (120) (120)
Net income............................................................... -- 969 969
----------- ------------ ------------
Balance at December 31, 1995............................................. 22,535 (32,929) (10,394)
Capital contribution (unaudited)......................................... 29,989 -- 29,989
Other (unaudited)........................................................ -- (31) (31)
Net income (unaudited)................................................... -- 1,209 1,209
----------- ------------ ------------
Balance at June 30, 1996 (unaudited)..................................... $ 52,524 ($ 31,751) $ 20,773
----------- ------------ ------------
----------- ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1 -- BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS:
Universal Outdoor, Inc., Universal Outdoor II Holding Company (the Holding
Company), Outdoor Properties, Inc., Midwest Outdoor Management, Inc. and CBT
Development, Inc. were entities under common ownership and control. In
connection with the Refinancing Plan (see below), (i) a wholly-owned subsidiary
of the Holding Company was merged with and into Universal Outdoor, Inc., which
thereupon became a wholly-owned subsidiary of the Holding Company and (ii)
Universal Outdoor, Inc. (Universal) acquired all of the assets, in consideration
for the assumption of all of the liabilities, of each of Outdoor Properties,
Inc., Midwest Outdoor Management, Inc. and CBT Development, Inc. In conjunction
with the Refinancing Plan, 2,649 shares of class A common stock of Universal
were exchanged for an equal number of common shares of the Holding Company, and
1,556 shares of class B common stock of Universal were exchanged for 48,000
shares of Series B voting preferred stock of the Holding Company.
Effective November 18, 1993, Universal executed a Refinancing Plan to extend
the average life of its obligations, thereby enhancing its operating and
financial flexibility. As part of the Refinancing Plan, Universal combined, in a
single operating entity (Universal Outdoor, Inc.) under the Holding Company,
business activities previously conducted by separate affiliated corporations,
repaid certain outstanding indebtedness, issued $65.0 million Senior Notes due
2003 of Universal and replaced its existing bank credit facility. In addition,
the Refinancing Plan provided for the amendment of the terms of the redeemable
preferred stock of the Holding Company to allow the provisions of the indenture
governing the Senior Notes due 2003 to restrict payments by the operating
company to the Holding Company until the $65.0 million Senior Notes due 2003
have been retired.
Pursuant to the Refinancing Plan, Universal entered a new credit facility
which permits borrowings of up to $12,500 on a revolving basis. Additionally,
Universal issued $65.0 million Senior Notes. With the funds obtained, Universal
(i) repaid all outstanding bank borrowings, (ii) retired approximately $25,000
of senior secured notes (including a prepayment penalty of $1,000), (iii)
retired approximately $6,500 of senior subordinated notes, (iv) repaid
approximately $3,400 of other indebtedness and (v) paid related transaction fees
and expenses, including prepayment penalties.
Upon consummation of the Refinancing Plan, Universal recognized an
extraordinary loss totaling $3,300 relating to the write-off of unamortized
deferred financing costs and prepayment fees associated with long term debt
instruments. Furthermore, the redeemable preferred stock ($16,900 at November
18, 1993, the refinancing date) and a $1,200 unsecured term loan became
obligations of and were recorded in the Holding Company with the operations of
Universal and all other assets and liabilities recorded in the operating
subsidiary, Universal. The Holding Company's sole source of funds will be the
operations of its wholly-owned subsidiary, Universal. However the terms of the
$65.0 million Senior Notes due 2003 effectively preclude the operating
subsidiary from distributing cash to satisfy obligations of the Holding Company.
Universal is a leading Midwestern outdoor advertising company. Universal
owns and operates outdoor advertising display faces principally in five
geographic markets: Chicago, Illinois; Milwaukee, Wisconsin; Indianapolis,
Indiana; Des Moines, Iowa; and Evansville, Indiana. Universal sells outdoor
advertising space to national, regional and local advertisers.
Historically, manufacturers of tobacco products, principally cigarettes,
have been major users of outdoor advertising displays, including displays
operated by Universal. In 1993, 1994 and 1995, tobacco industry advertising
accounted for approximately 14.8%, 13.1% and 13.3% of Universal's net revenues,
respectively.
F-7
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
The summary of significant accounting policies is presented to assist the
reader in understanding and evaluating Universal's consolidated financial
statements. These policies are in conformity with generally accepted accounting
principles consistently applied in all material respects.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Universal's revenues are generated from contracts with advertisers generally
covering periods of one to twelve months. Universal recognizes revenues ratably
over the contract term and defers customer prepayment of rental fees. Costs
incurred for the production of outdoor advertising displays are recognized in
the initial month of the contract or as incurred during the contract period.
PREPAID LAND RENTS
Most of Universal's outdoor advertising structures are located on leased
land. Land rents are typically paid in advance for periods ranging from one to
twelve months. Prepaid land rents are expensed ratably over the related rental
term.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets. Expenditures for maintenance and repairs are charged to operations as
incurred; major improvements are capitalized.
INTANGIBLE ASSETS
Non-compete agreements, deferred financing and acquisition costs are
amortized over their estimated economic lives, ranging from three to ten years.
The excess of cost over fair value of assets acquired is amortized over twenty
years on a straight-line basis. Universal reviews the carrying value of
intangibles and other long-lived assets for impairment when events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. This review is performed by comparing estimated undiscounted future
cash flows from use of the asset to the recorded value of the asset.
INCOME TAXES
Income tax expense is based on pre-tax income for financial reporting
purposes, adjusted for the effects of permanent differences between such income
and that reported for tax return purposes. Deferred tax assets and liabilities
are recognized for expected future tax consequences of temporary differences
between the carrying amounts and tax bases of the underlying assets and
liabilities (Note 6).
EARNINGS PER SHARE
An earnings per share calculation has not been presented because Universal
and its predecessor are closely held and owned by a private investor group and
accordingly, earnings per share is not required or meaningful.
RECLASSIFICATIONS
Certain financial information in the prior years have been reclassified to
conform to the current year presentation.
F-8
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INTERIM FINANCIAL INFORMATION
The interim financial information as of June 30, 1996 and 1995 and for the
six months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
NOTE 3 -- PROPERTY AND EQUIPMENT:
Major classes of property and equipment consist of the following at December
31, 1994 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Outdoor advertising structures.............................................................. $ 70,869 $ 76,340
Land and capitalized land lease costs....................................................... 2,167 2,232
Vehicles and equipment...................................................................... 3,751 4,712
Building and leasehold improvements......................................................... 3,019 3,150
Display faces under construction............................................................ 125 1,344
--------- ---------
79,931 87,778
Less accumulated depreciation............................................................... 26,280 32,432
--------- ---------
Net property and equipment.................................................................. $ 53,651 $ 55,346
--------- ---------
--------- ---------
</TABLE>
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS:
Long-term debt consists of the following at December 31, 1994 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1995
--------- ----------
<S> <C> <C>
11% Senior Notes due 2003, net of discount of $902 and $839 (a).................. $ 64,098 $ 64,161
Credit facility (b).............................................................. 6,990 3,286
Acquisition line (b)............................................................. -- 6,375
Other obligations (c)............................................................ 2,274 2,315
--------- ----------
73,362 76,137
Less current maturities of long-term debt and other obligations.................. 58 58
--------- ----------
$ 73,304 $ 76,079
--------- ----------
--------- ----------
</TABLE>
- ------------------------
(a) The $65.0 million Senior Notes due 2003 have interest payable semi-annually
and are subject to redemption at the option of Universal beginning in 1998.
The $65.0 million Senior Notes due 2003 also contain certain restrictive
covenants including, among others, limitations on additional debt incurrence
and restrictions on distributions to stockholders, except for limited
payments permitted under the Indenture.
(b) In July 1995, Universal's credit agreement was amended to increase the
available borrowings, to extend the term of the agreement, and to add an
acquisition line of credit.
Pursuant to the amended revolving credit agreement that extends through May
2001, Universal has borrowing available under a credit facility and an
acquisition line of credit. The credit facility permits borrowings up to
$12,500 until May 1, 2000 when available borrowings under the credit
facility are scheduled to reduce to $10,000. The acquisition line of credit
permits borrowings up to $22,500. Available borrowings under the acquisition
line are scheduled to reduce to $19,500 in 1996, $15,500 in 1997, $10,500 in
1998 and $4,500 in 1999 and $0 in 2000.
F-9
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
The loans under the credit facility and acquisition line bear interest at
the rate per annum equal to the following: (i) Prime rate plus 0.25% when
the aggregate principle amount outstanding under the credit facility and the
acquisition line is $20 million or less, and (ii) Prime rate plus 0.50% when
the aggregate principle amount outstanding is greater than $20 million.
Prior to the amendment, Universal paid interest on this facility at (i) the
Prime rate or (ii) LIBOR plus 225 basis points. The interest rate in effect
during 1995 ranged from 8.5% to 9.25% and was 6% to 8.5% during 1994.
Interest on the credit facility is payable monthly. The credit facility is
collateralized by a first security interest in all assets of Universal.
Borrowings under the credit agreement are subject to certain restrictive
covenants including, among others, a maximum ratio of total indebtedness to
earnings, a minimum ratio of earnings to total interest expense and
restrictions on additional debt incurrence as well as distributions to
stockholders. Commitment fees are 0.25% of the unused portion of the
committed facility and are paid quarterly.
(c) Other obligations include the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
- - Secured term note due November 30, 1999 bearing interest at the prime
rate. Interest on this note is payable monthly. This note is secured by a
building in Addision, Illinois........................................... $ 1,200 $ 1,148
- - Promissory note due December 31, 2001. Interest on this note is
calculated annually and is equal to 14% of the cash flow (as defined) of
Universal's subsidiary................................................... 500 500
- - Promissory note with interest, compounded annually, at 10%, due May 4,
1999. For the first two years subsequent to May 4, 1994, interest is
added to the principal balance. Thereafter, interest is to be paid
monthly in arrears....................................................... 500 500
- - Other obligations........................................................ 74 167
--------- ---------
$ 2,274 $ 2,315
--------- ---------
--------- ---------
</TABLE>
On June 30, 1994, the Holding Company (Universal's parent) issued $50.0
million 14% Senior Secured Discount Notes due 2004 for an aggregate
consideration of approximately $25.4 million. The $50.0 million Senior Secured
Discount Notes due 2004 do not pay any interest prior to July 1, 1999.
Commencing on July 1, 1999, interest on the Notes will accrue and will be
payable in cash semi-annually on each January 1, and July 1 commencing on
January 1, 2000. The Holding Company will be dependant on the cash flow of
Universal and its subsidiary in order to meet its debt service obligations. The
Holding Company believes that it will receive distributions from Universal to
enable it to service the cash interest payments; however, there can be no
assurances that such distributions, if any, will be adequate to satisfy either
the cash interest on, or the payment such debt. Significant contractual and
other restrictions exist on the payment of dividends and the making of loans by
Universal to the Holding Company. Consequently, all or a portion of the $50.0
million Senior Secured Discount Notes due 2004 may require refinancing prior to
the maturity thereof. During the peirod prior to July 1, 2004, the Holding
Company does not expect to have significant short-term cash requirements except
for certain legal, accounting, printing and other similar costs.
Aggregate maturities of long-term debt obligations for each of the five
years subsequent to 1995 are $58, $54, $95, $1,512 and $4,500.
F-10
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 5 -- LEASE COMMITMENTS:
Rent expense totaled $4,100, $4,600 and $4,600 in 1993, 1994 and 1995,
respectively. Minimum annual rentals under the terms of noncancellable operating
leases in effect at December 31, 1995 are payable as follows:
<TABLE>
<CAPTION>
OFFICE
YEAR LEASES LAND TOTAL
- ------------------------------------------------------------------------- ----------- --------- ---------
<S> <C> <C> <C>
1996..................................................................... $ 191 $ 3,315 $ 3,506
1997..................................................................... 145 2,995 3,140
1998..................................................................... 63 2,615 2,678
1999..................................................................... 63 2,242 2,305
2000..................................................................... 53 1,925 1,978
Thereafter............................................................... -- 13,083 13,083
----- --------- ---------
$ 515 $ 26,175 $ 26,690
----- --------- ---------
----- --------- ---------
</TABLE>
NOTE 6 -- INCOME TAXES:
Universal and the Holding Company entered into a tax sharing agreement that
became effective upon completion of the Refinancing Plan. Under the tax sharing
agreement, the Holding Company filed a consolidated federal income tax return
with Universal for the taxable year of Universal ended on December 31, 1993 and
will continue to file consolidated returns for each taxable year thereafter for
which the Holding Company and Universal are eligible to file consolidated
federal income tax returns. Under the tax sharing agreement, for each taxable
year of Universal with respect to which Universal is included in a consolidated
federal income tax return with the Holding Company, Universal will pay to the
Holding Company an amount equal to the lesser of (i) the consolidated federal
income tax liability of the consolidated group of which the Holding Company is
the common parent or (ii) the federal income tax liability of Universal,
computed as if Universal had filed a separate federal income tax return.
Accordingly, Universal has included the tax benefits of the Holding Company's
net operating loss carryforwards generated prior to consummation of the
Refinancing Plan in its deferred tax computation. Tax benefits from losses
generated by the Holding Company subsequent to the consummation of the
Refinancing Plan are not available to Universal; however, such benefits may be
transferred through either an intercompany transfer or a capital transaction.
Since Universal utilized operating loss carryfowards to completely offset
income in 1995 and incurred a net operating loss in 1994, no provision for
income taxes was required. Deferred tax assets, determined in accordance with
FAS 109, consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Bad debts............................................................................ $ 42 $ 42
Non-deductible accrued expenses...................................................... 81 53
Depreciation......................................................................... 136 523
Loss carryforwards................................................................... 6,483 5,841
--------- ---------
6,742 6,459
--------- ---------
Valuation reserve.................................................................... (6,742) (6,459)
--------- ---------
Net deferred tax asset............................................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>
F-11
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 6 -- INCOME TAXES: (CONTINUED)
For tax return purposes, the following companies have net operating loss
carryforwards at December 31, 1994 which expire between 2005-2009:
<TABLE>
<S> <C> <C>
PRIOR TO REFINANCING PLAN:
Universal........................................................ $ 5,808
Holding Company.................................................. 7,172
---------
$ 12,980
---------
---------
SUBSEQUENT TO REFINANCING PLAN:
Universal........................................................ $ 1,622
---------
---------
</TABLE>
Certain restrictions on the Universal's utilization of the net operating
losses will apply if there has been an "ownership change" of either Universal,
the Holding Company, or both within the meaning of section 382 of the Internal
Revenue Code. Upon the Holding Company's completion of its debt offering and
stock purchases, a limitation was imposed on the net operating loss
carryforwards which arose prior to the Refinancing Plan of Universal. The
limitation, as specified in Section 382 of the Internal Revenue Code, is based
on a percentage of the value of the Company at the time of the ownership change.
Furthermore, the Holding Company's use of Universal's net operating losses are
subject to limitations applicable to corporations filing consolidated federal
income tax returns.
NOTE 7 -- SUPPLEMENTAL CASH FLOW INFORMATION:
In March 1995, Universal entered into two stock purchase agreements to
purchase, for a net combined purchase price of $1,400, advertising structures
located in the Dallas market. Approximately $1,200 of the total purchase price
was paid in cash and $200 was paid in the form of promissory notes issued by
Universal or assumption of debt of the acquired Company. Additionally, during
1995 Universal acquired signboard crane equipment for $103 under a capital
lease. Accordingly, the Statement of Cash Flows does not reflect the debt
incurred in the acquisition of the stock or the equipment.
In May 1994, Universal entered into two asset purchase agreements to
purchase, for a net combined purchase price of $4,300, advertising structures
located in the Chicago and Milwaukee markets. Approximately, $3,300 of the total
purchase price was paid in cash and $1,000 was paid in the form of promissory
notes issued by Universal. Additionally, in October 1994, Universal acquired a
building in Addison, Illinois, for $1,500, $1,200 of which was funded with a
secured term note. Accordingly, the Statement of Cash Flows does not reflect
these notes issued to acquire the advertising structures or building.
NOTE 8 -- FINANCIAL INSTRUMENTS:
Universal values its financial instruments as required by FAS No. 107,
"Disclosures about Fair Values of Financial Instruments." The carrying amounts
of cash and cash equivalents, short term debt and long-term variable rate debt
approximate fair value. The fair value of long-term debt is based on market
prices. The estimated fair values of Universal financial instruments, for which
the carrying amount does not approximate fair value, as of December 31, 1995 is
as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Long-term debt.................................................................. $ 76,137 $ 77,112
</TABLE>
NOTE 9 -- CONTINGENCIES:
Universal is subject to various legal claims, suits and complaints in the
normal course of business. Such litigation includes claims by municipalities
that certain outdoor advertising structures must be removed. While the ultimate
outcome of current and future litigation cannot be predicted with certainty,
F-12
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 9 -- CONTINGENCIES: (CONTINUED)
management believes, based on the advice of the Universal's counsel, the final
outcome of such litigation will not have a material adverse effect on the
Universal's financial position.
NOTE 10 -- RELATED-PARTY TRANSACTIONS
In June 1994, Universal's parent entity, Universal Outdoor Holding, Inc.,
advanced approximately $1,200 to Universal in the form of a intercompany loan,
which was a portion of the proceeds from the sale by the Holding Company of the
$50.0 million Senior Secured Discount Notes due 2004 (Note 4). Universal does
not pay interest on this loan, and as of December 31, 1995, approximately $234
was outstanding.
NOTE 11 -- SUBSEQUENT EVENTS:
In January 1996, the Company entered into an asset purchase agreement with
Ad-Sign, Inc. Under this agreement, Universal purchased approximately 160
display faces in the Chicago market in exchange for $12.5 million. The purchase
price was paid in cash and was financed with borrowings against the Acquisition
Line of Credit.
In February 1996, the Company entered into an agreement to purchase all
outstanding stock of NOA Holding Company for approximately $85 million ("Naegele
Acquisition"). The Company expects fees and expenses associated with the deal to
be $5 million. As a result of the proposed stock purchase, Universal will
acquire signboards in the Minneapolis/St. Paul, Minnesota and Jacksonville,
Florida markets. The Company expects to finance this acquisition with $60
million in bank borrowings and $30 million in cash proceeds from the purchase of
equity of the Holding Company by an investor group. The transaction is expected
to close in April 1996.
In addition, the Holding Company sold 186,500 shares of Class B common stock
and 188,500 shares of Class C common stock for approximately $30 million. The
proceeds were used to assist in the financing of the Naegele Acquisition.
In April 1996, the Company acquired four painted bulletin faces in the
Chicago market from Paramount Outdoor, Inc. in an asset purchase transaction for
approximately $600,000.
In July 1996, the Holding Company completed an initial public offering (IPO)
of its stock whereby the Company sold 4,630 shares of Common Stock at net
proceeds of $62,435,550. The proceeds were used to pay down on existing debt. In
conjunction with the IPO, the Company effected a 16-for-one stock split. The
accompanying financial statements and related notes thereto have been restated
to reflect the 16-for-one stock split for all periods presented.
In August 1996, the Company entered into an agreement to purchase all
outstanding stock of Outdoor Advertising Holdings, Inc., for approximately $240
million. The Company expects fees and expenses associated with the deal to be
$10 million. As a result of the proposed stock purchase, Universal will acquire
signboards in the Southeast markets including Orlando, Jacksonville, Palm Beach,
Ocala, and the East Coast and Gulf Coast areas of Florida. The Company expects
to finance this acquisition with bank borrowings. The transaction is expected to
close in October, 1996.
In September 1996, the Company acquired an option to purchase certain assets
of Tanner-Peck Outdoor for $5 million. The option is to purchase certain assets
located in and around Memphis, Tennessee and Tunica County, Mississippi during
the period from December 1, 1996 and December 31, 1996. The purchase price in
connection with purchase upon exercise of the option is approximately $66
million plus 100,000 shares of Common Stock of the Company.
In September 1996, the Company acquired certain assets of Iowa Outdoor
Displays for approximately $1.8 million. As a result of the agreement, the
Company will acquire signboards in the Des Moines market.
F-13
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 11 -- SUBSEQUENT EVENTS: (CONTINUED)
Also in September 1996, the Company acquired certain assets of The Chase
Company for approximately $5.8 million. As a result of the agreement, the
Company will acquire signboards in the Dallas market.
The Company will finance the purchase price of certain of the Acquisitions
and the related refinancing of certain existing bank indebtedness of the Company
through an amended and restated revolving credit facility loan and an amended
and restated acquisition term loan aggregating $300 million under the New Credit
Facility.
F-14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
NOA Holding Company
We have audited the accompanying consolidated balance sheets of NOA Holding
Company as of May 31, 1994 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended May 31, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of NOA Holding
Company as of May 31, 1994 and 1995 and the consolidated results of its
operations and cash flows for each of the three years in the period ended May
31, 1995 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
July 21, 1995
F-15
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 31,
--------------------
1994 1995
--------- --------- MARCH 31,
1996
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash......................................................................... $ 1,619 $ 1,630 $ 906
Accounts receivable, net of allowance for doubtful accounts of $346,000 in
1994 and $338,000 in 1995.................................................. 4,384 4,517 3,639
Other receivables............................................................ 256 262 126
Inventories.................................................................. 267 282 153
Current portion of prepaid leases............................................ 1,183 1,098 1,059
Prepaid expenses............................................................. 390 274 191
Other assets................................................................. 150 35 210
--------- --------- -----------
Total current assets..................................................... 8,249 8,098 6,284
--------- --------- -----------
Long-term portion of prepaid leases............................................ 312 509 545
Property and equipment, net (Note 3)........................................... 23,562 22,357 14,422
Intangibles, net (Note 4)...................................................... 17,505 12,374 5,715
--------- --------- -----------
Total assets............................................................. $ 49,628 $ 43,338 $ 26,966
--------- --------- -----------
--------- --------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 605 $ 650 $ 460
Revolving credit............................................................. 200 -- --
Accrued interest............................................................. 598 191 393
Other accrued expenses....................................................... 1,626 1,800 1,705
Deferred revenue............................................................. 100 66 136
Current portion of long-term debt............................................ 6,000 608 91
--------- --------- -----------
Total current liabilities................................................ 9,129 3,315 2,785
--------- --------- -----------
Long-term debt (Note 5)........................................................ 29,657 30,324 5,072
Other long-term liabilities.................................................... 577 480 521
STOCKHOLDERS' EQUITY (NOTES 8 AND 9)
Preferred stock, par value $.10 per share:
Authorized shares -- 1,000
Issued shares -- 1,000....................................................... -- -- --
Class A common stock, par value $.01 per share:
Authorized shares -- 200,000
Issued shares -- 81,693.70 in 1994 and 72,919.94 in 1995..................... 1 1 1
Class B common stock, par value $.01 per share:
Authorized shares -- 25,000
Issued shares -- 13,199.82 in 1994 and 6,172.16 in 1995...................... -- -- --
Additional paid-in capital..................................................... 19,524 18,857 18,857
Retained deficit............................................................... (9,260) (9,639) (270)
--------- --------- -----------
Total stockholders' equity............................................... 10,265 9,219 18,588
--------- --------- -----------
Total liabilities and stockholders' equity............................... $ 49,628 $ 43,338 $ 26,966
--------- --------- -----------
--------- --------- -----------
</TABLE>
See notes to consolidated financial statements.
F-16
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED MAY 31 MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................................................... $ 33,503 $ 33,784 $ 37,054 $ 30,369 $ 28,964
Less agency commissions and discounts...................... 4,394 4,082 4,553 3,730 3,570
--------- --------- --------- --------- ---------
Net revenue................................................ 29,109 29,702 32,501 26,639 25,394
Operating expenses:
Production............................................... 6,876 6,466 6,472 5,416 4,697
Real estate rental....................................... 6,763 7,143 7,556 6,212 6,021
Selling.................................................. 2,364 2,773 2,545 2,108 1,803
General and administrative............................... 4,951 5,294 5,388 4,391 3,509
Depreciation and amortization............................ 6,726 6,816 7,201 6,589 5,073
--------- --------- --------- --------- ---------
27,680 28,492 29,162 24,716 21,103
--------- --------- --------- --------- ---------
Operating profit........................................... 1,429 1,210 3,339 1,923 4,291
Interest................................................... 3,613 3,479 3,062 2,601 1,769
Gain on sale of assets..................................... -- -- -- -- (9,983)
--------- --------- --------- --------- ---------
Net income (loss) before income taxes...................... (2,184) (2,269) 277 (678) 12,505
Income taxes............................................... -- -- -- -- 2,441
--------- --------- --------- --------- ---------
Net income (loss).......................................... (2,184) (2,269) 277 (678) 10,064
Dividends on preferred stock............................... (594) -- -- -- (695)
--------- --------- --------- --------- ---------
Net income (loss) applicable to common shares.............. $ (2,778) $ (2,269) $ 277 $ (678) $ 9,369
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-17
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED STOCK CLASS A COMMON CLASS B COMMON
STOCK STOCK ADDITIONAL
--------------- ---------------- ------------------ PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------ --------- ----- ---------- ------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1992................. 1,000 $ -- 81,693.70 $ 1 13,199.82 $ -- $19,228 $ (3,612)
Dividends declared.................... -- -- -- -- -- -- -- (594)
Net loss.............................. -- -- -- -- -- -- -- (2,184)
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1993................. 1,000 -- 81,693.70 1 13,199.82 -- 19,228 (6,390)
Dividends declared.................... -- -- -- -- -- -- -- (305)
Dividends in-kind..................... -- -- -- -- -- -- 296 (296)
Net loss.............................. -- -- -- -- -- -- -- (2,269)
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1994................. 1,000 -- 81,693.70 1 13,199.82 -- 19,524 (9,260)
Dividends in-kind..................... -- -- -- -- -- -- 961 (656)
Proceeds from issuance of stock....... -- -- -- -- 3,852.63 -- -- --
Stock redemptions relative to the sale
of Pony Panels...................... -- -- (7,599.32) -- (9,754.26) -- (1,372) --
Repurchases of stock.................. -- -- (1,174.44) -- (1,126.03) -- (270) --
Compensation expense on stock
issuances........................... -- -- -- -- -- -- 14 --
Net income............................ -- -- -- -- -- -- -- 277
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1995................. 1,000 $ -- 72,919.94 $ 1 6,172.16 $ -- $18,857 $ (9,639)
Net income (unaudited)................ -- -- -- -- -- -- -- 9,369
------ ------ --------- ----- ---------- ------ --------- --------
Balance at March 31, 1996 (unaudited)... 1,000 $ 72,919.94 $ 1 6,172.16 $ -- $18,857 $ (270)
------ ------ --------- ----- ---------- ------ --------- --------
------ ------ --------- ----- ---------- ------ --------- --------
</TABLE>
See notes to consolidated financial statements.
F-18
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED MAY 31 MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $ (2,184) $ (2,269) $ 277 $ (678) $ 9,369
Adjustments to reconcile to net cash provided by operating
activities:
Depreciation and amortization............................. 6,726 6,816 7,201 6,589 5,073
Gain on sale of assets.................................... -- -- -- -- (9,983)
Deferred tax provision.................................... 550
Barter revenue resulting from purchases of equipment...... (108) -- -- -- --
Stock compensation expense................................ -- -- 14 -- --
Changes in operating assets and liabilities:
Accounts receivable..................................... (444) (57) (320) 118 (7)
Other current and noncurrent assets..................... (36) 628 98 66 (123)
Accounts payable........................................ 191 144 45 (108) --
Accrued expenses, deferred revenue and other............ 5 (477) (59) (231) (344)
--------- --------- --------- --------- ---------
Net cash provided by operating activities................... 4,150 4,785 7,256 5,756 4,535
--------- --------- --------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures for signs.............................. (928) (1,459) (1,636) (1,146) (1,164)
Proceeds from disposal of signs............................. 150 301 51 26 106
Other capital expenditures.................................. -- (242) (338) (293) (235)
Proceeds from the sale of assets............................ -- -- 542 542 21,784
--------- --------- --------- --------- ---------
Net cash used in investing activities....................... (778) (1,400) (1,381) (871) 20,491
--------- --------- --------- --------- ---------
FINANCING ACTIVITIES
Net borrowings from bank.................................... -- 200 -- -- 1,500
Dividends paid.............................................. (594) (296) -- -- --
Increase in preferred stock................................. -- -- -- -- 540
Principal payments of bank debt............................. (3,100) (3,043) (5,157) (4,357) (27,700)
Payments to revise credit agreement......................... -- -- (669) (668) --
Principal payments on notes payable......................... -- -- (38) -- (90)
--------- --------- --------- --------- ---------
Net cash used in financing activities....................... (3,694) (3,139) (5,864) (5,025) (25,750)
--------- --------- --------- --------- ---------
Net cash provided........................................... (322) 246 11 (140) (724)
Cash at beginning at of period.............................. 1,695 1,373 1,619 1,619 1,630
--------- --------- --------- --------- ---------
Cash at end of period....................................... $ 1,373 $ 1,619 $ 1,630 $ 1,479 $ 906
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
Supplemental schedule of noncash operating and investing activities:
The Company sold the net assets of Pony Panels on August 31, 1994 as part
of a stock redemption. The book value of the net assets sold totaled
approximately $1,900,000.
The Company incurred long-term obligations of $270,000 for stock
redemptions made during the year ended May 31, 1995.
Purchases of equipment resulting from barter agreements totaled $108,000
for the year ended May 31, 1993. There were no such purchases in 1994 and
1995.
See notes to consolidated financial statements.
F-19
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements consolidate the accounts of NOA
Holding Company (formerly McCarty Holding Company, Inc.) and its wholly-owned
subsidiary, Naegele Outdoor Advertising Company. All intercompany transactions
have been eliminated in consolidation.
REVENUE RECOGNITION
Advertising revenue is recognized monthly over the period in which
advertisement displays are posted on the advertising structures. A full month's
revenue is recognized in the first month of posting. The direct costs incurred
to produce the related advertisements are expensed as incurred. Payments
received in advance of billings are recorded as deferred revenue.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Maintenance, repairs and
renewals, which neither materially add to the value of the property, nor
appreciably prolong its life, are charged to expense as incurred.
Depreciation of property and equipment is provided on declining balance and
straight-line methods over useful lives of 3 to 25 years.
INTANGIBLE ASSETS
Intangibles assets are carried and are amortized on the straight-line method
over useful lives of 5 to 40 years. Goodwill represents the cost of acquired
businesses in excess of amounts assigned to tangible and intangible assets at
the date of acquisition.
INVENTORIES
Inventories consist principally of supplies and are stated at lower of cost
or market as determined on a first-in, first-out basis.
INCOME TAXES
Income taxes are computed in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
BARTER TRANSACTIONS
The Company occasionally enters into agreements to trade advertising space
for goods or services. Prior to December 8, 1992, the Company did not record
such arrangements as revenue unless the items bartered for were capital items.
The impact on revenues and expense of barter transactions not recorded in fiscal
1993 was $164,000.
RECLASSIFICATION
Certain amounts previously reported in 1993 and 1994 have been reclassified
to conform to the 1995 presentation.
INTERIM FINANCIAL INFORMATION
The interim financial information as of March 31, 1996 and 1995 and for the
ten months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
F-20
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
2. ACQUISITIONS
Effective January 19, 1994, the Company purchased Atlantic Outdoor
Advertising, Inc. for $1 million. The acquisition was recorded using the
purchase method of accounting for business combinations.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED
1994 1995 USEFUL LIFE
--------- --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Land............................................................... $ 1,235 $ 1,294 --
Advertising structures............................................. 24,825 25,256 20 years
Buildings.......................................................... 491 491 10-25 years
Machinery and equipment............................................ 1,180 1,201 6 years
Office furniture and equipment..................................... 1,896 1,865 5-10 years
Automobiles and trucks............................................. 1,045 1,124 5 years
Other.............................................................. 384 370 3-10 years
--------- ---------
31,056 31,601
Less accumulated depreciation...................................... 7,494 9,244
--------- ---------
$ 23,562 $ 22,357
--------- ---------
--------- ---------
</TABLE>
4. INTANGIBLES
The intangibles consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL
1994 1995 LIFE
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Advertising site leases............................................... $ 22,760 $ 21,762 7 years
Covenant not to compete............................................... 3,118 3,129 5 years
Goodwill.............................................................. 2,159 2,030 40 years
Loan costs............................................................ 2,028 2,697 6 years
Organization costs.................................................... 506 503 5 years
--------- ---------
30,571 30,121
Less accumulated amortization......................................... 13,066 17,747
--------- ---------
$ 17,505 $ 12,374
--------- ---------
--------- ---------
</TABLE>
The advertising site leases and covenant not to compete were recorded as a
result of an acquisition in May 1991. Their cost represents management's best
estimate of the fair value at the date of acquisition. The loan costs represent
fees paid to obtain a bank term loan and line of credit in 1991 and to refinance
the term loan and line of credit in August 1994. In connection with the loan
refinancing, the Company wrote-off approximately $1 million of unamortized loan
costs. The organization costs are management's estimate of the portion of
various fees paid which are allocable to this asset.
F-21
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
5. DEBT
Long-term debt consists of the following at May 31:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Revolving Credit Commitment under the Amended and Restated Credit
Agreement dated August 31, 1994........................................ $ -- $ 30,700
Term loans under the Credit Agreement dated as of May 22, 1991.......... 35,657 --
Revolving Credit Loan under the Credit Agreement dated as of May 22,
1991................................................................... 200 --
Subordinated note payable, annual installments of $52 through July 1997,
plus quarterly interest payments at prime.............................. -- 157
Subordinated notes payable, annual installments of $38 through March
1997, plus quarterly interest payments at prime........................ -- 75
--------- ---------
35,857 30,932
Less current portion.................................................... 6,200 608
--------- ---------
$ 29,657 $ 30,324
--------- ---------
--------- ---------
</TABLE>
The Company amended and restated its bank Credit Agreement on August 31,
1994 and established a Revolving Credit Commitment of up to $38,000,000 and an
Acquisition Loan Commitment of up to $5,000,000. Both commitments decrease
quarterly each fiscal year and terminate on February 28, 2001. The available
Revolving Credit Commitment at May 31, 1995 was $32,800,000. At year end there
were no borrowings against the $5,000,000 Acquisition Loan Commitment. As part
of the Agreement, interest on the first $20,000,000 of debt is payable under an
Interest Rate Protect Plan ("IPP"). The IPP provides for a fixed rate of 6.28%
plus applicable margin (2.5% at May 31, 1995) for a period of three years and
began August 5, 1994. The Amended and Restated Credit Agreement also enables the
Company to borrow the remainder of the debt at a rate equal to either the Loan
Interbank Offered Rate (LIBOR) plus 3.0% or at the Lending Agent's base rate
plus 1.75%. In addition, the Company can realize lower borrowing rates if
certain financial results are achieved. At May 31, 1995, the interest rate in
effect was LIBOR plus 2.5%.
The Company is obligated to pay loan commitment fees to the banks equal to
one-half of 1% of the average daily unused portion of the commitments.
The bank has issued a letter of credit to the Company's insurance carrier
totaling $323,000 at the end of fiscal 1994 and 1995.
All common shares of the Company are pledged as collateral for the Credit
Agreement; accordingly, substantially all of the Company's assets are
effectively pledged as collateral.
The Credit Agreement contains certain restrictive covenants which the
Company must comply with on a continuing basis. The Company is restricted as to
borrowings, dividend payments, acquisitions, stock repurchases, sales of assets
and capital expenditures.
During fiscal 1995, the Company entered into certain stock redemption
agreements to repurchase 1,174.44 shares of Class A Common Stock and 1,126.03
shares of Class B Common Stock. As part of the agreements, the Company issued
subordinated promissory notes totaling approximately $270,000.
Total interest paid on all debt was $3,849,000, $3,528,000 and $3,468,000
for fiscal 1993, 1994 and 1995, respectively.
F-22
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
5. DEBT (CONTINUED)
Aggregate annual maturities of long-term debt during the five-year period
ending May 31, 2000 are (in thousands):
<TABLE>
<S> <C>
Year ending May 31:
1996.............................................................. $ 608
1997.............................................................. 4,365
1998.............................................................. 6,227
1999.............................................................. 7,600
2000.............................................................. 7,600
</TABLE>
6. INCOME TAXES
At May 31, 1995, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $8.0 million. These carryforwards
expire between May 31, 2006 and 2010. During the current fiscal year, the
Company utilized approximately $625,000 of net operating loss carryforwards to
offset current year taxable income.
Components of deferred tax assets and liabilities are (in thousands):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Loss carryforward........................................................ $ 3,403 $ 3,145
Accrued expenses......................................................... 249 207
Loan cost amortization................................................... -- 343
--------- ---------
3,652 3,695
Deferred tax liabilities:
Depreciation............................................................. 857 1,090
Bad debt allowance....................................................... 33 36
--------- ---------
890 1,126
--------- ---------
Net deferred tax assets before valuation allowance......................... 2,762 2,569
Less valuation allowance................................................... 2,762 2,569
--------- ---------
Net deferred tax assets.................................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>
7. EMPLOYEE BENEFIT PLAN
The Company has a voluntary defined contribution 401(k) savings and
retirement plan for the benefit of its nonunion employees who may contribute
from 3% to 10% of their compensation. The Company has no obligation to
contribute to the plan and made no contribution for fiscal 1993, 1994 and 1995.
8. REDEEMABLE PREFERRED STOCK
The preferred stock is redeemable, subject to certain restrictions, by the
Company at a price equal to its value as carried on the financial statements.
The Company also has the right to convert the preferred stock to debt at a rate
of $1,000 principal of debt to $1,000 liquidation value of the preferred stock.
The liquidation value of each of share of preferred stock is $7,699 and $8,660
at May 31, 1994 and 1995, respectively. After May 22, 2001, the preferred
shareholders have the right to control the Board of Directors for the purpose of
selling the Company.
Subject to certain bank restrictions, dividends on the preferred shares are
payable semi-annually at the rate of 8% either in cash or in-kind payments which
increase the liquidation value of the preferred stock.
F-23
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
8. REDEEMABLE PREFERRED STOCK (CONTINUED)
Should operating profits exceed certain targets, the dividend rate increases to
12%. The minimum targets for fiscal 1996 are $9,259 for each six month period.
9. COMMON STOCK AND WARRANT
The Class B common stock is entirely owned by key employees and officers.
The ownership vests over a period of five years. In the event of a sale or
liquidation of the Company, the Class A common stock has a 10% return preference
over the Class B common stock.
During fiscal 1995, the Company implemented a stock purchase plan for its
key employees. Under the plan, 4,253 shares of Class B common stock will be
granted to the employees at a purchase price of $.10 per share. The shares will
vest over a five year period. Approximately 3,853 shares had been granted by May
31, 1995.
Additionally, a warrant to purchase 5,000 shares of Class A common stock at
$144.75 per share was outstanding at May 31, 1994 and 1995. The warrant expires
on May 22, 2006 and has no voting rights.
10. SALES OF PONY PANELS
Only July 22, 1994, the Company entered into an agreement with The McCarty
Company ("McCarty") under which McCarty acquired all of the assets of the Pony
Panels division (excluding cash) in exchange for McCarty's assumption of Pony
Panel's liabilities, delivery of 7,599.32 shares of Class A Common Stock and
9,754.26 shares of Class B Common Stock of NOA Holding Company, and cash in the
amount of $542.
11. COMMITMENTS AND CONTINGENCIES
The City of Jacksonville, Florida has enacted a number of ordinances which
would require the removal of outdoor advertising structures which are not
located on federal aid primary and/or interstate highways. Management has
vigorously contested the validity of these ordinances for the last four years.
In March 1995, the Company reached a settlement with the City of Jacksonville
and Capsigns, Inc. and has agreed to remove 711 billboards faces over a period
of 20 years.
The Company is also involved in litigation with various other municipalities
and regulatory agencies as the result of condemnation proceedings and licensing
and permit renewal disputes, which could result in the removal of advertising
structures.
Management believes, based upon the information currently available, that
the settlement with the City of Jacksonville and Capsigns, Inc., along with the
outcomes of the various actions described above, will not have a material
adverse effect on the consolidated financial condition or results of operations
of the Company.
During fiscal 1995, the Company became a party to certain material
litigation. The action alleges that a former billposting employee, while in the
process of posting a billboard, fell to the ground (because the platform on
which he was working gave way) and suffered significant injuries. It is alleged
that these injuries have precluded him from seeking any gainful employment. This
matter involves a significant level issue concerning the exclusive remedy
provision of workers' compensation law in Minnesota. Minnesota law provides that
an employer providing workers' compensation benefits is immune from tort
liability. It is the Company's contention that, because the Company provided
workers' compensation benefits to the former employee, the Company is entitled
to tort immunity.
The Plaintiff disputes the Company's interpretation of the law and argues
that the tort suit can go forward. This matter was argued before a trial judge
on February 28, 1995, who ruled in favor of the Plaintiff. An appeal to the
Minnesota Court of Appeals is currently pending.
F-24
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Plaintiff has also made a demand of approximately $4.9 million for lost
wages and pain and suffering. An attempt to amend this complaint and state a
claim for punitive damages has also been made. The Court has not yet acted on
the amendment.
At this time it is not possible to estimate the probable outcome of these
actions and, accordingly, the Company has not established a reserve for the
outcome of this litigation.
The Company leases the facility in Minneapolis from the Company's preferred
stockholder with annual rents of $480,000, exclusive of operating costs, which
commenced May of 1993 and continues through May of 2001.
The Company is required to make the following minimum operating lease
payments for equipment and facilities under noncancelable lease agreements (in
thousands):
<TABLE>
<S> <C>
Year ending May 31:
1996.............................................................. $ 552
1997.............................................................. 552
1998.............................................................. 552
1999.............................................................. 557
2000.............................................................. 557
Thereafter........................................................ 704
---------
$ 3,474
---------
---------
</TABLE>
Rent expense for operating leases for the years ended May 31, 1993, 1994 and
1995 totaled $6,950,000, $6,837,000 and $7,268,000, respectively.
F-25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Universal Outdoor Holdings, Inc.
We have audited the accompanying statement of revenues and direct expenses
of Ad-Sign for the year ended December 31, 1995. This statement is the
responsibility of the company's management. Our responsibility is to express an
opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and direct expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
expenses. 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 audit provides a
reasonable basis for our opinion.
In our opinion, the statement of revenues and direct expenses audited by us
presents fairly, in all material respects, the revenues and direct expenses of
Ad-Sign for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
PRICE WATERHOUSE LLP
June 14, 1996
Chicago, Illinois
F-26
<PAGE>
AD-SIGN
STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Gross revenues...................................................... $ 2,804
Less agency commissions............................................. 224
---------
Net revenues...................................................... 2,580
---------
Direct expenses:
Direct advertising expenses....................................... 338
General and administrative expenses............................... 402
Depreciation and amortization..................................... 454
---------
1,194
---------
Operating income.................................................... $ 1,386
---------
---------
</TABLE>
See accompanying notes to the statement of revenues and direct expenses.
F-27
<PAGE>
AD-SIGN
NOTES TO THE STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
NOTE 1 -- BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS:
The Statement of Revenues and Direct Expenses for the year ended December
31, 1995 presents revenues from contracts for the 160 advertising display faces
acquired from Ad-Sign, Inc. by Universal Outdoor Holdings, Inc. (Universal) in
the first quarter of 1996. This financial statement excludes operating expenses
which are not directly related to the assets acquired by Universal. Although
Universal only acquired certain assets of Ad-Sign, Inc., this acquisition meets
the criteria for a "business acquired" in accordance with Regulation S-X, Rule
3-05 of the Securities Exchange Act of 1934.
Ad-Sign is an outdoor advertising company which owns and operates outdoor
advertising display faces principally in Chicago, Illinois. Ad-Sign sells
outdoor advertising space to national, regional and local advertisers.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
The preparation of the statement of revenues and direct expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates. The significant accounting policies used in the preparation of these
financial statements are as follows.
REVENUES AND DIRECT EXPENSES
Advertising revenues are generated from contracts with advertisers generally
covering periods of one to twelve months. Ad-Sign recognizes revenues ratably
over the contract term and defers customer prepayment of advertising fees. Costs
incurred for the production of outdoor advertising displays are recognized in
the initial month of the contract or as incurred during the contract period.
PREPAID LAND RENTS
Most of Ad-Sign's outdoor advertising structures are located on leased land.
Land rents are typically paid in advance for periods ranging from one to twelve
months. Prepaid land rents are expenses ratably over the related rental term.
NOTE 3 -- SUBSEQUENT EVENT:
In the first quarter of 1996, Ad-Sign, Inc. entered into an asset purchase
agreement with Universal Outdoor Holdings, Inc. Under this agreement, Universal
purchased 160 advertising display faces in the Chicago market for $12.5 million.
F-28
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
POA Acquisition Corporation
We have audited the accompanying balance sheets of POA Acquisition
Corporation as of December 31, 1995 and 1994, and the related statements of
operations, shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of POA Acquisition Corporation
at December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995.
As discussed in Note 2 to the financial statements, the 1994 financial
statements have been restated to reflect the correction of an error in the
calculation of the provision for income taxes.
Ernst & Young LLP
Orlando, Florida
April 1, 1996, except for Note 16
as to which the date is August 27, 1996
F-29
<PAGE>
POA ACQUISITION CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------------- -------------
1995 1996
------------- -------------
1994 (UNAUDITED)
-------------
(RESTATED)
<S> <C> <C> <C>
Current assets:
Cash.............................................................. $ 727,690 $ 811,352 $ 2,873,233
Accounts receivable............................................... 4,482,520 5,631,320 6,207,868
Prepaid expenses.................................................. 1,698,539 1,822,964 2,471,868
Prepaid income taxes.............................................. 51,629 43,875 --
Deferred income taxes............................................. 2,596,951 3,213,848 3,213,848
------------- ------------- -------------
Total current assets............................................ 9,557,329 11,523,359 14,766,817
Deferred income taxes............................................... 14,269,374 11,835,410 10,730,410
Property, plant and equipment, net.................................. 20,112,931 23,005,058 23,433,086
Other assets........................................................ 46,266,092 41,854,491 49,337,612
------------- ------------- -------------
$ 90,205,726 $ 88,218,318 $ 98,267,925
------------- ------------- -------------
------------- ------------- -------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses............................. $ 3,432,619 $ 2,992,112 $ 3,419,277
Current portion of long-term debt................................. 8,061,214 9,109,419 9,109,419
------------- ------------- -------------
Total current liabilities....................................... 11,493,833 12,101,531 12,528,696
Long-term debt, less current portion................................ 70,210,555 65,603,203 73,947,859
Shareholder's equity
Common stock, $.01 par value:
Authorized shares -- 2,000,000
Issued and outstanding shares -- 100 in 1995 and 1994........... 1 1 1
Additional paid-in capital........................................ 45,419,909 45,419,909 45,419,909
Accumulated deficit............................................... (36,918,572) (34,906,326) (33,628,540)
------------- ------------- -------------
Total shareholder's equity...................................... 8,501,338 10,513,584 11,791,370
------------- ------------- -------------
$ 90,205,726 $ 88,218,318 $ 98,267,925
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes.
F-30
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------- ----------------------------
1993 1994 1995 1995 1996
------------- ------------- ------------- ------------- -------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Advertising revenues................. $ 37,456,464 $ 41,737,266 $ 45,830,359 $ 21,563,122 $ 24,860,268
Less commissions and discounts....... (3,362,525) (3,865,492) (4,393,319) (2,047,289) (2,249,876)
------------- ------------- ------------- ------------- -------------
34,093,939 37,871,774 41,437,040 19,515,833 22,610,392
------------- ------------- ------------- ------------- -------------
Expenses:
Operating.......................... 10,493,219 11,151,065 11,775,891 5,775,612 6,531,119
Selling, general and
administrative................... 9,413,920 10,283,413 10,698,212 5,028,685 5,999,987
Amortization....................... 4,853,633 5,208,589 5,061,849 2,540,689 2,540,689
Depreciation....................... 2,871,608 2,878,346 2,545,182 1,231,195 1,461,016
------------- ------------- ------------- ------------- -------------
27,632,380 29,521,413 30,081,134 14,576,181 16,532,811
------------- ------------- ------------- ------------- -------------
Income from operations............... 6,461,559 8,350,361 11,355,906 4,939,652 6,077,581
------------- ------------- ------------- ------------- -------------
Other income (expense):
Interest expense................... (5,866,923) (7,012,646) (7,346,241) (3,710,133) (3,691,754)
Loss on sale of a division......... -- (494,824) -- -- --
Gain (loss) on disposal of property
and equipment, net............... (446,151) (329,056) (64,332) (155,276) 46,959
Interest and other income.......... 167,360 24,412 42,244 -- --
------------- ------------- ------------- ------------- -------------
(6,145,714) (7,812,114) (7,368,329) (3,865,409) (3,644,795)
------------- ------------- ------------- ------------- -------------
Income before income taxes and
extraordinary item.................. 315,845 538,247 3,987,577 1,074,243 2,432,786
Provision for income taxes:
Current............................ 100,158 37,572 158,264 42,600 96,500
Deferred........................... 478,263 1,256,910 1,817,067 489,400 1,108,500
------------- ------------- ------------- ------------- -------------
578,421 1,294,482 1,975,331 532,000 1,205,000
------------- ------------- ------------- ------------- -------------
Income (loss) before extraordinary
item................................ (262,576) (756,235) 2,012,246 542,243 1,227,786
Extraordinary item:
(Loss) gain on early extinguishment
of debt, net of income tax
expense (benefit) of $(147,350)
and $50,000...................... -- (244,552) -- -- 50,000
------------- ------------- ------------- ------------- -------------
Net income (loss).................... $ (262,576) $ (1,000,787) $ 2,012,246 $ 542,243 $ 1,277,786
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
See accompanying notes.
F-31
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PREFERRED PAID-IN ACCUMULATED SHAREHOLDER'S
STOCK STOCK CAPITAL DEFICIT EQUITY
--------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993............... $ 1 $ 12,237 $ 57,644,726 $ (28,262,869) $ 29,394,095
Net loss for 1993...................... -- -- -- (262,576) (262,576)
--------- ----------- -------------- -------------- --------------
Balances at December 31, 1993............ 1 12,237 57,644,726 (28,525,445) 29,131,519
Net loss for 1994 (restated)........... -- -- -- (1,000,787) (1,000,787)
Issuance of preferred stock............ -- 550,000 4,950,000 -- 5,500,000
Redemption of preferred stock.......... -- (562,237) (17,174,817) -- (17,737,054)
Cumulative preferred stock dividends... -- -- -- (7,392,340) (7,392,340)
--------- ----------- -------------- -------------- --------------
Balance at December 31, 1994
(restated).............................. 1 -- 45,419,909 (36,918,572) 8,501,338
Net income for 1995.................... -- -- -- 2,012,246 2,012,246
--------- ----------- -------------- -------------- --------------
Balance at December 31, 1995............. 1 -- 45,419,909 (34,906,326) 10,513,584
Net income for the six months ended June
30, 1996 (unaudited).................... -- -- -- 1,277,786 1,277,786
--------- ----------- -------------- -------------- --------------
$ 1 $ -- $ 45,419,909 $ (33,628,540) $ 11,791,370
--------- ----------- -------------- -------------- --------------
--------- ----------- -------------- -------------- --------------
</TABLE>
See accompanying notes.
F-32
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED DECEMBER 31, ENDED JUNE 30
-------------------------------------- ------------------------
1993 1995 1995 1996
----------- ----------- ----------- -----------
1994
------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................ $ (262,576) $ (1,000,787) $ 2,012,246 $ 542,243 $ 1,277,786
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Amortization................................... 4,853,633 5,208,589 5,061,849 2,540,689 2,540,689
Depreciation................................... 2,871,608 2,878,346 2,545,182 1,231,194 1,461,016
Deferred income taxes.......................... 478,263 1,123,867 1,817,067 489,400 1,108,500
Loss on sale of division....................... 1,367,286 494,824 -- -- --
Loss on disposal of property and equipment,
net.......................................... 446,151 329,056 64,332 3,100 (46,959)
Provision for bad debts........................ 122,694 375,190 64,285 -- --
Changes in operating assets and liabilities:
Increase in accounts receivable.............. (677,585) (523,087) (1,213,085) (418,229) (576,547)
Increase in prepaid expenses................. (68,365) (253,802) (124,425) (181,128) (652,406)
Decrease (increase) in prepaid income taxes.. (78,843) (27,786) 7,754 -- 43,875
Decrease (increase) in other assets.......... 862 (2,511,167) (500,248) -- --
(Increase) decrease in accounts payable and
accrued expenses........................... 867,753 772,507 (440,507) 15,570 427,165
----------- ------------ ----------- ----------- -----------
Net cash provided by operating activities........ 9,920,881 6,865,750 9,294,450 4,222,839 5,583,119
INVESTING ACTIVITIES
Proceeds from sale of division................... -- 2,000,000 -- -- --
Proceeds from disposal of property and
equipment....................................... 160,450 101,463 227,854 155,276 367,500
Purchases of property, plant and equipment....... (2,586,418) (1,787,528) (5,729,495) (777,279) (2,209,588)
Purchases of intangibles......................... -- -- (150,000) -- (10,023,806)
----------- ------------ ----------- ----------- -----------
Net cash (used in) provided by investing
activities...................................... (2,425,968) 313,935 (5,651,641) (622,003) (11,865,894)
FINANCING ACTIVITIES
Proceeds from long-term borrowings............... 133,500 83,023,442 4,500,000 1,000,000 13,147,633
Payments of long-term debt....................... (8,151,871) (70,696,101) (8,059,147) (4,029,691) (4,802,977)
Proceeds from issuance of preferred stock........ -- 5,500,000 -- -- --
Redemption of preferred stock.................... -- (17,737,054) -- -- --
Dividends paid................................... -- (7,392,340) -- -- --
----------- ------------ ----------- ----------- -----------
Net cash used in financing activities............ (8,018,371) (7,302,053) (3,559,147) (3,029,691) 8,344,656
----------- ------------ ----------- ----------- -----------
Net increase (decrease) in cash.................. (523,458) (122,368) 83,662 571,145 2,061,881
Cash at beginning of year........................ 1,373,516 850,058 727,690 727,690 811,352
----------- ------------ ----------- ----------- -----------
Cash at end of year.............................. $ 850,058 $ 727,690 $ 811,352 $ 1,298,835 $ 2,873,233
----------- ------------ ----------- ----------- -----------
----------- ------------ ----------- ----------- -----------
</TABLE>
See accompanying notes.
F-33
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 -- ORGANIZATION
On January 31, 1989, Outdoor Advertising Holdings, Inc. (Holdings)
contributed its shares of POA Acquisition Corporation (Company) common stock,
along with cash, to Peterson Acquisition, Inc. (Acquisition), a wholly-owned
subsidiary of Holdings. Acquisition immediately purchased the Company's
outstanding common shares under the terms of an Agreement and Plan of Merger
dated December 21,1988. Acquisition was subsequently merged into the Company and
its outstanding shares were converted into one hundred shares of the Company's
common stock.
The merger was accounted for as a purchase with a purchase price of
$33,279,550 (including acquisition costs of $4,448,023). Certain individuals,
who were former shareholders of the Company, own shares of Holdings and are
included in the management of Holdings and the Company. The Company allocated
the purchase price among the assets acquired and liabilities assumed, based upon
the respective fair values of the assets and liabilities, with the excess
purchase price recorded as goodwill.
The Company provides outdoor advertising services in the states of Florida,
South Carolina and Tennessee. Approximately 70% of the business is in the State
of Florida.
NOTE 2 -- RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS
In October 1994, the Company sold certain assets, liabilities and the
business of its Orangeburg Division. In determining the gain or loss on the sale
for tax purposes, approximately $2,500,000 of goodwill was incorrectly included
in the calculation. The 1994 financial statements have been restated to reflect
the correction of this error resulting in a decrease in income before
extraordinary item and an increase in net loss of $956,000 from the amounts
previously reported.
NOTE 3 -- ACCOUNTING POLICIES
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation for financial
reporting purposes is computed by the straight-line method over the estimated
useful lives of the various classes of assets as follows:
<TABLE>
<S> <C>
28-30
Buildings....................................................... years
Advertising structures.......................................... 12 years
Equipment....................................................... 2-7 years
</TABLE>
The Company uses the accelerated Cost Recovery System and the Modified
Accelerated Cost Recovery System for income tax reporting purposes.
OTHER ASSETS
Loan costs incurred in connection with obtaining financing have been
deferred and are being amortized over the life of the loans. Goodwill represents
the excess of the cost of acquired businesses over the fair market value at
acquisition of the specifically identified assets.
Intangible assets are being amortized over the following periods:
<TABLE>
<S> <C>
8-10
Advertising structure leases..................................... years
Goodwill......................................................... 40 years
Deferred loan costs.............................................. 1-6 years
</TABLE>
F-34
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 3 -- ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company follows the liability method of accounting for income taxes.
Deferred income taxes relate to the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
ADVERTISING REVENUE
Advertising revenue is recognized ratably on a monthly basis over the period
in which advertisement displays are posted on the advertising structures.
ADVERTISING STRUCTURE RENTALS
Advertising structure lease rentals are generally paid in advance and
charged to expense over the life of the lease.
INTEREST RATE SWAP AND INTEREST CAP AGREEMENTS
The Company has entered into interest rate swap and interest rate cap
agreements to effectively convert a portion of its variable-rate borrowings into
fixed-rate obligations. The amount to be received or paid related to these
agreements is recognized over the lives of the agreements as an adjustment to
interest expense.
BARTER TRANSACTIONS
The Company enters into agreements to provide outdoor advertising services
in exchange for various goods and services of their customers. Revenue
recognized from these transactions approximated $1,497,000, $830,000 and $0 in
1995, 1994 and 1993, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, accounts payable and
long-term debt at December 31, 1995 approximate fair value.
ACCOUNTING STANDARD
In March 1995, the FASB issued Statement No. 121 ("SFAS No. 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. As of December 31, 1995
there were no indications of impairment that would effect the carrying value of
assets.
INTERIM FINANCIAL INFORMATION
The interim financial information as of June 30, 1996 and 1995 and for the
six months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
F-35
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 4 -- ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Trade....................................................................... $ 5,701,472 $ 4,493,568
Employee notes and other.................................................... 463,300 458,119
------------ ------------
6,164,772 4,951,687
Less allowance for uncollectible accounts................................... (533,452) (469,167)
------------ ------------
$ 5,631,320 $ 4,482,520
------------ ------------
------------ ------------
</TABLE>
Included in employee notes and other are notes and accrued interest
aggregating $299,269 in 1995 and $279,473 in 1994 from common shareholders.
NOTE 5 -- PREPAID EXPENSES
Prepaid expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Lease rental payments....................................................... $ 1,261,795 $ 1,065,874
Maintenance supplies........................................................ 94,581 133,268
Other....................................................................... 466,588 499,397
------------ ------------
$ 1,822,964 $ 1,698,539
------------ ------------
------------ ------------
</TABLE>
NOTE 6 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Land.................................................................... $ 2,466,681 $ 2,466,681
Buildings............................................................... 2,074,084 2,011,256
Advertising structures.................................................. 31,857,123 27,446,874
Equipment............................................................... 3,602,942 2,978,167
-------------- --------------
40,000,830 34,902,978
Less accumulated depreciation........................................... (16,995,772) (14,790,047)
-------------- --------------
$ 23,005,058 $ 20,112,931
-------------- --------------
-------------- --------------
</TABLE>
NOTE 7 -- OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Goodwill................................................................ $ 45,239,949 $ 45,239,949
Advertising structure leases, at cost................................... 26,096,863 26,021,863
Non-compete and other, at cost.......................................... 6,495,641 6,420,390
Deferred loan costs..................................................... 3,403,068 2,903,068
-------------- --------------
81,235,521 80,585,270
Less accumulated amortization........................................... (39,381,027) (34,319,178)
-------------- --------------
$ 41,854,494 $ 46,266,092
-------------- --------------
-------------- --------------
</TABLE>
F-36
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 8 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Trade accounts payable...................................................... $ 1,285,008 $ 1,794,814
Accrued compensation and other.............................................. 1,677,573 1,623,766
Accrued interest............................................................ 29,531 14,039
------------ ------------
$ 2,992,112 $ 3,432,619
------------ ------------
------------ ------------
</TABLE>
NOTE 9 -- LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Notes payable to banks................................................... $ 74,500,000 $ 78,000,000
Other long-term debt..................................................... 212,622 271,769
------------- -------------
74,712,622 78,271,769
Less amounts due within one year......................................... (9,109,419) (8,061,214)
------------- -------------
$ 65,603,203 $ 70,210,555
------------- -------------
------------- -------------
</TABLE>
In January 1994, the Company refinanced its notes payable to banks, paid off
the unsecured subordinated notes payable to investment banking firms and
redeemed the 14% Series A senior redeemable cumulative preferred stock with term
notes and revolving credit notes totaling $83,000,000 and $7,000,000,
respectively. Notes payable to banks are term notes and revolving credit notes
are secured by all assets and common stock of the Company. Interest is charged
on borrowings under the term notes and revolving credit notes at the Company's
discretion at either a Eurodollar base rate or an ABR rate determined in
accordance with the terms of the Credit Agreement. Interest on the term notes is
currently charged at a Eurodollar base rate determined at each interest renewal
period. The December 31, 1995 term notes consist of a $54,500,000 borrowing at
8.19% and a $20,000,000 borrowing at 10.94%. On December 29, 1995, the Company
amended its Credit Agreement to allow for an additional $50,000,000 line of
credit available for acquisitions. No borrowings under this amendment have
occurred. Long-term debt maturities over the next five years are approximately
as follows: 1996 -- $9,107,000: 1997 -- $11,051,000: 1998 -- $13,048,000: 1999
- -- $21,505,000: 2000 -- $20,000,000 and $0 thereafter.
The refinancing of the notes payable in 1994 resulted in an extraordinary
loss of $391,902 as a result of writing-off the unamortized portion of deferred
loan costs related to those borrowings.
The Company entered into interest rate swap and interest rate cap agreements
that expire in 1997 with a notional amount of $40,000,000 at December 31, 1995
to reduce the impact of changes in interest rates on its variable rate long-term
debt.
The counterpart to the agreements is a major financial institution. In the
event a counterparty fails to meet the terms of an interest rate swap or
interest rate cap agreement, the Company's exposure is limited to the interest
rate differential. Credit loss from counterparty nonperformance is not
anticipated.
The Company paid approximately $7,331,000, $7,570,000 and $4,301,000 in cash
for interest in 1995, 1994 and 1993, respectively.
F-37
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 10 -- EMPLOYEE BENEFITS PLANS
The Company has a discretionary defined contribution plan which provides
retirement benefits to substantially all employees. The contributions made to
this plan were approximately $100,000 in 1995 and 1994, respectively and
$110,000 in 1993.
NOTE 11 -- INCOME TAXES
At December 31, 1995, the Company had federal and state net operating loss
carryforwards of approximately $43,600,000 for income tax purposes available to
offset future taxable income through 2006 to 2009. The Company was subject to
alternative minimum tax which is imposed at a 20% rate on the corporation's
alternative minimum taxable income in 1995. The alternative minimum tax expense
for 1995 was $132,800 and $100,158 for 1993. The tax paid will be allowed as a
credit carryover against regular tax in future periods. Net operating loss
carryforwards for alternative minimum tax purposes are approximately
$38,900,000. For financial reporting purposes, no valuation allowance has been
recognized to offset the deferred tax assets related to these carryforwards. The
tax benefit of any net operating losses which are not utilized will be
recognized as a current year expense in the year of expiration.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets as of December 31, 1995, are attributable to
the bad debt allowance, depreciation and amortization differences, alternative
minimum tax, and net operating loss carryforwards.
Components of the provision for income taxes for each year are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------------------
1995 1993
------------ 1994 ----------
------------
(RESTATED)
<S> <C> <C> <C>
Current
Federal....................................................... $ 132,754 $ 11,522 $ 100,158
State......................................................... 25,510 26,050 --
------------ ------------ ----------
Total current................................................... $ 158,264 $ 37,572 $ 100,158
------------ ------------ ----------
------------ ------------ ----------
Deferred:
Federal....................................................... $ 1,532,587 $ 1,073,054 $ 432,500
State......................................................... 284,480 183,856 45,763
------------ ------------ ----------
Total deferred.................................................. $ 1,817,067 $ 1,256,910 $ 478,263
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The provision for income taxes included in the statements of operations
differs from the amounts computed by applying the statutory rate to income
before income taxes as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1993
------------ 1994 ----------
------------
(RESTATED)
<S> <C> <C> <C>
Income tax expense at the statutory rate........................ $ 1,355,776 $ 183,004 $ 107,387
Goodwill........................................................ 387,017 942,732 481,136
Meals and entertainment......................................... 17,432 21,214 7,959
State taxes, net of federal benefit............................. 204,593 138,538 30,204
Other........................................................... 10,513 8,994 (48,265)
------------ ------------ ----------
$ 1,975,331 $ 1,294,482 $ 578,421
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
F-38
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 11 -- INCOME TAXES (CONTINUED)
Components of deferred tax assets for each year are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995
------------- 1994
-------------
(RESTATED)
<S> <C> <C>
Current deferred tax assets:
Net operating loss carryforward........................................ $ 3,000,000 $ 2,444,000
Charitable contribution carryforward................................... 2,050 --
Prepaid expenses....................................................... (82,331) (114,184)
Bad debt allowance..................................................... 254,347 176,407
Accrued liabilities.................................................... 39,782 90,728
------------- -------------
Total current deferred tax assets........................................ $ 3,213,848 $ 2,596,951
------------- -------------
------------- -------------
Noncurrent deferred tax assets:
Property and equipment................................................. $ 141,450 $ 87,150
Intangible assets...................................................... (1,961,941) (2,224,357)
Alternative minimum tax credit......................................... 276,112 148,370
Net operating loss carryforward........................................ 13,391,143 16,269,565
State income taxes..................................................... (11,354) (11,354)
------------- -------------
$ 11,835,410 $ 14,269,374
------------- -------------
------------- -------------
</TABLE>
The Company paid income taxes of $149,000, $48,000 and $104,000 in 1995,
1994 and 1993, respectively.
NOTE 12 -- COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases office space under various non-cancelable operating
leases. Minimum lease payments under these leases are approximately as follows:
1996 -- $151,000; 1997 -- $136,000 and $0 thereafter. The Company also leases
land for advertising structures under operating leases which are cancelable or
which have terms of less than one year.
Rent expense charged to operations amounted to approximately $7,461,000 in
1995, $6,947,000 in 1994 and $6,630,000 in 1993.
NOTE 13 -- PREFERRED STOCK
Holdings has issued various classes of preferred stock which provide for,
among other things, cumulative dividends which accrue quarterly whether or not
declared by the board of directors, and a liquidation value which includes
accrued dividends. This liquidation value amounted to approximately $70,711,000
at December 31, 1995 and $66,029,000 at December 31, 1994, of which
approximately $28,110,000 and $23,428,000, respectively, is accrued but unpaid
dividends. At December 31, 1995 Holdings had no assets, other than its
investment in the Company. The Holdings preferred stock does not contain
mandatory redemption features.
NOTE 14 -- ACQUISITIONS
During the year ended December 31, 1995, the Company acquired the assets of
three separate advertising entities. Under the terms of the transactions, the
Company acquired certain fixed assets, customer lists and advertising leases of
these entities for a combined total of $3,710,000. In connection with the
acquisition of the customer lists and advertising leases, intangible assets were
recorded at a total of
F-39
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 14 -- ACQUISITIONS (CONTINUED)
$150,000. The customer lists and advertising leases were assigned useful lives
of three and ten years, respectively.
NOTE 15 -- SUBSEQUENT EVENTS
ACQUISITION
On March 29, 1996, the Company purchased the stock of a company that
provides outdoor advertising services for $710,000. The Acquisition has been
accounted for by the purchase method.
COMMITMENT
The Company has entered into an agreement to purchase the capital stock of a
company that provides outdoor advertising services. The purchase price is
$10,000,000 which will be financed with the Company's Term C notes. The Company
anticipates accounting for this acquisition by the purchase method.
NOTE 16 -- SALE OF THE COMPANY
On August 27, 1996, the Company's parent, Holdings, entered into an
Agreement and Plan of Merger pursuant to which it agreed to sell the outstanding
capital stock of Holdings for approximately $240,000,000 in cash.
F-40
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Members
Tanner-Peck, L.L.C.
Memphis, Tennessee
We have audited the accompanying combined balance sheet of Tanner-Peck,
L.L.C. (the "Company") as of December 31, 1995, and the related combined
statements of income, changes in members' equity and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion of these financial
statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Tanner-Peck, L.L.C. as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
February 23, 1996, except for Note 8 which is
as of September 12, 1996
BDO Seidman, LLP
Memphis, TN
F-41
<PAGE>
TANNER-PECK, L.L.C.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------- JUNE 30,
1996
-------------
(UNAUDITED)
<S> <C> <C>
ASSETS (NOTE 7):
Current
Cash and cash equivalents (Note 3)............................................... $ 2,175,396 $ 1,712,501
Trade accounts receivable, less allowance for doubtful accounts of $57,934 and
$177,765 (Note 2).............................................................. 1,312,635 2,277,222
Other receivables................................................................ 9,496 33,955
Prepaid expenses................................................................. 320,663 270,324
------------- -------------
Total current assets............................................................... 3,818,190 4,294,002
Property and equipment, less accumulated depreciation (Note 4)..................... 21,197,368 20,726,722
------------- -------------
$ 25,015,558 $ 25,020,724
------------- -------------
------------- -------------
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Trade accounts payable........................................................... $ 412,834 $ 8,244
Accrued expenses................................................................. 213,181 262,886
Current maturities of long-term debt (Note 5).................................... 49,471 51,500
------------- -------------
Total current liabilities.......................................................... 675,486 322,630
Long-term debt, less current maturities (Note 5)................................... 1,134,849 1,108,420
Minority interest.................................................................. 34,671 39,858
------------- -------------
Total liabilities.................................................................. 1,845,006 1,470,908
Commitments and contingencies (Note 7).............................................
Members' equity (Note 1)........................................................... 23,170,552 23,549,816
------------- -------------
$ 25,015,558 $ 25,020,724
------------- -------------
------------- -------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-42
<PAGE>
TANNER-PECK, L.L.C.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
FOR THE JUNE 30,
YEAR ENDED ----------------------------
DECEMBER 31, 1995 1995 1996
----------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Billboard revenue................................................ $ 8,099,188 $ 3,620,866 $ 7,717,336
Cost of sales.................................................... (3,679,087) (1,627,763) (3,955,512)
----------------- ------------- -------------
Gross profit..................................................... 4,420,101 1,993,103 3,761,824
Selling, general and administrative expenses..................... (1,746,678) (665,149) (1,361,049)
----------------- ------------- -------------
Operating income................................................. 2,673,423 1,327,954 2,400,775
Interest expense................................................. (582,705) (280,099) (47,091)
Minority interest................................................ (14,080) (7,862) (5,188)
----------------- ------------- -------------
Net income....................................................... $ 2,076,638 $ 1,039,993 $ 2,348,496
----------------- ------------- -------------
----------------- ------------- -------------
Pro forma:
Historical net income.......................................... $ 2,076,638 $ 1,039,993 $ 2,348,496
Pro forma income taxes (Note 6)................................ 801,000 401,000 901,000
----------------- ------------- -------------
Pro forma net income........................................... $ 1,275,638 $ 638,993 $ 1,447,496
----------------- ------------- -------------
----------------- ------------- -------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-43
<PAGE>
TANNER-PECK, L.L.C.
COMBINED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
<TABLE>
<CAPTION>
PAID-IN RETAINED
CAPITAL EARNINGS TOTAL EQUITY
------------- ------------ -------------
<S> <C> <C> <C>
Members' equity, December 31, 1994................................... $ 1,343,946 $ -- $ 1,343,946
Net income for 1995.................................................. -- 2,076,638 2,076,638
Capital contributions (Note 1)....................................... 20,393,521 -- 20,393,521
Distributions to members............................................. -- (643,553) (643,553)
------------- ------------ -------------
Members' equity, December 31, 1995................................... $ 21,737,467 $ 1,433,085 $ 23,170,552
------------- ------------ -------------
Unaudited:
Members equity, December 31, 1994.................................. $ 1,343,946 $ -- $ 1,343,946
Net income for the six months ended June 30, 1995.................. -- 1,039,993 1,039,993
Distributions for members.......................................... -- (390,000) (390,000)
------------- ------------ -------------
Members' equity June 30, 1995...................................... 1,343,946 649,993 1,993,939
------------- ------------ -------------
------------- ------------ -------------
Members' equity, December 31, 1995................................. $ 21,737,467 $ 1,433,085 $ 23,170,552
Net income for the six months ended June 30, 1996.................. -- 2,348,496 2,348,496
Distributions to members........................................... -- (1,969,232) (1,969,232)
------------- ------------ -------------
Members' equity, June 30, 1996..................................... $ 21,737,467 $ 1,812,349 $ 23,549,816
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-44
<PAGE>
TANNER-PECK, L.L.C.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
FOR THE JUNE 30,
YEAR ENDED --------------------------
DECEMBER 31, 1995 1995 1996
----------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................... $ 2,076,638 $ 1,039,992 $ 2,348,496
Depreciation.................................................... 579,977 238,071 762,210
Provision for bad debts......................................... 190,577 49,000 125,000
Minority interest............................................... 14,080 7,862 5,188
Gain on disposal of assets...................................... (1,176) -- --
Changes in operating assets and liabilities:
Trade accounts receivable..................................... (549,837) (243,061) (1,089,587)
Prepaid expenses and other accounts receivables............... (149,182) (239,218) 25,880
Trade accounts payable........................................ 190,305 (200,061) (404,590)
Accrued expenses.............................................. 90,740 (99,557) 49,705
----------------- ------------ ------------
Net cash provided by operations............................. 2,442,122 553,028 1,822,302
----------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Memphis division of Naegele Outdoor Advertising
Company (Note 1).............................................. (14,020,096)
Capital expenditures............................................ (940,622) (559,382) (291,565)
Proceeds from sale of property and equipment.................... 16,977 --
----------------- ------------ ------------
Net cash used for investing activities........................ (14,943,741) (559,382) (291,565)
----------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributed by members (Note 1)............................ 20,393,521 -- --
Principal advances on long-term debt............................ 5,194,649 3,085,884 --
Principal payments on long-term debt............................ (10,318,097) (2,470,990) (24,400)
Distributions to members........................................ (643,553) (390,000) (1,969,232)
----------------- ------------ ------------
Net cash provided by (used for) financing activities.............. 14,626,520 224,894 (1,993,632)
----------------- ------------ ------------
Net increase (decrease) in cash and cash equivalents.............. 2,124,901 218,540 (462,895)
Cash and cash equivalents, at beginning of period................. 50,495 50,495 2,175,396
----------------- ------------ ------------
Cash and cash equivalents, at end of period....................... $ 2,175,396 $ 269,035 $ 1,712,501
----------------- ------------ ------------
----------------- ------------ ------------
SUPPLEMENTAL DISCLOSURE:
Interest paid................................................... $ 97,029 $ 48,976 $ 47,088
----------------- ------------ ------------
----------------- ------------ ------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-45
<PAGE>
TANNER-PECK, L.L.C.
SUMMARY OF ACCOUNTING POLICIES
<TABLE>
<S> <C>
GENERAL Tanner-Peck, L.L.C. was organized on January 12, 1995. Prior
to its organization as a limited liability company, the
entity conducted business as Tanner-Peck Outdoor Sign (Note
3).
BASIS OF COMBINATION The combined financial statements include the outdoor
advertising business of Tanner-Peck, L.L.C. (the "Company")
and TOA Enterprises, L.P. The ownership of TOA Enterprise,
L.P. includes a 5% minority interest which has been provided
for in the combined financial statements. These combined
financial statements do not include other assets or
liabilities of the individual member owners.
ACQUISITION Effective November 29, 1995, the Company acquired the assets
and assumed certain liabilities of the Memphis division of
Naegele Outdoor Advertising Company ("Naegele") (Note 1).
The acquisition was accounted for using the purchase method
of accounting. Accordingly, the assets acquired and
liabilities assumed were recorded at their respective
estimated fair values, and the results of operations of
Naegele since the acquisition data have been included in the
combined financial statements of the Company.
USE OF ESTIMATES The preparation of the Company's financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The most
significant of these estimates is the allowance for doubtful
accounts (Note 2).
REVENUE RECOGNITION The Company enters into contracts with its customers to
provide billboard and poster advertising for terms ranging
from one month to five years. Revenue under these contracts
is recognized each month as customers are invoiced for
leased advertising space provided.
PROPERTY, EQUIPMENT AND
DEPRECIATION Property and equipment are stated at cost. Depreciation is
computed using the straight-line method over the following
estimated useful lives:
Years
------------------------------------------------------------
Billboard structures 15
Machinery and equipment 7
Office furniture and equipment 7
Vehicles 7
------------------------------------------------------------
Leasehold improvements are amortized over the shorter of the
useful life of the improvement or the term of the lease.
</TABLE>
F-46
<PAGE>
TANNER-PECK, L.L.C.
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
<TABLE>
<S> <C>
TAXES ON INCOME The combined companies are treated as a "pass through"
entity for income tax purposes. Accordingly, the companies
pay no taxes on income and each member, partner or
shareholder includes their portion of income in their
respective tax returns.
OPERATING LEASES The Company leases the sites upon which its billboards are
located under various operating lease agreements. In
general, these leases provide for monthly rental payments
and rental expense is recognized each month.
STATEMENTS OF CASH FLOWS For purposes of the statements of cash flows, the Company
classifies cash on hand and in checking and savings accounts
as cash equivalents.
INTERIM FINANCIAL INFORMATION The interim financial information as of June 30, 1996 and
1995 and for the six months then ended has been prepared
from the unaudited financial records of the Company and, in
the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position
and results of operations and of cash flows for the
respective interim periods. All adjustments were of a normal
and recurring nature.
</TABLE>
F-47
<PAGE>
TANNER-PECK, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1 -- ACQUISITION AND RECAPITALIZATION
Effective November 29, 1995, the Company acquired most of the assets, and
assumed certain liabilities, of Naegele, an outdoor advertising business. The
acquisition was effectuated by the Company paying approximately $14 million cash
and assuming $133,000 in liabilities of Naegele as well as all of its operating
lease obligations. The purchase price has been allocated to the various assets
acquired based on their respective estimated fair values as follows:
<TABLE>
<S> <C>
Billboard structures........................................... $12,536,306
Land........................................................... 398,781
Office furniture and equipment................................. 369,673
Machinery and equipment........................................ 308,778
Leasehold improvement.......................................... 279,701
Vehicles....................................................... 153,435
Other assets................................................... 106,422
----------
$14,153,096
----------
----------
</TABLE>
Concurrent with the acquisition, the Company was recapitalized by admitting
a new member to the Company, The Weatherley Tanner Trust (the "Trust"), and
receiving a capital contribution of $20,393,521 cash as follows (Note 7):
Mr. William B. Tanner $5,835,116
The Weatherley Tanner Trust $14,558,405
As part of the recapitalization, notes payable aggregating $5,500,000 were
paid in full upon the closing of the acquisition.
Pro forma sales and net income as if the acquisition had occurred as of
January 1, 1995 would have been as follows (unaudited):
<TABLE>
<S> <C>
Sales.......................................................... $13,104,000
Net income..................................................... 98,000
</TABLE>
NOTE 2 -- TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable arise from the leasing of advertising space on
billboards and posters which are primarily located in the Memphis, Tennessee
area. Accordingly, the collectibility of such receivables is largely dependent
upon the strength of the local economy.
Activity in the allowance for doubtful accounts is summarized as follows:
<TABLE>
<S> <C>
Balance -- January 1, 1995..................................... $ 30,466
Charged to expense............................................. 190,577
Uncollected balances written off, net of recoveries............ (163,109)
----------
Balance -- December 31, 1995................................... $ 57,934
----------
----------
</TABLE>
Future revenues under noncancellable advertising billboard lease contracts
for the next five years and thereafter are as follows at December 31, 1995:
<TABLE>
<S> <C>
1996............................................................ $7,950,000
1997............................................................ 2,475,000
1998............................................................ 1,500,000
1999............................................................ 850,000
2000............................................................ --
</TABLE>
F-48
<PAGE>
TANNER-PECK, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- RELATED PARTY TRANSACTIONS
When Tanner-Peck, L.L.C. was organized on January 12, 1995, the owners of
the previous company, Tanner-Peck Outdoor Sign, elected not to include certain
land and the cost of a perpetual easement in the assets of Tanner-Peck, L.L.C.
The use of these assets (cost of $736,453) are necessary for the continued use
of the billboards located thereon. Rental expense for the use of these assets
was $36,283 for the year ended December 31, 1995.
The Company maintains certain bank accounts at United American Banks of
Memphis, a related entity through common ownership.
The Company also pays a member of the Company monthly rental payments of
$3,000 for office space used by the Company.
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
JUNE 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------- -------------
<S> <C> <C>
Billboard structures..................................................... $ 20,631,409 $ 20,698,818
Land..................................................................... 398,781 398,781
Buildings................................................................ 18,001 18,001
Office furniture and equipment........................................... 489,152 492,965
Machinery and equipment.................................................. 335,478 340,782
Leasehold improvements................................................... 279,701 335,194
Vehicles................................................................. 225,353 303,595
------------- -------------
22,377,875 22,588,137
Less accumulated depreciation............................................ (1,344,327) (2,101,238)
------------- -------------
21,033,548 20,486,899
Construction in progress................................................. 163,820 239,823
------------- -------------
Net property and equipment............................................... $ 21,197,368 $ 20,726,722
------------- -------------
------------- -------------
</TABLE>
Construction in progress consists of billboards and related structures which
are under construction. The total cost of construction is not expected to be
significant and will be funded through operations.
F-49
<PAGE>
TANNER-PECK, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------ ------------
<S> <C> <C>
Unsecured note payable to a company, bearing interest at 8% per annum,
payable in monthly principal and interest payments of $10,861 through
October 2001 and a final payment of $755,178 due November 2001............ $1,092,795 $ 1,070,982
Other notes payable, bearing interest at 8% per annum, payable in monthly
principal and interest payments of approximately $1,054 through October
2001 and a final payment of $51,990 due November 2001..................... 91,525 88,938
------------ ------------
1,184,320 1,159,920
Less current maturities.................................................... (49,471) (51,500)
------------ ------------
Long-term debt............................................................. $1,134,849 $ 1,108,420
------------ ------------
------------ ------------
</TABLE>
NOTE 6 -- INCOME TAXES
The combined companies are treated as a "pass through" entity for income tax
purposes and pay no taxes on income. Instead, each individual member, partner or
shareholder includes their portion of income in their respective tax returns.
The pro forma income taxes shown on the accompanying combined statements of
income represent the income taxes that would have been reported had the Company
filed federal and state tax returns as a C Corporation.
The following summarizes pro forma income taxes:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE SIX MONTHS
ENDED ENDED JUNE 30,
DECEMBER 31, ----------------------
1995 1995 1996
------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Federal.......................................................... $ 717,000 $ 359,000 $ 806,000
State............................................................ 84,000 42,000 95,000
------------ ---------- ----------
Total.......................................................... $ 801,000 $ 401,000 $ 901,000
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
The pro forma income taxes differ from the amounts computed by applying the
maximum federal statutory rates as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR
ENDED ENDED JUNE 30,
DECEMBER 31, --------------------
1995 1995 1996
------------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Provision for federal income taxes at statutory rates................. 34.0% 34.0% 34.0%
State taxes, net of federal benefit................................... 4.0 4.0 4.0
Other................................................................. 0.6 0.6 0.4
------ --------- ---------
Pro forma income taxes................................................ 38.6% 38.6% 38.4%
------ --------- ---------
------ --------- ---------
</TABLE>
F-50
<PAGE>
TANNER-PECK, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
The $20,393,521 cash capital contributions discussed in Note 1 were financed
by loans from a bank directly to the respective members or to intermediaries who
in turn loaned funds to the members. All of the Company's assets are pledged as
collateral for these loans.
The Company is subject to certain restrictive covenants under the loan
agreement which, among other things, limit future capital expenditures and
require the maintenance of certain minimum debt service coverage and leverage
ratios. One of the intermediaries, who controls a commercial bank by ownership
of a holding company, is subject to certain restrictive covenants as to the
commercial bank. The most significant of these covenants include the maintenance
of certain minimum capital ratios and a minimum allowance for loan and lease
losses. Moreover, the holding company and its commercial bank are precluded from
incurring additional indebtedness.
The approximates future minimum rental payments for noncancelable operating
leases having remaining terms in excess of one year as of December 31, 1995 are
as follows:
<TABLE>
<S> <C>
1996............................................................ $3,300,000
1997............................................................ 3,200,000
1998............................................................ 2,800,000
1999............................................................ 2,600,000
Thereafter...................................................... 12,700,000
</TABLE>
Rental expense under these operating leases was $1,581,467 for the year
ended December 31, 1995.
The Company is a defendant in a number of lawsuits arising in the normal
course of business. In addition, there are several actions by certain
governmental agencies regarding permits and related matters. Management believes
that the ultimate outcome of these matters will not have a material effect on
the financial position or results of operations of the Company.
NOTE 8 -- SUBSEQENT EVENT
On September 12, 1996 the Company entered into an agreement with Universal
Outdoor Holdings, Inc. ("Universal") whereby Universal has the option to
purchase substantially all of the assets of the Company during the period from
December 1, 1996 to December 31, 1996 for approximately $71 million plus 100,000
shares of the common stock of Universal.
F-51
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN. IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR SINCE
THE DATES AS OF WHICH INFORMATION IS SET FORTH HEREIN. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 10
The Transactions............................... 14
Use of Proceeds................................ 16
Capitalization................................. 17
Pro Forma Financial Information................ 18
Selected Consolidated Financial and Operating
Data......................................... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 28
Business....................................... 35
Management..................................... 44
Certain Transactions........................... 46
Principal Stockholders......................... 47
Description of Notes........................... 49
Description of Indebtedness and Other
Commitments.................................. 68
Underwriting................................... 72
Validity of Notes.............................. 73
Experts........................................ 73
Available Information.......................... 73
Index to Consolidated Financial Statements..... F-1
</TABLE>
$200,000,000
[LOGO]
UNIVERSAL OUTDOOR, INC.
% SENIOR SUBORDINATED
NOTES DUE 2006
--------------
PROSPECTUS
--------------
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of estimated expenses incurred in connection
with the Notes being registered hereby, other than underwriting discounts and
commissions:
<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 68,966
NASD Filing Fee................................................... 20,500
Printing and Engraving Expenses................................... 250,000
Legal Fees and Expenses........................................... 137,500
Accounting Fees and Expenses...................................... 150,000
Blue Sky Fees and Expenses (including legal fees)................. 20,000
Miscellaneous..................................................... 103,034
---------
Total......................................................... 750,000
---------
---------
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Delaware Law") and
Article XI of the Registrant's Bylaws provide for indemnification of the
Registrant's directors and officers to the maximum extent provided by Delaware
Law, which may include liabilities under the Securities Act.
Section 8 of the Underwriting Agreement provides for indemnification by the
Underwriters of directors, officers and controlling persons of the Company
against certain liabilities, including liabilities under the Securities Act,
under certain limited circumstances.
As permitted by Section 102(b) of the Delaware Law, the Certificate of
Incorporation provides that directors of the Company shall have no personal
liability to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of a director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violations of law,
(iii) under Section 174 of the Delaware Law, or (iv) for any transaction from
which a director derived an improper personal benefit.
The Company does not maintain directors' and officers' liability insurance.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1993, the Company has issued the following securities which
were not registered under the Securities Act:
On November 18, 1993, pursuant to a Contribution Agreement between Parent
and all of the then shareholders of the Company, (i) the holders of all of the
common shares of the Company exchanged such shares on a one-for-one basis for
shares of Common Stock of Parent and (ii) the holders of all of the Class B
common shares of the Company exchanged such shares for an aggregate of 48,000
shares of Series B Preferred Stock, no par value, of Parent. These exchanges
were exempt from registration as either not involving any "sale" or as exempt
private placements under Section 4(2) of the Securities Act.
In each case, exemption from registration was claimed on the grounds that
the issuance of such securities did not involve any public offering within the
meaning of Section 4(2) of the Securities Act.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement
2.1 Plan and Agreement of Merger, dated November 18, 1993, between the Company and
Parent (filed as Exhibit 2 to the Company's Registration Statement on Form S-1
(Commission File No. 33-72710) and incorporated herein by reference)
2.2* Agreement and Plan of Merger between the Company, Universal Acquisition Corp.
and OAH dated August 27, 1996
2.3* Option and Asset Purchase Agreement between the Company and the Memphis/Tunica
Sellers dated September 12, 1996
2.4 Form of Asset Purchase Agreement between the Company and Iowa Outdoor, Inc.
dated September 12, 1996
2.5* Asset Purchase Agreement between the Company and The Chase Company dated Sep-
tember 11, 1996
3.1 Third Amended and Restated Articles of Incorporation
3.2 Second Amended and Restated Bylaws
4.1 Form of Indenture between the Company and the United States Trust Company of
New York
4.2 Form of Note
4.3 Form T-1
5.1 Opinion of Winston & Strawn
10.1 Form of Amended and Restated Revolving Credit Agreement dated October, 1996
entered into among the Company, the various lending institutions from time to
time parties thereto, LaSalle National Bank, as Co-Agent and Bankers Trust
Company, as Agent
10.2 Form of Amended and Restated Acquisition Credit Agreement dated October, 1996
entered into among the Company, the various lending institutions from time to
time parties thereto, LaSalle National Bank, as Co-Agent and Bankers Trust
Company, as Agent.
10.3 Agreement Regarding Tax Liabilities and Payments dated as of November 18, 1993
by and between Parent and the Company (filed as Exhibit 10(f) to the Company's
Form S-1 Registration Statement (File No. 33-72710) and incorporated herein by
reference)
10.4** Option Exchange Agreement among the Company, Parent and WHS dated November 18,
1993
10.5* Amendment to Option Exchange Agreement among the Company, Parent, Daniel L.
Simon, Brian T. Clingen and WHS
10.6* Fee Letter between the Company and Kelso & Company, L.P.
10.7* Joint Management Agreement between the Company and the Memphis/Tunica Sellers
21.1 Subsidiaries of the Company
23.1*** Consent of Price Waterhouse LLP
23.2*** Consent of Ernst & Young LLP
23.3*** Consent of Ernst & Young LLP
23.4*** Consent of BDO Seidman, LLP
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
23.5 Consent of Winston & Strawn (contained in Exhibit 5.1)
24 Powers of Attorney (included on Signature Page)
</TABLE>
- ------------------------
*Filed with Parent's Registration Statement on Form S-1 dated October 9, 1996
(Commission File No. 333-12457) and incorporated herein by reference.
**Filed with Parent's Registration Statement on Form S-1 dated July 23, 1996
(Commission File No. 333-5351) and incorporated herein by reference.
*** Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that:
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to Item 14 above, or otherwise, the Company has been
advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Chicago, State of Illinois, on the 10th day of October, 1996.
UNIVERSAL OUTDOOR, INC.
By: *
-----------------------------------------
Daniel L. Simon
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Act, this Amendment No. 2 to
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
- ---------------------------- ------------------------------ ------------------
* President and Chief Executive
- ---------------------------- Officer (Principal Executive October 10, 1996
Daniel L. Simon Officer) and Director
Vice President and Chief
* Financial Officer (Principal
- ---------------------------- Financial and Accounting October 10, 1996
Brian T. Clingen Officer) and Director
*
- ---------------------------- Director October 10, 1996
Michael J. Roche
*
- ---------------------------- Director October 10, 1996
Michael B. Goldberg
*
- ---------------------------- Director October 10, 1996
Frank K. Bynum
*By: /s/ PAUL G. SIMON
-------------------------
Paul G. Simon
ATTORNEY-IN-FACT
II-4
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------------ ------------------------------------------------------------------------------------------------ -----
<C> <S> <C>
1.1 Form of Underwriting Agreement
2.1 Plan and Agreement of Merger, dated November 18, 1993, between Parent and UOI (filed as Exhibit
2 to the Company's Registration Statement on Form S-1 (Commission File No. 33-72710) and
incorporated herein by reference)
2.2* Agreement and Plan of Merger between the Company, Universal Acquisition Corp. and OAH dated
August 27, 1996
2.3* Option and Asset Purchase Agreement between the Company and the Memphis/Tunica Sellers dated
September 12, 1996
2.4 Form of Asset Purchase Agreement between the Comapny and Iowa Outdoor, Inc. dated September 12,
1996
2.5* Asset Purchase Agreement between the Company and The Chase Company dated September 11, 1996
3.1 Third Amended and Restated Articles of Incorporation
3.2 Second Amended and Restated Bylaws
4.1 Form of Indenture between the Company and the United States Trust Company of New York
4.2 Form of Note
4.3 Form T-1
5.1 Opinion of Winston & Strawn
10.1 Form of Amended and Restated Revolving Credit Agreement dated October, 1996 entered into among
the Company, the various lending institutions from time to time parties thereto, LaSalle
National Bank, as Co-Agent and Bankers Trust Company, as Agent
10.2 Form of Amended and Restated Acquisition Credit Agreement dated October, 1996 entered into among
the Company, the various lending institutions from time to time parties thereto, LaSalle
National Bank, as Co-Agent and Bankers Trust Company, as Agent
10.3 Agreement Regarding Tax Liabilities and Payments dated as of November 18, 1993 by and between
Parent and the Company (filed as Exhibit 10(f) to the Company's Form S-1 Registration Statement
(File No. 33-72710) and incorporated herein by reference)
10.4** Option Exchange Agreement among the Company, Parent and WHS dated November 18, 1993
10.5* Amendment to Option Exchange Agreement among the Company, Parent, Daniel L. Simon, Brian T.
Clingen and WHS
10.6* Fee Letter between the Company and Kelso & Company, L.P.
10.7* Joint Management Agreement between the Company and the Memphis/Tunica Sellers
21.1 Subsidiaries of the Company
23.1*** Consent of Price Waterhouse LLP
23.2*** Consent of Ernst & Young LLP
23.3*** Consent of Ernst & Young LLP
23.4*** Consent of BDO Seidman LLP
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------------ ------------------------------------------------------------------------------------------------ -----
23.5 Consent of Winston & Strawn (contained in Exhibit 5.1)
<C> <S> <C>
24 Powers of Attorney (included on Signature Page)
</TABLE>
- ------------------------
*Filed with Parent's Registration Statement on Form S-1 dated October 9, 1996
(Commission File No. 333-12457) and incorporated herein by reference
**Filed with Parent's Registration Statement on Form S-1 dated July 23, 1996
(Commission File No. 333-5351) and incorporated herein by reference
*** Previously filed
<PAGE>
EXHIBIT 1.1
$200,000,000
UNIVERSAL OUTDOOR, INC.
[__]% Senior Subordinated Notes due 2006
FORM OF
UNDERWRITING AGREEMENT
October [__], 1996
<PAGE>
UNDERWRITING AGREEMENT
October [ ], 1996
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
Universal Outdoor, Inc., a corporation organized and existing under
the laws of Illinois (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to you (the "Underwriters")
$200,000,000 aggregate principal amount of its [___]% Senior Subordinated Notes
due 2006 (the "Securities"), to be issued pursuant to an indenture dated as of
October [___], 1996 (the "Indenture") between the Company and United States
Trust Company of New York, as trustee (the "Trustee").
The Securities are more fully described in the Registration Statement
referred to below and in the Indenture, a copy of which has been filed as an
Exhibit to such Registration Statement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agree with, you that:
(a) A registration statement on Form S-1 (File No. 333-12427)
with respect to the Securities has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary
<PAGE>
prospectuses (meeting the requirements of the Rules and Regulations) contained
therein and the exhibits, financial statements and schedules, as finally amended
and revised, have heretofore been delivered by the Company to you. Such
registration statement, together with any registration statement filed by the
Company pursuant to Rule 462(b) of the Act, herein referred to as the
"Registration Statement," which shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, has become effective under the Act and no post-effective
amendment to the Registration Statement has been filed as of the date of this
Agreement. "Prospectus" means (A) the form of prospectus first filed with the
Commission pursuant to Rule 424(b) or (B) the last preliminary prospectus
included in the Registration Statement filed prior to the time it becomes
effective or filed pursuant to Rule 424(a) under the Act that is delivered by
the Company to the Underwriters for delivery to purchasers of the Securities,
together with the term sheet or abbreviated term sheet filed with the Commission
pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus included
in the Registration Statement prior to the time it becomes effective is herein
referred to as a "Preliminary Prospectus."
(b) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Illinois, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Each of the subsidiaries
of the Company (collectively, the "Subsidiaries") has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority to own or
lease its properties and conduct its business as described in the Registration
Statement. The Subsidiaries are the only subsidiaries, direct or indirect, of
the Company. The Company and each of the Subsidiaries are duly qualified to
transact business in all jurisdictions in which the conduct of their business
requires such qualification. The outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and are owned by the Company or another Subsidiary free and
clear of all liens, encumbrances and equities and claims,
2
<PAGE>
except for the pledge of the issued and outstanding common stock of each
Subsidiary pursuant to the Amended and Restated Acquisition Credit Facility and
the Amended and Restated Revolving Credit Facility (the "Credit Facility"), each
among the Company, LaSalle National Bank and Bankers Trust Company
(collectively, the "Existing Stock Pledges"); and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership interests in
the Subsidiaries are outstanding.
(c) The outstanding shares of common stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable.
Neither the filing of the Registration Statement nor the offering or sale of the
Securities as contemplated by this Agreement gives rise to any rights, other
than those which have been waived or satisfied, for or relating to the
registration of any securities of the Company.
(d) The information set forth under the caption "Capitalization"
in the Prospectus is true and correct. All of the Securities conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Securities conforms to the corporate law of the
jurisdiction of the Company's incorporation.
(e) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Securities nor instituted proceedings for that purpose. The Registration
Statement contains, and the Prospectus and any amendments or supplements thereto
will contain, all statements which are required to be stated therein by, and
will conform, to the requirements of the Act and the Rules and Regulations and
with the Trust Indenture Act of 1939, as amended, and the rules and regulations
thereunder (the "Trust Indenture Act"). The Registration Statement and any
amendment thereto do not contain, and will not contain, any untrue statement of
a material fact and do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus and any amendments and supplements thereto do not
contain, and will not contain, any untrue statement of mate-
3
<PAGE>
rial fact; and do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter, specifically for use in the preparation thereof.
(f) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of the Company and the consolidated Subsidiaries, at
the indicated dates and for the indicated periods. Such financial statements
and related schedules have been prepared in accordance with generally accepted
principles of accounting, consistently applied throughout the periods involved,
except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included in the Registration Statement presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company. The pro forma financial statements and other pro forma financial
information included in the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(g) Price Waterhouse LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.
4
<PAGE>
(h) Except as set forth in the Registration Statement, there is
neither (i) any action, suit, claim or proceeding pending or, to the knowledge
of the Company, threatened against the Company or any of the Subsidiaries before
any court or administrative agency or otherwise which, if determined adversely
to the Company or any of its Subsidiaries, might result in, nor (ii) any
legislation, statute, regulation, rule or ordinance to the knowledge of the
Company proposed or pending before any legislative body or administrative
agency, which, if enacted or promulgated, might result in, any material adverse
change in the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
of the Subsidiaries taken as a whole or to prevent the consummation of the
transactions contemplated hereby,
(i) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets reflected in the financial statements
(or as described in the Registration Statement) hereinabove described, subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements (or as described in the Registration
Statement) or which are not material in amount. The Company and the
Subsidiaries occupy their leased properties or properties subject to easement
under valid and binding leases or easements, respectively.
(j) The Company and the Subsidiaries have filed all Federal,
state, local and foreign income tax returns which have been required to be filed
and have paid all taxes indicated by said returns and all assessments received
by them or any of them to the extent that such taxes have become due and are not
being contested in good faith. All tax liabilities have been adequately
provided for in the financial statements of the Company.
(k) Since the respective dates as of which information is given
in the Registration Statement, as it may be amended or supplemented, there has
not been any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business, management,
properties, assets (including for these purposes the assets of the
Memphis/Tunica Sellers (as defined in the Prospectus) to be sold pursuant to the
Option Agreement (as defined below)
5
<PAGE>
as if they were owned by the Company or any of its Subsidiaries), rights,
operations, condition (financial or otherwise), or prospects of the Company and
its Subsidiaries taken as a whole, whether or not occurring in the ordinary
course of business, and there has not been any material transaction entered into
or any material transaction that is probable of being entered into by the
Company or the Subsidiaries, other than transactions in the ordinary course of
business and changes and transactions described in the Registration Statement,
as it may be amended or supplemented. The Company and the Subsidiaries have no
material contingent obligations which are not disclosed in the Company's
financial statements which are included in the Registration Statement.
(l) Neither the Company nor any of the Subsidiaries is or, with
the giving of notice or lapse of time or both, will be, in violation of or in
default under its Articles of Incorporation or By-Laws as presently in effect or
under any agreement, lease, contract, indenture or other instrument or
obligation (including, but not limited to, the Credit Facility or the indenture
with respect to the Company's 11% Senior Notes due 2003 (the "Existing
Indenture")) to which it is a party or by which it, or any of its properties, is
bound and which default is of material significance in respect of the condition,
financial or otherwise of the Company and its Subsidiaries taken as a whole or
the business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the Subsidiaries taken
as a whole. The execution and delivery of this Agreement and the Indenture and
the consummation of the transactions herein contemplated and the fulfillment of
the terms hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or any
Subsidiary is a party (including, but not limited to, the Credit Facility or the
Existing Indenture), or of the Articles of Incorporation or By-laws of the
Company as presently in effect or any Subsidiary or any order, rule or
regulation applicable to the Company or any Subsidiary of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
6
<PAGE>
(m) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the Indenture and the consummation of the
transactions herein contemplated (except such additional steps as may be
required by the Commission, the National Association of Securities Dealers, Inc.
(the "NASD") or such additional steps as may be necessary to qualify the
Securities for public offering by the Underwriters under state securities or
Blue Sky laws) has been obtained or made and is in full force and effect.
(n) The Company and each of the Subsidiaries hold all material
licenses, consents, authorizations, approvals, orders, certificates and permits
(collectively, "Licenses") of and from, and have made all declarations and
filings with and satisfied all eligibility and other similar requirements
imposed by, all Federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, in each case
as required for the conduct of the business in which it is engaged, and each
such License is in full force and effect, except to the extent that the failure
to obtain any such License or to make any such declaration or filing or satisfy
any such requirement would not have a material adverse effect on the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, taken
as a whole.
(o) The Company and its Subsidiaries are in compliance with all
applicable Federal, state and local laws and regulations relating to (i) zoning,
land use, protection of the environment, human health and safety or hazardous or
toxic substances, wastes, pollutants or contaminants and (ii) employee or
occupational safety, discrimination in hiring, promotion or pay of employees,
employee hours and wages or employee benefits, except where such noncompliance
would not, singly or in the aggregate, have a material adverse effect on the
earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole.
7
<PAGE>
(p) Neither the Company nor any of the Subsidiaries has
infringed any patents, patent rights, trade names, trademarks or copyrights,
which infringement is material to the business of the Company and the
Subsidiaries taken as a whole. The Company knows of no material infringement by
others of patents, patent rights, trade names, trademarks or copyrights owned by
or licensed to the Company.
(q) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940 (the "1940 Act") and the rules and regulations of the Commission
thereunder.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(t) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (A) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (B) Sections 412
8
<PAGE>
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(u) The Option and Asset Purchase Agreement, dated September 12,
1996, between the Company and the Memphis/Tunica Sellers (the "Option
Agreement") has been duly authorized, executed and delivered by the parties
thereto and constitutes a valid and binding agreement of the parties thereto,
enforceable against the parties thereto in accordance with its terms, except to
the extent that enforcement thereof may be limited by (A) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (B) general principles of
equity.
(v) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and the Company
further agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Commission or
with the Florida Department of Banking and Finance (the "Department"), whichever
date is later, or if the information reported or incorporated by reference in
the Prospectus, if any, concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.
(w) The Securities have been duly and validly authorized by the
Company and the Securities, when the Securities are authenticated by the Trustee
and the Securities are issued, sold and delivered in accordance with this
Agreement and the Indenture, will have been duly and validly executed,
authenticated, issued and delivered and will constitute valid and binding
obliga-
9
<PAGE>
tions of the Company, enforceable against the Company, in accordance with their
terms and entitled to the benefits provided by the Indenture, except to the
extent that enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity.
(x) The Indenture conforms to the description thereof contained
in the Registration Statement and the Prospectus, has been duly and validly
authorized and, when executed and delivered by the Company and the Trustee and
qualified under the Trust Indenture Act, will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforcement thereof may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (B) general
principles of equity.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of
the representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, you agree to purchase from
the Company, at a purchase price of [___]% of the principal amount thereof, plus
accrued interest, if any, from October [__], 1996 to the Closing Date
hereinafter referred to, $200,000,000 principal amount of the Securities.
Delivery of and payment of the purchase price for the Securities shall
be made in your offices at 245 Park Avenue, New York, New York 10167, or at such
other location as may be mutually acceptable. Such delivery and payment shall
be made at 10:00 a.m., New York time, on the third business day following the
date the Registration Statement becomes effective, or, if the Company has
elected to rely upon Rule 430A of the Regulations, the third business day after
execution of this Agreement, or at such other time as shall be agreed upon by
you and the Company. The time and date of such delivery and payment are herein
called the "Closing Date." Delivery of the Securities shall be made to you for
your account against payment of the purchase price for the Securities by wire
transfer of immediately available funds to an account or accounts to be
designated by the Company at
10
<PAGE>
least one business day prior to the Closing Date, and the Company shall promptly
reimburse you for the costs of obtaining such funds.
The Securities shall be registered in such name or names and in such
authorized denominations as you may request in writing at least two full
business days prior to the Closing Date. The Company will permit you to examine
and package such Securities for delivery at least one full business day prior to
the Closing Date.
3. OFFERING. Upon your authorization of the release of the
Securities, you propose to offer the Securities for sale to the public upon the
terms set forth in the Prospectus.
4. COVENANTS OF THE COMPANY: The Company covenants and agrees with
you as follows:
(a) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations.
(b) The Company will advise the Representatives promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission, (C)
of any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, and (D) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of the institution of
any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such
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<PAGE>
stop order preventing or suspending the use of the Prospectus and to obtain as
soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Underwriters in
endeavoring to qualify the Securities for sale under the securities laws of such
jurisdictions as the Underwriters may reasonably have designated in writing and
will make such applications, file such documents, and furnish such information
as may be reasonably required for that purpose, provided the Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. The Company will, from time to time, prepare
and file such statements, reports, and other documents, as are or may be
required to continue such qualifications in effect for so long a period as the
Underwriters may reasonably request for distribution of the Securities.
(d) The Company will deliver to, or upon the order of, the
Underwriters, from time to time, as many copies of any Preliminary Prospectus as
the Underwriters may reasonably request. The Company will deliver to, or upon
the order of, the Underwriters during the period when delivery of a Prospectus
is required under the Act, as many copies of the Prospectus in final form, or as
thereafter amended or supplemented, as the Underwriters may reasonably request.
The Company will deliver to the Underwriters at or before the Closing Date, four
signed copies of the Registration Statement and all amendments thereto including
all exhibits filed therewith, and will deliver to the Underwriters such number
of copies of the Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested), and of all
amendments thereto, as the Underwriters may reasonably request.
(e) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934 (the "Exchange Act"), and
the rules and regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or
12
<PAGE>
dealer, any event shall occur as a result of which, in the judgment of the
Company or in the reasonable opinion of the Underwriters, it becomes necessary
to amend or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading, or, if it is necessary at any time to
amend or supplement the Prospectus to comply with any law, the Company promptly
will prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply with the
law.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(g) The Company will, for a period of five years from the
Closing Date, deliver to the Underwriters copies of annual reports and copies of
all other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the requirements
of such exchange or with the Commission pursuant to the Act or the Exchange Act.
The Company will deliver to the Underwriters similar reports with respect to
significant subsidiaries, as that term is defined in the Rules and Regulations,
which are not consolidated in the Company's financial statements.
(h) The Company shall apply the net proceeds of its sale of the
Securities as set forth in the Prospectus.
(i) The Company shall not invest, or otherwise use the proceeds
received by the Company from
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<PAGE>
its sale of the Securities in such a manner as would require the Company or any
of the Subsidiaries to register as an investment company under the 1940 Act or
the rules and regulations thereunder.
(j) For a period of 180 days after the date of this Agreement,
except as described in or contemplated by the Prospectus, the Company will not,
without your prior written consent, issue, sell, offer or agree to sell, or
otherwise dispose of, directly or indirectly, any debt securities of the
Company.
(k) The Company will not claim the benefit of any usury laws
against any holders of the Securities.
5. PAYMENT OF EXPENSE. Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
thereof or supplements thereto (including, without limitation, fees and expenses
of the Company's accountants and counsel), the Indenture, the underwriting
documents (including this Agreement), and all other documents related to the
public offering of the Securities (including those supplied to you in quantities
as hereinabove stated), (ii) the issuance, transfer and delivery of the
Securities to you, including any transfer or other taxes payable thereon, (iii)
the qualification of the Securities under state and foreign securities or Blue
Sky laws and the eligibility of the Securities for investment under state and
foreign law, including the costs of printing and mailing a preliminary and final
"Blue Sky Survey" and a "Legal Investment Memorandum" and the reasonable fees of
your counsel and such counsel's reasonable disbursements in relation thereto,
(iv) the review of the terms of the public offering of the Securities by the
NASD, (v) the rating of the Securities by one or more rating agencies and (vi)
the fees and expenses of the Trustee and any agent of the Trustee and the fees
and disbursements of counsel for the
14
<PAGE>
Trustee in connection with the Indenture and the Securities.
6. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. Your obligations to
purchase and pay for the Securities shall be subject to the accuracy of the
representations and warranties of the Company contained as of the date hereof
and as of the Closing Date, to the absence from any certificates, opinions,
written statements or letters furnished to you pursuant to this Section 6 or to
your counsel, Skadden, Arps, Slate, Meagher & Flom ("Underwriter's Counsel")
pursuant to this Section 6 of any material misstatement or omission, to the
performance by the Company of its obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a Federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Securities.
(b) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Winston & Strawn,
counsel for the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Illinois, with corporate power and authority to own or
lease its properties and
15
<PAGE>
conduct its business as described in the Registration Statement; each of
the Subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement; the Company and each of the Subsidiaries are duly qualified to
transact business in all jurisdictions in which the failure to qualify
would have a materially adverse effect upon the business of the Company
taken as a whole; and the outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued and are fully
paid and non-assessable and are owned by the Company or a Subsidiary; and,
to the best of such counsel's knowledge, the outstanding shares of capital
stock of each of the Subsidiaries is owned free and clear of all liens,
encumbrances and equities and claims except for the Existing Stock Pledges,
and no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into any
shares of capital stock or of ownership interests in the Subsidiaries are
outstanding.
(ii) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization" in the
Prospectus; the authorized shares of the Company's common stock have
been duly authorized; the outstanding shares of the Company's common
stock have been duly authorized and validly issued and are fully paid
and non-assessable.
(iii) To the knowledge of such counsel, no holder of
any securities of the Company or any other person has the right,
contractual or otherwise, which has not been satisfied or effectively
waived, to cause the Company to sell or otherwise issue to them, or to
permit them to underwrite the sale of, any securities or the right to
have any securities of the Company included in the Registration
16
<PAGE>
Statement or the right, as a result of the filing of the Registration
Statement, to require registration under the Act of any of the Securities
of the Company.
(iv) The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no
stop order proceedings with respect thereto have been instituted or
are pending or threatened under the Act.
(v) The Registration Statement, the Prospectus and
each amendment or supplement thereto appear on their face to be
appropriately responsive in all material respects with the
requirements of the Act and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the
financial or statistical data therein).
(vi) The statements in the Prospectus under the
captions "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources,"
"Description of Indebtedness and Other Commitments," "Certain
Transactions," and "Management -- The 1996 Warrant Plan," as such
statements constitute a summary of the legal matters or documents
referred to therein or matters of law, fairly summarize in all
material respects the information required to be shown (except that
such counsel need express no opinion as to the financial or
statistical data therein).
(vii) Such counsel does not know of any contracts or
other documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement or the Prospectus which are not so
described or filed as required, and such contracts and documents as
are summarized in the Registration Statement or the Prospectus are
fairly summarized in all material respects.
17
<PAGE>
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or
any of the Subsidiaries except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and
the Indenture and the consummation of the transactions herein
contemplated do not and will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under,
the Articles of Incorporation or By-laws of the Company, or any
material agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound.
(x) This Agreement has been duly authorized, executed
and delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body which has not been received
or granted is required in connection with the execution and delivery
of this Agreement and the Indenture and the consummation of the
transactions herein contemplated (other than as may be required by the
NASD or as required by state securities and Blue Sky laws as to which
such counsel need express no opinion).
(xii) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by this
Agreement, and application of the net proceeds therefrom as described
in the Prospectus, required to register as an investment company under
the 1940 Act.
(xiii) The Option Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against
18
<PAGE>
the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of
equity.
(xiv) The Indenture has been duly and validly
authorized, executed and delivered by the Company, has been duly
qualified under and complies as to form in all material respects with
the Trust Indenture Act and constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, except as such enforcement may be subject to (A) bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or
conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally and (B) general principles of equity
(regardless of whether such enforcement may be sought in a proceeding
in equity or at law), and except to the extent that a waiver of rights
under any usury laws may be unenforceable. No taxes or fees are
required to be paid with respect to the execution of the Indenture by
the Company and the issuance of the Securities. The Securities have
been duly and validly authorized, executed, authenticated, issued and
delivered and constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, except as such enforcement
may be subject to (A) bankruptcy, insolvency, reorganization,
fraudulent transfer or conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(B) general principles of equity (regardless of whether such
enforcement may be sought in a proceeding in equity or at law), and
except to the extent that a waiver of rights under any usury laws may
be unenforceable. The Underwriters will receive good, valid and
marketable title to the Securities being sold by the Company
hereunder,
19
<PAGE>
free and clear of all liens, encumbrances, claims, security interests,
restrictions or transfer, shareholders' agreements, voting trusts and other
defects of title whatsoever. The Securities and the Indenture conform to
the descriptions thereof contained in the Registration Statement and the
Prospectus.
In addition to the matters set forth above, such opinion shall
also include a statement to the effect that no facts have come to the
attention of such counsel which led them to believe that (i) the
Registration Statement, at the time it became effective under the Act (but
after giving effect to any modifications incorporated therein pursuant to
Rule 430A under the Act) and as of the Closing Date contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, or any supplement thereto, on the date
it was filed pursuant to the Rules and Regulations and as of the Closing
Date as the case may be, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made,
not misleading (except that such counsel need express no view as to
financial statements, schedules and statistical information therein). With
respect to such statement, Winston & Strawn may state that their belief is
based upon the procedures set forth therein, but is without independent
check and verification.
The Representatives shall also have received on the Closing Date the
opinion of local counsel for the Company experienced in such matters in
Jacksonville, dated the Closing Date addressed to the Underwriters to the
effect that the statements under the caption "Business-Government
Regulation," insofar as such statements constitute a summary of regulatory
matters in such jurisdiction relating to the outdoor advertising industry,
fairly describe the regulatory matters relating to such industry.
(c) The Representatives shall have received from Skadden, Arps,
Slate, Meagher & Flom, counsel
20
<PAGE>
for the Underwriters, an opinion dated the Closing Date as to such matters as
the Representatives may reasonably require. In addition to the matters set
forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to believe
that (i) the Registration Statement, or any amendment thereto, as of the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) as of the Closing Date
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (ii) the Prospectus, or any supplement thereto, on the date
it was filed pursuant to the Rules and Regulations and as of the Closing Date
contained an untrue statement of a material fact or omitted to state a material
fact, necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Skadden,
Arps, Slate, Meagher & Flom may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(d) The Representatives shall have received at or prior to the
Closing Date from Skadden, Arps, Slate, Meagher & Flom a memorandum or summary,
in form and substance satisfactory to the Representatives, with respect to the
qualification for offering and sale by the Underwriters of the Securities under
the state securities or Blue Sky laws of such jurisdictions as the
Representatives may reasonably have designated to the Company.
(e) The Representatives shall have received, on each of the
dates hereof and the Closing Date, as the case may be, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to you, of Price Waterhouse LLP, Ernst & Young LLP and BDO Siedman,
LLP confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them and in-
21
<PAGE>
cluded in the Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Act and the related published
Rules and Regulations; and containing such other statements and information as
is ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received on the Closing Date
a certificate or certificates of the President and Chief Executive Officer and
the Chief Financial Officer of the Company to the effect that, as of the Closing
Date each of them severally represents as follows:
(i) The Registration Statement has become effective
under the Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been taken or are, to his knowledge, contemplated by the
Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing
Date;
(iii) All filings required to have been made pursuant
to Rules 424 or 430A under the Act have been made;
(iv) He has carefully examined the Registration
Statement and the Prospectus and, in his opinion, as of the effective
date of the Registration Statement, the statements contained in the
Registration Statement were true and correct, and such Registration
Statement and Prospectus did not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Pro-
22
<PAGE>
spectus which has not been so set forth in such supplement or amendment;
and
(v) Since the respective dates as of which information
is given in the Registration Statement and Prospectus, there has not
been any material adverse change or any development involving a
prospective material adverse change in or affecting the condition,
financial or otherwise, of the Company and its Subsidiaries taken as a
whole or the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of
the Company and the Subsidiaries taken as a whole, whether or not
arising in the ordinary course of business.
(g) The public offering of 5,750,000 shares of common stock of
Universal Outdoor Holdings, Inc., a Delaware corporation ("Holdings"), pursuant
to an Underwriting Agreement, dated October 9, 1996, among Holdings, the Selling
Shareholders named therein and Alex. Brown & Sons Incorporated, Bear, Stearns &
Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation as
representatives of the several underwriters listed on Schedule I thereto shall
have been consummated.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Skadden, Arps,
Slate, Meagher & Flom, counsel for the Underwriters.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriter's Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriter's Counsel, all your obligations hereunder may be cancelled by you
at, or at any time prior to, the Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone, telex or telegraph,
confirmed in writing.
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7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you and
each person, if any, who controls you within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and out-of-pocket expenses whatsoever (including
but not limited to reasonable attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which you or any such person may become subject under the Act, the Exchange Act
or otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related preliminary prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; PROVIDED, HOWEVER, that
the Company will not be liable in any such case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of you expressly for use
therein and PROVIDED, further, that the Company will not be liable to you or any
person who controls you with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus which is
corrected in the Prospectus if the Company sustains the burden of proving that
you sold securities to the person asserting any such loss, liability, claim or
damage without sending or giving, at or prior to the written confirmation of the
sale of such securities to such person, a copy of the Prospectus, if the Company
had previously furnished copies thereof to you. This indemnity agreement will
be in addition to any liability which the Company may otherwise have, including,
under this Agreement.
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<PAGE>
(b) You agree to indemnify and hold harmless the Company, each
of its directors, each of its officers who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any losses, liabilities, claims, damages and expenses whatsoever (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Securities, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of you expressly for use therein; PROVIDED, HOWEVER, that in no case
shall you be liable or responsible for any amount in excess of the underwriting
discount received by you. This indemnity will be in addition to any liability
which you may otherwise have including under this Agreement. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and the second paragraph and the second sentence of the third paragraph
under the caption "Underwriting" in the Prospectus constitute the only
information furnished in writing by or on behalf of you expressly for use in the
registration statement relating to the Securities as originally filed or in any
amendment thereof on or prior to the date hereof, any related preliminary
prospectus or the Prospectus or in any amendment thereof or supplement thereto,
as the case may be.
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<PAGE>
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties,
it being understood, however, that the indemnifying parties shall not, in
connection with any one such action or separate but substantially similar
related actions arising out of the same general allegations or circumstances, be
liable for fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for the indemnified parties.
Anything in this subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its
26
<PAGE>
written consent; PROVIDED, HOWEVER, that such consent was not unreasonably
withheld.
8. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
you shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than you, who may also be liable for
contribution, including persons who control the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) to
which the Company and you may be subject, in such proportions as is appropriate
to reflect the relative benefits received by the Company and you from the
offering of the Securities or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and you in connection with the
statements or omissions which 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 you shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and (y) the underwriting discounts and commissions received by
you, respectively, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault of the Company and of you 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
27
<PAGE>
the Company or you and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) in no case shall you be liable or responsible for any amount
in excess of the underwriting discount applicable to the Securities purchased by
you hereunder, and (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
Notwithstanding the provisions of this Section 8, you shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by you and distributed to the public were offered to
the public exceeds the amount of any damages that you have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 8, each person, if any, who
controls you within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as you, and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this Section 8. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; PROVIDED, HOWEVER, that such consent was not unreasonably
withheld.
28
<PAGE>
9. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS.
All representations and warranties, covenants and agreements of you and the
Company contained in this Agreement, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of you or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of any payment for the Securities to and by you. The representations
contained in Section 1 and the agreements contained in Sections 5, 7, 8 and
10(d) hereof shall survive the termination of this Agreement including pursuant
to Section 10 hereof.
10. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon the later of when
(i) you and the Company shall have received notification of the effectiveness of
the Registration Statement or (ii) the execution of this Agreement. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by
notifying you, or by you by notifying the Company. Notwithstanding the
foregoing, the provisions of this Section 10 and Sections 1, 5, 7 and 8 hereof
shall at all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at any
time prior to the Closing Date if (A) any domestic or international event or act
or occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or securities
in general; or (B) if trading on the New York or American Stock Exchanges shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York or American Stock Exchanges by the New York or American Stock
Exchanges or by order of the Commission or any other governmental authority
having jurisdiction; or (C) if a banking moratorium has been declared by a state
or federal authority or if any new restriction materially adversely affecting
the distribu-
29
<PAGE>
tion of the Securities shall have become effective; or (D)(i) if the United
States becomes engaged in hostilities or there is an escalation of hostilities
involving the United States or there is a declaration of a national emergency or
war by the United States or (ii) if there shall have been a change in political,
financial or economic conditions if the effect of any such event in (i) or (ii)
is such as in your judgment makes it impracticable or inadvisable to proceed
with the offering, sale and delivery of the Securities on the terms contemplated
by the Prospectus.
(c) Any notice of termination pursuant to this Section 10 shall
be by telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 10(a) hereof or (ii) Section 10(b) hereof), or if the sale
of the Securities provided for herein is not consummated because any condition
to your obligations set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof, the Company will, subject to demand by you,
reimburse you for all out-of-pocket expenses (including the fees and expenses of
your counsel), incurred by you in connection herewith.
11. NOTICE. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to you shall be
mailed, delivered, or telexed or telegraphed and confirmed in writing, to Bear,
Stearns & Co. Inc., 245 Park Avenue, New York, NY 10167, Attention: Corporate
Finance Department; if sent to the Company, shall be mailed, delivered, or
telegraphed and confirmed in writing to Universal Outdoor, Inc., 321 North Clark
Street, Suite 1010, Chicago, IL 60610, Attention: Chief Financial Officer.
12. PARTIES. This Agreement shall inure solely to the benefit of,
and shall be binding upon you and the Company and the controlling persons,
directors, officers, employees and agents referred to in Sections 7 and 8, and
their respective successors and assigns, and no other person shall have or be
construed to have any
30
<PAGE>
legal or equitable right, remedy or claim under or in respect of or by virtue of
this Agreement or any provision herein contained. The term "successors and
assigns" shall not include a purchaser, in its capacity as such, of Securities
from you.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
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<PAGE>
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
UNIVERSAL OUTDOOR, INC.
By: _________________________________
Name:
Title:
Accepted, as of the date first above written.
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
By: BEAR, STEARNS & CO. INC.
By: ______________________
Name:
Title:
32
<PAGE>
Exhibit 2.4
FORM OF
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into this ______ day of______, 1996, by
and among MOUNTAIN MEDIA, INC., a Pennsylvania corporation doing business as
Iowa Outdoor Displays ("IOD") and ROBERT H. LAMBERT, ("Lambert")(IOD and Lambert
are collectively referred to as "Seller") and UNIVERSAL OUTDOOR, INC., an
Illinois corporation, ("Buyer").
W I T N E S S E T H :
In consideration of the respective representations, warranties and
covenants contained in this Agreement and other good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, Buyer and Seller
agree as follows:
l. Transfer of Assets.
1.1 Buyer agrees that at the Closing it shall acquire all of the
business and assets of Seller, whether disclosed or undisclosed,
wherever located, which are used in the outdoor advertising business
in the market described in Exhibit 1.1, ("Market"), including, but not
limited to, those assets listed on Exhibits or Schedules attached to
this Agreement ("Assets"), and Seller agrees to transfer, assign,
convey and deliver to Buyer all of the Assets, in exchange solely for
the consideration specified under the provisions of Section 1.4 herein
("Purchase Price"), plus the assumption of certain obligations of
Seller as specified.
1.2 The consideration payable by Buyer, as specified in Section 1.1,
includes any applicable sales taxes or other taxes imposed upon the
transfer of the Assets to Buyer.
1.3 The Assets shall include, but shall not be limited to, the
following, all of which are located in the Market:
1.3.1 All interest in and to real property as described on
Exhibit 1.3.1 including all leasehold interests of Seller in
and to real property, and all easements and licenses,
including prepaid ground rents.
1.3.2 All sign structures, whether owned or leased, and any
fixtures and leasehold
1
<PAGE>
interests in sign structures, and all lights, electrical
hook ups, catwalks and other appurtenant equipment in the
Market which are described in Exhibit 1.3.2.
1.3.3 All rights and entitlement of Seller in and to
advertising contracts which are listed in Exhibit 1.3.3.
1.3.4 All other contract rights and entitlements related to
the business of Seller, whether oral or written in excess of
$5,000, including those set forth in 1.3.4.
1.3.5 All rights and obligations of Seller in and to sign
constructions. All such rights and a list of any
contractors are listed in Exhibit 1.3.5. For purposes of
this subsection "sign constructions" shall mean any
locations as to which Seller has a perfected or partial
right or expectancy to construct signs.
1.3.6 All governmental permits, licenses, approvals or
authorizations necessary for Seller to conduct its outdoor
business within the Market. Seller shall cooperate with
Buyer in the assignment and transfer to Buyer of all such
governmental permits, licenses, approvals or authorizations,
including state and local sign permits. All such sign
permits and all other material permits, licenses, approvals
or authorizations are listed in Exhibit 1.3.1 and 1.3.6.
1.3.7 All other assets and property of Seller used in the
Market in Seller's outdoor advertising business, such as
motor vehicles, office equipment and machinery, sign panels,
lighting fixtures, furniture, inventories of raw materials,
supplies, customer lists, business records, and work in
progress. A list of all other material assets is set out in
Exhibit 1.3.7.
1.3.8 All deposits from customers held by Seller arising from
transactions in the Market. A list of all deposits from
customers is set forth in Exhibit 1.3.8.
1.3.9 All telephone numbers and listings used by Seller in
the Market. Seller will not change said telephone numbers.
A list of all
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telephone numbers and listings is attached as Exhibit 1.3.9.
1.3.10 [Intentionally Deleted]
1.3.11 Data regarding lessors, advertisers and other business
data in machine-readable form.
1.3.12 All accounts receivables and prepaid expenses of IOD
attached as Exhibit 1.3.12.
1.4 Buyer shall pay to Seller a Purchase Price for the Assets of: (a)
One Million Seven Hundred Twenty-Five Thousand Dollars ($1,725,000) in
cash or by wire transfer at Closing at Seller's direction as shown on
Exhibit 1.4(a) and (b) Seventy-Five Thousand Dollars ($75,000) payable
into escrow pursuant to the terms of the Escrow Agreement attached
Exhibit 1.4(b). The Purchase Price set forth herein is subject to the
following adjustments:
1.4.1 [Intentionally Deleted]
1.4.2 Minus the amounts which will credit Buyer for the
following:
1.4.2.1 $1000 for the Construction of one face on
Route 48, Shenandoah.
1.4.2.2 Any advertising services delivered after Closing
for which Seller has already received payment as
reflected on Exhibit 1.3.8.
1.4.3 Other than as provided for in Section 1.4.2, all items
of income and expense listed below relating to the Assets
will be prorated as of the Closing Date, with Seller liable
to the extent such items relate to any time period up to and
including the Closing Date, and Buyer liable to the extent
such items relate to periods on or subsequent to the Closing
Date: (a) personal property, real estate, occupancy and
water taxes, if any, on or with respect to the Assets; (b)
rents, taxes and other items payable by Seller under any
contract to be assigned to or assumed by Buyer; (c) the
amount of sewer rents and charges for water, telephone,
electricity and other utilities and fuel; and (d)
[Intentionally Deleted] (e) all
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<PAGE>
items paid or payable on or after the Closing Date under any
of the Assumed Obligations (as such term is defined in
Section 4.1 herein) to the extent not specifically
referenced in clauses (a) - (d) above which are normally
prorated in connection with similar transactions;
The net aggregate amount of the prorations described in
(a) - (d) shall be added to or subtracted from the base
amount payable by Buyer to Seller on the Closing Date. If
current payments with respect to items to be prorated
pursuant to this Section 1.4.3 are not ascertainable on or
before the Closing Date, such payments shall be prorated on
the basis of the most recently ascertainable bill therefor
and shall be reprorated between Seller and Buyer when the
current bills with respect to such items have been issued
and a cash settlement shall be made within thirty (30) days
thereafter.
The prorated items known to the parties at Closing are
as listed on Exhibit 1.4.3
1.5 The Purchase Price will be paid by Buyer plus or minus the
amount, if any, by which the Purchase Price is adjusted pursuant to
subsection 1.4 of this Agreement
1.6 The parties hereto agree that the allocated Asset values attached
hereto, designated Exhibit 1.6, fairly and accurately represent the
respective values of the Asset categories of Seller purchased by Buyer
pursuant to the Asset Agreement.
1.7 At the Closing, Seller shall execute the Non-Competition, Non-
Solicitation and Non-Disclosure Agreement substantially in the form
set forth in Exhibit 1.7(a).
If Seller violates this Section 1.7 and the Non-competition, Non-
Solicitation and Non-Disclosure Agreement referenced herein, and Buyer
obtains a final judgment or arbitration award or a settlement is
reached with Seller for damages as a result of this violation, Buyer
may offset the amount of this judgment, arbitration award or
settlement against any amounts owed by Buyer. "Final" shall mean any
judgment for which no appeal has been filed during the thirty (30)
days following the entry of the judgment order. Provided, however,
Buyer's
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<PAGE>
claim shall not be limited to the amount of any offset available.
1.8 After the Closing, Buyer shall have the right to use the name
Iowa Outdoor Displays and all other trade names used by Seller in the
Market. Buyer shall also have the right for one year from the Closing
Date to endorse the name Iowa Outdoor Displays to all checks which,
pursuant to the terms of this Agreement, are the property of Buyer.
2. Representations and Warranties of Seller. Seller represents and warrants
to Buyer as an inducement to Buyer to purchase the Assets of Buyer pursuant
to the terms of this Agreement as follows:
2.1 IOD is a Pennsylvania corporation, duly organized, validly
existing and in good standing under the laws of that state, and has
the corporate power to own its property and carry on its business as
now being conducted, and to execute and deliver the Asset Purchase
Agreement and any other agreements to be entered into by Seller in
connection with the Asset Purchase Agreement.
2.2 Seller is properly qualified as a foreign corporation to do
business in the jurisdictions listed in the attachment hereto
designated as Exhibit 2.2. These are the only jurisdictions where
Seller is required to be qualified as a foreign corporation in order
to conduct business in the Market.
2.3 To the best of Seller's knowledge, except as set forth on Exhibit
2.3, there are no violations of applicable laws or regulations,
including, but not limited to, zoning regulations and building permits
or other permits related to sign structures have occurred that would
have a material adverse effect on the future operation of any Asset.
2.4 Attached as Exhibit 2.4 are unaudited balance sheets and
comparative operating statements of Seller's business in the Market as
of July 31, 1996 (the "Financial Statements"). These Financial
Statements are in accordance with the books and records of Seller and
fairly and accurately present its financial position as of that date
in accordance with generally accepted accounting principles.
2.5 Since the date of the Financial Statements, except as disclosed
in Exhibit 2.5 attached hereto, to the best of Seller's knowledge
there have been no material adverse changes in the general affairs,
management or financial
5
<PAGE>
position or financial condition of Seller with respect to the Market.
2.6 The Exhibits attached to this Agreement are correct in all
material respects including specifically the following:
2.6.1 The information about contracts attached as Exhibit 1.3.3
and Exhibit 1.3.4 to this Agreement is true and correct as of the date
set forth in said Exhibit. Except as set forth in Exhibit 2.6.1, said
contracts (1) are in full force and effect (2) have not been breached
by Seller or to the best of Seller's knowledge, any of the parties
thereto; and (3) all payments required under said contracts have been
made except those not yet due and payable provided the current portion
of which is included as a Current Liabilities. Seller has no
"percentage rental" leases.
2.6.2 All sign leases to which Seller is a Lessee are in full
force and effect.
2.6.3 [Intentionally Deleted]
2.6.4 Exhibit 2.6.4 lists agreements, whether oral or written
requiring payments or performance by IOD after Closing other than
Lease payments and the following agreements:
(a) Each material contract, agreement or commitment for the sale
or lease of Seller's Assets, products or services, excluding
advertising contracts and contracts to provide advertising allowances
or promotional services which are listed in Exhibit 1.3.4.
(b) Each contract with any dealer, distributor, broker, agent or
sales representative.
(c) Employment contracts, including union contracts, executed by
any officer, director, employee or consultant of Seller.
2.7 There are no unfair labor practice charges pending, or to the
best of Seller's knowledge, threatened against Seller. Seller has not
engaged in any unfair labor practices, and there is no strike,
dispute, request for representation or work stoppage pending or
threatened against Seller by or with respect to any such employees.
2.8 The execution, delivery and performance of this Agreement by
Seller, including, without limitation, all conveyances, transfers,
assignments and deliveries
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<PAGE>
contemplated herein, have been duly and effectively authorized and
approved by IOD's board of directors and shareholders and all other
persons, businesses, banks and governmental bodies or courts whose
approval is required. This Agreement and each and every instrument
executed and delivered hereunder by Seller shall constitute a valid
and binding obligation of Seller enforceable according to their terms.
2.9 The performance of this Agreement by Seller will not conflict
with or violate the provisions of any material agreement or instrument
binding upon Seller
2.10 Except as set forth in Exhibit 2.10, there is no suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the best
of Seller's knowledge, threatened against or affecting the business,
Assets or financial conditions of Seller within the Market which would
have any material adverse effect on Seller's performance of this
Agreement and the transactions contemplated herein. Seller is not in
default with respect to any order, writ, injunction or decree of any
federal, state, local or foreign court, department, agency or
instrumentality.
2.11 Except as set forth on Exhibit 2.11, at Closing Seller will
convey good and merchantable title to all Assets and Seller's title to
all property included in the Assets required to be disclosed in the
Exhibits to this Agreement is not encumbered in any manner other than
for liens for taxes not yet due.
2.12 All Assets are useable in the ordinary course of business in
accordance with industry standards except those listed in Exhibit
2.12. Seller has no knowledge of any defects in the condition of any
of the said Assets, ordinary wear and tear excepted.
2.13 Seller represents and warrants to Buyer that as of the date of
this Agreement the following environmental representations and
warranties are true:
2.13.1 Seller has not caused or permitted its operations on
any real estate owned or leased by Seller to generate,
manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process hazardous substances
or other dangerous or toxic substances or solid wastes,
except in compliance with all applicable federal, state and
local laws or regulations, and has not
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caused or to the best of Seller's knowledge permitted and
has no knowledge of the release of any hazardous substances
that have gone onto or offsite of any real estate owned or
leased by Seller (other than the disposal of paints, pastes
and similar chemicals through approved channels) and Seller
has no knowledge that any person or entity has in the past
utilized any real estate owned or leased by Seller in a
manner which has created any hazardous substance on or off
any real estate owned or leased by Seller. There are no
pending and, to the best of Seller's knowledge, no
threatened claims, suits, administrative proceedings, or
other actions by a Court or governmental entity with regard
to hazardous substances on any real estate owned or leased
by Seller except as set forth in Exhibit 2.13.1.
2.13.2 Seller agrees to indemnify and hold harmless Buyer, its
successors, and assigns against and in respect of any and
all damages, claims, losses, liabilities and expenses,
including, without limitation, reasonable legal, accounting,
consulting, engineering and other expenses, which may be
imposed upon or incurred by Buyer, its successors or
assigns, or asserted against the Buyer, their successors or
assigns by any other party or parties (including, without
limitation, a governmental entity), arising out of or in
connection with any environmental condition, resulting from
activity of Seller prior to Closing. The indemnification
obligations of Seller in this Section 2.13.2 shall survive
and extend to the fifth anniversary of Closing subject to
the limits stated in Section 10.5.
2.14 As of the date of this Agreement, Seller knows of no individual,
partnership, corporation or other entity in the Market who makes it a
practice to destroy billboards as part of a campaign or concerted
effort to damage billboard companies.
2.15 Except current liabilities incurred or paid in the ordinary
course of business and obligations under contracts entered into or
performed in the ordinary course of business Seller has not since the
date of the Financial Statements attached as Exhibit 2.4:
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2.15.1 incurred or become subject to any obligations or
liabilities (absolute or contingent) which have a material
adverse effect on the Assets;
2.15.2 mortgaged, pledged or subjected to any lien, charge or
encumbrance any of its assets covered by this Agreement
(other than liens for taxes not yet due;
2.15.3 entered into any transaction other than in the ordinary
course of business in any way affecting the Assets, except
for this Agreement and the transactions contemplated
hereunder;
2.15.4 increased, without the knowledge of Buyer, the general
rate of compensation payable to any of its employees or made
or accrued for any new employee benefit plans for employees.
A list of employees who work on a full time basis and all
compensation and bonus arrangements for these employees is
set forth in Exhibit 2.15.4;
2.15.5 made, accrued or become liable in any way for any
bonus, profit sharing, pension, incentive compensation or
other similar payments to any employee; or
2.15.6 suffered any other event or condition of any character
which has materially adversely affected Seller's business.
2.16 The accounts receivable of Seller reflected in the Financial
Statements attached hereto as Exhibit 2.4 and the accounts receivable
of Seller resulting from its business operations through the Closing
Date have been or, to the best of Seller's knowledge, will be
collected in the ordinary course of business, considering the offset
for the reserve for doubtful accounts on the same basis as used by
Seller in the past. Seller shall continue through the Closing Date
its normal and customary collection efforts with regard to such
accounts receivable and shall not make any operational changes in
anticipation of this transaction. Said accounts receivable arose out
of bona fide transactions in the ordinary course of business and are
not subject to any right of offset or counterclaim except for any
barter or lease trade out arrangements disclosed in Section 2.21.
2.17 Except as set forth in Exhibit 2.17, Seller does not sponsor or
participate in any (i) life, health, accident
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or disability or any other "employee welfare benefit plan" as defined
in Section 3(l) of ERISA, or (ii) any "employee pension benefit plan"
as defined in Section 3(2) of ERISA. Exhibit 2.17 also discloses the
Seller's vacation, sick leave and holiday policies.
2.18 Pursuant to the terms of this Agreement, is delivering to Buyer
all Assets used in the Market by Seller to operate its business except
Seller's Automobile.
2.19 Seller has paid all federal and municipal taxes, including real
and personal property, sales and use taxes it is required to pay.
2.20 Seller has not sublet any property except as disclosed in
Exhibit 2.20.
2.21 Seller has not engaged in any "bartering" or "lease trade outs"
of accounts receivable or advertising space except as set forth in
Exhibit 2.21.
2.22 The supplies owned by Seller being purchased by Buyer, which are
current assets, are useable by Buyer, both as to quality and quantity,
in the ordinary course of business in accordance with industry
standards.
2.23 [Intentionally Deleted]
2.24 [Intentionally Deleted]
2.25 Seller has all permits and licenses needed to operate the Assets
being purchased by Buyer and no one has challenged the validity of
those permits and licenses except as set forth in Exhibit 2.25.
2.26 No Major Advertiser of Seller has advised Seller that it will not
renew or it is going to breach or terminate its advertising contracts
when it is assigned to Buyer. The term "Major Advertiser" as used
herein shall mean any advertiser whose annual payments are Five
Thousand Dollars ($5,000.00) in the aggregate or more. No group of
advertisers whose annual payments exceed Forty Thousand Dollars
($40,000) have advised Seller they will not renew or are going to
breach or terminate their advertising contracts when they are assigned
to Buyer.
2.27 Seller has not received notice of any tax audits against Seller.
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2.28 Seller shall be responsible for providing any notice of layoff or
plant closing required in connection with the transaction contemplated
herein pursuant to the Federal Worker Adjustment and Retraining
Notification Act of 1988, any successor federal law, and any
applicable state or local plant closing notification statute, and
Seller shall bear any liability or obligation that may rise or accrue
as the result of improper or untimely notice or that may arise from
any person claiming wrongful termination or change of employment as a
result of any action or omissions of Seller with respect to the
transactions set forth in this Agreement.
2.29 All dues owed by Seller to any outdoor advertising association
have been paid.
2.30 There are no agreements or undertakings pursuant to which any
third party has or may have the right to acquire from Seller any of
the stock or (except in the ordinary course of business) Assets of
Seller.
2.31 To the best of Seller's knowledge, except as set forth on Exhibit
2.31, after Closing Buyer will have the exclusive right to use the
Seller's name and all other trade names used by Seller in the outdoor
advertising business in the outdoor advertising market area where
Seller currently transacts business.
2.32 To the best of Seller's knowledge, in the five years prior to
Closing, no employee of Seller, lessor, business invitee, or other
person has suffered personal injury or property damage as a result of
any action involving the business or Assets of Seller within the
Market such that a claim has been or may be raised against Seller
directly or indirectly or under the workman's compensation laws of any
state except as set forth in Exhibit 2.32.
2.33 Seller shall have delivered to Buyer under this Agreement sign
structures containing, in the aggregate, at least 155 advertising
faces.
2.34 Except as disclosed on Exhibit 2.34, following Closing, neither
Seller nor any affiliates, officers, directors or shareholders of IOD
nor any person related to or affiliated with Lambert will have any
direct, indirect or beneficial ownership of any real or personal
property which is in any way involved with or related to the operation
of the Assets and property of Seller used in the Market in Seller's
outdoor advertising business being purchased by Buyer.
3. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
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3.1 Buyer has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Illinois,
with full power and authority to own its properties and carry on its
business as now being conducted and to execute and deliver this Asset
Purchase Agreement and any other Agreements to be entered into by
Buyer in connection with this Asset Purchase Agreement.
3.2 The performance of this Agreement by Buyer will not conflict with
or violate the provisions of any material agreement or instrument
binding upon Buyer; and the execution, delivery and performance of
this Agreement shall have been duly and effectively authorized by
Buyer prior to Closing. This Agreement and each and every instrument
executed and delivered by Buyer shall constitute a valid and binding
obligation of Buyer.
3.3 There is no suit, action, arbitration or legal, administrative or
other proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened against or affecting the business,
assets or financial conditions of Buyer which would have any material
adverse effect on Buyer's performance of this Agreement and the
transactions contemplated. Buyer is not in default with respect to
any order, writ, injunction or decree of any federal, state, local or
foreign court, department, agency or instrumentality.
3.4 Buyer shall use its best efforts to perform and fulfill all
conditions and obligations on its part to be performed and fulfilled
under this Agreement, to the end that the transactions contemplated by
this Agreement shall be fully carried out.
4. Assumption of Obligations.
4.1 Buyer does not assume any obligations or liabilities of Seller of
any kind or nature, except as to those post-closing matters specified
below.
4.1.1 Post-closing liabilities under leases affecting the
Assets or within the Market; and which have not been paid,
performed or discharged by Seller.
4.1.2 Post-closing obligations to deliver advertising
services pursuant to advertising contracts purchased
pursuant to this Agreement in the Market.
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4.2 Anything to the contrary notwithstanding, it is expressly
understood that Buyer shall not assume any of the following
obligations or liabilities of Seller:
4.2.1 Any city, state or federal tax liabilities for any kind
of tax for any period prior to and including the Closing
Date. Real and personal property taxes shall be prorated as
of the Closing Date, based upon bills received, when
received.
4.2.2 Any income tax liability arising from the sale of
Assets to Buyer or conveyance of Assets to Buyer or any
liquidation and dissolution of Seller.
4.2.3 Any obligation, commitment or liability of or claim
against Seller which constitutes or arises from a breach by
Seller of any representation, warranty or covenant.
4.2.4 Any obligation, commitment or liability of or claim
against Seller which may arise from Seller's operation of
the Assets prior to the Closing Date.
4.2.5 Any obligation, commitment or liability of or claim
against Seller which may arise from the rendering of
professional, legal, accounting, appraisal, engineering or
other similar services to Seller in connection with the
transactions.
4.2.6 Any liability of Seller under profit-sharing or similar
employee benefit plans or any other employee benefit
collective bargaining agreement, employment agreement or
salary or bonus arrangement.
4.3 Seller herewith agrees that it shall pay promptly when due, or
contest, any and all liabilities of Seller arising in the Market not
assumed by Buyer at Closing or discharged by Seller prior to Closing,
if Seller's failure to pay would have a material adverse effect on
Buyer, provided that Seller may contest the assertion of any such
liability to the extent reasonably prudent and Buyer shall cooperate
fully in any such contest. If Seller elects to contest any such
liability and fails to succeed in such contest after any appeals, then
Seller shall promptly pay such liability. Seller shall give Buyer
written notice before Seller begins contesting any such liability
unless Seller does not have adequate time,
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in which event, Seller shall give Buyer said written notice within
five (5) business days after Seller begins contesting any such
liability.
In the event that Seller is contesting any liability not assumed
by Buyer under the terms of the Asset Agreement, Seller shall make it
clear to the third party that Seller and not Buyer is the entity
disputing the matter.
4.4 Installments of special assessments levied against real estate
included in the Assets shall be the obligation of Seller if due on or
before the Closing Date and the obligation of Buyer if due after the
Closing Date.
4.5 Prior to the Closing and for six months thereafter, Seller shall
cooperate with Buyer to obtain all consents, approvals, and
certificates and licenses and permits, and other documents required or
appropriate in connection with the performance by it of this Agreement
and the consummation of the transactions contemplated hereby or
otherwise required in order to prevent the breach of any
representation and warranty set forth herein; provided, however, that
no contact will be made by the Seller with any third party to obtain
any Consent except in accordance with arrangements previously agreed
to by Buyer.
4.6 Excluding workmen's compensation, Seller shall be responsible for
all claims associated with health, illness or injury insofar as they
relate to events or conditions existing on or before the Closing Date
and relating to employees or their dependents (or others) to the
extent that event or condition has been reported on or before the
Closing Date to Seller or to a medical professional or as to which
medical treatment has been obtained on or before the Closing Date;
provided, however, that Buyer's health plans will (to the extent they
would cover medical expenses for a condition arising after the Closing
Date) cover medical expenses for continuing employees incurred after
the Closing Date to the extent said medical expenses result from a
medical condition existing on or before the Closing Date that have not
been so reported or the subject of such treatment.
Seller shall be responsible for all workmen's compensation claims
associated with health, illness or injury insofar as they relate to
events occurring on or before the Closing Date.
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4.7 Seller shall offer continuation coverage under its applicable
group health plans to all employees of Seller and their covered
dependents who incur a "qualifying event" (within the meaning of
section 4980(B) of the Code and section 603 of ERISA) as a result of
or in connection with the transactions contemplated by this Agreement.
Such coverage shall comply with the continuation coverage requirements
(including any applicable notice provisions) of section 4980(B) of the
Code and Part 6 of Title I of ERISA and any applicable state law
continuation coverage requirements.
5. Conduct of Business Pending Closing. Seller represents, warrants and
agrees that from the date of this Agreement until the Closing as to the
Markets and Assets:
5.1 The business of Seller will be conducted in the usual and
ordinary course, the character of the business will not change, no
different business will be undertaken within the Market, and Seller
will, in accordance with its past practices, preserve for Buyer the
relationship with suppliers, customers and others having business
relations with Seller, including those employees of Seller which Buyer
intends to hire after Closing.
5.2 Except in the ordinary course of business, Seller will not enter
into any contract, agreement, commitment or understanding with respect
to employing any agents, wholesalers, dealers, brokers or consultants
in the development and sale of their services which requires an
expenditure of more than $5,000 without the prior written
authorization of Buyer.
5.3 As to the Market or Assets in the Market, Seller will not:
(i) mortgage, pledge or subject to any lien, charge or
encumbrance any of its Assets in the Market;
(ii) sell or transfer any of its Assets in the Market, except in
the ordinary course of business, or any permits, licenses, approvals,
or authorization or except in the ordinary course of business, cancel
any debts or claims;
(iii) knowingly enter into any transaction outside the ordinary
course of business.
(iv) make, accrue or become liable in any way for any bonus
(other than those which Seller shall pay in full), profit-sharing,
pension, incentive compensation or other similar payments to any
employee in the Market
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inconsistent with prior practices or other than as shown on a Schedule
or Exhibit to this Agreement;
(v) make or permit any amendment or early termination of any
contract, except in the ordinary course of business;
(vi) through negotiations or otherwise, make any commitment
affecting the Market or incur any liability affecting the Market to
labor organizations without the prior written approval of Buyer;
(vii) make any material alteration to the normal and customary
pricing in the Market or terms and conditions of sale extended to
Seller's customers; or
(vii) discharge or satisfy any lien or encumbrance affecting the
Market or pay any obligation or liability affecting the Market
(absolute or contingent), except as required or allowed hereunder.
5.4 Seller shall maintain books of account consistent with past
accounting practices as described in Section 2.4. Seller will not
materially alter its current insurance coverage without the prior
written consent of Buyer.
5.5 Prior to this Agreement, Seller has made available to Buyer and
its representatives certain information and records relating to the
business and affairs of Seller as requested by Buyer. During the
normal business hours throughout the period from this date to the
Closing Date, Seller will give to Buyer and its accountants, counsel,
appraisers and other representatives full access to all properties,
contracts, commitments, books and records or Seller pertaining to the
Market. Buyer will keep such information confidential and not
disclose or use such information except for purposes of this Agreement
until Closing.
5.6 Prior to Closing, Buyer shall not have the risk of loss with
respect to the Assets to be conveyed pursuant to this Agreement. In
the event, between the date of this Agreement and the Closing Date,
any parcel of improved real property or personal property being
purchased, or leased as a part of this transaction, including but not
limited to, the office furniture and equipment, fixtures, leasehold
improvements, equipment, vehicles or other personal property is
materially damaged or destroyed by fire or other casualty or in the
event that the sign structures to be purchased are materially damaged
or destroyed by fire or other casualty, and if as a result the Assets
are materially diminished in value,
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Buyer may elect to terminate this Agreement, and all obligations of
the parties shall cease and neither party shall have any further
rights against the other. Seller shall have the right within thirty
(30) days to remedy or repair such damage or destruction and (subject
to the terms and conditions of this Agreement) thereupon require Buyer
to close. Seller shall immediately notify the Buyer in writing of the
occurrence of any fire or other casualty. Buyer shall notify Seller
in writing within two days of Buyer's receipt of Seller's notice
whether Buyer elects to consummate this transaction.
6. Conditions to Obligations of Buyer to Consummate the Transaction. The
obligations of Buyer to be performed at the Closing shall be subject to the
satisfaction or the waiver in writing by Buyer on or prior to the Closing
Date of the following conditions:
6.1 Buyer shall have received an opinion from counsel for Seller in
the form attached as Exhibit 6.1 which shall be reasonably
satisfactory to Buyer, dated the Closing Date, to the effect that;
6.1.1 IOD is a corporation duly organized, existing and in
good standing under the laws of the State of Pennsylvania
and has the corporate power to carry on its business as now
being conducted in the Market, and is not required to
qualify to do business in any state where the nature of its
business or assets require qualification.
6.1.2 Such counsel does not know of any pending or threatened
lawsuits against Seller other than those described in
Exhibit 2.10 or elsewhere in this Agreement.
6.1.3 The execution, delivery and performance of this
Agreement by Seller has been duly authorized and approved by
its Board of Directors and this Agreement and each
instrument executed and delivered herewith by Seller has
been duly executed by and constitute valid and binding
obligations of Seller on the Closing Date enforceable
according to their terms except to the extent enforceability
is limited by applicable bankruptcy and insolvency laws and
by general principles of equity. Counsel may take exception
to the enforceability of the noncompetition and
nonsolicitation provisions of the instruments and other
generally accepted exceptions.
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6.1.4 This Agreement and each instrument have been duly
executed and delivered by Seller.
6.1.5 [Intentionally Deleted]
6.1.6 [Intentionally Deleted]
6.1.7 When the Bill of Sale or other conveyance instruments
shall have been delivered to Buyer by Seller, such delivery
will transfer to Buyer good title to the Assets, and the
Assets to the best of counsel's knowledge will be free and
clear of all liens, encumbrances, claims, charges and
assessments whatsoever, other than any incurred by Buyer.
6.2 Buyer shall not have discovered and given notice to Seller prior
to closing of any material error, misstatement or omission in the
representations and warranties made by Seller which alone or in the
aggregate are materially adverse to Seller or to Buyer if the
transaction is completed, unless Seller has covered the same to
Buyer's reasonable satisfaction. The representations and warranties
and Exhibits or Schedules of Seller contained in this Agreement shall
be true on and as of the Closing Date with the same effect as though
such representations and warranties have been made on and as of such
date, except for any variations resulting from actions contemplated or
permitted by this Agreement, which variations shall not be materially
adverse, and each and all of the covenants to be performed by Seller
on or before the Closing Date pursuant to the terms shall have been
duly performed in all material respects. Seller shall deliver to
Buyer a certificate to that effect, dated the Closing Date, certifying
to all the foregoing, and executed by an authorized officer of Seller.
6.3 All contracts, leases and options, permits and rights employed by
Seller in the conduct of its business in the Market, to the extent
assignable by Seller, shall be assigned to Buyer at Closing, and
Seller will use reasonable business efforts to obtain and provide to
Buyer at Closing any third parties' consents required for such
assignments.
6.4 If required by law, Seller shall have
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complied with all requirements imposed by such agencies of the U. S.
Government as may be necessary for the valid and legal consummation of
the transactions contemplated by this Agreement.
6.5 No court or governmental agency shall have issued an order,
binding on Buyer, enjoining the closing of the transactions
contemplated herein, and no proceeding shall be pending or threatened
that could result in such order.
6.6 [Intentionally Deleted]
6.7 Seller shall have delivered a certificate that there has been no
material adverse change in the exhibits prepared for this Agreement
between the date of the exhibit and the Closing Date.
6.8 There shall be no existing or threatened suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the best
of Seller's knowledge, threatened against or affecting the business,
assets or financial conditions of Seller within the Market which would
have any material adverse effect on Seller's performance of this
Agreement and the transactions contemplated, including that listed in
Exhibit 2.10 or elsewhere in this Agreement.
6.9 Seller shall deliver a certified copy of the Board of Directors
resolution approving this transaction and the execution of this
Agreement.
6.10 Seller shall deliver an Incumbency Certificate to Buyer as to
Seller.
6.11 Seller shall deliver to Buyer copies of all books, records and
documents relating to the Assets at the Closing. Seller shall retain
its minute books and Corporate records.
6.12 Seller shall have terminated or reassigned all of Seller's
employees in the Market.
7. Conditions to Obligations of Seller to Consummate the Transaction.
The obligations of Seller to be performed at the Closing shall be subject
to the satisfaction or the waiver in writing by Seller on or prior to the
Closing Date of the following conditions:
7.1 Seller shall have received an opinion of Buyer's counsel in the
form attached as Exhibit 7.1 and which shall be reasonably
satisfactory to Seller, dated the
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Closing Date, to the effect that:
7.1.1 Buyer is a corporation duly organized, existing and in
good standing under the laws of the State of Illinois and
has the corporate power to carry on its business as now
being conducted.
7.1.2 The execution, delivery and performance of this
Agreement by Buyer has been duly authorized and approved;
and this Agreement and each instrument executed and
delivered by Buyer have been duly executed by and constitute
valid and binding obligations of Buyer enforceable according
to their terms subject, however, to any state or federal
laws for debtor relief or general principles of equitable
relief.
7.1.3 All actions and proceedings required by law or this
Agreement to be taken by Buyer at or prior to the Closing in
connection with this Agreement and the transactions provided
for have been duly and validly taken or waived by Seller.
7.2 Seller shall not have discovered any material error, misstatement
or omission in the representations and warranties made by Buyer which
alone or in the aggregate to Buyer or Seller if this transaction is
completed unless Buyer has covered the same to Seller's reasonable
satisfaction. The representations and warranties of Buyer contained
in this Agreement shall be true on and as of the Closing Date with the
same effect as though such representations and warranties had been
made on and as of such date, except for any variations therein
resulting from actions permitted by this Agreement, which variations
shall not be materially adverse to Buyer and each and all the
covenants to be performed by Buyer on or before the Closing Date shall
have been duly performed in all material respects. Buyer shall
deliver to Seller a certificate to that effect, dated the Closing
Date, and executed by an authorized officer of Buyer.
7.3 If required by law, Buyer shall have complied with all
requirements imposed by such agencies of the U. S. Government as may
be necessary for the valid and legal consummation of the transactions
contemplated hereby.
7.4 No court of competent jurisdiction or governmental agency shall
have issued an order, binding on Seller, enjoining the closing of the
transactions contemplated herein, and no proceeding shall be pending
or threatened
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that could result in such order.
7.5 There shall be no existing or threatened suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the best
of Buyer's knowledge, threatened against or affecting the business,
assets or financial conditions of Buyer within the Market which would
have any material adverse effect on Buyer's performance of this
Agreement and the transactions contemplated, including that listed in
Exhibit 2.10 or elsewhere in this Agreement.
7.6 Buyer shall deliver an Incumbency Certificate to Seller as to
Buyer.
8. Closing.
8.1 The transactions required under this Agreement to be consummated
at the Closing shall take place at such date ("Closing Date"), and
time as Seller and Buyer may agree, as close as possible to the
execution of this agreement, but in no event later than
September 30, 1996.
8.2 In addition to, and without limiting any other provision of this
Agreement, Seller agrees to do, perform and deliver at the date of
Closing the following:
8.2.1 The opinion of counsel of Seller as specified in
Section 6.1;
8.2.2 Execution by Seller of the requisite instruments of
conveyance, including, but not limited to, a Bill of Sale
and assignments;
8.2.3 Appropriate instruments of transfer to Buyer all
parcels of real estate or leaseholds covered by this
Agreement.
8.2.4 Evidence satisfactory to Buyer showing compliance with
provisions of any applicable requirement of the U.S.
Government or any state or local government.
8.2.5 Such other instruments as counsel for Buyer may
reasonably request.
8.2.6 A certificate that there has been no material adverse
change in the Exhibits prepared for this Agreement, between
the date of the Exhibit and the Closing Date.
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8.3 In addition to, and without limiting any other provisions of this
Agreement, Buyer agrees to do, perform and deliver at the Closing the
following:
8.3.1 The opinion of Buyer's counsel as specified in
Section 7.01;
8.3.2 The amount specified in Section 1.4 in the form of an
interbank transfer of immediately available funds;
8.3.3 Deposit of the amount specified in Section 1.4 in
escrow pursuant to the Escrow Agreement.
8.3.4 Evidence satisfactory to Seller showing compliance with
provisions of any applicable requirement of the U.S.
Government or any state or local government.
8.3.5 Such other instruments as counsel for Seller may
reasonably request.
9. Post-Closing Covenants.
9.1 Buyer and Seller agree to retain and permit each other access to
relevant pre-closing accounting records and corporate books of Seller
regarding the Assets for a period of six (6) years following the
Closing Date for any proper purpose. "Proper purpose" means the
preparation and review of any federal, state or local tax filing or
governmental report, filing, or application and defending or enforcing
rights against third parties or defending or enforcing rights under
this Agreement.
9.2 Seller and Buyer agree to cooperate in the preparation of any
governmental reports and to furnish reasonably requested information
needed for the preparation of governmental reports.
9.3 Consents. To the extent that the assignment of any contract,
license, lease or other agreement to be assigned to Buyer herein shall
require the consent of any person other than Seller, this Agreement
shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof. Of any such consent is
not obtained before the Closing Date, Seller agrees to cooperate with
Buyer thereafter in any reasonable arrangement (such as
subcontracting, sublicensing or subleasing) designed to provide for
Buyer
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the benefits under the applicable contract, license, lease or other
agreement, as the case may be including without limitation,
enforcement, at the cost to and for the benefit of Buyer, of any all
rights of Seller against the other parties thereto arising out of the
breach or cancellation thereof by such other parties or otherwise.
9.4 Waiver of Bulk Transfer Laws. The Buyer and Seller each hereby
agrees to waive compliance by the other with the provisions of the
bulk transfer law of any jurisdiction.
10. Indemnity.
10.1 Seller agrees to indemnify Buyer against all claims, losses,
expenses, obligations, damages and liabilities (including, without
limitation, costs and expenses of litigation and reasonable attorneys'
fees) occurring or arising from the following: (1) any breach of any
representation or warranty or failure to do and perform any covenant
or agreement of Seller contained in this Agreement; (2) any
obligation, debt or liability of Seller or any claim based upon any
other occurrence arising from the operation of the Assets anywhere, or
from the operation of Seller's entire business anywhere, prior to the
Closing, the obligation for which is not expressly assumed or agreed
to be assumed by Buyer; or (3) any claim of any finder or broker
engaged by Seller or owed compensation by Seller as a result of the
transactions contemplated in this Agreement.
10.2 Buyer hereby agrees to indemnify Seller against all claims,
losses, expenses, obligations, damages and liabilities (including,
without limitation, costs and expenses of litigation and reasonable
attorneys' fees) occurring or arising from the following: (1) any
breach of any representation or warranty or failure to do and perform
any covenant or agreement of Buyer contained in this Agreement; (2)
any obligation, debt or liability of Seller or any claim based upon
any other occurrence arising from the operation of the Assets
anywhere, or from the operation of Buyer's entire business anywhere,
after the Closing, the obligation for which is not expressly assumed
or agreed to be assumed by Seller; or (3) any claim of any finder or
broker engaged by Buyer or owed compensation by Buyer as a result of
this transaction.
10.3 Within a reasonable time after receipt of notification of a
claim, the indemnified party shall notify the indemnifying party of
any claim or demand which the indemnified party has determined has
given rise
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to a right of indemnification. Such notice shall specify the
agreement, representation or warranty with respect to which the claim
is made, the facts giving rise to the claim, the alleged basis for the
claim, and the amount (to the extent then determinable) of liability
for which indemnity is asserted. Failure to give the foregoing
notice shall not be deemed a waiver of any claim or a bar to the
assertion of such claim unless and to the extent an indemnifying party
is able to establish damage or prejudice arising from the delay, in
which case such failure shall be a waiver and bar only to the extent
of such damage or prejudice. In the event any action, suit or
proceeding is brought against the indemnified party with respect to
which it may make a claim for indemnification, the indemnifying party
shall assume the defense of such action, suit or proceeding and shall
hire attorneys and other professionals reasonably acceptable to the
indemnified party. The defense shall include all settlement
negotiations and arbitration, trial, appeal or other proceedings which
indemnifying party's counsel shall deem appropriate, all of which
shall be at the discretion of and conducted by the indemnifying party.
The indemnified party shall have the right to be represented by
advisory counsel and accountants, at its expense, and shall be kept
informed of such action, suit or proceeding at reasonable times at all
stages thereof, whether or not so represented. The parties agree to
make available to each other, their counsel and accountants all
information and documents reasonably available to them which relate to
such proceedings or litigation, and the parties further agree to
render to each other such assistance as they may reasonably require of
each other in order to ensure the proper and adequate defense of any
such action, suit or proceeding. Each party shall promptly notify the
other party of any audit or examination of its books and records
undertaken by federal or state tax authorities and the results of any
such audit or examination, if such audit or examination is reasonably
expected to impact the other party.
10.4 In the event that any party does not provide indemnification as
required by the terms of this Article 10, and an indemnified party
shall pay or suffer a loss due to an indemnified liability, the party
or parties failing to provide indemnification shall pay all expenses
suffered by the indemnified party including reasonable legal expenses
of compelling the indemnifying party or parties to provide
indemnification to so provide.
If any party brings a legal action to compel an indemnification
and loses, the losing party or parties shall pay all reasonable costs
of litigation and the
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legal expenses of the defendant in that action.
10.5 Limits on Indemnification. No claim for indemnification or
damages shall be made by Buyer hereunder unless the aggregate
cumulative amount of claims of Buyer (or any person or entity claiming
through Buyer) exceeds $7,500 and then only to the extent such claims
exceeds such amount. Notwithstanding anything in this Agreement
to the contrary, Seller shall not be liable to Buyer or any person
claiming through Buyer for an aggregate cumulative amount in excess of
$250,000.
10.6 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof shall be settled by final and
binding arbitration in accordance with the then prevailing rules of
the American Arbitration Association, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. The
arbitration proceedings shall be held in Des Moines, Iowa, before a
single arbitrator.
11. Finders. Except with respect to Johnsen, Fretty & Co., which shall be paid
solely by Seller, Seller and Buyer each represent and warrant to the other
that they have not dealt with any finder or broker, they have not had
communications with any individual acting in such capacity with regard to
these transactions, and they are not in any way obligated to compensate any
such person.
12. Miscellaneous.
12.1 This Agreement may be amended or modified by, and only by, a
written document executed by all of the parties.
12.2 The titles of the sections of this Agreement are for convenience
of reference only and are not to be considered in construing this
Agreement.
12.3 This Agreement and any documents specifically referred to
constitute the entire understanding between the parties with respect
to the subject matter, superseding all negotiations, prior discussions
and preliminary agreements. This Agreement may be executed in any
number of counterparts.
12.4 The representations and warranties by the parties shall survive
the Closing for a period of two (2) years, all covenants and
agreements shall also survive the
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Closing for a period of two (2) years unless they expire by their
terms on or before Closing. Except as set forth in Section 2.13, no
claim for indemnification shall be allowed after such two year period.
12.5 It is expressly understood and agreed that Buyer and Seller or
their respective officers or agents have not made any warranty or
agreement, express or implied, except as are expressly provided, as to
the tax consequences of this transaction or the tax consequences of
any transaction pursuant to or arising out of this Agreement.
12.6 Other than to a subsidiary or affiliate of Buyer, this Agreement
may not be assigned without the prior written consent of the other
party. This Agreement will be binding upon and inure to the benefit
of the parties, their successors or permitted assigns, and the parties
agree for themselves, their successors or permitted assigns, to
execute any instrument and to perform any acts which may be necessary
or proper to carry out the purposes of this Agreement.
12.7 The Exhibits to this agreement shall be as of the date of this
Agreement unless otherwise stated, but Seller shall provide Buyer with
the certification provided for in Section 6.7.
12.8 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered in person or by electronic facsimile with receipt
acknowledged and copies sent by mail as provided below to the
respective persons named below or if mailed by Express, certified or
registered mail, postage prepaid, return receipt requested:
If to Seller:
Robert H. Lambert
Iowa Outdoor Displays, Inc.
P.O.Box 66
105 W. Montgomery
Creston, IA 50801
(Phone: 515-782-4176)
(Fax: 515-782-4177)
With a copy to:
David A. Swerdloff, Esq.
Day, Berry & Howard
One Canterbury Green
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Stamford, CT 06901
(Phone: 203-977-7301)
(Fax: 203-977-7334)
If to Buyer:
Brian T. Clingen
Paul G. Simon
Universal Outdoor, Inc.
321 North Clark Street, Suite 1010
Chicago, Illinois 60610
12.9 After the execution of this Agreement, Buyer may issue such press
releases and prepare and file documents containing such information
regarding this Agreement and the transactions contemplated as Buyer
deems appropriate.
12.10 This Agreement may be executed in one or more counterparts, each
of which need not contain the signatures of all parties, and all of
such counterparts taken together shall constitute one Agreement.
Signatures on facsimile copies of this Agreement are acceptable.
IN WITNESS WHEREOF, all of the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
BUYER:
UNIVERSAL OUTDOOR, INC.
By:
----------------------------------
Its:
----------------------------------
SELLER:
MOUNTAIN MEDIA INC., D/B/A
IOWA OUTDOOR DISPLAYS
By:
----------------------------------
Its
----------------------------------
--------------------------------------
ROBERT H. LAMBERT
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EXHIBIT 3.1
THIRD RESTATED ARTICLES OF INCORPORATION
ARTICLE ONE The name of the Corporation is UNIVERSAL OUTDOOR, INC. (the
"Corporation") incorporated on June 12, 1975.
ARTICLE TWO The name and address of the registered agent and its registered
office are:
Paul G. Simon
321 North Clark Street
Suite 1010
Chicago, Illinois 60610
Cook County
ARTICLE THREE The purpose or purposes for which the Corporation is organized
are:
To engage in the selling and placing of space for all forms of
billboard, sign and display advertising; to act as agent, broker,
representative, or in any other capacity, for others in the sale
of space for advertising purposes; and to do a general
advertising business in all its branches.
To manufacture, install, supply, maintain, lease and operate
billboard sign boards and all other types of signs; and to
acquire businesses of one or more so engaged.
To manufacture, buy, sell, job, trade in or otherwise deal in
goods, wares and merchandise of every kind, nature and
description.
To do all things proper, incidental and conducive to the
attainment of such purposes.
To engage in the transaction of any or all lawful business for
which the Corporations may be incorporated under the Illinois
Business Corporation Act.
<PAGE>
ARTICLE FOUR The authorized shares shall be:
Par Value Number of Shares
Class Per Share Authorized
----- --------- ----------
Common $0.01 1,000,000
ARTICLE FIVE The number of shares issued as of the date hereof, and the amount
of paid-in capital of the Corporation are:
Number of Amount of
Par Value Shares Paid-in
Class Per share Issued Capital
----- --------- ------ -------
Common $0.01 10,000 $13,203,794
AMENDED
ARTICLE SIX Paragraph 1: The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors
except as otherwise required by law. The number of directors
constituting the entire Board of Directors of the Corporation
shall be as set forth in the By-Laws.
Paragraph 2: In all elections for directors, every shareholder
shall have the right to vote the number of shares owned by such
shareholder for as many persons as there are directors to be
elected. Shareholders shall have no right to cumulate such
votes.
Paragraph 3: Subject to paragraph 4 of this ARTICLE SIXTH or as
otherwise required by law, the Board of Directors shall take
action in the manner provided for in the By-Laws of the
Corporation.
Paragraph 4: So long as Kelso Investment Associations V, L.P. a
Delaware limited partnership, Kelso Equity Partners V, L.P., a
Delaware limited partnership, and the individuals named on the
signature page to that certain Agreement and Plan of
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Recapitalization dated July 26, 1996 shall beneficially own, in
the aggregate, more than 10% of the outstanding shares of
Universal Outdoor Holdings, Inc., a Delaware corporation
("HOLDINGS"), the Board of Directors shall use its best efforts
to cause the Board of Directors of the Corporation to be
comprised at all times of the directors as are the directors of
Holdings at such time.
ARTICLE SEVEN Dividends may be declared and paid upon the Common Stock out of
the assets of the Corporation legally available therefor, when
and as determined by the Board of Directors, in its discretion.
ARTICLE EIGHT The holders of the Common Stock shall be entitled to receive, in
the event of any liquidation, dissolution or winding up of the
Corporation, all of the assets of the Corporation available for
distribution to shareholders. In such event, each holder of the
Common Stock shall receive such fraction of such assets as shall
be equal the total number of shares of Common Stock held by such
holder divided by the total number of shares of Common Stock then
issued and outstanding.
AMENDED
ARTICLE NINTH Any action by the Board of Directors of the Corporation or by the
Corporation with respect to the appointment, removal or
replacement of each of the chief executive officers of the
Corporation who shall be the Chairman of the Board and the
President, respectively, of the Corporation shall require the
approval of the holders of a majority of the outstanding shares
of Common Stock.
ARTICLE TENTH In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make,
alter or repeal the By-Laws of the Corporation; PROVIDED, THAT no
by-law
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shall at any time be inconsistent with any provision of these
Articles.
4
<PAGE>
EXHIBIT 3.2
SECOND AMENDED AND RESTATED
BY-LAWS
OF
UNIVERSAL OUTDOOR, INC.
ARTICLE I.
OFFICES
The corporation shall continuously maintain in the State of Illinois a
registered office and a registered agent whose office is identical with such
registered office, and may have other offices within or without the state.
ARTICLE II.
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. An annual meeting of the shareholders
shall be held on the second Monday in January of each year for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. In the absence of a determination to the contrary, the
annual meeting shall be held at the offices of the corporation.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders
may be called either by the chairman of the board, president, by the board of
directors or by the holders of not less than one-fifth of all the outstanding
shares of the corporation entitled to vote on the matter for which the meeting
is called, for the purpose or purposes stated in the call of the meeting. A
special meeting shall be held at such place as may be determined by resolution
of the board of directors or, in the absence of such a determination, at the
offices of the corporation.
SECTION 3. NOTICE OF MEETINGS. Written notice stating the place,
date, and hour of the meeting, and in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered not
<PAGE>
less than ten nor more than forty days before the date of the meeting, or in the
case of a merger, consolidation, share exchange, dissolution or sale, lease or
exchange of assets not less than twenty nor more than forty days before the date
of the meeting, either personally or by mail, by or at the direction of the
chairman of the board, president, or the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, addressed to the shareholder at his or her address as
it appears on the records of the corporation, with postage thereon prepaid.
When a meeting is adjourned to another time or place, notice need not be given
of the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken.
SECTION 4. FIXING OF RECORD DATE. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend, or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of shares or for the purpose of any other lawful action,
the board of directors of the corporation may fix in advance a record date which
shall not be more than forty days and, for a meeting of shareholders, not less
than ten days, or in the case of a merger, consolidation, share exchange,
dissolution or sale, lease or exchange of assets not less than twenty days,
before the date of such meeting. If no record date is fixed, the record date
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders shall be the date on which notice of the meeting is
mailed, and the record date for the determination of shareholders for any other
purpose shall be the date on which the board of directors adopts the resolution
relating thereto. A determination of shareholders of record entitled to notice
of or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting.
SECTION 5. VOTING LISTS. The officer or agent having charge of the
transfer books for shares of the corporation shall make, within ten days after
the record date for a meeting of shareholders or ten days before such meeting,
whichever is earlier, a complete list of the shareholders entitled to vote at
such meeting, arranged in alphabetical order, showing the address of and the
number of shares registered in the name of each
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shareholder, which list, for a period of ten days prior to such meeting, shall
be kept on file at the registered office of the corporation and shall be open to
inspection by any shareholder, and to copying at the shareholder's expense, at
any time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and may be inspected by any
shareholder during the whole time of the meeting. The original share ledger or
transfer book, or a duplicate thereof kept in the State of Illinois, shall be
prima facie evidence as to who are the shareholders entitled to examine such
list or share ledger or transfer book or to vote at any meeting of shareholders.
SECTION 6. QUORUM. The holders of a majority of the outstanding
shares of the corporation entitled to vote on a matter, present in person or
represented by proxy, shall constitute a quorum at any meeting of shareholders;
provided that if less than a majority of the outstanding shares are represented
at said meeting, a majority of the shares so represented may adjourn the meeting
at any time without further notice. If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting shall be the act
of the shareholders, unless the vote of a greater number of voting by classes is
required by the Illinois Business Corporation Act of 1983, as amended, the
articles of incorporation or these by-laws. At any adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the original meeting. Withdrawal of shareholders from any meeting
shall not cause failure of a duly constituted quorum at that meeting.
SECTION 7. PROXIES. A shareholder may appoint a proxy to vote or
otherwise act for him or her by signing an appointment form and delivering it to
the person so appointed.
No proxy shall be valid after the expiration of 11 months from the
date thereof unless otherwise provided in the proxy. Every proxy continues in
full force and effect until revoked by the person executing it prior to the vote
pursuant thereto, except as otherwise provided herein. Such revocation may be
effected by a writing delivered to the corporation stating that the proxy is
revoked or by a subsequent proxy executed by, or by attendance at the meeting
and voting in person by, the person executing the proxy. The dates contained on
the forms of proxy presumptively determine the order of execution, regardless of
the postmark dates on the envelopes in which they are mailed.
3
<PAGE>
An appointment of the proxy is revocable by the shareholder unless the
appointment form conspicuously stated that it is irrevocable and the appointment
is coupled with an interest in the shares or in the corporation generally. An
appointment made irrevocable as provided herein becomes revocable when the
interest in the proxy terminates. A transferee for value of shares subject to
an irrevocable appointment may revoke the appointment if the transferee was
ignorant of its existence when the share were acquired and both the existence of
the appointment and its revocability were not noted conspicuously on the
certificate (or information statement for shares without certificates)
representing the shares.
The death or incapacity of the shareholder appointing a proxy does not
revoke the proxy's authority unless notice of the death or incapacity is
received by the officer or agent who maintains the corporation's share transfer
book before the proxy exercises his or her authority under the appointment.
Unless the appointment of a proxy contains an express limitation on
the proxy's authority, a corporation may accept the proxy's vote or other action
as that of the shareholder making the appointment. If the proxy appointed fails
to vote or otherwise act in accordance with the appointment, the shareholder is
entitled to such legal or equitable relief as is appropriate in the
circumstances.
SECTION 8. VOTING OF SHARES. Except as otherwise provided in the
articles of incorporation or the Illinois Business Corporation Act of 1983, as
amended, each outstanding voting share, regardless of class, shall be entitled
to one vote upon each matter submitted to vote at a meeting of shareholders.
SECTION 9. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the
corporation's own shares held by the corporation in fiduciary capacity may be
voted and shall be counted in determining the total number of outstanding shares
entitled to vote at any given time.
Shares registered in the name of another corporation, domestic or
foreign, may be voted by any officer agent, proxy or other legal representative
authorized to vote such shares under the law of incorporation of such
corporation. The chairman of the board or president or other person holding the
position of chief executive officer of such other corporation may be treated as
authorized to vote such shares, together with any other
4
<PAGE>
person indicated and any other holder of an office indicated by the corporate
shareholder to the corporation as a person or an officer authorized to vote such
shares. Such persons and offices indicated shall be registered on the transfer
books for shares and included in any voting list prepared in accordance with
Section 5 of this Article.
Shares registered in the name of a deceased person, a minor ward or a
person under legal disability may be voted by his or her administrator,
executor, or court appointed guardian, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor, or court
appointed guardian. Shares registered in the name of a trustee may be voted by
him or her, either in person or by proxy.
Shares registered in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name if authority so
to do is contained in an appropriate order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Any number of shareholders may create a voting trust for the purpose
of conferring upon a trustee or trustees the right to vote or otherwise
represent their share, for a period not to exceed ten years, by entering into a
written voting trust agreement specifying the terms and conditions of the voting
trust, and by transferring their shares to such trustee or trustees for the
purpose of the agreement. Any such trust agreement shall not become effective
until a counterpart of the agreement is deposited with the corporation at its
registered office. The counterpart of the voting trust agreement so deposited
with the corporation shall be subject to the same right of examination by a
shareholder of the corporation, in person or by agent or attorney, as is the
record of the shareholders of the corporation, and shall be subject to
examination by any holder of a beneficial interest in the voting trust, either
in person or by agent or attorney, at any reasonable time for any proper
purpose.
5
<PAGE>
SECTION 10. INSPECTORS. At any meeting of shareholders, the
presiding officer may, or upon the request of any shareholder shall, appoint one
or more persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity and
effect of proxies; count all votes and report the results; and do such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or
her or by a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
SECTION 11. INFORMAL ACTION BY SHAREHOLDERS. Any action required to
be taken at any annual or special meeting of the shareholders of the
corporation, or any other action which may be taken at a meeting of the
shareholders, may be taken without a meeting and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed (i) if 5 days prior
notice of the proposed action is given in writing to all of the shareholders
entitled to vote with respect to the subject matter thereof, by the holders of
outstanding shares having not less then 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 thereon were present and voting or (ii) by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given in writing to those
shareholders who have not consented in writing. In the event that the action
which is consented to is such as would have required the filing of a certificate
under any section of the Illinois Business Corporation Act of 1983 if such
action had been voted on by the shareholders at a meeting thereof, the
certificate filed under such section shall state, in lieu of any statement
required by such section concerning any vote of shareholders, that written
consent has been given in accordance with the provisions of Section 7.10 of the
Illinois Business Corporation Act of
6
<PAGE>
1983, as amended, and that written notice has been given as provided in such
Section 7.10.
SECTION 12. VOTING BY BALLOT. Voting on any question or in any
election may be by voice unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
ARTICLE III.
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the
corporation shall be managed by or under the direction of its board of directors
except as otherwise required by law.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of
directors of the corporation shall be five (5). Except as provided in Section
13 of this Article, each director shall hold office until the next annual
meeting of shareholder or until his successor shall have been elected and
qualified. Directors need not be residents of the State of Illinois or
shareholders of the corporation. The number of directors may be increased or
decreased from time to time, pursuant to the provisions of the articles of
incorporation, by the amendment of this section; but no decrease shall have the
effect of shortening the term of any incumbent director. So long as Kelso
Investment Associates V, L.P., a Delaware limited partnership ("KIA"), Kelso
Equity Partners V, L.P., a Delaware limited partnership ("KEP"), and the
individuals named on the signature page to that certain Agreement and Plan of
Recapitalization dated as of July 26, 1996 shall beneficially own, in the
aggregate, more than 10% of the outstanding shares of the corporation, the direc
tors of the board of directors of the corporation shall be identical to the
directors on the Board of Directors of Universal Outdoor Holdings, Inc., a
Delaware corporation.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than these by-laws, immediately
after the annual meeting of shareholders. The board of directors may provide,
by resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the
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<PAGE>
request of the chairman of the board, president or any two directors. The
person or persons authorized to call special meetings of the board of directors
may fix any place as the place for holding any special meeting of the board of
directors called by them.
SECTION 5. NOTICE. Notice of any special meeting shall be given at
least ten (10) days previous thereto by written notice to each director at his
business address as it appears in records of the corporation. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice be given by telegram,
such notice shall be deemed to be delivered when the telegram is delivered to
the telegram company. The attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting 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
board of directors need be specified in the notice or waiver of notice of such
meeting.
SECTION 6. QUORUM. At all meetings of the board one-half of the
directors shall constitute a quorum for the transaction of business. If a
quorum is not present at said meeting, a majority of the directors present may
adjourn the meeting at any time without further notice. Unless specifically
prohibited by the articles of incorporation or these by-laws, members of the
board of directors or of any committee of the board of directors may participate
in and act at any meeting of such board or committee through the use of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in such
meeting shall constitute attendance and presence in person at the meeting of the
person or persons so participating.
SECTION 7. MANNER OF ACTING. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the board of directors, unless the act of a greater number is required by
statute or these by-laws.
SECTION 8. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by the unanimous approval of the directors present at a meeting at which there
is a quorum, and each director so chosen
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<PAGE>
shall hold office until his successor is elected and qualified, or until his
earlier resignation or removal. If there are no directors in office, then an
election of directors may be held in the manner provided by statute.
SECTION 9. ACTION WITH A MEETING. Unless specifically prohibited by
the articles of incorporation or these by-laws, any action required to be taken
at a meeting of the board of directors, or any other action which may be taken
at a meeting of the board of directors, or of any committee thereof may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all the directors entitled to vote with respect to the
subject matter thereof, or by all the members of such committee, as the case may
be. Any such consent signed by all directors or all the members of the
committee shall have the same effect as a unanimous vote, and may be stated as
such in any document filed with the Secretary of State or with anyone else.
SECTION 10. COMPENSATION. The board of directors, by the affirmative
vote of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers, or otherwise. By resolution of the board of directors, the directors
may be paid their expenses, if any, of attendance at each meeting of the board.
No such payment previously mentioned in this section shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
SECTION 11. PRESUMPTION OF ASSENT. A director of the corporation who
is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be conclusively presumed to have assented to the
action taken unless his dissent shall be entered in the minutes of the meeting
or unless he shall file his written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
SECTION 12. COMMITTEES. A majority of the directors may create one
or more committees and appoint members of the board of directors to serve on the
committee or committees. Each committee shall have two or more members, who
serve at the pleasure of the board.
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(a) Unless the appointment by the board of directors requires a
greater number, a majority of any committee shall constitute a quorum and a
majority of a quorum is necessary for committee action. A committee may act by
unanimous consent in writing without a meeting, and subject to the provisions of
the by-laws or action by the board of directors, the committee by majority vote
of its members shall determine the time and place of meetings and the notice
required therefor.
(b) To the extent specified by the board of directors or in the
articles of incorporation or these by-laws, each committee may exercise the
authority of the board of directors under Section 8.05 of the Illinois Business
Corporation Act of 1983, as amended; provided, however, a committee may not:
(1) authorize distributions;
(2) approve or recommend to shareholders any act required by law
to be approved by shareholders;
(3) fill vacancies on the board or on any of its committees;
(4) elect or remove officers or fix the compensation of any
member of the committee;
(5) adopt, amend or repeal these by-laws;
(6) approve a plan of merger not requiring shareholder approval;
(7) authorize or approve reacquisition of shares, except
according to a general formula or method prescribed by the board;
(8) authorize or approve the issuance or sale, or contract for
sale, of shares or determine the designation and relative rights, preferences,
and limitations of a series of shares, except that the board may direct a
committee to fix the specific terms of the issuance or sale or contract for sale
of the number of shares to be allocated to particular employees under an
employee benefit plan; or
(9) amend, alter, repeal, or take action inconsistent with any
resolution or action of the board of directors when the resolution or action of
the board of directors provides by its terms that it shall not be amended,
altered or repealed by action of a committee.
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Vacancies in the membership of the committee shall be filled by the board of
directors at a regular or special meeting of the board of directors. The
executive committee shall keep regular minute of its proceedings and report the
same to the board when required.
SECTION 13. REMOVAL OF DIRECTORS. Any director may be removed, with
or without cause, (i) by unanimous approval of the directors present at a
meeting at which a quorum is present as set forth in the articles of
incorporation, or (ii) at a meeting of shareholders by the affirmative vote of
the holders of a majority of the outstanding shares then entitled to vote at an
election of directors, except as follows:
(1) No director shall be removed at a meeting of shareholders
unless the notice of such meeting shall state that a purpose of the meeting is
to vote upon the removal of one or more directors named in the notice. Only the
named director or directors may be removed at such meeting.
(2) In the case the corporation provides for cumulative voting,
if less than the entire board is to be removed, no director may be removed at a
meeting of shareholders, with or without cause, if the votes cast against his or
her removal would be sufficient to elect him or her if then cumulatively voted
at an election of the entire board of directors.
(3) If a director is elected by a class or series of shares, he
or she may be removed only by the shareholders of that class or series.
The above provisions shall not preclude the circuit court of the
county in which the corporation's registered office is located from removing a
director of the corporation from office in a proceeding commenced either by the
corporation or by shareholders of the corporation holding at least 10 percent of
the outstanding shares of any class if the court finds (1) the director is
engaged in fraudulent or dishonest conduct or has grossly abused his or her
position to the detriment of the corporation, and (2) removal is in the best
interest of the corporation. If the court removes a director, it may bar the
director from reelection for a period prescribed by the court. If such a
proceeding is commenced by the shareholders, they shall make the corporation a
party defendant.
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ARTICLE IV.
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a
chairman of the board, president, a treasurer, a secretary, and such vice
presidents, assistant treasurers, assistant secretaries or other officers as may
be elected by the board of directors. Any two or more offices may be held by
the same person.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the board of directors at the first
meeting of the board of directors held after each annual meeting of
shareholders, PROVIDED, HOWEVER, that any action by the board of directors or by
the corporation with respect to the appointment of the executive officers of the
corporation shall require the approval of the holders of a majority of the
outstanding voting shares of the corporation. If the election of officers shall
not be held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and filled
at any meeting of the board of directors, subject to the first sentence of this
section. Each officer shall hold office until his or her successor shall have
been duly elected and shall have qualified or until his or her death or until he
or she shall resign or shall have been removed in the manner hereinafter
provided. Election of an officer shall not of itself create contract rights.
SECTION 3. REMOVAL. Any officer elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed, PROVIDED, HOWEVER, that any action by the board of directors or by the
corporation with respect to the removal or replacement of the executive officers
of the corporation shall require the approval of the holders of a majority of
the outstanding voting shares of the corporation.
SECTION 4. EXECUTIVE OFFICERS. The executive officers of the
Corporation shall be two in number and shall be granted the powers as stated
herein.
4(a) CHAIRMAN OF THE BOARD. The chairman of the board shall be one
of the principal executive officers of the corporation. Subject to
the direction and control of the board of
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directors, the chairman shall have the authority to manage the
business of the corporation; see that the resolutions and directions
of the board of directors are carried into effect in all instances
except where such responsibility is specifically designated to some
other officer by the board of directors; enforce the by-laws of this
corporation and discharge all duties incident to his office which are
required by law and such other duties as may be specifically
prescribed from time to time by the board of directors. He shall
cause to be called regular and special meetings of the shareholders
and directors. Except in those instances in which the authority to
execute is expressly delegated to another officer or agent of the
corporation, the chairman of the board may execute for the corporation
certificates for its shares and any contracts, deeds, mortgages,
bonds, or other instruments which the board of directors has
authorized to be executed and he may accomplish such execution either
under or without the seal of the corporation and either individually
or with the secretary, any assistant secretary, or other officers
authorized by the board of directors.
4(b) PRESIDENT. The president shall be one of the principal
executive officers of the corporation. Subject to the direction and
control of the board of directors, the president shall have the
authority to manage the business of the corporation; see that the
resolutions and directions of the board of directors are carried into
effect in all instances except where such responsibility is
specifically designated to some other officer by the board of
directors; enforce the by-laws of this corporation and discharge all
duties incident to his office which are required by law and such other
duties as may be specifically prescribed from time to time by the
board of directors. He shall cause to be called regular and special
meetings of the shareholders and directors. Except in these instances
in which the authority to execute is expressly delegated to another
officer or agent of the corporation, the chairman of the board may
execute for the corporation certificates for its shares and any
contracts, deeds, mortgages, bonds, or other instruments which the
board of directors has authorized to be executed and he may accomplish
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such execution either under or without the seal of the corporation and
either individually or with the secretary, any assistant secretary, or
other officers authorized by the board of directors.
SECTION 5. THE VICE-PRESIDENT(S). The vice-president(s), if any,
shall assist the president in the discharge of his or her duties as the
president may direct and shall perform such other duties as from time to time
may be assigned to him by the president or by the board of directors. In the
absence of the president or in the event of his inability or refusal to act, the
vice-president (or in the event there be more than one vice-president, the vice-
presidents in the order designated by the board of directors, or by the
president if the board of directors has not made such designation, or in the
absence of any designation, then in the order of seniority of tenure as vice-
president) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. Except in those instances in which the authority to execute is
expressly delegated to another officer or agent of the corporation or a
different mode of execution is expressly prescribed by the board of directors or
these by-laws, the vice-president (or each of them if there are more than one)
may execute for the corporation certificates for its shares and any contracts,
deeds, mortgages, bonds or other instruments which the board of directors has
authorized to be executed, and he or she may accomplish such execution either
under or without the seal of the corporation and either individually or with the
secretary, any assistant secretary, or any other officer thereunto authorized by
the board of directors, according to the requirements of the form of the
instrument.
SECTION 6. THE TREASURER. The treasurer shall be the principal
accounting and financial officer of the corporation. He or she shall: (a) have
charge of and be responsible for the maintenance of adequate books of account
for the corporation; (b) have charge and custody of all funds and securities of
the corporation, and be responsible therefor and for the receipt and
disbursement thereof; and (c) perform all the duties incident to the office of
treasurer and such other duties as from time to time may be assigned to him or
her by the president or by the board of directors. If required by the board of
directors, the treasurer shall give a bond for the faithful discharge of his or
her duties in such sum and with such surety or sureties as the board of
directors may determine.
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SECTION 7. THE SECRETARY. The secretary shall: (a) record the
minutes of the shareholders' and of the board of directors' meetings in one or
more books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation; (d) keep
a register of the post-office address of each shareholder which shall be
furnished to the secretary by such shareholder; (e) sign with the president, or
a vicepresident, or any other officer thereunto authorized by the board of
directors, certificates for shares of the corporation, the issue of which shall
have been authorized by the board of directors, and any contracts, deeds,
mortgages, bonds, or other instruments which the board of directors has
authorized to be executed, according to the requirements of the form of the
instrument; except when a different mode of execution is expressly prescribed by
the board of directors or these by-laws; (f) have general charge of the stock
transfer books of the corporation; (g) have authority to certify the by-laws,
resolutions of the shareholders and board of directors and committees thereof,
and other documents of the corporation as true and correct copies thereof, and
(h) perform all duties incident to the office of secretary and such other duties
as from time to time may be assigned to him or her by the president or by the
board of directors.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers and assistant secretaries shall perform such duties as
shall be assigned to them by the treasurer or the secretary, respectively, or by
the president or the board of directors. The assistant secretaries may sign
with the president, or a vice-president, or any other officer thereunto
authorized by the board of directors, certificates for shares of the
corporation, the issue of which shall have been authorized by the board of
directors, and any contracts, deeds, mortgages, bonds, or other instruments
which the board of directors has authorized to be executed, according to the
requirements of the form of the instrument, except when a different mode of
execution is expressly prescribed by the board of directors or these by-laws.
The assistant treasurers shall respectively, if required by the board of
directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the board of directors shall determine.
SECTION 9. SALARIES. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiv-
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ing such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes, or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers, agent
or agents of the corporation and in such manner as shall from time to time be
determined by resolution of the board of directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the board of directors
may select.
ARTICLE VI.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. The issued shares of the
corporation shall be represented by certificates or shall be uncertified shares.
Certificates representing shares of the corporation shall be signed by the
appropriate corporate officers and may be sealed with the seal, or a facsimile
of the seal, of the corporation, if the corporation uses a seal. In case the
seal of the corporation is changed after the certificate is sealed with the seal
or a facsimile of the seal of the corporation, but before it is issued, the
certificate may be issued by the corporation with the same effect as if the seal
had not been changed. If a certificate is counter-
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signed by a transfer agent or registrar, other than the corporation itself or
its employee, any other signatures or countersignature on the certificate may be
facsimiles, In case any officer of the corporation, or any officer or employee
of the transfer agent or registrar who has signed or whose facsimile signature
has been placed upon such certificate ceases to be an officer of the
corporation, or an officer or employee of the transfer agent or registrar before
such certificate is issued, the certificate may be issued by the corporation
with the same effect as if the officer of the corporation, or the officer or
employee of the transfer agent or registrar had not ceased to be such at the
date of its issue.
In the event the corporation authorizes more than one class of stock
every certificate representing shares issued by a corporation shall set forth
upon the face or back of the certificate a full summary or statement of all of
the designations, preferences, qualifications, limitations, restrictions, and
special or relative rights of the shares of each class authorized to be issued,
and, if the corporation is authorized to issue any preferred or special class in
series, the variations in the relative rights and preferences between the shares
of each such series so far as the same have been fixed and determined and the
authority of the board of directors to fix and determine the relative rights and
preferences of subsequent series. Such statement may be omitted from the
certificate if it shall be set forth upon the face or back of the certificate
that such statement, in full, will be furnished by the corporation to any
shareholder upon request and without charge.
Each certificate representing shares shall also state:
(a) That the corporation is organized under the laws of the State of
Illinois.
(b) The name of the person to whom issued.
(c) The number and class of shares, and the designation of the
series, if any, which such certificate represents.
No certificate shall be issued for any share until such share is fully
paid.
Unless otherwise provided by the articles of incorporation or by-laws,
the board of directors of a corporation may provide by resolution that some or
all of any or all classes and series of its shares shall be
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uncertificated shares, provided that such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Within a reasonable time after the issuance or transfer of
uncertificated shares, the corporation shall send to the registered owner
thereof a written notice containing the information required to be set forth or
stated on certificates pursuant to Section 6.35 of the Illinois Business
Corporation Act of 1983, as amended. Except as otherwise expressly provided by
law, the rights and obligations of the holders of uncertificated shared and
rights and obligations of the holders of certificates representing shares of the
same class and series shall be identical.
The name and address of each shareholder, the number and class of
shares held and the date on which the certificates for the shares were issued
shall be entered on the books of the corporation. The person in whose name
shares stand on the books of the corporation shall be deemed the owner thereof
for all purposes as regards the corporation.
SECTION 2. LOST CERTIFICATES. If a certificate representing shares
has allegedly been lost or destroyed the board of directors may in its
discretion, except as may be required by law, direct that a new certificate be
issued upon such indemnification and other reasonable requirements as it may
impose.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares of the
corporation shall be recorded on the books of the corporation and, except in the
case of a lost or destroyed certificate, on surrender for cancellation of the
certificate for such shares. A certificate presented for transfer must be duly
endorsed and accompanied by proper guaranty of signature and other appropriate
assurances that the endorsement is effective. Transfer of an uncertificated
share shall be made on receipt by the corporation of an instruction from the
registered owner or other appropriate person. The instruction shall be in
writing or a communication in such form as may be agreed upon in writing by the
corporation.
ARTICLE VII.
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors.
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ARTICLE VIII.
DIVIDENDS
The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its articles of incorporation.
ARTICLE IX.
SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Illinois." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced, provided that the affixing of the corporate seal to an instrument
shall not give the instrument additional force or effect, or change the
construction thereof, and the use of the corporate seal is not mandatory.
ARTICLE X.
WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of
these by-laws or under the provisions of the articles of incorporation or under
the provisions of the Illinois Business Corporation Act of 1983, as amended, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance at any meeting shall
constitute waiver of notice thereof unless the person at the meeting objects to
the holding of the meeting because proper notice was act given.
ARTICLE XI.
AMENDMENTS
Unless the power to make, alter, amend or repeal by-laws is reserved
to the shareholders by the articles of incorporation, the by-laws of the
corporation may be made, altered, amended or repealed by the board of directors.
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ARTICLE XII.
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
SECTION 1. The corporation shall have power to indemnify any 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 (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or who is or was serving at the
request of the corporation 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 such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment or settlement,
conviction or upon a plea of nolo contenders or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which such person reasonably believed to be in or not opposed to the best
interest of the corporation, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. The corporation shall have the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person 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,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or
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matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duty to the
corporation unless and only to the extent that the court in which such action or
suit was brought shall determine upon application that despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
SECTION 3. To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 1 and 2, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
SECTION 4. Any indemnification under Sections 1 and 2 (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because such person has met the
applicable standard of conduct set forth in Sections 1 and 2. Such determination
shall be made (a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the shareholders.
SECTION 5. The indemnification provided by this article shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any contract, agreement, vote of shareholders or disinterested directors
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
SECTION 6. 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, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
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against him or her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the corporation would have the
power to indemnify him or her against such liability under the provisions of
this article.
SECTION 7. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding, as authorized by the board of
directors in the specific case, upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount, unless it
shall ultimately be determined that he or she is entitled to be indemnified by
the corporation as authorized in this Section.
SECTION 8. If the corporation pays an indemnity or advances expenses
to a director, officer, employee or agent, the corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next shareholders meeting.
ARTICLE XIII.
AMENDMENT TO BY-LAWS
These By-Laws may only be amended, altered, changed or repealed as
provided in the articles of incorporation of the corporation.
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EXHIBIT 4.1
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UNIVERSAL OUTDOOR, INC.
ISSUER,
AND
UNITED STATES TRUST COMPANY OF NEW YORK
TRUSTEE
------------------------
INDENTURE
Dated as of October [ ], 1996
--
-----------------------------------
$200,000,000
[ ]% Senior Subordinated Notes due 2006
------------------------------------------------------------
------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
- ------- -------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
i
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PAGE
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(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
- ------------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Incorporation by Reference of TIA . . . . . . . . . . . . . . 20
SECTION 1.3. Rules of Construction . . . . . . . . . . . . . . . . . . . . 20
ARTICLE II
THE SECURITIES
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.2. Execution and Authentication. . . . . . . . . . . . . . . . . 22
SECTION 2.3. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . 23
SECTION 2.4. Paying Agent to Hold Assets in Trust. . . . . . . . . . . . . 24
SECTION 2.5. Securityholder Lists. . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.7. Replacement Securities. . . . . . . . . . . . . . . . . . . . 28
SECTION 2.8. Outstanding Securities. . . . . . . . . . . . . . . . . . . . 28
SECTION 2.9. Treasury Securities . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.10. Temporary Securities. . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.2. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.3. Selection of Securities to Be Redeemed. . . . . . . . . . . . 32
SECTION 3.4. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.5. Effect of Notice of Redemption. . . . . . . . . . . . . . . . 34
SECTION 3.6. Deposit of Redemption Price . . . . . . . . . . . . . . . . . 34
SECTION 3.7. Securities Redeemed in Part . . . . . . . . . . . . . . . . . 35
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ARTICLE IV
COVENANTS
PAGE
----
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . 35
SECTION 4.3. Limitation on Restricted Payments.. . . . . . . . . . . . . . 36
SECTION 4.4. Corporate Existence . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.5. Payment of Taxes and Other Claims . . . . . . . . . . . . . . 37
SECTION 4.6. Compliance Certificate; Notice of Default . . . . . . . . . . 38
SECTION 4.7. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.8. Limitation on Status as Investment Company. . . . . . . . . . 38
SECTION 4.9. Limitation on Transactions with Affiliates. . . . . . . . . . 39
SECTION 4.10. Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock. . . . . . . . . . . . . . . . . . 39
SECTION 4.11. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries. . . . . . . . . . . . . . . . . . . . 41
SECTION 4.12. Limitation on Liens Securing Indebtedness . . . . . . . . . . 42
SECTION 4.13. Limitation on Sale of Assets and Subsidiary Stock . . . . . . 42
SECTION 4.14. Limitation on Layering Indebtedness . . . . . . . . . . . . . 46
SECTION 4.15. Limitation on Lines of Business . . . . . . . . . . . . . . . 46
SECTION 4.16. Restriction on Sale and Issuance of Subsidiary Stock. . . . . 47
SECTION 4.17. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . 47
SECTION 4.18. Payment for Consent . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. Limitation on Merger, Sale or Consolidation . . . . . . . . . 48
SECTION 5.2. Successor Corporation Substituted . . . . . . . . . . . . . . 48
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.2. Acceleration of Maturity Date; Rescission and Annulment . . . 51
SECTION 6.3. Collection of Indebtedness and Suits for Enforcement by
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.4. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . 53
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SECTION 6.5. Trustee May Enforce Claims Without Possession of Securities . 54
SECTION 6.6. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.7. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest. . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.9. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . 56
SECTION 6.10. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . 57
SECTION 6.11. Control by Holders. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.12. Waiver of Past Default. . . . . . . . . . . . . . . . . . . . 57
SECTION 6.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.14. Restoration of Rights and Remedies. . . . . . . . . . . . . . 58
ARTICLE VII
TRUSTEE
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7.3. Individual Rights of Trustee. . . . . . . . . . . . . . . . . 61
SECTION 7.4. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . 62
SECTION 7.7. Compensation and Indemnity. . . . . . . . . . . . . . . . . . 62
SECTION 7.8. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . 64
SECTION 7.9. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . 65
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . 65
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . 65
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. Option to Effect Legal Defeasance or Covenant Defeasance. . . 65
SECTION 8.2. Legal Defeasance and Discharge. . . . . . . . . . . . . . . . 66
SECTION 8.3. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.4. Conditions to Legal or Covenant Defeasance. . . . . . . . . . 67
SECTION 8.5. Deposited Cash and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions . . . . . . . . . . . . 69
SECTION 8.6. Repayment to the Company. . . . . . . . . . . . . . . . . . . 69
v
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SECTION 8.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Supplemental Indentures Without Consent of Holders. . . . . . 70
SECTION 9.2. Amendments, Supplemental Indentures and Waivers with Consent
of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.3. Compliance with TIA . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.4. Revocation and Effect of Consents . . . . . . . . . . . . . . 73
SECTION 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . 74
SECTION 9.6. Trustee to Sign Amendments, Etc.. . . . . . . . . . . . . . . 74
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 10.1. Repurchase of Securities at Option of the Holder Upon a
Change of Control . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE XI
SUBORDINATION
SECTION 11.1. Securities Subordinated to Senior Debt. . . . . . . . . . . . 77
SECTION 11.2. No Payment on Securities in Certain Circumstances . . . . . . 78
SECTION 11.3. Securities Subordinated to Prior Payment of All Senior Debt
on Dissolution, Liquidation or Reorganization . . . . . . . . 79
SECTION 11.4. Securityholders to Be Subrogated to Rights of Holders of
Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.5. Obligations of the Company Unconditional. . . . . . . . . . . 81
SECTION 11.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11.7. Application by Trustee of Assets Deposited with It. . . . . . 82
SECTION 11.8. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Debt . . . . . . . . . . . . 82
SECTION 11.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities . . . . . . . . . . . . . . . . . 82
SECTION 11.10. Right of Trustee to Hold Senior Debt. . . . . . . . . . . . . 83
SECTION 11.11. Article XI Not to Prevent Events of Default . . . . . . . . . 83
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SECTION 11.12. No Fiduciary Duty of Trustee to Holders of Senior Debt. . . . 83
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. TIA Controls. . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 12.3. Communications by Holders with Other Holders. . . . . . . . . 85
SECTION 12.4. Certificate and Opinion as to Conditions Precedent. . . . . . 85
SECTION 12.5. Statements Required in Certificate or Opinion . . . . . . . . 86
SECTION 12.6. Rules by Trustee, Paying Agent, Registrar . . . . . . . . . . 86
SECTION 12.7. Non-Business Days . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 12.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 12.9. No Adverse Interpretation of Other Agreements . . . . . . . . 87
SECTION 12.10. No Recourse against Others. . . . . . . . . . . . . . . . . . 88
SECTION 12.11. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 12.12. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . 88
SECTION 12.13. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 12.14. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . 88
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Exhibit A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
vii
<PAGE>
INDENTURE, dated as of October [__], 1996, by and among Universal
Outdoor, Inc., an Illinois corporation (the "Company"), and United States Trust
Company of New York, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
[__]% Senior Subordinated Notes due 2006:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
"ACCELERATION NOTICE" shall have the meaning specified in Section 6.2.
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital
Stock of any person existing at the time such person becomes a Subsidiary of the
Company, including by designation, or is merged or consolidated into or with
the Company or one of its Subsidiaries.
"ACQUISITION" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, PROVIDED, THAT, with respect to ownership interest in the Company
and its Subsidiaries a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"AFFILIATE TRANSACTION" shall have the meaning specified in Section
4.9.
"AGENT" means any authenticating agent, Registrar, Paying Agent or
transfer agent.
<PAGE>
"ASSET SALE" shall have the meaning specified in Section 4.13.
"ASSET SALE OFFER" shall have the meaning specified in Section 4.13.
"ASSET SALE OFFER AMOUNT" shall have the meaning specified in Section
4.13.
"ASSET SALE OFFER PERIOD" shall have the meaning specified in Section
4.13.
"ASSET SALE OFFER PRICE" shall have the meaning specified in Section
4.13.
"AVERAGE LIFE" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of (a)
the product of the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"BENEFICIAL OWNER" or "BENEFICIAL OWNER" for purposes of the
definition of Change of Control has the meaning attributed to it in Rules l3d-3
and l3d-5 under the Exchange Act (as in effect on the Issue Date), whether or
not applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"BOARD OF DIRECTORS" or "BOARD" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
2
<PAGE>
"CAPITAL STOCK" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CAPITALIZED LEASE OBLIGATION" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person, as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person.
"CASH" or "CASH" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"CASH EQUIVALENT" means (a)(i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit issued by any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million or (iii)
commercial paper issued by others rated at least A-1 or the equivalent thereof
by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing within one year after
the date of acquisition or (b) shares of money market mutual funds or similar
funds having assets in excess of $500,000,000.
"CHANGE OF CONTROL" means (i) any merger or consolidation of the
Company or the Parent with or into any person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of the
assets of the Company or the Parent, on a consolidated basis, in one transaction
or a series of related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than the Parent in the case of the Company or a Permitted Holder or Holders, is
or becomes the "beneficial owner," directly or indirectly, of more than 50% of
the total
3
<PAGE>
voting power in the aggregate normally entitled to vote in the
election of directors, managers, or trustees, as applicable, of the
transferee(s) or surviving entity or entities, (ii) any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than the Parent in the case of the
Company or a Permitted Holder or Holders, is or becomes the "beneficial owner,"
directly or indirectly, of more than 50% of the total voting power in the
aggregate of all classes of Capital Stock of the Company or the Parent, as the
case may be, then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of the Company or the Parent (together with any new
directors whose election by such Board or whose nomination for election by the
shareholders of the Company or the Parent, as the case may be, was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of the Company or the Parent, as the case may
be, then in office.
"CHANGE OF CONTROL OFFER" shall have the meaning specified in Section
10.1.
"CHANGE OF CONTROL OFFER PERIOD" shall have the meaning specified in
Section 10.1.
"CHANGE OF CONTROL PURCHASE DATE" shall have the meaning specified in
Section 10.1.
"CHANGE OF CONTROL PURCHASE PRICE" shall have the meaning specified in
Section 10.1.
"COMMISSION" means the SEC.
"COMMON STOCK" means the common stock, $.01 par value, of Parent.
"COMPANY" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means such successor.
"CONSOLIDATED EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) consolidated
income tax expense, (ii) consolidated depreciation and amortization expense,
PROVIDED that consolidated depreciation and amortization of a Subsidiary that is
a less than wholly owned Subsidiary shall only be added to the extent of the
equity interest of the Company in such Subsidiary and only to the extent that
dividends in excess of such Person's PRO RATA share of net
4
<PAGE>
income are paid, and (iii) Consolidated Fixed Charges, less the amount of all
cash payments made by such person or any of its Subsidiaries during such period
to the extent such payments relate to non-cash charges that were added back in
determining Consolidated EBITDA for such period or any prior period.
"CONSOLIDATED FIXED CHARGES" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of preferred stock (other than
by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such person or a
Subsidiary of such person of an obligation of another person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed.
"CONSOLIDATED LEVERAGE RATIO" of any person on any date of
determination (the "Transaction Date") means the ratio, on a PRO FORMA basis
after giving effect to the application of any proceeds of Indebtedness, of (a)
Indebtedness as of the end of the Reference Period to (b) the aggregate amount
of Consolidated EBITDA of such person attributable to continuing operations and
businesses (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of) for the Reference Period; PROVIDED,
that for purposes of such calculation, (i) Acquisitions which occurred during
the Reference Period or subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the first day of the
Reference Period and (ii) the incurrence of any Indebtedness or issuance of any
Disqualified Capital Stock subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the last day of the
Reference Period.
"CONSOLIDATED NET INCOME" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries
5
<PAGE>
(determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains or losses which are
either extraordinary, unusual (as determined in accordance with GAAP) or are
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock or losses in connection with the Transactions), (b) the net
income, if positive, of any person, other than a wholly owned Consolidated
Subsidiary, in which such person or any of its Consolidated Subsidiaries has an
interest, except to the extent of the amount of any dividends or distributions
actually paid in cash to such person or a wholly owned Consolidated Subsidiary
of such person during such period, but in any case not in excess of such
person's PRO RATA share of such person's net income for such period and (c) the
net income, if positive, of any of such person's Consolidated Subsidiaries to
the extent that the declaration or payment of dividends or similar distributions
is not at the time permitted by operation of the terms of its charter or bylaws
or any other agreement, instrument, judgment, decree, order, or governmental
regulation applicable to such Consolidated Subsidiary.
"CONSOLIDATED NET WORTH" of any person at any date means the aggregate
consolidated stockholders' equity of such person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such person or a Consolidated Subsidiary of such person
subsequent to the Issue Date, and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in persons that are not Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such person in accordance with GAAP.
"COVENANT DEFEASANCE" shall have the meaning specified in Section 8.3.
"CREDIT AGREEMENT" means the credit agreement dated [ ] by and
among the Company, certain of its subsidiaries, certain financial institutions
and Bankers Trust Company, as agent, providing for (A) an aggregate
$75 million term loan facility, and (B) an aggregate $225 million revolving
credit facility, including any related notes, guarantees, collateral documents,
instruments and agreements executed in
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connection therewith, as such credit agreement and/or related documents may be
amended, restated, supplemented, renewed, replaced or otherwise modified from
time to time whether or not with the same agent, trustee, representative lenders
or holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term "Credit Agreement" shall
include agreements in respect of Interest Swap and Hedging Obligations with
lenders party to the Credit Agreement and shall also include any amendment,
amendment and restatement, renewal, extension, restructuring, supplement or
modification to any Credit Agreement and all refundings, refinancings and
replacements of any Credit Agreement, including any agreement (i) extending the
maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii)
adding or deleting borrowers or guarantors thereunder, so long as borrowers and
issuers include one or more of the Company and its Subsidiaries and their
respective successors and assigns, (iii) increasing the amount of Indebtedness
incurred thereunder or available to be borrowed thereunder, PROVIDED that on the
date such Indebtedness is incurred it would not be prohibited by clause (f) of
Section 4.10 or (iv) otherwise altering the terms and conditions thereof in a
manner not expressly prohibited by the terms hereof.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEBT INCURRENCE RATIO" shall have the meaning specified in Section
4.10.
"DEFAULT" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"DEFAULTED INTEREST" shall have the meaning specified in Section 2.12.
"DEFINITIVE SECURITIES" means Securities that are in the form of the
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 2 thereof.
"DEPOSITARY" means, with respect to the Securities issuable or issued
in whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b),
with respect to any person, an Equity Interest of such person that, by its terms
or by the terms
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of any security into which it is convertible, exercisable or exchangeable, is,
or upon the happening of an event or the passage of time would be, required to
be redeemed or repurchased (including at the option of the holder thereof) by
such person or any of its Subsidiaries, in whole or in part, on or prior to the
Stated Maturity of the Securities and (b) with respect to any Subsidiary of such
person (including with respect to any Subsidiary of the Company), any Equity
Interest other than any common equity with no preference, privileges, or
redemption or repayment provisions
"DTC" shall have the meaning specified in Section 2.3.
"EQUITY INTEREST" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership interests in, such Person. Convertible or exchangeable Indebtedness
shall not be deemed to be an Equity Interest for purposes of clause (b) of the
definition of Restricted Payments to the extent acquired at any time the
conversion or exchange feature is not "in-the-money".
"EQUITY PRIVATE PLACEMENT" means any sale by the Parent of its Capital
Stock (other than Disqualified Capital Stock) not requiring registration under
the Securities Act.
"EVENT OF DEFAULT" shall have the meaning specified in Section 6.1.
"EVENT OF LOSS" means, with respect to any property or asset, any (i)
loss, destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"EXCESS PROCEEDS" shall have the meaning specified in Section 4.13.
"EXCESS PROCEEDS DATE" shall have the meaning specified in Section
4.13.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"FAIR MARKET VALUE" or "FAIR MARKET VALUE" means, with respect to any
assets or properties, the amount at which such assets or properties would change
hands between a willing buyer and a willing seller, within a commercially
reasonable time, each having reasonable knowledge of the relevant facts, neither
being under a compulsion to sell or buy, as such amount is determined by (i) the
Board of Directors of the Company
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acting in good faith or (ii) an appraisal or valuation firm of national or
regional standing selected by the Company, with experience in the appraisal or
valuation of properties or assets of the type for which Fair Market Value is
being determined.
"GAAP" means United States generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
"GLOBAL SECURITY" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
to the form of Security attached hereto as Exhibit A.
"HOLDER" or "SECURITYHOLDER" means the Person in whose name a Security
is registered on the Registrar's books.
"INCUR" or "INCURRENCE" shall have the meaning specified in Section
4.10.
"INCURRENCE DATE" shall have the meaning specified in Section 4.10.
"INDEBTEDNESS" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such any person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
(except for balances incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors and except for balances
due and actually paid within six months of the date property is delivered or
services are rendered or, if not actually paid within six months, being
contested in good faith), (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) under any Capitalized Lease
Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such person with respect to any letter of credit; (b) all net
obligations of such person under Interest Swap and Hedging Obligations; (c) all
liabilities and obligations of others of the kind described in the preceding
clause (a) or (b) that such person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such person; (d) any
and all deferrals, renewals, extensions, refinancing and refundings (whether
direct or indirect) of, or amendments, modifications or supplements to, any
liability of the kind described in any of the
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preceding clauses (a), (b) or (c), or this clause (d), whether or not between or
among the same parties, and (e) all Disqualified Capital Stock of such Person
(measured at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends). For purposes hereof, the
"maximum fixed repurchase price" of any Disqualified Capital Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Capital Stock as if such Disqualified Capital Stock
were purchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Disqualified Capital Stock, such Fair
Market Value to be determined in good faith by the board of directors of the
issuer (or managing general partner of the issuer) of such Disqualified Capital
Stock. For purposes hereof, the amount of any Indebtedness issued with original
issue discount shall be the original purchase price plus accreted interest,
PROVIDED, HOWEVER, that such accretion shall not be deemed an incurrence of
Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"INTEREST PAYMENT DATE" means the stated due date of an installment of
interest on the Securities.
"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"INVESTMENT" by any person in any other person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other person or any agreement obligating a person to make any such
acquisition; (b) the making by such person of any deposit (in excess of $5
million in any one transaction) with, or advance, loan or other extension of
credit to, such other person (including the purchase of property from another
person subject to an understanding or agreement, contingent or otherwise,
obligating such
10
<PAGE>
Person to resell such property to such other person) or any commitment to make
any such advance, loan or extension (but excluding accounts receivable or
deposits arising in the ordinary course of business); (c) other than guarantees
of Indebtedness of the Company or any Subsidiary to the extent permitted by
Section 4.10, the entering into by such person of any guarantee of, or other
credit support or contingent obligation with respect to, Indebtedness or other
liability of such other person; (d) the making of any capital contribution by
such person to such other person, other than to the Company or a Subsidiary of
the Company; and (e) the designation by the Board of Directors of the Company of
any person to be an Unrestricted Subsidiary. The Company shall be deemed to make
an Investment in an amount equal to the fair market value of the net assets of
any subsidiary (or, if neither the Company nor any of its Subsidiaries has
theretofore made an Investment in such subsidiary, in an amount equal to the
Investments being made), at the time that such subsidiary is designated an
Unrestricted Subsidiary, and any property transferred to an Unrestricted
Subsidiary from the Company or a Subsidiary shall be deemed an Investment valued
at its fair market value at the time of such transfer.
"ISSUE DATE" means the date of first issuance of the Securities under
the Indenture.
"JUNIOR SECURITY" means any Qualified Capital Stock and any
Indebtedness of the Company that is subordinated in right of payment to Senior
Debt at least to the same extent as the Securities, and has no scheduled
installment of principal due, by redemption, sinking fund payment or otherwise,
on or prior to the Stated Maturity of the Securities.
"LEGAL DEFEASANCE" shall have the meaning specified in Section 8.2.
"LIEN" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"MATURITY DATE" means, when used with respect to any Security, the
date specified on such Security as the fixed date on which the final installment
of principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of this Indenture regarding
acceleration of Indebtedness or any Change of Control Offer or Asset Sale
Offer).
"NET CASH PROCEEDS" means the aggregate amount of Cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and
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<PAGE>
by the Parent in the case of a Public Equity Offering or an Equity Private
Placement and by the Company and its Subsidiaries in respect of an Asset Sale
plus, in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Company (to
the extent not previously included in the calculation of Net Cash Proceeds) upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and expenses (including, without limitation, the fees and
expenses of legal counsel and investment banking fees and expenses) incurred in
connection with such Asset Sale or sale of Qualified Capital Stock or Public
Equity Offering or Equity Private Placement, and, in the case of an Asset Sale
only, less (i) the amount (estimated in good faith by the Company) of income,
franchise, sales and other applicable taxes required to be paid by the Company
or any of its respective Subsidiaries in connection with such Asset Sale, (ii)
payments made to repay Indebtedness or any other obligation outstanding at the
time of such Asset Sale that either (A) is secured by a Lien on the property or
assets sold or (B) is required to be paid as a result of such sale, and (iii)
appropriate amounts to be provided by the Company or any Subsidiary of the
Company as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post- employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP.
"NOTICE OF DEFAULT" shall have the meaning specified in Section
6.1(3).
"OBLIGATION" means any principal, premium or interest payment, or
monetary penalty, or damages, due by the Company under the terms of the
Securities or the Indenture.
"OFFICER" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means, with respect to the Company, a
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company and otherwise complying with the requirements of Sections 12.4
and 12.5, and delivered to the Trustee or an Agent, as applicable.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee (which may include counsel to the Trustee
or the
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Company including an employee of the Company) or an Agent, as applicable,
complying with the requirements of Sections 12.4 and 12.5, and delivered to the
Trustee or an Agent, as applicable.
"PARENT" means Universal Outdoor Holdings, Inc., a Delaware
corporation.
"PAYING AGENT" shall have the meaning specified in Section 2.3.
"PAYMENT BLOCKAGE PERIOD" shall have the meaning specified in Section
11.2.
"PAYMENT DEFAULT" shall have the meaning specified in Section 11.2.
"PAYMENT NOTICE" shall have the meaning specified in Section 11.3.
"PERMITTED HOLDER" means Daniel L. Simon, Brian T. Clingen or Kelso &
Company, L.P. or any of their respective affiliates (as such term is defined in
Rule 12b-2 under the Exchange Act).
"PERMITTED INDEBTEDNESS" means the Indebtedness of the Company to any
wholly owned Subsidiary, and Indebtedness of any wholly owned Subsidiary to any
other wholly owned Subsidiary or to the Company; PROVIDED, that, in the case of
Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Company's obligations pursuant to the
Securities and the date of any event that causes such Subsidiary to no longer be
a wholly owned Subsidiary shall be an Incurrence Date.
"PERMITTED INVESTMENT" means (a) Investments in any of the Securities;
(b) Cash Equivalents; (c) Permitted Indebtedness; (d) Investments in Persons
who, after such Investments, will become Subsidiaries of the Company; (e) other
Investments not to exceed $25 million in aggregate at any time outstanding; and
(f) Investments in any property or assets to be used in a business in which the
Company was engaged on the date of the Indenture.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation
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of law in the ordinary course of business provided that (i) the underlying
obligations are not overdue for a period of more than 30 days, or (ii) such
Liens are being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of the
Company in accordance with GAAP; (d) Liens securing the performance of bids,
trade contracts (other than borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (e) easements,
rights-of-way, zoning, similar restrictions and other similar encumbrances or
title defects which, singly or in the aggregate, do not in any case materially
detract from the value of the property, subject thereto (as such property is
used by the Company or any of its Subsidiaries) or interfere with the ordinary
conduct of the business of the Company or any of its Subsidiaries; (f) Liens
arising by operation of law in connection with judgments, only to the extent,
for an amount and for a period not resulting in an Event of Default with respect
thereto; (g) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security legislation; (h) Liens securing the Securities; (i) Liens
securing Indebtedness of a Person existing at the time such Person becomes a
Subsidiary or is merged with or into the Company or a Subsidiary or Liens
securing Indebtedness incurred in connection with an Acquisition, PROVIDED that
such Liens were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to
any other assets; (j) Liens arising from Purchase Money Indebtedness permitted
to be incurred under clause (c) of Section 4.10 provided such Liens relate to
the property which is subject to such Purchase Money Indebtedness; (k) leases or
subleases granted to other persons in the ordinary course of business not
materially interfering with the conduct of the business of the Company or any of
its Subsidiaries or materially detracting from the value of the relative assets
of the Company or any Subsidiary; (l) Liens arising from precautionary Uniform
Commercial Code financing statement filings regarding operating leases entered
into by the Company or any of its Subsidiaries in the ordinary course of
business; and (m) Liens securing Refinancing Indebtedness incurred to refinance
any Indebtedness that was previously so secured in a manner no more adverse to
the Holders of the Securities than the terms of the Liens securing such
refinanced Indebtedness provided that the Indebtedness secured is not increased
and the lien is not extended to any additional assets or property.
"PERSON" or "PERSON" means any corporation, individual, partnership,
trust, unincorporated association, or a government or any agency or political
subdivision thereof.
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"PRINCIPAL CORPORATE TRUST OFFICE OF THE TRUSTEE" means the office of
the Trustee as set forth in Section 12.2 and such other offices as the Trustee
may designate from time to time.
"PROPERTY" or "PROPERTY" means any right or interest in or to property
or assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"PURCHASE DATE" shall have the meaning specified in Section 4.14.
"PUBLIC EQUITY OFFERING" means an underwritten offering of Common
Stock of the Parent pursuant to an effective registration statement under the
Securities Act.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness of such person to
any seller or other person incurred to finance the acquisition (including in the
case of a Capitalized Lease Obligation, the lease) of any real or personal
tangible property which, in the reasonable good faith judgment of the Board of
Directors of the Company, is directly related to a Related Business of the
Company and which is incurred substantially concurrently with such acquisition
and is secured only by the assets so financed.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
"QUALIFIED EXCHANGE" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Indebtedness of
the Company issued on or after the Issue Date with the Net Cash Proceeds
received by the Company from the substantially concurrent sale of Qualified
Capital Stock or any exchange of Qualified Capital Stock for any Capital Stock
or Indebtedness issued on or after the Issue Date.
"RECORD DATE" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security attached hereto as
Exhibit A.
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in
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the form of Security attached hereto as Exhibit A, which shall include,
without duplication, in each case, accrued and unpaid interest to the Redemption
Date (subject to the provisions of Section 3.5).
"REFERENCE PERIOD" with regard to any person means the four full
fiscal quarters (or such lesser period during which such person has been in
existence) for which financial statements are available ended immediately
preceding any date upon which any determination is to be made pursuant to the
terms of the Securities or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing,
plus, in each case, premium and fees and expenses; PROVIDED, that (A) such
Refinancing Indebtedness of any Subsidiary of the Company shall only be used to
Refinance outstanding Indebtedness or Disqualified Capital Stock of such
Subsidiary, (B) such Refinancing Indebtedness shall (x) not have an Average Life
shorter than the Indebtedness or Disqualified Capital Stock to be so refinanced
at the time of such Refinancing and (y) in all respects, be no less subordinated
or junior, if applicable, to the rights of Holders of the Securities than was
the Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have a final stated maturity or redemption date,
as applicable, no earlier than the final stated maturity or redemption date, as
applicable, of the Indebtedness or Disqualified Capital Stock to be so
refinanced.
"REGISTRAR" shall have the meaning specified in Section 2.3.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
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"RESTRICTED PAYMENT" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such person or any parent of such person, (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Equity Interests of such person or parent of such person, (c) other than with
the proceeds from the substantially concurrent sale of, or in exchange for,
Refinancing Indebtedness any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms of
or any defeasance of, any Subordinated Indebtedness, directly or indirectly, by
such person or Subsidiary of such person prior to the scheduled maturity, any
scheduled or required repayment of principal, or scheduled sinking fund payment,
as the case may be, of such Indebtedness and (d) any Investment by such person,
other than a Permitted Investment; PROVIDED, HOWEVER, that the term "Restricted
Payment" does not include (i) any dividend, distribution or other payment on or
with respect to Capital Stock of an issuer to the extent payable solely in
shares of Qualified Capital Stock of such issuer; or (ii) any dividend,
distribution or other payment to the Company, or to any of its wholly owned
Subsidiaries, by the Company or any of its Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means all series of the [___]% Senior Subordinated Notes
due 2006, that are issued under and pursuant to the terms of the Indenture, as
amended or supplemented from time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SECURITIES CUSTODIAN" means the Registrar, as custodian with respect
to the Securities in global form, or any successor entity thereto.
"SECURITYHOLDER" or "HOLDER" means the Person in whose name a Security
is registered on the Registrar's books.
"SENIOR DEBT" of the Company means Indebtedness (including any
monetary obligation in respect of the Credit Agreement, and interest, whether or
not allowable, accruing on Indebtedness incurred pursuant to the Credit
Agreement after the filing of a petition initiating any proceeding under any
bankruptcy, insolvency or similar law) of the Company arising under the Credit
Agreement or that, by the terms of the instrument creating or evidencing such
Indebtedness, is expressly designated Senior Debt or made senior in right of
payment to the Securities; PROVIDED, that in no event shall
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Senior Debt include (a) Indebtedness to any Subsidiary of the Company or any
officer, director or employee of the Company or any Subsidiary of the Company,
(b) Indebtedness incurred in violation of the terms of the Indenture, (c)
Indebtedness consisting of trade payables, (d) Disqualified Capital Stock and
(e) Capitalized Lease Obligations.
"SENIOR DEBT REPRESENTATIVE" means the agent under the Credit
Agreement or the indenture trustee or other trustee, agent or representative for
the holders of an aggregate of at least $10 million principal amount outstanding
of any other Senior Debt.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any
Subsidiary of the Company that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries or (ii) as of the end
of such fiscal year, was the owner of more than 10% of the consolidated assets
of the Company and its Subsidiaries, all as set forth on the most recently
available consolidated financial statements of the Company for such fiscal year.
"SPECIAL RECORD DATE" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.
"STATED MATURITY," when used with respect to any Security, means
[_____________], 2006.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company that is
expressly subordinated in right of payment to the Securities in any respect or,
for purposes of the definition of Restricted Payments only, has a stated
maturity on or after the Stated Maturity.
"SUBSIDIARY," with respect to any person, means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such person,
by such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person, (ii) any other person (other than a corporation or
partnership) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Company or of any Subsidiary of the
Company. Unless the context requires otherwise, Subsidiary means each direct
and indirect Subsidiary of the Company.
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"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb), as in effect on the date of the execution of this
Indenture; except as otherwise provided in Section 9.3.
"TRANSACTIONS" means the acquisition of Outdoor Advertising Holdings,
Inc. pursuant to an Agreement and Plan of Merger entered into on August 27,
1996, the tender offer and consent solicitation by the Company to purchase all
of its outstanding 11% Series A Senior Notes due 2003, the tender offer and
consent solicitation by Parent to purchase all of its outstanding 14% Senior
Secured Notes due 2004, the execution of the Credit Agreement, the purchase of
certain assets of Tanner Peck, L.L.C., TOA Enterprises, L.P., William B. Tanner,
WBT Outdoor, Inc. and The Weatherley Tanner Trust pursuant to an Option and
Asset Purchase Agreement entered into on September 12, 1996, the purchase of
certain assets of Iowa Outdoor Displays pursuant to an Asset Purchase Agreement
entered into on September 12, 1996 and the purchase of certain assets of The
Chase Company pursuant to an Asset Purchase Agreement entered into on September
11, 1996.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means such successor.
"TRUST OFFICER" means any officer within the corporate trust
administration division (or any successor group) of the Trustee or any other
officer of the Trustee customarily performing functions similar to those
performed by the Persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the Trustee to whom such trust matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"U.S. GOVERNMENT OBLIGATIONS" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"UNRESTRICTED SUBSIDIARY" means any subsidiary of the Company that
does not own any Capital Stock of, or own or hold any Lien on any property of,
the Company or any other Subsidiary of the Company and that shall be designated
an Unrestricted Subsidiary by the Board of Directors of the Company; PROVIDED,
that (i) such subsidiary shall not engage, to any substantial extent, in any
line or lines of business activity other than a Related Business and (ii)
neither immediately prior thereto nor after giving pro forma effect to such
designation would there exist a Default or Event of Default. The
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Board of Directors of the Company may designate any Unrestricted Subsidiary to
be a Subsidiary, provided, that (i) no Default or Event of Default is existing
or will occur as a consequence thereof and (ii) immediately after giving effect
to such designation, on a PRO FORMA basis, the Company could incur at least
$1.00 of Indebtedness pursuant to the Debt Incurrence Ratio in paragraph (a) of
Section 4.10. Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Equity Interests
of which are owned by the Company or one or more wholly owned Subsidiaries of
the Company.
SECTION 1.2. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the SEC.
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITYHOLDER" means a Holder or a Securityholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.3. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
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(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
SECTION 2.1. FORM AND DATING.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto, which
Exhibit is part of this Indenture. The Securities may have notations, legends
or endorsements required by law, stock exchange rule or usage or the terms
hereof. The Company shall approve the form of the Securities and any notation,
legend or endorsement on them. Any such notations, legends or endorsements not
contained in the form of Security attached as Exhibit A hereto shall be
delivered in writing to the Trustee. Each Security shall be dated the date of
its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
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SECTION 2.2. EXECUTION AND AUTHENTICATION.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Security for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate or cause to be authenticated the
Securities for original issue in the aggregate principal amount of up to
$200,000,000 upon a written order of the Company in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of Securities to
be authenticated and the date on which the Securities are to be authenticated.
The aggregate principal amount of Securities outstanding at any time may not
exceed $200,000,000, except as provided in Section 2.7. Upon the written order
of the Company in the form of an Officers' Certificate, the Trustee shall
authenticate Securities in substitution of Securities originally issued to
reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
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SECTION 2.3. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or exchange ("Registrar") and an office or agency of
the Company where Securities may be presented for payment ("Paying Agent") and
where notices and demands to or upon the Company in respect of the Securities
may be served. The Company may act as Registrar or Paying Agent, except that
for the purposes of Articles III, VIII, X and Section 4.13 and as otherwise
specified in this Indenture, neither the Company nor any Affiliate of the
Company shall act as Paying Agent. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-Registrars and one or more additional Paying Agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
Paying Agent. The Company hereby initially appoints the Trustee as Registrar
and Paying Agent, and by its signature hereto, the Trustee hereby agrees so to
act. The Company may at any time change any Paying Agent or Registrar without
notice to any Holder.
The Company shall enter into an appropriate written agency agreement
with any Agent (including the Paying Agent) not a party to this Indenture, which
agreement shall implement the provisions of this Indenture that relate to such
Agent, and shall furnish a copy of each such agreement to the Trustee. The
Company shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Securities.
The Company initially appoints the Registrar to act as Securities
Custodian with respect to the Global Securities.
Upon the occurrence of an Event of Default described in Section 6.1(d)
or (f), the Trustee shall, or upon the occurrence of any other Event of Default
by notice to the Company, the Registrar and the Paying Agent, the Trustee may,
assume the duties and obligations of the Registrar and the Paying Agent
hereunder.
The Trustee is authorized to enter into a letter of representation
with DTC in the form provided to the Trustee by the Company and to act in
accordance with such letter.
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SECTION 2.4. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, premium, if any, or interest on, the Securities (whether such
assets have been distributed to it by the Company or any other obligor on the
Securities), and shall notify the Trustee in writing of any Default in making
any such payment. If either of the Company or a Subsidiary of the Company acts
as Paying Agent, it shall segregate such assets and hold them as a separate
trust fund for the benefit of the Holders or the Trustee. The Company at any
time may require a Paying Agent to distribute all assets held by it to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any Payment Default or any Event of Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed.
Upon distribution to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent, the Paying Agent (if other than the Company)
shall have no further liability for such assets.
SECTION 2.5. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee on or before the
third Business Day preceding each Interest Payment Date and at such other times
as the Trustee or any such Paying Agent may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders and the Company shall otherwise comply with TIA Section
312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When
Definitive Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive Securities;
or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized denominations,
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the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; PROVIDED, HOWEVER,
that the Definitive Securities surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar duly
executed by the Holder thereof or his attorney duly authorized in writing.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar, together with
written instructions of the Holder directing the Registrar to make, or to direct
the Securities Custodian to make, an endorsement on the Global Security to
reflect an increase in the aggregate principal amount of the Securities
represented by the Global Security, then the Registrar shall cancel such
Definitive Security and cause, or direct the Securities Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian, the aggregate principal amount of
Securities represented by the Global Security to be increased accordingly. If
no Global Securities are then outstanding, the Company shall issue and the
Trustee shall authenticate a new Global Security in the appropriate principal
amount.
(c) TRANSFER OF BENEFICIAL INTERESTS IN GLOBAL SECURITIES. The
transfer of beneficial interests in Global Securities shall be effected through
the Depositary, in accordance with the procedures of the Depositary and shall
not be governed by this Indenture.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR A
DEFINITIVE SECURITY.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Registrar of written instructions
or such other form of instructions as is customary for the Depositary from
the Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Security, the Registrar or the Securities Custodian,
at the direction of the Trustee, will cause, in accordance with the
standing instructions and procedures existing between the Depositary and
the Securities Custodian, the aggregate principal amount of the Global
Security to be reduced and, following such reduction, the Company will
execute and, upon receipt of an authentication order in the form
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of an Officers' Certificate, the Trustee or the Trustee's authenticating
agent will authenticate and deliver to the transferee a Definitive
Security.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section 2.6(d)
shall be registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Registrar. The Registrar
shall deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE SECURITIES IN ABSENCE OF
DEPOSITARY. If at any time:
(i) the Depositary for the Securities notifies the Company
that the Depositary is unwilling or unable to continue as Depositary for
the Global Securities and a successor Depositary for the Global Securities
is not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, in its sole discretion, notifies the
Trustee and the Registrar in writing that they elect to cause the issuance
of Definitive Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will, or its authenticating agent will, authenticate and deliver Definitive
Securities, in an aggregate principal amount equal to the principal amount of
the Global Securities, in exchange for such Global Securities.
(g) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECURITY. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or cancelled, such Global
Security shall be returned to or retained and cancelled by the Trustee. At any
time prior to such cancella-
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tion, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, redeemed, repurchased or cancelled, the principal amount
of Securities represented by such Global Security shall be reduced and an
endorsement shall be made on such Global Security, by the Trustee or the
Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(h) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
DEFINITIVE SECURITIES.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee or any authenticating agent of
the Trustee shall authenticate Definitive Securities and Global Securities
at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessment, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments, or similar governmental charge payable upon
exchanges or transfers pursuant to Section 2.2 (fourth paragraph), 2.10,
3.7, 4.13(8), 9.5, or 10.1 (final paragraph)).
(iii) The Registrar shall not be required to register the
transfer of or exchange (a) any Definitive Security selected for redemption
in whole or in part pursuant to Article III, except the unredeemed portion
of any Definitive Security being redeemed in part, or (b) any Security for
a period beginning 15 Business Days before the mailing of a notice of an
offer to repurchase pursuant to Article X or Section 4.13 hereof or a
notice of redemption of Securities pursuant to Article III hereof and
ending at the close of business on the day of such mailing.
(iv) Prior to due presentment for registration or transfer
of any Security, the Trustee, any Agent and the Company may deem and treat
the Person in whose name the Security is registered as the absolute owner
of such Security, and none of the Trustee, Agent or the Company shall be
affected by notice to the contrary.
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SECTION 2.7. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory to
the Trustee to the effect that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee or any authenticating
agent of the Trustee shall authenticate a replacement Security if the Trustee's
requirements are met. If required by the Trustee or the Company, such Holder
must provide an indemnity bond or other indemnity, sufficient in the judgment of
both the Company and the Trustee, to protect the Company, the Trustee or any
Agent from any loss which any of them may suffer if a Security is replaced. The
Company may require the payment of a sum sufficient to cover any transfer tax,
assessment or similar governmental charge that may be imposed in relation to the
issuance of any new Security and charge such Holder for its reasonable, out-of-
pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.8. OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee (including any Security represented by a
Global Security) except those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Security effected by
the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a BONA FIDE purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds Cash or U.S. Government
Obligations sufficient to pay all of the principal and interest and premium, if
any, due on the Securities payable on that date and payment of the Securities
called for redemption is not otherwise prohibited, then on and after that date
such Securities cease to be outstanding and interest on them ceases to accrue.
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SECTION 2.9. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company or Affiliates of the Company shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, amendment, supplement,
waiver or consent, only Securities that a Trust Officer of the Trustee knows are
so owned shall be disregarded.
SECTION 2.10. TEMPORARY SECURITIES.
Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of permanent Securities but may
have variations that the Company reasonably and in good faith considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities in
exchange for temporary Securities. Until so exchanged, the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
permanent Securities authenticated and delivered hereunder.
SECTION 2.11 CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to it or them (as applicable) for registration of
transfer, exchange or payment. The Trustee or, at the direction of the Trustee,
the Registrar or the Paying Agent (other than the Company or an Affiliate of the
Company), and no one else shall cancel and, at the written direction of the
Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.7, the Company may not issue new
Securities to replace Securities that have been paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section 2.11, except
as expressly permitted in the form of Securities and as permitted by this
Indenture.
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SECTION 2.12. DEFAULTED INTEREST.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of Cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such Cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Security register not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the
Securities (or their respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the
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Trustee of the proposed payment pursuant to this clause,
such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
ARTICLE III
REDEMPTION
SECTION 3.1. RIGHT OF REDEMPTION.
Redemption of Securities, as permitted by any provision of this
Indenture, shall be made in accordance with such provision and this Article III.
The Company will not have the right to redeem any Securities prior to
[____________], 2001, except as provided in the immediately following paragraph.
On or after [___________], 2001, the Company will have the right to redeem all
or any part of the Securities at the Redemption Prices specified in the form of
Security attached as Exhibit A set forth therein in Paragraph 5 thereof,
including accrued and unpaid interest to the Redemption Date (subject to the
right of Holders of record on a Record Date to receive interest due on an
Interest Payment Date that is on or prior to such Redemption Date, and subject
to the provisions set forth in Section 3.5).
Notwithstanding the foregoing, prior to [_____________], 1999, upon
any Public Equity Offering or Equity Private Placement, in each case resulting
in Net Cash Proceeds of $100 million or more which are then contributed in full
to the Company, up to $70 million aggregate principal amount of the Securities
may be redeemed at the option of the Company with cash from the Net Cash
Proceeds of such Public Equity Offering or Equity Private Placement, at [
]% of principal, PROVIDED, HOWEVER, that immediately following such redemption
not less than $130 million aggregate principal amount of the Securities are
outstanding, PROVIDED, FURTHER, that such redemption shall occur within 120 days
of such Public Equity Offering or Equity Private Placement.
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SECTION 3.2. NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify the Trustee in writing of the Redemption Date
and the principal amount of Securities to be redeemed and whether it wants the
Trustee to give notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in this
Section 3.2 at least 45 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee). Any such notice may be cancelled at any
time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.
SECTION 3.3. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities or portions thereof
for redemption on a PRO RATA basis, by lot or by such other method as the
Trustee shall determine to be fair and appropriate.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.4. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the
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Trustee and each Holder whose Securities are to be redeemed to such Holder's
last address as then shown on the registry books of the Registrar. At the
Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued
and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice to
collect the Redemption Price;
(5) that, unless the Company defaults in its obligation to
deposit Cash or U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with
their terms will provide Cash in an amount to fund the Redemption Price
with the Paying Agent in accordance with Section 3.6 hereof or such
redemption payment is otherwise prohibited, interest on Securities called
for redemption ceases to accrue on and after the Redemption Date and the
only remaining right of the Holders of such Securities is to receive
payment of the Redemption Price, including accrued and unpaid interest to
the Redemption Date, upon surrender to the Paying Agent of the Securities
called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the portion
of the principal amount equal to $1,000 or any integral multiple thereof,
of such Security to be redeemed and that, after the Redemption Date, and
upon surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
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(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section
3.4 and pursuant to the optional redemption provisions of Paragraph 5 of
the Securities.
SECTION 3.5. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued and unpaid interest to the
Redemption Date. Upon surrender to the Trustee or, if the Trustee is no longer
the paying agent, to the Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, including interest, if any, accrued and
unpaid to the Redemption Date; PROVIDED that if the Redemption Date is on or
after a regular Record Date and on or prior to the Interest Payment Date to
which such Record Date relates, the accrued interest shall be payable to the
Holder of the redeemed Securities registered on the relevant Record Date and no
additional interest will be payable to Holders of the redeemed Securities on the
Redemption Date; and PROVIDED, FURTHER, that if a Redemption Date is a non-
Business Day, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
SECTION 3.6. DEPOSIT OF REDEMPTION PRICE.
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) Cash or
U.S. Government Obligations sufficient to pay the Redemption Price of, and
accrued and unpaid interest on, all Securities to be redeemed on such Redemption
Date (other than Securities or portions thereof called for redemption on that
date that have been delivered by the Company to the Trustee for cancellation).
The Paying Agent shall promptly return to the Company any Cash or U.S.
Government Obligations so deposited which is not required for that purpose upon
the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surren-
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der for redemption because of the failure of the Company to comply with the
preceding paragraph, interest shall continue to accrue and be paid from the
Redemption Date until such payment is made on the unpaid principal, and, to the
extent lawful, on any interest not paid on such unpaid principal, in each case
at the rate and in the manner provided in Section 4.1 hereof and the Security.
SECTION 3.7. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, without service charge to the Holder, a new Security or Securities equal
in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1. PAYMENT OF SECURITIES.
The Company shall pay the principal of and interest and premium, if
applicable, on the Securities on the dates and in the manner provided herein and
in the Securities. An installment of principal of or interest and premium, if
applicable, on the Securities shall be considered paid on the date it is due if
the Trustee or Paying Agent (other than the Company, a Subsidiary of the Company
or an Affiliate of the Company) holds for the benefit of the Holders, on or
before 10:00 a.m. New York City time on that date, Cash deposited and designated
for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at
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any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 12.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the Trustee's agency at
[__________________________________], New York, New York [_______] as such
office.
SECTION 4.3. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, make any Restricted Payment if, after giving effect
to such Restricted Payment on a PRO FORMA basis, (1) a Default or an Event of
Default shall have occurred and be continuing, (2) the Company is not permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Debt
Incurrence Ratio in paragraph (a) of Section 4.10, or (3) the aggregate amount
of all Restricted Payments made by the Company and its Subsidiaries, including
after giving effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the sum of (a) Consolidated EBITDA of the Company and
its Consolidated Subsidiaries for the period (taken as one accounting period),
commencing on the first day of the first full fiscal quarter commencing after
the Issue Date, to and including the last day of the fiscal quarter ended
immediately prior to the date of each such calculation (or, in the event
Consolidated EBITDA for such period is a deficit, then minus 100% of such
deficit), minus (b) 1.5 times the Consolidated Fixed Charges over such period,
plus (c) the aggregate Net Cash Proceeds received by the Company from the sale
of its Qualified Capital Stock or Indebtedness to the extent subsequently
converted into Qualified Capital Stock (other than (i) to a Subsidiary of the
Company and (ii) to the extent applied in connection with a Qualified Exchange)
or the fair market value (as determined by the Board of Directors reasonably and
in good faith) of securities of the Parent issued in connection with an
acquisition by the Company or any of its Subsidiaries, in each case after the
Issue Date, plus (d) the net reductions in Investments (other than reductions in
Permitted Investments) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans or from
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designations of Unrestricted Subsidiaries as Subsidiaries, valued in each case
as provided in the definition of "Investment," not to exceed the amount of
Investments previously made by the Company and its Subsidiaries in such Person,
plus (e) $15 million.
The preceding paragraph, however, will not prohibit (w) payments in
accordance with "Use of Proceeds" section of the prospectus, dated October
[____], 1996, which is part of the Company's Registration Statement on Form S-1,
(x) repurchases of Capital Stock out of the proceeds of any "key man" life
insurance policies on Daniel L. Simon existing on the Issue Date and described
in the Prospectus and additional repurchases of Capital Stock from employees of
the Company or its Subsidiaries upon the death, disability or termination of
employment in an aggregate amount to all employees not to exceed $1 million per
year or $2 million in the aggregate on and after the Issue Date, (y) a Qualified
Exchange, or (z) the payment of any dividend on Qualified Capital Stock within
60 days after the date of its declaration if such dividend could have been made
on the date of such declaration in compliance with the foregoing provisions.
The full amount of any Restricted Payment made pursuant to the foregoing clauses
(x) and (z) of the immediately preceding sentence, however, will be deducted in
the calculation of the aggregate amount of Restricted Payments available to be
made referred to in clause (3) of the immediately preceding paragraph of this
Section 4.3.
SECTION 4.4. CORPORATE EXISTENCE.
Except as otherwise provided or permitted in Article V or elsewhere in
this Indenture, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence in accordance
with its organizational documents (as the same may be amended from time to time)
and the rights (charter and statutory) and corporate franchises of the Company;
PROVIDED, HOWEVER, nothing in this Section will prohibit the Company from
engaging in any transaction permitted under Section 11.4 or Section 11.5 hereof
and PROVIDED, FURTHER, that the Company shall not be required to preserve any
right or franchise if the Board of Directors of the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of such entity.
SECTION 4.5. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except (i) as contested in good faith by appropriate proceedings and with
respect to which appropriate reserves have been taken to the extent required by
GAAP or (ii) where the failure to effect such payment is not adverse in any
material respect to the Holders.
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SECTION 4.6. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee within 120 days
after the end of its fiscal year an Officers' Certificate complying with Section
314(a)(4) of the TIA and stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers and stating, as to each such
Officer signing such certificate, to the best of his knowledge, based on such
review, whether or not the signer knows of any Event of Default or event which
with notice or the passage of time would become an Event of Default which has
occurred and is continuing. The Officers' Certificate shall also notify the
Trustee should the relevant fiscal year end on any date other than the current
fiscal year end date.
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto. The Trustee shall not be deemed to have knowledge of any
Default or any Event of Default unless one of its Trust Officers receives
written notice thereof from the Company or any of the Holders.
SECTION 4.7. REPORTS.
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Commission, and deliver to the Trustee and to each Holder within 15 days after
it has filed such with the Commission (if the Commission will accept such
filing), annual, quarterly and other reports required by Section 13 or 15(d) of
the Exchange Act.
SECTION 4.8. LIMITATION ON STATUS AS INVESTMENT COMPANY.
Neither the Company nor any Subsidiary shall be required to register
as an "investment company" (as that term is defined in the Investment Company
Act of 1940, as amended) or shall otherwise become subject to regulation under
the Investment Company Act.
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SECTION 4.9. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
Neither the Company nor any of its Subsidiaries will be permitted
after the Issue Date to enter into or suffer to exist any contract, agreement,
arrangement or transaction (other than guarantees of the Credit Agreement by the
Company's Subsidiaries) with any Affiliate (an "Affiliate Transaction"), or any
series of related Affiliate Transactions, (i) unless it is determined that the
terms of such Affiliate Transaction are fair and reasonable to the Company, and
no less favorable to the Company than could have been obtained in an arm's
length transaction with a non-Affiliate and, (ii) if involving consideration to
either party in excess of $1 million, unless such Affiliate Transaction(s) is
evidenced by an Officers' Certificate addressed and delivered to the Trustee
certifying that such Affiliate Transaction (or Affiliate Transactions) has been
approved by a majority of the members of the Board of Directors that are
disinterested in such transaction and (iii) if involving consideration to either
party in excess of $10 million, unless in addition the Company, prior to the
consummation thereof, obtains a written favorable opinion as to the fairness of
such transaction to the Company from a financial point of view from an
independent investment banking firm of national reputation.
This Section 4.9 shall not apply to (i) any transaction between the
Company and any of its Subsidiaries or between Subsidiaries, (ii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company and any employment agreement entered into by the
Company or any Subsidiary in the ordinary course of business and (iii) any tax
sharing arrangement between the Company and Parent.
SECTION 4.10. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND
DISQUALIFIED CAPITAL STOCK.
Except as set forth in this Section 4.10, the Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, issue,
assume, guaranty, incur, become directly or indirectly liable with respect to
(including as a result of an Acquisition), or otherwise become responsible for,
contingently or otherwise (individually and collectively, to "incur" or, as
appropriate, an "incurrence"), any Indebtedness or any Disqualified Capital
Stock (including Acquired Indebtedness). Notwithstanding the foregoing:
(a) if (i) no Default or Event of Default shall have occurred
and be continuing at the time of, or would occur after giving effect on a PRO
forma basis to, such incurrence of Indebtedness or Disqualified Capital Stock
and (ii) on the date of such
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incurrence (the "Incurrence Date"), the Consolidated Leverage Ratio of the
Company as of the end of the Reference Period immediately preceding the
Incurrence Date, after giving effect on a PRO FORMA basis to such incurrence of
such Indebtedness or Disqualified Capital Stock and, to the extent set forth in
the definition of Consolidated Leverage Ratio, the use of proceeds thereof,
would not exceed 6.5 to l from the Issue Date to and including the third
anniversary of the Issue Date, 6.25 to 1 from the third anniversary of the Issue
Date to and including the fifth anniversary thereof, and 6.0 to 1 thereafter
(each, a "Debt Incurrence Ratio"), then the Company may incur such Indebtedness
or Disqualified Capital Stock;
(b) the Company and the Subsidiaries may incur Indebtedness
evidenced by the Securities and represented by the Indenture up to the amounts
specified therein as of the date thereof;
(c) the Company and the Subsidiaries may incur Purchase Money
Indebtedness (including any Indebtedness issued to refinance, replace or refund
such Indebtedness) on or after the Issue Date, PROVIDED, that (i) the aggregate
amount of such Indebtedness incurred on or after the Issue Date and outstanding
at any time pursuant to this paragraph (c) shall not exceed $10 million, and
(ii) in each case, such Indebtedness shall not constitute more than 100% of the
cost (determined in accordance with GAAP) to the Company or such Subsidiary, as
applicable, of the property so purchased or leased;
(d) the Company and the Subsidiaries, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (a), (b) and (c) of this
Section 4.10 or which is outstanding on the Issue Date so long as, in the case
of Refinancing Indebtedness which is not Senior Debt, such Refinancing
Indebtedness is secured only by the assets that secured the Indebtedness so
refinanced;
(e) the Company and the Subsidiaries may incur Permitted
Indebtedness;
(f) Indebtedness incurred pursuant to the Credit Agreement up to
an aggregate amount outstanding (including any Indebtedness issued to refinance,
refund or replace such Indebtedness) at any time not to exceed $300 million
minus the amount of any such Indebtedness retired with Net Cash Proceeds from
any Asset Sale and plus any such Indebtedness constituting Interest Swap and
Hedging Obligations;
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(g) other Indebtedness of the Company or its Subsidiaries not to
exceed $25 million at any time outstanding, of which only $10 million may be
incurred by Subsidiaries.
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with the Company or a Subsidiary of
the Company shall be deemed to have been Incurred at the time such Person
becomes such a Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Subsidiary of the Company, as applicable.
For purposes of determining amounts of Indebtedness under this Section 4.10, (i)
Indebtedness resulting from security interests granted with respect to
Indebtedness otherwise included in the determination of Indebtedness, and
guarantees (and security interests with respect thereof) of, or obligations with
respect to letters of credit supporting, Indebtedness otherwise included in the
determination of Indebtedness shall not be included in the determination of
Indebtedness, (ii) any Liens permitted hereunder supporting Indebtedness
otherwise included in the determination of Indebtedness shall not be included in
the determination of Indebtedness and (iii) Indebtedness permitted under this
Section 4.10 need not be permitted solely by reference to one provision
permitting such Indebtedness but may be permitted in part by reference to one
such provision and in part by reference to one or more other provisions of this
Section 4.10. For purposes of determining compliance with this Section 4.10, in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, the Company in its sole discretion
shall classify such item of Indebtedness and shall only be required to include
the amount and type of Indebtedness in one of such categories.
SECTION 4.11. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, assume or suffer to exist any consensual
restriction on the ability of any Subsidiary of the Company to pay dividends or
make other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, the Company or any Subsidiary
of the Company, except (a) restrictions imposed by the Securities or the
Indenture, (b) restrictions imposed by applicable law, (c) restrictions under
any Acquired Indebtedness not incurred in violation of this Indenture or any
agreement relating to any property, asset, or business acquired by the Company
or any of its Subsidiaries, which restrictions in each case existed at the time
of acquisition, were
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not put in place in connection with or in anticipation of such acquisition and
are not applicable to any person, other than the person acquired, or to any
property, asset or business, other than the property, assets and business so
acquired, (d) any such restriction or requirement imposed by Indebtedness
incurred under paragraph (f) of Section 4.10, (e) restrictions with respect
solely to a Subsidiary of the Company imposed pursuant to a binding agreement
which has been entered into for the sale or disposition of all or substantially
all of the Equity Interests or of any assets of such Subsidiary, provided such
restrictions apply solely to the Equity Interests or assets of such Subsidiary,
(f) restrictions on transfer contained in Purchase Money Indebtedness incurred
pursuant to paragraph (c) of Section 4.10, provided such restrictions relate
only to the transfer of the property acquired with the proceeds of such Purchase
Money Indebtedness, and (g) in connection with and pursuant to permitted
Refinancing Indebtedness, replacements of restrictions imposed pursuant to
clause (a) or (f) of this Section 4.11 that are not more restrictive than those
being replaced and do not apply to any other person or assets than those that
would have been covered by the restrictions in the Indebtedness so refinanced.
Notwithstanding the foregoing, neither (a) customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course of
business, consistent with industry practice, nor (b) Liens permitted under the
terms of this Indenture shall in and of themselves be considered a restriction
on the ability of the applicable Subsidiary to transfer such agreement or
assets, as the case may be.
SECTION 4.12. LIMITATION ON LIENS SECURING INDEBTEDNESS.
The Company shall not, and shall not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien of any kind, other than Permitted
Liens, upon any of their respective assets now owned or acquired on or after the
date of the Indenture or upon any income or profits therefrom securing any
Indebtedness of the Company other than Senior Debt of the Company, unless the
Company provides, and causes its Subsidiaries to provide, concurrently or
immediately thereafter, that the Securities are equally and ratably so secured
so long as such Lien exists, PROVIDED that, if such Indebtedness is Subordinated
Indebtedness, the Lien securing such Subordinated Indebtedness shall be
subordinate and junior to the Lien securing the Securities with the same
relative priority as such Subordinated Indebtedness shall have with respect to
the Securities.
SECTION 4.13. LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, in one or a series of related transactions, convey, sell, transfer, assign
or otherwise dispose
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of, directly or indirectly, any of its property, business or assets, including
by merger or consolidation (other than a merger or consolidation of the
Company), and including any sale or other transfer or issuance of any Equity
Interests of any Subsidiary of the Company, whether by the Company or a
Subsidiary of either or through the issuance, sale or transfer of Equity
Interests by a Subsidiary of the Company (an "Asset Sale"), unless (l)(a) within
210 days after the date of such Asset Sale, the Net Cash Proceeds therefrom (the
"Asset Sale Offer Amount") are applied to the optional redemption of the
Securities in accordance with the terms hereof or to the repurchase of
Securities pursuant to a cash offer (the "Asset Sale Offer") to repurchase
Securities at a purchase price (the "Asset Sale Offer Price") of 100% of
principal amount, plus accrued interest to the date of payment, made within 180
days of such Asset Sale or (b) within 180 days following such Asset Sale, the
Asset Sale Offer Amount is (i) invested (or committed to be invested, and in
fact is so invested, within an additional 90 days) in assets and property other
than notes, bonds, obligation and securities (except in connection with the
acquisition of a wholly owned Subsidiary) which in the good faith reasonable
judgment of the Board will immediately constitute or be a part of a Related
Business of the Company or such Subsidiary immediately following such
transaction or (ii) used to permanently reduce Senior Debt (PROVIDED that in the
case of a revolver or similar arrangement that makes credit available, such
commitment is also permanently reduced by such amount), (2) at least 75% of the
consideration for such Asset Sale or series of related Asset Sales consists of
Cash, Cash Equivalents or Permitted Investments, (3) no Default or Event of
Default shall have occurred and be continuing at the time of, or would occur
after giving effect, on a PRO FORMA basis, to, such Asset Sale, and (4) the
Board of Directors of the Company determines in good faith that the Company or
such Subsidiary, as applicable, receives fair market value for such Asset Sale.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Subsidiaries may, in the ordinary
course of business, convey, sell, transfer, assign or otherwise dispose of
inventory acquired and held for resale in the ordinary course of business;
(ii) the Company and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with the limitation on mergers, sales or consolidations
provisions in this Indenture;
(iii) the Company and its Subsidiaries may sell or dispose
of damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Subsidiary, as applicable;
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(iv) the Subsidiaries may convey, sell, transfer, assign or
otherwise dispose of assets to the Company or any of its wholly owned
Subsidiaries; and
(v) the Company and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets (in addition to those
transactions described in clause (i) through (iv)of this Section 4.13) with
an aggregate fair market value of $5 million in any fiscal year.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds from Asset Sales not applied to the uses set forth in clause (l) of the
first paragraph of this Section 4.10 (the "Excess Proceeds") exceeds $15 million
and that each Asset Sale Offer shall remain open for 20 Business Days following
its commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset
Sale Offer Period, the Company shall apply the Asset Sale Offer Amount plus an
amount equal to accrued interest to the purchase of all Securities properly
tendered (on a PRO RATA basis if the Asset Sale Offer Amount is insufficient to
purchase all Securities so tendered) at the Asset Sale Offer Price (together
with accrued interest). To the extent that the aggregate amount of Securities
tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer
Amount, the Company may use any remaining Net Cash Proceeds for general
corporate purposes as otherwise permitted by this Indenture and following each
Asset Sale Offer the Excess Proceeds amount shall be reset to zero. For
purposes of clause (2) of the first paragraph of this Section 4.13 total
consideration received means the total consideration received for such Asset
Sales minus the amount of (a) Senior Debt assumed by a transferee and (b)
property that within 30 days of such Asset Sale is converted into Cash or Cash
Equivalents.
All Net Cash Proceeds from an Event of Loss shall be invested, used
for prepayment of Senior Debt, or used to repurchase Securities, all within the
period and as otherwise provided above in clause 1(a) or 1(b) of the first
paragraph of this Section 4.13.
Notice of an Asset Sale Offer will be sent 20 Business Days prior to
the close of business on the third Business Day prior to the date set by the
Company to repurchase Securities pursuant to this Section 4.13 (the "Purchase
Date"), by first-class mail, by the Company to each Holder at its registered
address, with a copy to the Trustee. The notice to the Holders will contain all
information, instructions and materials required by applicable law. The notice,
which (to the extent consistent with this Indenture) shall govern the terms of
the Asset Sale Offer, shall state:
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(1) that the Asset Sale Offer is being made pursuant to
such notice and this Section 4.13;
(2) the Asset Sale Offer, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), and the Purchase
Date, which Purchase Date shall be on or prior to 45 Business Days
following the Excess Proceeds Date;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing Cash
with the Paying Agent in accordance with the provisions of this Section
4.13, any Security, or portion thereof, accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest after the Purchase
Date;
(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Asset Sale Offer will be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 4.13, notwithstanding anything
in this Indenture to the contrary, be the Company or any Affiliate of the
Company) at the address specified in the notice prior to the close of
business on the third Business Day prior to the Purchase Date;
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent receives, up to the
close of business on the third Business Day prior to the Purchase Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Securities the Holder is
withholding and a statement that such Holder is withdrawing his election to
have such principal amount of Securities purchased;
(7) that if Securities in a principal amount in excess of
the principal amount of Securities to be acquired pursuant to the Asset
Sale Offer are tendered and not withdrawn, the Company shall purchase
Securities on a PRO RATA basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
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(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(9) a brief description of the circumstances and relevant
facts regarding such Asset Sales.
On or before the Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the Asset
Sale Offer on or before the third Business Day prior to the Purchase Date (on a
PRO RATA basis if required pursuant to paragraph (7) hereof) and (ii) deposit
with the Paying Agent Cash sufficient to pay the Asset Sale Offer Price for all
Securities or portions thereof so tendered and accepted plus accrued and unpaid
interest thereon to the Purchase Date. On the Purchase Date, the Company shall
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall on the Purchase Date mail or deliver to Holders
of Securities so accepted payment in an amount equal to the Asset Sale Offer
Price for such Securities (together with accrued and unpaid interest), and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered. Any Security not so accepted shall be promptly mailed or delivered
by the Company to the Holder thereof. The Company agrees that any Asset Sale
Offer shall be made in compliance with all applicable laws, rules, and
regulations, including, if applicable, Regulation 14E of the Exchange Act and
the rules and regulations thereunder and all other applicable Federal and state
securities laws, and any provisions of this Indenture which conflict with such
laws shall be deemed to be superseded by the provisions of such laws.
SECTION 4.14. LIMITATION ON LAYERING INDEBTEDNESS.
The Company shall not, directly or indirectly, incur, or suffer to
exist any Indebtedness that is expressly subordinate in right of payment to any
other Indebtedness of the Company unless, by its terms, such Indebtedness is
subordinate in right of payment to, or ranks PARI PASSU with, the Securities.
SECTION 4.15. LIMITATION ON LINES OF BUSINESS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, engage to any substantial extent in any line or
lines of business activity other than that which, in the reasonable good faith
judgment of the Board of Directors of the Company, is a Related Business.
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SECTION 4.16. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time voluntarily insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the principal of, premium of, or interest on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee relating to any such law, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 4.17. PAYMENT FOR CONSENT.
Neither the Company nor any of its Subsidiaries or Unrestricted
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Securities for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of this Indenture of the Securities unless such
consideration is offered to be aid or agreed to be paid to all holders of the
Securities which so consent, waive or agree to amend in the time frame set forth
in solicitation documents relating to such consent, waiver or agreement.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. LIMITATION ON MERGER, SALE OR CONSOLIDATION.
The Company shall not, directly or indirectly, consolidate with or
merge with or into another person or sell, lease, convey or transfer all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons, unless (i) either (a) the Company is the continuing
entity or (b) the resulting, surviving or transferee entity is a corporation
organized under the laws of the United States, any state thereof or the District
of Columbia and expressly assumes by supplemental indenture all of the
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obligations of the Company in connection with the Securities and this Indenture;
(ii) no Default or Event of Default shall exist or shall occur immediately after
giving effect on a PRO FORMA basis to such transaction; (iii) immediately after
giving effect to such transaction on a PRO FORMA basis, the Consolidated Net
Worth of the consolidated resulting, surviving or transferee entity is at least
equal to the Consolidated Net Worth of the Company immediately prior to such
transaction; and (iv) immediately after giving effect to such transaction on a
PRO FORMA basis, the consolidated resulting, surviving or transferee entity
would immediately thereafter be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Debt Incurrence Ratio set forth in paragraph (a) of
Section 4.10.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of all or substantially all of the properties and assets of
one or more Subsidiaries, the Company's interest in which constitutes all or
substantially all of the properties and assets of the Company shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or consummation of a plan of
liquidation in accordance with Section 5.1, the successor corporation formed by
such consolidation or into which the Company is merged or to which such transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor corporation had been named herein as the Company, and the Company
shall be released from all obligations under the Securities and this Indenture
except with respect to any obligations that arise from, or are related to, such
transaction.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or
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pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) the failure by the Company to pay any installment of
interest on the Securities as and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Company to pay all or any part of the
principal, or premium, if any, on the Securities when and as the same becomes
due and payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control Purchase Price
or the Asset Sale Offer Price, or otherwise;
(c) the failure by the Company or any Subsidiary to observe or
perform any other covenant or agreement contained in the Securities or this
Indenture (other than a default in the performance of any covenant or agreement
which is specifically dealt with elsewhere in this Section 6.1) and the
continuance of such failure for a period of 30 days after written notice is
given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Securities
outstanding specifying such Default and requiring that it be remedied (PROVIDED,
HOWEVER, that the grace period after notice for an Event of Default arising as a
result of the Company's inability to repay Senior Debt in full, or to obtain
requisite consents from holders of Senior Debt to repurchase Securities,
following a Change of Control, or to make the Change of Control Offer as
described in Section 10.1 shall be five days);
(d) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of its
Significant Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order shall
have continued undischarged and unstayed for a period of 60 consecutive days; or
a decree or order of a court of competent jurisdiction, judgment appointing a
receiver, liquidator, trustee, or assignee in bankruptcy or insolvency for the
Company, any of its Significant Subsidiaries, or any substantial part of the
property of any such Person, or for the winding up or liquidation of the affairs
of any such Person, shall have been entered, and such decree, judgment, or order
shall have remained in force undischarged and unstayed for a period of 60 days;
(e) a default in the payment of principal on any issue of
Indebtedness of the Company or any of its Subsidiaries at final stated maturity
or any
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acceleration for any other reason of the stated maturity of any Indebtedness of
the Company or any of its Subsidiaries in each case with an aggregate principal
amount in excess of $10 million; and
(f) the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a Custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any substantial part of its assets
or property, or shall make a general assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
take any corporate action in furtherance of or to facilitate, conditionally or
otherwise, any of the foregoing; and
(g) final unsatisfied judgments not covered by insurance
aggregating in excess of $10 million, at any one time rendered against the
Company or any of its Subsidiaries and either (i) the commencement by any
creditor of any enforcement proceeding upon any such judgment or order or (ii)
such judgment or order is not stayed, bonded or discharged within 60 days.
Notwithstanding the five day period and notice requirement contained
in Section 6.1(c) above, (i) with respect to a default under Article X, the five
day period referred to in Section 6.1(c) shall be deemed to have begun as of the
date notice of a Change of Control Offer is required to be sent to the Holders
in the event that the Company has not complied with the provisions of Section
10.1, and the Trustee or Holders of at least 25% in principal amount of the
outstanding Securities thereafter give the Notice of Default referred to in
Section 6.1(c) in respect of such compliance to the Company and, if applicable,
the Trustee; PROVIDED, HOWEVER, that if the breach or default is a result of a
default in the payment when due of the Change of Control Purchase Price on the
Change of Control Payment Date, such default shall be deemed, for purposes of
this Section 6.1, to arise on the Change of Control Payment Date; and (ii) with
respect to a default under Section 4.13 requiring the giving of such notice, the
30-day period referred to in Section 6.1(c) shall be deemed to have begun as of
the date the notice of an Asset Sale Offer is required to be sent in the event
that the Company has not complied with the provisions of Section 4.13, and the
Trustee or Holders of at least 25% in principal amount of the outstanding
Securities thereafter give the Notice of Default referred to in Section 6.1(c)
in respect of such compliance to the Company and, if applicable, the Trustee;
PROVIDED, HOWEVER, that if the breach or default is a result of a default in the
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payment when due of the Asset Sale Offer Price on the Purchase Date, such
default shall be deemed, for purposes of this Section 6.1, to arise no later
than on the Purchase Date.
SECTION 6.2. ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clauses (d) and (f) of Section 6.1, relating to the
Company only) then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of the Securities then outstanding,
by notice in writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all principal, determined as set forth
below, and accrued interest thereon to be due and payable immediately; PROVIDED,
HOWEVER, that if any Senior Debt is outstanding pursuant to the Credit
Agreement, upon a declaration of such acceleration, such principal and interest
shall be due and payable upon the earlier of (x) the third Business Day after
the sending to the Company and the Senior Debt Representatives of such written
notice, unless such Event of Default is cured or waived prior to such date and
(y) the date of acceleration of any Senior Debt under the Credit Agreement. If
an Event of Default specified in clauses (d) and (f) of Section 6.1, relating to
the Company only occurs, all principal and accrued interest thereon will be
immediately due and payable on all outstanding Securities without any
declaration or other act on the part of Trustee or the Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of not less
than a majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee Cash
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, applicable to)
any Securities which would become due other than by reason of such
declaration of acceleration, and interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
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(D) all sums paid or advanced by the Trustee hereunder and
the compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel, and any other amounts due the Trustee under Section
7.7, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on Securities which have become
due solely by such declaration of acceleration, have been cured or waived
as provided in Section 6.12, including, if applicable, any Event of Default
relating to the covenants contained in Section 10.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to (i) any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent default or impair any
right consequent thereon.
The Trustee shall provide to each Senior Debt Representative a copy of
each Acceleration Notice that it sends, and of each Acceleration Notice and
notice of rescission of a declaration of acceleration that it receives, under
this Section 6.2, on the date that the Trustee sends any such notice, and as
promptly as possible following the date that the Trustee receives any such
notice.
SECTION 6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clause (a) or (b) of Section 6.1
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses, disbursements and advances
of the Trustee and its agents and counsel and all other amounts due the Trustee
under Section 7.7.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 6.4. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal and premium, if any, or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in respect of
the Securities and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel and all
other amounts due the Trustee under Section 7.7) and of the Holders allowed
in such judicial proceeding, and
(2) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such
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payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and its agents and counsel, and any other amounts due
the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel and
all other amounts due the Trustee under Section 7.7, be for the ratable benefit
of the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 6.6. PRIORITIES.
Any money collected by the Trustee pursuant to this Article VI shall,
subject to Article XI, be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal, premium (if any) or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal, premium (if any) and interest,
respectively; and
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THIRD: To the Company or such other Person as may be lawfully
entitled thereto, the remainder, if any.
The Trustee may, but shall not be obligated to, fix a record date and
payment date for any payment to the Holders under this Section 6.6.
SECTION 6.7. LIMITATION ON SUITS.
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in aggregate principal
amount of then outstanding Securities shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities to be incurred or reasonably probable to be incurred in
compliance with such request;
(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
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SECTION 6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and interest on, such
Security on the respective dates such payments are due as expressed in such
Security (in the case of redemption, the Redemption Price on the applicable
Redemption Date, in the case of an Asset Sale Offer, the Asset Sale Offer Price,
on the date of payment thereof and in the case of a Change of Control, the
Change of Control Offer Price, on the date of payment thereof) and to institute
suit for the enforcement of any such payment after such respective dates, and
such rights shall not be impaired without the consent of such Holder.
SECTION 6.9. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.10. DELAY OR OMISSION NOT WAIVER.
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VI or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 6.11. CONTROL BY HOLDERS.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, PROVIDED, that
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(1) such direction shall not be in conflict with any rule of law
or with this Indenture or involve the Trustee in personal liability,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 6.12. WAIVER OF PAST DEFAULT.
Subject to Section 6.8, prior to the declaration of acceleration of
the maturity of the Securities, the Holder or Holders of not less than a
majority in aggregate principal amount of the Securities then outstanding may,
on behalf of all Holders, waive any past default hereunder and its consequences,
except a default
(A) in the payment of the principal of, premium, if any, or
interest on, any Security as specified in clauses (a) and (b) of Section
6.1 and not yet cured; or
(B) in respect of a covenant or provision hereof which,
under Article IX, cannot be modified or amended without the consent of the
Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
SECTION 6.13. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted to be taken by it
as Trustee, any court may in its discretion require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the
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provisions of this Section 6.13 shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the outstanding Securities, or to any suit
instituted by any Holder for enforcement of the payment of principal of, or
premium (if any) or interest on, any Security on or after the respective
Maturity Date expressed in such Security (including, in the case of redemption,
on or after the Redemption Date).
SECTION 6.14. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed, subject to
the terms hereof.
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no covenants or
obligations shall be implied in or read into this Indenture which are
adverse to the Trustee, and
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(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1,
(2) The Trustee shall not be liable for any error of judgment
made in good faith by it, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts, and
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
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SECTION 7.2. RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 13.4 and 13.5. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture, nor for any action
permitted to be taken or omitted hereunder by any Agent.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided for in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the
performance of the Company's covenants in Article IV hereof or as to the
performance by any Agent
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of its duties hereunder. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except any Default or Event of
Default of which the Trustee shall have received written notification or with
respect to which a Trust Officer shall have actual knowledge.
(i) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any of
its Subsidiaries, or its Affiliates with the same rights the Trustee would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication (if executed by the Trustee), or the use or
application of any funds received by a Paying Agent other than the Trustee.
SECTION 7.5. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder and the
Senior Debt Representatives notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs. Except in the
case of a Default or an Event of Default in payment of principal (or premium, if
any) of, or interest on, any Security (including the payment of the Change of
Control Purchase Price on the Change of Control Purchase Date, the payment of
the Redemption Price on the Redemption Date and the payment of the Asset Sale
Price on the date of payment thereof), the Trustee may withhold the notice if
and so long as a Trust Officer in good faith determines that withholding the
notice is in the interest of the Securityholders.
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SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each January 31, beginning with January 31, 1997,
the Trustee shall, if required by law, mail to each Securityholder a brief
report dated as of such January 31 that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Company agrees to pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it in accordance with this Indenture. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it and each of them harmless against, any claim, demand, expense
(including but not limited to reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel), loss or liability incurred by it
without negligence or bad faith on the part of the Trustee, arising out of or in
connection with the administration of this trust and its rights or duties
hereunder including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Trustee shall notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall provide
reasonable cooperation at the Company's expense in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel. The Company need not pay any settlement made without its
written consent, which consent shall not be unreasonably withheld. The Company
need not reimburse any expense or indemnify against any loss
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or liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(d) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article VIII of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company in writing, to
become effective upon the appointment of a successor trustee. The Holder or
Holders of a majority in aggregate principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes charge
of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder
or Holders of a majority in
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aggregate principal amount of the Securities may appoint a successor Trustee to
replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in Section
7.7 have been paid, the retiring Trustee shall transfer all property held by it
as trustee to the successor Trustee, subject to the lien provided in Section
7.7, the resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in aggregate principal amount of the
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee (together with its corporate parent) shall
have a combined capital and surplus of at least $25,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b).
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The Company may, at its option and at any time, elect to have Section
8.2 or Section 8.3 applied to all outstanding Securities upon compliance with
the conditions set forth below in this Article VIII.
SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.2, the Company shall be deemed to have been discharged from
its obligations with respect to all outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of the Sections of this Indenture referred to in (a) through (d)
below, and to have satisfied all its other obligations under such Securities and
this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due from the trust funds described below; (b) the Company's
obligations with respect to such Securities concerning issuing temporary
Securities, registration of Securities, mutilated, destroyed, lost or stolen
Securities, and the maintenance of an office or agency for payment and money for
security payments held in trust; (c) the rights, powers, trust, duties, and
immunities of the Trustee, and the Company's obligations in connection
therewith; and (d) this Article VIII. Subject to compliance with this Article
VIII, the Company may exercise its option
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under this Section 8.2 notwithstanding the prior exercise of its option under
Section 8.3 with respect to the Securities.
SECTION 8.3. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.3, the Company shall be released from its obligations under
the covenants contained in Sections 4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11,
4.12, 4.13, 4.14, 4.15, and 4.16, Article V and Article X with respect to the
outstanding Securities on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities, the Company
need not comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document (and Section 6.1(c) shall not apply to any such covenant),
but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.1 of the option applicable to this Section 8.3,
Sections 6.1(d) through 6.1(g) shall not constitute Events of Default.
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfactory to the Trustee
satisfying the requirements of Section 7.10 who shall agree to comply with the
provisions of this Article VIII applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Securities, (a)
Cash in an amount, or (b) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than one day before the due date of any
payment, Cash in an amount, or (c) a combination thereof, in such amounts, as in
each case will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee,
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to pay and discharge and which shall be applied by the Paying Agent (or other
qualifying trustee) to pay and discharge the principal of, premium, if any, and
interest on the outstanding Securities on the stated maturity or on the
applicable redemption date, as the case may be, of such principal or installment
of principal, premium, if any, or interest on the Securities; PROVIDED that the
Paying Agent shall have been irrevocably instructed to apply such Cash and the
proceeds of such U.S. Government Obligations to said payments with respect to
the Securities. The Paying Agent shall promptly advise the Trustee in writing
of any Cash or Securities deposited pursuant to this Section 8.4;
(b) In the case of an election under Section 8.2, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.3, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to Federal income tax in the same amount, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such deposit or,
insofar as Section 6.1(d) or Section 6.1(f) is concerned, at any time in the
period ending on the 91st day after the date of such deposit (it being
understood that this condition is a condition subsequent which shall not be
deemed satisfied until the expiration of such period, but in the case of
Covenant Defeasance, the covenants which are defeased under Section 8.3 will
cease to be in effect unless an Event of Default under Section 6.1(d) or Section
6.1(f) occurs during such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other
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material agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound;
(f) In the case of an election under either Section 8.2 or 8.3,
the Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.2
or 8.3 was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the conditions
precedent provided for in, in the case of the Officer's Certificate, clauses (a)
through (f), and, in the case of the Opinion of Counsel, clauses (a) (with
respect to the validity and perfection of the security interest), (b), (c) and
(e) of this Section 8.4 have been complied with.
SECTION 8.5. DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6, all Cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Paying Agent (or other
qualifying trustee, collectively for purposes of this Section 8.5, the "Paying
Agent") pursuant to Section 8.4 in respect of the outstanding Securities shall
be held in trust and applied by the Paying Agent, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any other Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.6. REPAYMENT TO THE COMPANY.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee or the Paying Agent, as applicable, shall deliver or pay to the Company
from time to time upon the request of the Company any Cash or U.S. Government
Obligations held by it as provided in Section 8.4 hereof which in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4(a) hereof), are in excess of the amount thereof that
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.
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Any Cash and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall,
subject to the requirements of applicable law, be paid to the Company on its
request; and the Holder of such Security shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in the
NEW YORK TIMES and THE WALL STREET JOURNAL (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any Cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3
until such time as the Trustee or Paying Agent is permitted to apply such money
in accordance with Section 8.2 and 8.3, as the case may be; PROVIDED, HOWEVER,
that, if the Company makes any payment of principal of, premium, if any, or
interest on any Security following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the Cash and U.S. Government Obligations held by the
Trustee or Paying Agent.
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ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture,
PROVIDED such action pursuant to this clause shall not adversely affect the
interests of the Holders;
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon the
Company;
(3) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the obligations of the Company,
herein and in the Securities in accordance with Article V;
(4) to comply with the TIA;
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities; or
(6) to secure the Securities in accordance with the provisions
of Section 4.12.
SECTION 9.2. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH
CONSENT OF HOLDERS.
Subject to Section 6.8, with the consent of the Holders of not less
than a majority in aggregate principal amount of then outstanding Securities, by
written act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture or the Securities or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provi-
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sions of this Indenture or the Securities or of modifying in any manner the
rights of the Holders under this Indenture or the Securities. Subject to
Section 6.8, the Holder or Holders of not less than a majority in aggregate
principal amount of then outstanding Securities may waive compliance by the
Company with any provision of this Indenture or the Securities. Notwithstanding
any of the above, however, no such amendment, supplemental indenture or waiver
shall, without the consent of the Holder of each outstanding Security affected
thereby:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any provision of
this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on any
Security;
(3) reduce the principal or premium amount of any Security, or reduce
the Change of Control Purchase Price, the Asset Sale Offer Price or the
Redemption Price, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
(4) change the Stated Maturity;
(5) alter the redemption provisions of Article III (including the
defined terms therein) in a manner adverse to any Holder;
(6) make any changes in the provisions concerning waivers of Defaults
or Events of Default by Holders of the Securities or the rights of Holders to
recover the principal or premium of, interest on, or redemption payment with
respect to, any Security, including without limitation any changes in Section
6.8, 6.12 or this third sentence of this Section 9.2, except to increase any
required percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
outstanding Security affected thereby;
(7) make the principal of, or the interest or premium on, any
Security payable with anything or in any manner other than as provided for in
this Indenture (including changing the place of payment where, or the coin or
currency in which, any Security or any premium or the interest thereon is
payable) and the Securities as in effect on the date hereof; or
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(8) make the Securities further subordinated in right of payment to
any extent or under any circumstances to any other Indebtedness (it being
understood that amendments to Section 4.10 hereof which may have the effect of
increasing the amount of Senior Debt that the Company may Incur shall not, for
purposes of this clause (8), be deemed to make the Securities further
subordinated in right of payment to any extent or under any circumstances to any
other Indebtedness).
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.3. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by written notice to the
Company or the Person designated by the Company as the Person to whom consents
should be sent if such revocation is received by the Company or such Person
before the date on which the Trustee receives
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an Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented (and not theretofore revoked such consent)
to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; PROVIDED, that any such
waiver shall not impair or affect the right of any other Holder to receive
payment of principal and premium of and interest on a Security, on or after the
respective dates set for such amounts to become due and payable expressed in
such Security, or to bring suit for the enforcement of any such payment on or
after such respective dates.
SECTION 9.5. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms. Any
failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; PROVIDED, that the Trustee may, but
shall not be obligat-
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ed to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article IX is authorized or permitted by this
Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 10.1. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A
CHANGE OF CONTROL.
(a) In the event that a Change of Control occurs, each Holder
shall have the right, at such Holder's option, pursuant to an irrevocable and
unconditional offer by the Company (the "Change of Control Offer") subject to
the terms and conditions of this Indenture, to require the Company to repurchase
all or any part of such Holder's Securities (PROVIDED, that the principal amount
of such Securities at maturity must be $1,000 or an integral multiple thereof)
on a date selected by the Company that is no later than 35 Business Days after
the occurrence of such Change of Control (the "Change of Control Purchase
Date"), at a cash price (the "Change of Control Purchase Price") equal to 101%
of the principal amount thereof, plus (subject to the right of Holders of record
on a Record Date to receive interest due on an Interest Payment Date that is on
or prior to such repurchase date and subject to clause (b)(4) below) accrued and
unpaid interest, if any, to the Change of Control Purchase Date.
If the terms of any outstanding Senior Debt prohibit the Company from
repurchasing Securities in accordance with the terms of paragraph (a) of this
Section 10.1, then prior to the making of the offer, but in any event within 10
Business Days following any Change of Control, the Company covenants to
(i) repay in full such Senior Debt or offer to repay in full such Senior Debt
and repay such Senior Debt of each holder thereof who has accepted such offer or
(ii) obtain the requisite consent under such Senior Debt to permit the
repurchase of Securities in accordance with the terms of this Section 10.1. The
Company shall first comply with the preceding sentence before it shall be
required to repurchase Securities pursuant to this Section 10.1.
(b) In the event of a Change of Control, the Company shall be
required to commence an offer to purchase Securities (a "Change of Control
Offer") as follows:
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(1) the Change of Control Offer shall commence within 10
Business Days following the occurrence of the Change of Control;
(2) the Change of Control Offer shall remain open for not less
than 20 Business Days following its commencement (the "Change of Control
Offer Period");
(3) upon the expiration of the Change of Control Offer Period,
the Company shall purchase all of the properly tendered Securities at the
Change of Control Purchase Price, plus accrued and unpaid interest thereon;
(4) if the Change of Control Purchase Date is on or after a
Record Date and on or before the related interest payment date, any accrued
interest will be paid to the Person in whose name a Security is registered
at the close of business on such Record Date, and no additional interest
will be payable to Securityholders who tender Securities pursuant to the
Change of Control Offer;
(5) the Company shall provide the Trustee and the Paying Agent
with written notice of the Change of Control Offer at least three Business
Days before the commencement of any Change of Control Offer; and
(6) on or before the commencement of any Change of Control
Offer, the Company or the Registrar (upon the request and at the expense of
the Company) shall send, by first-class mail, a notice to each of the
Securityholders, which (to the extent consistent with this Indenture) shall
govern the terms of the Change of Control Offer and shall state:
(i) that the Change of Control Offer is being made
pursuant to such notice and this Section 10.1 and that all Securities, or
portions thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the
amount of accrued and unpaid interest, subject to clause (b)(4) above) and
the Change of Control Purchase Date;
(iii) that any Security, or portion thereof, not tendered
or accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing Cash
with the Paying Agent in accordance with the last paragraph of this Article
X or
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such payment is prevented, any Security, or portion thereof, accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be required
to surrender the Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security completed, to the Paying
Agent (which may not for purposes of this Section 10.1, notwithstanding
anything in this Indenture to the contrary, be the Company or any Affiliate
of the Company) at the address specified in the notice prior to the close
of business on the earlier of (a) the third Business Day prior to the
expiration of the Change of Control Offer;
(vi) that Holders will be entitled to withdraw their
election, in whole or in part, if the Paying Agent (which may not for
purposes of this Section 10.1, notwithstanding anything in this Indenture
to the contrary, be the Company or any Affiliate of the Company) receives,
prior to the expiration of the Change of Control Offer, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have such
principal amount of Securities purchased; and
(vii) a brief description of the events resulting in such
Change of Control.
Any such Change of Control Offer shall be made in compliance with all
applicable Federal and state laws, rules and regulations, including, if
applicable, Regulation 14E under the Exchange Act and the rules thereunder and
all other applicable Federal and state securities laws, and any provisions of
this Indenture which conflict with such laws shall be deemed to be superseded by
the provisions of such laws.
On or before the Change of Control Purchase Date, the Company shall
(i) accept for payment Securities or portions thereof properly tendered pursuant
to the Change of Control Offer prior to the expiration of the Change of Control
Offer, (ii) deposit with the Paying Agent Cash sufficient to pay the Change of
Control Purchase Price (together with accrued and unpaid interest, subject to
clause (b)(4) above) for all Securities or portions thereof so tendered and
(iii) deliver to the Trustee Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to Holders of Securities so
accepted payment in an amount equal to the Change of Control Purchase Price
(together with accrued and unpaid interest, subject to clause (b)(4) above), for
such
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Securities (subject to clause (b)(4) above), and the Trustee or its
authenticating agent shall promptly authenticate and mail or deliver (or cause
to be transferred by book entry) to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered;
PROVIDED, HOWEVER, that each such new Security will be in a principal amount of
$1,000 or an integral multiple thereof. Any Securities not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Purchase Date.
ARTICLE XI
SUBORDINATION
SECTION 11.1. SECURITIES SUBORDINATED TO SENIOR DEBT.
The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of and interest on the Securities and (b)
any other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company (including, without
limitation, pursuant to Section 4.13 or 10.1) is subordinated, to the extent and
in the manner provided in this Article XI, to the prior payment in full in Cash
or Cash Equivalents of all Senior Debt of the Company and that these
subordination provisions are for the benefit of the holders of Senior Debt.
This Article XI 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 are made for the benefit of the holders of
Senior Debt, and such holders are made obligees hereunder and any one or more of
them may enforce such provisions.
SECTION 11.2. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) No payment (by set-off or otherwise) shall be made by or on
behalf of the Company on account of the principal of, premium, if any, or
interest on the Securities (including any repurchases of Securities), or on
account of the redemption provisions of the Securities or any Obligation in
respect of the Securities, for cash or property (other than Junior Securities),
(i) upon the maturity of any Senior Debt of the Company by lapse of time,
acceleration (unless waived) or otherwise, unless and until all principal of,
premium, if any, and interest on such Senior Debt are first paid in full in cash
or Cash Equivalents (or such payment is duly provided for) or otherwise to the
extent holders accept satisfaction of amounts due by settlement in other than
cash or Cash
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Equivalents, or (ii) in the event of default in the payment of any
principal of, premium, if any, or interest on Senior Debt of the Company when it
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise (a "Payment Default"), unless and until such
Payment Default has been cured or waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a
Payment Default) that permits the holders of Senior Debt to declare such Senior
Debt to be due and payable and (ii) written notice of such event of default
given to the Company and the Trustee by the Senior Debt Representatives (a
"Payment Notice"), then, unless and until such event of default has been cured
or waived or otherwise has ceased to exist, no payment (by set-off or otherwise)
may be made by or on behalf of the Company which is an obligor on such Senior
Debt on account of the principal of, premium, if any, or interest on the
Securities (including any repurchases of any of the Securities), or on account
of the redemption provisions of the Securities or any Obligation in respect of
the Securities, in any such case, other than payments made with Junior
Securities. Notwithstanding the foregoing, unless the Senior Debt in respect of
which such event of default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period") (and such declaration has not been
rescinded or waived), at the end of the Payment Blockage Period, the Company
shall, unless a Payment Default exists, be required to pay all sums not paid to
the Holders of the Securities during the Payment Blockage Period due to the
foregoing prohibitions and to resume all other payments as and when due on the
Securities. Any number of Payment Notices may be given; PROVIDED, HOWEVER, that
(i) not more than one Payment Notice shall be given within a period of any 360
consecutive days, and (ii) no default that existed upon the date of such Payment
Notice or the commencement of such Payment Blockage Period (whether or not such
event of default is on the same issue of Senior Debt) shall be made the basis
for the commencement of any other Payment Blockage Period.
(c) In furtherance of the provisions of Section 12.1, in the
event that, notwithstanding the foregoing provisions of this Section 12.2, any
payment or distribution of assets of the Company (other than Junior Securities)
shall be received by the Trustee at a time when such payment or distribution is
prohibited by the provisions of this Section 12.2, such payment or distribution
shall be held in trust for the benefit of the holders of such Senior Debt, and
shall be paid or delivered by the Trustee, to the holders of such Senior Debt
remaining unpaid or unprovided for or to their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Debt may have been issued,
ratably according to the aggregate principal amounts remaining unpaid on account
of such Senior
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Debt held or represented by each, for application to the payment of all such
Senior Debt remaining unpaid, to the extent necessary to pay of provide for the
payment of all such Senior Debt in full in cash or Cash Equivalents after giving
effect to any concurrent payment or distribution to the holders of such Senior
Debt.
SECTION 11.3. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
DEBT ON DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(a) the holders of all Senior Debt of the Company will first be
entitled to receive payment in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment on account of the principal of,
premium, if any, and interest on the Securities or any Obligation in respect of
the Securities (other than Junior Securities);
(b) any payment or distribution of assets of the Company of any
kind or character from any source, whether in cash, property or securities
(other than Junior Securities) to which the Holders or the Trustee on behalf of
the Holders would be entitled (by set-off or otherwise), except for the
provisions of this Article XI, shall be paid by the liquidating trustee or agent
or other person making such a payment or distribution directly to the holders of
such Senior Debt or their representative to the extent necessary to make payment
in full (or have such payment duly provided for) on all such Senior Debt
remaining unpaid, after giving effect to any concurrent payment or distribution
to the holders of such Senior Debt; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company (other than Junior Securities)
shall be received by the Trustee at a time when such payment or distribution is
prohibited by the foregoing provisions, such payment or distribution shall be
held in trust for the benefit of the holders of such Senior Debt, and shall be
paid or delivered by the Trustee to the holders of such Senior Debt remaining
unpaid to their representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing any of such
Senior Debt may have been issued, ratably according to the aggregate principal
amounts remaining unpaid on account of such Senior Debt held or represented by
each, for application to the payment of all such Senior Debt remaining unpaid,
to the extent
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necessary to pay all such Senior Debt in full in cash or Cash Equivalents after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt.
SECTION 11.4. SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS
OF SENIOR DEBT.
Subject to the payment in full in Cash or Cash Equivalents of all
Senior Debt of the Company as provided herein, the Holders of Securities shall
be subrogated to the rights of the holders of such Senior Debt to receive
payments or distributions of assets of the Company applicable to the Senior Debt
until all amounts owing on the Securities shall be paid in full, and for the
purpose of such subrogation no such payments or distributions to the holders of
such Senior Debt by or on behalf of the Company, or by or on behalf of the
Holders by virtue of this Article XI, which otherwise would have been made to
the Holders shall, as between the Company and the Holders, be deemed to be
payment by the Company or on account of such Senior Debt, it being understood
that the provisions of this Article XI are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of such Senior Debt, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XI shall have been
applied, pursuant to the provisions of this Article XI, to the payment of
amounts payable under Senior Debt of the Company, then the Holders shall be
entitled to receive from the holders of such Senior Debt any payments or
distributions received by such holders of Senior Debt in excess of the amount
sufficient to pay all amounts payable under or in respect of such Senior Debt in
full in Cash or Cash Equivalents.
SECTION 11.5. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article XI or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Company and the
Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Debt, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
XI, of the holders of Senior Debt in respect of cash, property or securities of
the Company received upon the exercise of any such remedy. Notwithstanding
anything to the contrary in this
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Article XI or elsewhere in this Indenture or in the Securities, upon any
distribution of assets of the Company referred to in this Article XI, the
Trustee, subject to the provisions of Sections 7.1 and 7.2, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
Trustee or agent or other Person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
XI so long as such court has been apprised of the provisions of, or the order,
decree or certificate makes reference to, the provisions of this Article XI.
Nothing in this Section 11.5 shall apply to the claims of, or payments to, the
Trustee under or pursuant to Section 7.7.
SECTION 11.6. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than one Business Day prior to such payment,
written notice thereof from the Company or from one or more holders of Senior
Debt or from any representative therefor and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
shall be entitled in all respects conclusively to assume that no such fact
exists.
SECTION 11.7. APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Securityholders
and, to the extent allocated for the payment of Securities, shall not be subject
to the subordination provisions of this Article XI. Otherwise, any deposit of
assets with the Trustee or the Agent (whether or not in trust) for the payment
of principal of or interest on any Securities shall be subject to the provisions
of Sections 11.1, 11.2, 11.3 and 11.4; PROVIDED that, if prior to one Business
Day preceding the date on which by the terms of this Indenture any such assets
may become distributable for any purpose (including without limitation, the
payment of either principal of or interest on any Security) the Trustee or such
Paying Agent shall not have received with respect to such assets the written
notice provided for in Section 11.6, then the Trustee or such Paying Agent shall
have full power and authority to receive such assets and to apply the same to
the purpose for which they were
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received, and shall not be affected by any notice to the contrary which may be
received by it on or after such date.
SECTION 11.8. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF THE COMPANY OR HOLDERS OF SENIOR DEBT.
No right of any present or future holders of any Senior Debt to
enforce subordination provisions contained in this Article XI shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Debt may extend, renew, modify or
amend the terms of the Senior Debt or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Company, all without
affecting the liabilities and obligations of the parties to this Indenture or
the Holders.
SECTION 11.9. SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article XI and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company), the immediate filing of a
claim for the unpaid balance of his Securities in the form required in said
proceedings and cause said claim to be approved. If the Trustee does not file a
proper claim or proof of debt in the form required in such proceeding prior to
30 days before the expiration of the time to file such claim or claims, then the
holders of the Senior Debt or their representative are or is hereby authorized
to have the right to file and are or is hereby authorized to file an appropriate
claim for and on behalf of the Holders of said Securities. Nothing herein
contained shall be deemed to authorize the Trustee or the holders of Senior Debt
or their representative to authorize or consent to or accept or adopt on behalf
of any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Debt or their representative to
vote in respect of the claim of any Securityholder in any such proceeding.
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SECTION 11.10. RIGHT OF TRUSTEE TO HOLD SENIOR DEBT.
The Trustee shall be entitled to all of the rights set forth in this
Article XI in respect of any Senior Debt at any time held by it to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall
be construed to deprive the Trustee of any of its rights as such holder.
SECTION 11.11. ARTICLE XI NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of, premium, if
any, or interest on the Securities by reason of any provision of this Article XI
shall not be construed as preventing the occurrence of a Default or an Event of
Default under Section 6.1 or in any way limit the rights of the Trustee or any
Holder to pursue any other rights or remedies with respect to the Securities.
SECTION 11.12. NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR
DEBT.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders (other than
for its willful misconduct or negligence) if it shall in good faith mistakenly
pay over or distribute to the Holders of Securities or the Company or any other
Person, cash, property or securities to which any holders of Senior Debt shall
be entitled by virtue of this Article XI or otherwise. Nothing in this Section
11.12 shall affect the obligation of any other such Person to hold such payment
for the benefit of, and to pay such payment over to, the holders of Senior Debt
or their representative. In the event of any conflict between the fiduciary
duty of the Trustee to the Holders of Securities and to the holders of Senior
Debt, the Trustee is expressly authorized to resolve such conflict in favor of
the Holders.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
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SECTION 12.2. NOTICES.
Any notices or other communications to the Company, Paying Agent,
Registrar, Securities Custodian, transfer agent or the Trustee required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
if to the Company:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, Il 60610
Attention: Daniel L. Simon
Telephone: (312) 644-8673
Telecopy: (312) 644-8071
if to the Trustee:
United States Trust Company
of New York
[Address to come]
Telephone: [To come]
Telecopy: [To come]
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and five Business Days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him or her by first-class mail or other equivalent means at his or her
address as it appears on the registration books of the Registrar and shall be
sufficiently given to him or her if so mailed within the time prescribed.
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Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, such Person shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been met; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been met;
PROVIDED, HOWEVER, that in the case of any such request or application as to
which the furnishing of particular documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished under this Section 13.4.
SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
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(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been met; and
(4) a statement as to whether or not, in the opinion of
each such Person, such condition or covenant has been met; PROVIDED,
HOWEVER, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 12.7. NON-BUSINESS DAYS.
If a payment date is not a Business Day at such place, payment may be
made at such place on the next succeeding day that is a Business Day, and no
interest shall accrue for the intervening period.
SECTION 12.8. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN
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RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE
AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. NO RECOURSE AGAINST OTHERS.
No direct or indirect stockholder, employee, officer or director, as
such, past, present or future of the Company or any successor entity, shall have
any personal liability in respect of the obligations of the Company under the
Securities or this Indenture by reason of his, her or its status as such
stockholder, employee, officer or director. Each Securityholder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
SECTION 12.11. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successor.
87
<PAGE>
SECTION 12.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 12.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents and headings of the Articles and the Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
88
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
UNIVERSAL OUTDOOR, INC.
By:
-----------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee,
Registrar, Paying Agent and Securities Custodian
By:
-----------------------------------------
Name:
Title:
89
<PAGE>
EXHIBIT 4.2
FORM OF NOTE
UNIVERSAL OUTDOOR, INC.
10 1/4% SENIOR SUBORDINATED NOTE
DUE 2006
CUSIP:[ ______________]
No. $
___________
Universal Outdoor, Inc., an Illinois corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to _______
______________________, or registered assigns, the principal sum of ___________
Dollars, on [_________], 2006.
Interest Payment Dates: [_________] and [________] commencing
[___________], 1997.
Record Dates: [________] and [__________]
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated: October [__] 1996
UNIVERSAL OUTDOOR, INC., an
Illinois corporation
[Seal]
By:
----------------------------------------
Name:
Title:
Attest: _________________________
Secretary
A-1
<PAGE>
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned
Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee and
Authenticating Agent
By: ____________________________
Authorized Signatory
A-2
<PAGE>
UNIVERSAL OUTDOOR INC.
[___]% SENIOR SUBORDINATED NOTE
DUE 2006
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.(1)
1. INTEREST.
Universal Outdoor, Inc., an Illinois corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of [___]% per annum from October [___], 1996 until
maturity. To the extent it is lawful, the Company promises to pay interest on
any interest payment due but unpaid on such principal amount at a rate of [___]%
per annum compounded semi-annually.
The Company will pay interest semi-annually on [_________] and
[_________] of each year or, if any such day is not a Business Day, on the next
succeeding Business Day (each, an "Interest Payment Date"), commencing
[_________], 1997. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid on the
Securities, from the date of issuance. Interest will be computed on the basis
of a 360-day year consisting of twelve 30-day months.
- --------------------
(1) This paragraph should only be added if the Security is issued in global
form.
A-3
<PAGE>
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the [_________] or [_________] immediately preceding the Interest Payment
Date. Holders must surrender Securities to a Paying Agent to collect principal
payments. Except as provided below, the Company shall pay principal and
interest in such coin or currency of the United States of America as at the time
of payment shall be legal tender for payment of public and private debts
("Cash"). The Securities will be payable as to principal, premium, if any, and
interest, and the Securities may be presented for registration of transfer or
exchange, at the office or agency of the Company maintained for such purpose
within or without the Borough of Manhattan, the City and State of New York or,
at the option of the Company, payment of interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders, and
PROVIDED that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest and premium on all Global
Securities and all other Securities the Holders of which shall have provided
wire transfer instructions to an account within the United States to the Company
or the Paying Agent. Until otherwise designated by the Company, the Company's
office or agency will be the corporate trust office of the Trustee presently
located at the Trustee's agency at [_________________________], New York, New
York [_____].
3. PAYING AGENT AND REGISTRAR.
Initially, the United States Trust Company of New York (the "Trustee,"
which term includes any successor Trustee under the Indenture) will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. INDENTURE.
The Company issued the Securities under an Indenture, dated as of
October [__], 1996 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are senior
subordinated, unsecured general obligations of the Company limited in aggregate
principal amount to
A-4
<PAGE>
$200,000,000. The Securities are subordinated in right of payment to certain
other debt obligations of the Company.
5. REDEMPTION.
The Securities may be redeemed, at the option of the Company, in
whole or in part, at any time on or after [_________], 2001, at the Redemption
Price (expressed as a percentage of principal amount) set forth below with
respect to the indicated Redemption Date, together with any accrued but unpaid
interest to the Redemption Date (subject to the right of Holders of record on a
Record Date to receive interest due on the Interest Payment Date that is on or
prior to such Redemption Date). The Securities may not be so redeemed prior to
[_________], 2001, except as provided in the immediately following paragraph.
If redeemed during
the 12-month period
commencing [_________] Redemption Price
---------------------- ----------------
2001 . . . . . . . . . . . . . [_________] %
2002 . . . . . . . . . . . . . [_________] %
2003 . . . . . . . . . . . . [_________] %
2004 and thereafter. . . . . . 100.000%
Notwithstanding the foregoing, prior to [_____________], 1999, upon
any Public Equity Offering or Equity Private Placement, in each case resulting
in Net Cash Proceeds of $100 million or more which are then contributed in full
to the Company, up to $70 million aggregate principal amount of the Securities
may be redeemed at the option of the Company with cash from the Net Cash
Proceeds of such Public Equity Offering or Equity Private Placement, at
[______]% of principal, PROVIDED, HOWEVER, that immediately following such
redemption not less than $130 million aggregate principal amount of the
Securities are outstanding, PROVIDED, FURTHER, that such redemption shall occur
within 120 days of such Public Equity Offering or Equity Private Placement.
Any such redemption will comply with Article III of the Indenture.
6. NOTICE OF REDEMPTION.
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to the Redemption Date to the Holder of
each Security to be
A-5
<PAGE>
redeemed at such Holder's last address as then shown upon the registry books of
the Registrar. Securities may be redeemed in part in multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date and payment of
the Securities called for redemption is not otherwise prohibited, the Securities
called for redemption will cease to bear interest and the only right of the
Holders of such Securities will be to receive payment of the Redemption Price.
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of Securities in accordance with the Indenture. No service charge
will be made for any registration of transfer or exchange of the Securities, but
the Company may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental
charge payable in connection therewith. The Registrar need not register the
transfer of or exchange any Securities selected for redemption.
8. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee
and any such Paying Agent(s) with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, Cash, U.S.
Government Obligations or a combination thereof, in such amounts as will be
sufficient in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
Securities to redemption or maturity and comply with
A-6
<PAGE>
the other provisions of the Indenture relating thereto, the Company will be
discharged from certain provisions of the Indenture and the Securities
(including the restrictive covenants described in paragraph 12 below, but
excluding their obligation to pay the principal of and interest on the
Securities).
11. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may under certain circumstances amend or supplement
the Indenture or the Securities to, among other things, cure any ambiguity,
defect or inconsistency, or make any other change that does not adversely affect
the rights of any Holder of a Security.
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the
Company to, among other things, incur additional Indebtedness and Disqualified
Capital Stock, pay dividends or make certain other restricted payments, enter
into certain transactions with Affiliates, incur Liens, sell assets, merge or
consolidate with any other Person or transfer (by lease, assignment or
otherwise) substantially all of the properties and assets of the Company. The
limitations are subject to a number of important qualifications and exceptions.
The Company must periodically report to the Trustee on compliance with such
limitations.
13. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
offer to purchase on the Change of Control Purchase Date all outstanding
Securities at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Purchase
Date. Holders of Securities will receive a Change of Control Offer from the
Company prior to any related Change of Control Purchase Date and may elect to
have such Securities purchased by completing the form entitled "Option of Holder
to Elect Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability of the
Company to sell assets. In the event the proceeds from a permitted Asset Sale
exceed certain
A-7
<PAGE>
amounts, as specified in the Indenture, the Company generally will be required
either to reinvest the proceeds of such Asset Sale in its business, use such
proceeds to retire debt, or to make an asset sale offer to purchase a certain
amount of each Holder's Securities at 100% of the principal amount thereof, plus
accrued interest, if any, to the purchase date, as more fully set forth in the
Indenture
14. RANKING.
Payment of principal, premium, if any, and interest on the Securities
is subordinated, in the manner and to the extent set forth in the Indenture, to
the prior payment in full of all Senior Debt.
15. SUCCESSORS.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
16. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing (other than an Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable in the manner and with the
effect provided in the Indenture. Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest), if it determines that withholding
notice is in their interest.
17. TRUSTEE OR AGENT DEALINGS WITH COMPANY.
The Trustee and each Agent under the Indenture, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates as if it were not the Trustee and such Agent.
A-8
<PAGE>
18. NO RECOURSE AGAINST OTHERS.
No direct or indirect stockholder, employee, officer or director, as
such, past, present or future, of the Company or any successor entity shall have
any personal liability in respect of the obligations of the Company under the
Securities or the Indenture by reason of his or its status as such stockholder,
employee, officer or director. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
19. AUTHENTICATION.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
20. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. ADDITIONAL RIGHTS OF HOLDERS OF SECURITIES.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, IL 60610
Attention: Corporate Secretary
A-9
<PAGE>
ASSIGNMENT
I or we assign this Security to
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
_________________________
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Dated: __________ Signed: __________________________________
_________________________________________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee
- --------------------
** NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.13 or Article X of the Indenture, check the appropriate
box:
/ / Section 4.13
/ / Article X
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.13 or Article X of the Indenture, as the case
may be, state the amount you want to be purchased: $________
Date: ________________ Signature: ____________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee**
- --------------------
** NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-11
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized officer of
Date of Principal Amount Principal Amount Security following Trustee or
Exchange of this Global of this Global such decrease (or Securities
Security Security increase) Custodian
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------------------
(2) This schedule should only be added if the Security is issued in global
form.
<PAGE>
EXHIBIT 4.3
FORM T-1
-----------------------------------------------
-----------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
-------
--------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
--------------------
Universal Outdoor, Inc.
(Exact name of obligor as specified in its charter)
Illinois 36-2827496
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
321 North Clark Street, Suite 1010
Chicago, IL 60610
(Address of principal executive offices) (Zip Code)
-------------------
% Senior Subordinated Notes
Due 2006
(Title of the indenture securities)
-----------------------------------------------
-----------------------------------------------
<PAGE>
- 2 -
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Universal Outdoor, Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. LIST OF EXHIBITS
(CONT'D)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of October 8, 1996, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
-----------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 8th day
of October, 1996.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By:
-----------------------------
<PAGE>
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
---------------------------
By: S/Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
JUNE 30, 1996
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 77,810
Short-Term Investments 18,306
Securities, Available for Sale 867,513
Loans 1,333,282
Less: Allowance for Credit Losses 12,858
----------
Net Loans 1,320,424
Premises and Equipment 57,561
Other Assets 132,888
----------
TOTAL ASSETS $2,474,502
----------
----------
LIABILITIES
Deposits:
Non-Interest Bearing $ 469,797
Interest Bearing 1,545,026
----------
Total Deposits 2,014,823
Short-Term Credit Facilities 170,747
Accounts Payable and Accrued Liabilities 136,595
----------
TOTAL LIABILITIES $2,322,165
----------
----------
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 96,902
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (1,954)
----------
TOTAL STOCKHOLDER'S EQUITY 152,337
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,474,502
----------
----------
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named
bank do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory
authority and is true to the best of my knowledge and belief.
Richard E. Brinkman, SVP & Controller
September 12, 1996
<PAGE>
EXHIBIT 5.1
October 9, 1996
Universal Outdoor, Inc.
321 North Clark Street
Chicago, Illinois 60610
Re: Senior Subordinated
Notes of Universal Outdoor, Inc.
-------------------------------------------
Dear Sir or Madam:
We refer to the Registration Statement on Form S-1, Registration No.
333-12427 (together with any registration statement filed pursuant to Rule
462(b) of the Securities Act, the "Registration Statement"), filed by
Universal Outdoor, Inc. (the "Company") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the registration of the Company's Senior Subordinated
Notes (the "Notes"), which such Notes are to be issued and sold pursuant to
an Indenture (the "Indenture"). This opinion also relates to any
registration statement prepared in connection with the offering of Notes that
is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act, and the term "Notes" as used herein includes any additional notes
registered pursuant to such subsequently filed registration statement.
As set forth in the Registration Statement, the Company intends to (i)
duly execute and deliver the Indenture, (ii) execute, authenticate, issue and
deliver the Notes to the purchasers against payment of the purchase price,
and (iii) cause all required actions of directors and stockholders to
accomplish the offering of the Notes to be taken (the "Corporate Actions").
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing in Illinois.
2. Assuming that the Corporate Actions have been completed, the Notes
will be legally issued, fully paid, and non-assessable upon delivery thereof
to the purchasers thereof against payment of the agreed consideration
therefore.
<PAGE>
Universal Outdoor, Inc.
October 9, 1996
Page 2
We do not find it necessary for the purposes of this opinion to cover, and
accordingly we express no opinion as to, the application of the securities or
blue sky laws of the various states to the sale of the Notes.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to our firm included in or made a
part of the Registration Statement.
Very truly yours,
/s/ Winston & Strawn
<PAGE>
Exhibit 10.1
- --------------------------------------------------------------------------------
FORM OF
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
among
UNIVERSAL OUTDOOR, INC.,
VARIOUS LENDING INSTITUTIONS,
LA SALLE NATIONAL BANK,
AS CO-AGENT
and
BANKERS TRUST COMPANY,
AS AGENT
---------------------------------------
$12,500,000
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . 1
1.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Borrowing Amounts, etc. . . . . . . . . . . . . . . . . . 3
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . 3
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . 4
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . 6
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . 8
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . 10
1.13 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . 12
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 12
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . . . 12
2.03 Letter of Credit Requests; Notices of Issuance. . . . . . . . . . 13
2.04 Agreement to Repay Letter of Credit Drawings. . . . . . . . . . . 13
2.05 Letter of Credit Participations . . . . . . . . . . . . . . . . . 14
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3. Fees; Commitments. . . . . . . . . . . . . . . . . . . . . . . . 17
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.02 Voluntary Reduction of Commitments. . . . . . . . . . . . . . . . 18
3.03 Mandatory Adjustments of Commitments, etc.. . . . . . . . . . . . 18
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . 18
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . 19
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . 20
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
SECTION 5. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.01 Restatement Effective Date. . . . . . . . . . . . . . . . . . . . 22
5.02 Credit Events . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6. Representations, Warranties and Agreements . . . . . . . . . . . 26
6.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . 26
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . 26
6.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.04 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 27
6.06 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 27
6.07 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 28
6.08 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 28
6.09 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . 28
6.10 Financial Condition; Financial Statements . . . . . . . . . . . . 28
6.11 Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 29
6.12 Representations and Warranties in Transaction Documents . . . . . 30
6.13 Consummation of Transaction . . . . . . . . . . . . . . . . . . . 30
6.14 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . 30
6.15 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 30
6.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.17 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.18 Pollution and Other Regulations . . . . . . . . . . . . . . . . . 32
6.19 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 33
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . 34
7.02 Books, Records and Inspections. . . . . . . . . . . . . . . . . . 36
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.04 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 37
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . . . . 37
7.06 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . 37
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.08 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.09 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . . 39
7.10 Additional Security; Further Assurances . . . . . . . . . . . . . 39
7.11 Corporate Separateness. . . . . . . . . . . . . . . . . . . . . . 40
7.12 Compliance with Environmental Laws. . . . . . . . . . . . . . . . 41
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 41
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . . . . 41
(ii)
<PAGE>
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. . . . . . 42
8.03 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.05 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . 46
8.06 Investments and Loans . . . . . . . . . . . . . . . . . . . . . . 47
8.07 Subsidiaries; etc.. . . . . . . . . . . . . . . . . . . . . . . . 47
8.08 Prepayments of Indebtedness, etc. . . . . . . . . . . . . . . . . 47
8.09 Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 49
8.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . 50
8.12 Minimum Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . 50
8.13 Borrower Leverage Ratio . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 51
9.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . 52
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.04 Default Under Other Agreements. . . . . . . . . . . . . . . . . . 52
9.05 Bankruptcy, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 52
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.07 Credit Documents. . . . . . . . . . . . . . . . . . . . . . . . . 53
9.08 Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.10 AF Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . 81
11.03 Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . . 81
11.04 Certain Rights of the Agent. . . . . . . . . . . . . . . . . . . 82
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 82
11.07 The Agent in Its Individual Capacity . . . . . . . . . . . . . . 82
11.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . . 83
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . . 84
12.02 Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 84
(iii)
<PAGE>
12.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . 85
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . 87
12.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . . 87
12.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . 88
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.10 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . 89
12.12 Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . . 90
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . . 90
12.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 90
12.16 Special Amendments . . . . . . . . . . . . . . . . . . . . . . . 91
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Management Fees
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B-1 -- Form of Revolving Note
EXHIBIT B-2 -- Form of Swingline Note
EXHIBIT C -- Form of Assignment Agreement
(iv)
<PAGE>
AMENDMENT AND RESTATEMENT dated as of October __, 1996 to REVOLVING
CREDIT AGREEMENT dated as March 29, 1996, among UNIVERSAL OUTDOOR, INC., an
Illinois corporation, the lending institutions listed from time to time on Annex
I hereto (each a "Bank" and, collectively, the "Banks"), LA SALLE NATIONAL BANK,
as Co-Agent and BANKERS TRUST COMPANY, as agent (the "Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 10 are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower and certain financial institutions are parties
to a Revolving Credit Agreement, dated as of March 29, 1996 (as the same has
been amended, modified or supplemented prior to the date hereof, the "Original
Credit Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Original
Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows, provided that if the Restatement Effective Date has not occurred on or
prior to November 30, 1996 this amendment and restatement shall be void and of
no further effect, with the Original Credit Agreement to remain in effect;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 COMMITMENT. (a) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make a loan or loans (each a
"Revolving Loan" and, collectively, the "Revolving Loans"), which Revolving
Loans (i) shall be made at any time and from time to time on and after the
Restatement Effective Date and prior to the Expiry Date, (ii) except as
hereinafter provided, may, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (x) all Revolving Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, consist of Loans of the same Type
and (y) Revolving Loans maintained as Eurodollar Loans may not be incurred prior
to the Syndication Date, (iii) may be repaid and be reborrowed in accordance
with the provisions hereof and (iv) shall not exceed for any Bank at any time
outstanding that aggregate
<PAGE>
principal amount which, when combined with the
aggregate outstanding principal amount of all other Revolving Loans of such Bank
and with such Bank's Adjusted Percentage of the sum of (x) the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time and (y) the outstanding principal amount of
Swingline Loans (exclusive of Swingline Loans which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time, equals (1) if such Bank is a Non-Defaulting Bank,
the Adjusted Revolving Commitment of such Bank at such time and (2) if such Bank
is a Defaulting Bank, the Revolving Commitment of such Bank at such time.
(b) Subject to and upon the terms and conditions herein set forth,
BTCo in its individual capacity agrees to make at any time and from time to time
on or after the Initial Borrowing Date and prior to the Swingline Expiry Date, a
loan or loans to the Borrower (each a "Swingline Loan," and, collectively, the
"Swingline Loans"), which Swingline Loans (i) shall be made and maintained as
Base Rate Loans, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed in aggregate principal amount at any
time outstanding, when combined with the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Banks then outstanding and the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Swingline Loans) at such time, an amount equal to the Adjusted
Total Revolving Commitment then in effect and (iv) shall not exceed in aggregate
principal amount at any time outstanding the Maximum Swingline Amount. BTCo
will not make a Swingline Loan after it has received written notice from the
Required Banks that one or more of the applicable conditions to Credit Events
specified in Section 5.02 are not then satisfied.
(c) On any Business Day, BTCo may, in its sole discretion, give
notice to the Banks that its outstanding Swingline Loans shall be funded with a
Borrowing of Revolving Loans (PROVIDED that each such notice shall be deemed to
have been automatically given upon the occurrence of an Event of Default under
Section 9.05 or upon the exercise of any of the remedies provided in the last
paragraph of Section 9), in which case a Borrowing of Revolving Loans
constituting Base Rate Loans (each such Borrowing, a "Mandatory Borrowing")
shall be made on the immediately succeeding Business Day by all Banks PRO RATA
based on each Bank's Adjusted Percentage, and the proceeds thereof shall be
applied directly to repay BTCo for such outstanding Swingline Loans. Each Bank
hereby irrevocably agrees to make Base Rate Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the date specified in writing by BTCo
notwithstanding (i) that the amount of the Mandatory Borrowing may not comply
with the Minimum Borrowing Amount otherwise required hereunder, (ii) whether any
conditions specified in Section 5 are then satisfied, (iii) whether a Default or
an Event of Default has occurred and is contin-
-2-
<PAGE>
uing, (iv) the date of such Mandatory Borrowing and (v) any reduction in the
Total Revolving Commitment or the Adjusted Total Revolving Commitment after
any such Swingline Loans were made. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code in respect of the Borrower), each Bank
(other than BTCo) hereby agrees that it shall forthwith purchase from BTCo
(without recourse or warranty) such assignment of the outstanding Swingline
Loans as shall be necessary to cause the Banks to share in such Swingline
Loans ratably based upon their respective Adjusted Percentages, provided that
all interest payable on the Swingline Loans shall be for the account of BTCo
until the date the respective assignment is purchased and, to the extent
attributable to the purchased assignment, shall be payable to the Bank
purchasing same from and after such date of purchase.
1.02 MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount. More
than one Borrowing may be incurred on any day, provided that at no time shall
there be outstanding more than seven Borrowings of Eurodollar Loans hereunder
and under the AF Credit Agreement.
1.03 NOTICE OF BORROWING. (a) Whenever the Borrower desires to
incur Revolving Loans, it shall give the Agent at its Notice Office, prior to
11:00 A.M. (New York time), at least three Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of each Borrowing of
Eurodollar Loans and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be made hereunder. Each such notice (each a "Notice of Borrowing")
shall be in the form of Exhibit A-1 and shall be irrevocable and shall specify
(i) the aggregate principal amount of the Revolving Loans to be made pursuant to
such Borrowing, (ii) the date of Borrowing (which shall be a Business Day) and
(iii) whether the respective Borrowing shall consist of Base Rate Loans or (to
the extent permitted) Eurodollar Loans and, if Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Agent shall promptly give each
Bank written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing, of such Bank's proportionate share thereof and of the other
matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo, prior to 11:00 A.M. (New York
time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in each
case (x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.
-3-
<PAGE>
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(c), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section.
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent, BTCo (in the case of Swingline Loans) and the Letter of Credit Issuer (in
the case of Letters of Credit), as the case may be, may prior to receipt of
written confirmation act without liability upon the basis of such telephonic
notice, believed by the Agent, BTCo or the Letter of Credit Issuer in good faith
to be from an Authorized Officer of the Borrower. In each such case, the
Borrower hereby waives the right to dispute the Agent's, BTCo's or the Letter of
Credit Issuer's record of the terms of such telephonic notice.
1.04 DISBURSEMENT OF FUNDS. (a) No later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available its PRO RATA share of each Borrowing requested to be made on such date
in the manner provided below, provided that all Swingline Loans shall be made
available by BTCo no later than 2:00 P.M. on the date requested. All such
amounts shall be made available to the Agent in U.S. dollars and immediately
available funds at the Payment Office and the Agent promptly will make available
to the Borrower by depositing to its account at the Payment Office the aggregate
of the amounts so made available in the type of funds received. Unless the
Agent shall have been notified by any Bank prior to the date of Borrowing that
such Bank does not intend to make available to the Agent its portion of the
Borrowing or Borrowings to be made on such date, the Agent may assume that such
Bank has made such amount available to the Agent on such date of Borrowing, and
the Agent, in reliance upon such assumption, may (in its sole discretion and
without any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Bank and the Agent has made available same to the Borrower, the Agent
shall be entitled to recover such corresponding amount from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Agent. The Agent shall also be
entitled to recover on demand from such Bank or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Agent to the Borrower to the
date such corresponding amount is recovered by the Agent, at a rate per annum
equal to (x) if paid by such Bank, the overnight Federal Funds Effective Rate or
(y) if paid by the Borrower, the then applicable rate of interest, calculated in
accordance with Section 1.08, for the respective Loans.
-4-
<PAGE>
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made to it by each Bank shall be evidenced (i) if
Revolving Loans, by a promissory note substantially in the form of Exhibit B-1
with blanks appropriately completed in conformity herewith (each a "Revolving
Note" and, collectively, the "Revolving Notes") and (ii) if Swingline Loans, by
a promissory note substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith (the "Swingline Note").
(b) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank and be dated the
Restatement Effective Date, (iii) be in a stated principal amount equal to the
Revolving Commitment of such Bank and be payable in the principal amount of the
Revolving Loans evidenced thereby, (iv) mature on the Expiry Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(c) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to the order of BTCo and be dated the Restatement
Effective Date, (iii) be in a stated principal amount equal to the Maximum
Swingline Amount and be payable in the principal amount of Swingline Loans
evidenced thereby, (iv) mature on the Swingline Expiry Date, (v) bear interest
as provided in Section 1.08 in respect of the Base Rate Loans evidenced thereby
and (vi) be entitled to the benefits of this Agreement and the other Credit
Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of such
Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert on
any Business Day occurring on and after the Syndication Date all or a portion at
least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of the Revolving Loans (with Swingline Loans at all times to be
maintained as Base Rate Loans) into a Borrowing or Borrowings of another Type of
Loan, provided that (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
an Interest Period applicable thereto and no partial conversion
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of a Borrowing of Eurodollar Loans shall reduce the outstanding principal amount
of the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may not be converted
into Eurodollar Loans if any violation of Section 9.01 or any Event of Default
is then in existence to the extent that the Agent or the Required Banks have
determined that any such conversion at such time would be disadvantageous to the
Banks and (iii) Borrowings of Eurodollar Loans resulting from this Section 1.06
shall be limited in number as provided in Section 1.02. Each such conversion
shall be effected by the Borrower giving the Agent at its Notice Office, prior
to 11:00 A.M. (New York time), at least three Business Days' (or two Business
Days', in the case of a conversion into Base Rate Loans) prior written notice
(or telephonic notice promptly confirmed in writing) (each a "Notice of
Conversion") specifying the Loans to be so converted, the Type of Loans to be
converted into and, if to be converted into a Borrowing of Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Agent shall give each
Bank prompt notice of any such proposed conversion affecting any of its Loans.
1.07 PRO RATA BORROWINGS. All Revolving Loans under this Agreement
shall be made by the Banks PRO RATA on the basis of their Adjusted Percentages.
It is understood that no Bank shall be responsible for any default by any other
Bank in its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Bank to fulfill its commitments hereunder.
1.08 INTEREST. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity (whether
by acceleration or otherwise) at a rate per annum less than 2% plus the rate of
interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each
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Base Rate Loan, quarterly in arrears on the last Business Day of each February,
May, August and November, (ii) in respect of each Eurodollar Loan, on the last
day of each Interest Period applicable thereto and, in the case of an Interest
Period of six months, on the date occurring three months after the first day of
such Interest Period and (iii) in respect of each Loan, on any prepayment or
conversion (other than the prepayment and conversion of Revolving Loans that are
Base Rate Loans) (on the amount prepaid or converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
1.09 INTEREST PERIODS. (a) At the time the Borrower gives a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 10:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
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(iv) no Interest Period shall extend beyond the Expiry Date; and
(v) no Interest Period may be elected at any time when a violation of
Section 9.01 or an Event of Default is then in existence if the Agent or
the Required Banks have determined that such an election at such time would
be disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the Restatement
Effective Date affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Restatement Effective Date in any applicable law, governmental rule,
regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to,
a change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar Loan
has become unlawful by compliance by such Bank in good faith with any law,
governmental rule, regulation, guideline (or would conflict with any such
governmental rule, regulation, guideline or order not having the force of
law but with which such Bank customarily complies even though the failure
to comply therewith would not be
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unlawful), or has become impracticable as a result of a contingency
occurring after the Restatement Effective Date which materially and
adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) on such date and (y) within ten Business Days of the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and to the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks). Thereafter (x)
in the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to
such Bank, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the additional amounts owed
to such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan, provided that if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
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reducing the rate of return on such Bank's capital or assets as a consequence of
its commitments or obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy), then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction. Each Bank,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 COMPENSATION. (a) The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans but excluding in any event the loss of
anticipated profits) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Agent) a Borrowing of Eurodollar Loans does
not occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any prepayment, repayment or conversion of
any of its Eurodollar Loans occurs on a date which is not the last day of an
Interest Period applicable thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay its Eurodollar Loans when required by the terms of this
Agreement or (y) an election made pursuant to Section 1.10(b).
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Bank more than 180 days after such Bank obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the additional
costs of the type described in such Section, such Bank shall not be entitled to
compensation under Section 1.10, 2.06 or 4.04 for any amounts incurred or
accruing prior to the giving of such notice to the Borrower.
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.06 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Bank and
its lending office suffer no economic, legal or
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regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such Section. Nothing in this Section
1.12 shall affect or postpone any of the obligations of the Borrower or the
right of any Bank provided in Section 1.10, 2.06 or 4.04.
1.13 REPLACEMENT OF BANKS. (w) Upon any AF Bank being replaced under
Section 2.01 of the AF Credit Agreement, (x) upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
Section 2.06 or Section 4.04 with respect to any Bank which results in such Bank
charging to the Borrower increased costs in excess of those being generally
charged by the other Banks, (y) if a Bank becomes a Defaulting Bank and/or (z)
in the case of a refusal by a Bank to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which has been approved
by the Required Banks or Super Majority Banks, as the case may be, as provided
in Section 12.12, the Borrower shall have the right, if no Default or Event of
Default then exists, to replace (and, in the case of clause (w) above, shall
replace) such Bank (the "Replaced Bank") with one or more other transferee or
transferees who shall be acceptable to the Agent and none of whom shall
constitute a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank") reasonably acceptable to the Agent, provided that (i) any
Bank replaced pursuant to this Section 1.13 must also be replaced as an AF Bank
at the same time under Section 2.01 of the AF Credit Agreement by the same
Replacement Bank (and in the same pro rata amounts if more than one Replacement
Bank), (ii) any Bank that is replaced as an AF Bank pursuant to Section 2.01 of
the AF Credit Agreement must also be replaced at the same time as a Bank
hereunder by the same Replacement Bank (and in the same pro rata amounts if more
than one Replacement Bank), (iii) at the time of any replacement pursuant to
this Section 1.13, the Replacement Bank shall enter into one or more Assignment
Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to
said Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Revolving Commitment and outstanding
Revolving Loans of the Replaced Bank and, in connection therewith, shall pay to
the Replaced Bank in respect thereof an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Bank and (B) an amount equal to all accrued, but theretofore
unpaid, Fees owing to the Replaced Bank pursuant to Section 3.01 and (iv) all
obligations of the Borrower owing to the Replaced Bank (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Bank concurrently with such replacement. Upon the execution of
the respective Assignment Agreements, the payment of amounts referred to in
clauses (iii) and (iv) above and, if so requested by the Replacement Bank,
delivery to the Replacement Bank of the appropriate Note executed by the
Borrower, the Replacement Bank shall become a Bank hereunder and the Replaced
Bank shall cease to constitute a Bank hereunder, except with respect to
indemnification provisions applicable to the Replaced Bank under this Agreement,
which shall survive as to such Replaced Bank.
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SECTION 2. LETTERS OF CREDIT.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that a Letter of Credit
Issuer at any time and from time to time on or after the Initial Borrowing Date
and prior to the Expiry Date to issue, for the account of the Borrower and in
support of such standby obligations of the Borrower that are acceptable to the
Agent (each such letter of credit a "Letter of Credit" and, collectively, the
"Letters of Credit"), and subject to and upon the terms and conditions herein
set forth the Letter of Credit Issuer agrees to issue from time to time,
irrevocable letters of credit denominated in U.S. dollars in such form as may be
approved by the Letter of Credit Issuer and the Agent. Each letter of credit
issued under the Original Credit Agreement by an institution that is a Bank
hereunder on the Restatement Effective Date and that remains outstanding on the
Restatement Effective Date (each an "Existing Letter of Credit") shall
constitute a "Letter of Credit" for all purposes of this Agreement and shall be
deemed issued, for purposes of Section 2.05(a), 3.01(b) and 3.01(c), on the
Restatement Effective Date.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued, the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $5,000,000 or (y) when added to the aggregate principal amount
of all Revolving Loans made by Non-Defaulting Banks and Swingline Loans then
outstanding, the Adjusted Total Revolving Commitment at such time; and (ii) each
Letter of Credit shall have an expiry date occurring not later than one year
after such Letter of Credit's date of issuance (other than Existing Letters of
Credit) although any Letter of Credit may be extendable for successive periods
of up to 12 months, but not beyond the Business Day next preceding the Expiry
Date, on terms acceptable to the Letter of Credit Issuer and in no event shall
any Letter of Credit have an expiry date occurring later than the Business Day
next preceding the Expiry Date.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, the Letter of Credit Issuer shall not be required to issue any Letter of
Credit unless the Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate the Letter of Credit Issuer's
risk with respect to the participation in Letters of Credit of the Defaulting
Bank or Banks, including by cash collateralizing such Defaulting Bank's or
Banks' Percentage of the Letter of Credit Outstandings.
2.02 MINIMUM STATED AMOUNT. The initial Stated Amount of each Letter
of Credit shall be not less than $25,000 or such lesser amount acceptable to the
Letter of Credit Issuer.
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2.03 LETTER OF CREDIT REQUESTS; NOTICES OF ISSUANCE. (a) Whenever
it desires that a Letter of Credit be issued after the Initial Borrowing Date,
the Borrower shall give the Agent and the Letter of Credit Issuer written notice
(including by way of telecopier) in the form of Exhibit A-2 thereof prior to
1:00 P.M. (New York time) at least three Business Days (or such shorter period
as may be acceptable to the Letter of Credit Issuer) prior to the proposed date
of issuance (which shall be a Business Day) (each a "Letter of Credit Request"),
which Letter of Credit Request shall include any other documents that the Letter
of Credit Issuer customarily requires in connection therewith.
(b) The Letter of Credit Issuer shall, promptly after each issuance
of a Letter of Credit by it, give the Agent, each Bank and the Borrower written
notice of the issuance of such Letter of Credit, accompanied by a copy to the
Agent of the Letter of Credit or Letters of Credit issued by it.
2.04 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the
Agent at the Payment Office, for any payment or disbursement made by the Letter
of Credit Issuer under any Letter of Credit (each such amount so paid or
disbursed until reimbursed, an "Unpaid Drawing") immediately after, and in any
event on the date on which the Borrower is notified by the Letter of Credit
Issuer of such payment or disbursement with interest on the amount so paid or
disbursed by the Letter of Credit Issuer, to the extent not reimbursed prior to
1:00 P.M. (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but not including the date the Letter of
Credit Issuer is reimbursed therefor at a rate per annum which shall be the
Applicable Margin in excess of the Base Rate as in effect from time to time
(plus an additional 2% per annum if not reimbursed by the third Business Day
after the date of such notice of payment or disbursement), such interest also to
be payable on demand.
(b) The Borrower's obligation under this Section 2.04 to reimburse
the Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Letter of Credit Issuer, the
Agent or any Bank, including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit to conform to the terms of the
Letter of Credit or any non-application or misapplication by the beneficiary of
the proceeds of such drawing; PROVIDED, HOWEVER, that the Borrower shall not be
obligated to reimburse the Letter of Credit Issuer for any wrongful payment made
by the Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer.
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2.05 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, (and on the
Restatement Effective Date with respect to any Existing Letter of Credit), the
Letter of Credit Issuer shall be deemed to have sold and transferred to each
other Bank, and each such Bank (each a "Participant") shall be deemed
irrevocably and unconditionally to have purchased and received from such Letter
of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Bank's Adjusted Percentage, in such Letter
of Credit, each substitute letter of credit, each drawing made thereunder and
the obligations of the Borrower under this Agreement with respect thereto
(although the Letter of Credit Fee shall be payable directly to the Agent for
the account of the Banks as provided in Section 3.01(b) and the Participants
shall have no right to receive any portion of any Facing Fees) and any security
therefor or guaranty pertaining thereto. Upon any change in the Revolving
Commitments or Adjusted Percentages of the Banks pursuant to Section 12.04(b) or
upon a Bank Default, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations pursuant to this Section 2.05 to reflect the new Adjusted
Percentages of the assigning and assignee Bank or of all Banks, as the case may
be.
(b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by the Letter of Credit Issuer under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for the Letter of Credit
Issuer any resulting liability.
(c) In the event that the Letter of Credit Issuer makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to the Letter of Credit Issuer pursuant to Section 2.04(a), the
Letter of Credit Issuer shall promptly notify the Agent, and the Agent shall
promptly notify each Participant of such failure, and each Participant shall
promptly and unconditionally pay to the Agent for the account of the Letter of
Credit Issuer, the amount of such Participant's Adjusted Percentage of such
payment in U.S. dollars and in same day funds; PROVIDED, HOWEVER, that no
Participant shall be obligated to pay to the Agent its Adjusted Percentage of
such unreimbursed amount for any wrongful payment made by the Letter of Credit
Issuer under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of the Letter of Credit
Issuer. If the Agent so notifies any Participant required to fund an Unpaid
Drawing under a Letter of Credit prior to 11:00 A.M. (New York time) on any
Business Day, such Participant shall make available to the Agent for the account
of the Letter of Credit Issuer such Participant's Adjusted Percentage of the
amount of such payment on such Business Day in same day funds. If and to the
extent such Participant
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shall not have so made its Adjusted Percentage of the amount of such Unpaid
Drawing available to the Agent for the account of the Letter of Credit Issuer,
such Participant agrees to pay to the Agent for the account of the Letter of
Credit Issuer, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the Agent for
the account of the Letter of Credit Issuer at the overnight Federal Funds
Effective Rate. The failure of any Participant to make available to the Agent
for the account of the Letter of Credit Issuer its Adjusted Percentage of any
Unpaid Drawing under any Letter of Credit shall not relieve any other
Participant of its obligation hereunder to make available to the Agent for the
account of the Letter of Credit Issuer its Adjusted Percentage of any payment
under any Letter of Credit on the date required, as specified above, but no
Participant shall be responsible for the failure of any other
Participant to make available to the Agent for the account of the Letter of
Credit Issuer such other Participant's Adjusted Percentage of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account of
the Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, the Letter of Credit Issuer shall pay to the Agent and the
Agent shall promptly pay to each Participant which has paid its Adjusted
Percentage thereof, in U.S. dollars and in same day funds, an amount equal to
such Participant's Adjusted Percentage of the principal amount thereof and
interest thereon accruing at the overnight Federal Funds Effective Rate after
the purchase of the respective participations.
(e) The obligations of the Participants to make payments to the Agent
for the account of the Letter of Credit Issuer with respect to Letters of Credit
shall be irrevocable and not subject to counterclaim, set-off or other defense
or any other qualification or exception whatsoever (provided that no Participant
shall be required to make payments resulting from the Agent's gross negligence
or willful misconduct) and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any of
the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right which
the Borrower may have at any time against a beneficiary named in a Letter
of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Agent, the Letter of Credit Issuer,
any Bank or other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower and
the beneficiary named in any such Letter of Credit);
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(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by
the Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective Adjusted Percentages, for and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or
nature which may be imposed on, asserted against or incurred by the Letter of
Credit Issuer in performing its respective duties in any way relating to or
arising out of its issuance of Letters of Credit; PROVIDED that no Participants
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Letter of Credit Issuer's gross negligence or willful
misconduct.
2.06 INCREASED COSTS. If at any time after the Restatement Effective
Date, the adoption or effectiveness of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Letter
of Credit Issuer or any Bank with any request or directive (whether or not
having the force of law) by any such authority, central bank or comparable
agency shall either (i) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against Letters of Credit issued by the
Letter of Credit Issuer or such Bank's participation therein, or (ii) shall
impose on the Letter of Credit Issuer or any Bank any other conditions affecting
this Agreement, any Letter of Credit or such Bank's participation therein; and
the result of any of the foregoing is to increase the cost to the Letter of
Credit Issuer or such Bank of issuing, maintaining or participating in any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Letter of Credit Issuer or such Bank hereunder (other than any increased
cost or reduction in the amount received or receivable resulting from the
imposition of or a change in the rate of taxes or similar charges), then, upon
demand to the Borrower by the Letter of Credit Issuer or such Bank (a copy of
which notice shall be sent by the Letter of Credit Issuer or such Bank to the
Agent), the Borrower shall pay to the Letter of Credit Issuer or such Bank such
additional amount or amounts as will compensate the Letter of Credit Issuer or
such Bank for such increased cost or reduction. A certificate submitted to the
Borrower by the Letter of Credit Issuer or such Bank, as the case may be (a copy
of which certificate shall be sent by the Letter of Credit Issuer or such Bank
to the Agent),
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setting forth the basis for the determination of such additional
amount or amounts necessary to compensate the Letter of Credit Issuer or such
Bank as aforesaid shall be conclusive and binding on the Borrower absent
manifest error, although the failure to deliver any such certificate shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.06 upon the subsequent receipt thereof.
SECTION 3. FEES; COMMITMENTS.
3.01 FEES. (a) The Borrower agrees to pay to the Agent a commitment
commission ("Commitment Commission") for the account of each Non-Defaulting Bank
for the period from and including the Restatement Effective Date to, but not
including, the Expiry Date, or, if earlier, the date upon which the Total
Revolving Commitment has been terminated, computed at a rate for each day equal
to 1/2 of 1% per annum on such Bank's Unutilized Revolving Commitment on such
day. Such Commitment Commission shall be due and payable in arrears on the last
Business Day of each February, May, August and November and on the Expiry Date,
or, if earlier, the date upon which the Total Revolving Commitment is
terminated.
(b) The Borrower agrees to pay to the Agent for the account of each
Non-Defaulting Bank pro rata on the basis of their respective Adjusted
Percentages, a fee in respect of each Letter of Credit (the "Letter of Credit
Fee") computed for each day at the rate equal to the Applicable Eurodollar
Margin then in effect on the Stated Amount of such Letter of Credit on such day.
Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on
the last Business Day of each February, May, August and November of each year
and on the date upon which the Total Revolving Commitment is terminated.
(c) The Borrower agrees to pay to pay directly to the Letter of
Credit Issuer a fee in respect of each Letter of Credit (the "Facing Fee")
computed for each day at the rate of 1/4 of 1% per annum on the Stated Amount
of such Letter of Credit on such day provided that in no event shall the annual
Facing Fee be less than $500. Accrued Facing Fees shall be due and payable
quarterly in arrears on the last Business Day of each February, May, August and
November of each year and on the date upon which the Total Revolving Commitment
is terminated.
(d) The Borrower agrees to pay directly to the Letter of Credit
Issuer upon each issuance of, payment under, and/or amendment of, a Letter of
Credit such amount as shall at the time of such issuance, payment or amendment
be the administrative charge which the Letter of Credit Issuer is customarily
charging for issuances of, payments under or amendments of, letters of credit
issued by it.
(e) The Borrower shall pay to the Agent (x) on the Effective Date for
its own account and/or for distribution to the Banks such fees as heretofore
agreed by the
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Borrower and the Agent and (y) for its own account such other fees as agreed to
between the Borrower and the Agent, when and as due.
(f) All computations of Fees shall be made in accordance with Section
12.07(b).
3.02 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Agent at its Notice Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate or partially reduce the Unutilized Total
Revolving Commitment, provided that (x) any such termination shall apply to
proportionately and permanently reduce the Revolving Commitment of each Bank,
(y) no such reduction shall reduce any Non-Defaulting Bank's Revolving
Commitment to an amount that is less than the sum of (A) the outstanding
Revolving Loans of such Bank and (B) such Bank's Adjusted Percentage of
outstanding Swingline Loans and of Letter of Credit Outstandings and (z) any
partial reduction pursuant to this Section 3.02 shall be in the amount of at
least $1,000,000.
3.03 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. The Total Revolving
Commitment shall terminate on the earlier of (x) the Expiry Date, (y) the
Acquisition Facility Termination Date and (z) the date on which any Change of
Control occurs.
SECTION 4. PAYMENTS.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent at
the Payment Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, the amount of such prepayment and
(in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to which
made, which notice shall be given by the Borrower at least one Business Day
prior to the date of such prepayment with respect to Base Rate Loans (other than
Swingline Loans, with respect to which notice may be given prior to 1:00 P.M. on
the date of prepayment) and two Business Days prior to the date of such
prepayment with respect to Eurodollar Loans, which notice shall promptly be
transmitted by the Agent to each of the Banks; (ii) each partial prepayment of
any Borrowing shall be in an aggregate principal amount of at least $500,000
and, if greater in an integral multiple of $100,000, provided that (x) Swingline
Loans may be prepaid in an aggregate amount of at least $250,000 and (y) no
partial prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce
the aggregate principal amount of the Eurodollar Loans outstanding pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) at the time of any prepayment of Eurodollar Loans pursuant to
this Section 4.01 on any date other than the last day of the Interest Period
applicable thereto, the
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Borrower shall pay the amounts required pursuant to Section 1.11; and (iv) each
prepayment in respect of any Loans made pursuant to a Borrowing shall be applied
PRO RATA among such Loans, provided, that at the Borrower's election in
connection with any prepayment of Revolving Loans pursuant to this Section 4.01,
such prepayment shall not be applied to any Revolving Loans of a Defaulting
Bank.
4.02 MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(i) If on any date the sum of the aggregate outstanding principal
amount of Revolving Loans made by Non-Defaulting Banks, Swingline Loans and the
Letter of Credit Outstandings exceeds the Adjusted Total Revolving Commitment as
then in effect, the Borrower shall repay on such date the principal of Swingline
Loans, and if no Swingline Loans are or remain outstanding, Revolving Loans of
Non-Defaulting Banks, in an aggregate amount equal to such excess. If, after
giving effect to the repayment of all outstanding Swingline Loans and Revolving
Loans of Non-Defaulting Banks, the aggregate amount of Letter of Credit
Outstandings exceeds the Adjusted Total Revolving Commitment then in effect, the
Borrower shall pay to the Agent an amount in cash and/or Cash Equivalents equal
to such excess and the Agent shall hold such payment as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance satisfactory to the Agent (which shall
permit certain investments in Cash Equivalents satisfactory to the Agent, until
the proceeds are applied to the secured obligations).
(ii) If on any date the aggregate outstanding principal amount of the
Revolving Loans made by a Defaulting Bank exceeds the Revolving Commitment of
such Defaulting Bank, the Borrower shall repay principal of the Revolving Loans
of such Defaulting Bank in an amount equal to such excess.
(B) APPLICATION:
(a) With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which made, provided that (i) Eurodollar
Loans may so be designated for prepayment pursuant to this Section 4.02 only on
the last day of an Interest Period applicable thereto unless all Eurodollar
Loans with Interest Periods ending on such date of required prepayment and all
Base Rate Loans have been paid in full; (ii) if any prepayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount, such Borrowing shall be immediately converted into Base Rate Loans;
(iii) each prepayment of any Revolving Loans made by Non-Defaulting Banks
pursuant to a Bor-
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rowing shall be applied PRO RATA among such Revolving Loans; and (iv) each
prepayment of any Revolving Loans made by Defaulting Banks pursuant to a
Borrowing shall be applied PRO RATA among such Revolving Loans. In the absence
of a designation by the Borrower as described in the preceding sentence, the
Agent shall, subject to the above, make such designation in its sole discretion
with a view, but no obligation, to minimize breakage costs owing under Section
1.11.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Agent
for the ratable (based on its PRO RATA share) account of the Banks entitled
thereto, not later than 1:00 P.M. (New York time) on the date when due and shall
be made in immediately available funds and in lawful money of the United States
of America at the Payment Office, it being understood that written notice by the
Borrower to the Agent to make a payment from the funds in the Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account. Any payments under this Agreement which are
made later than 1:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in Section 4.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (but excluding, except as provided in the second succeeding sentence,
any tax imposed on or measured by the net income (or any franchise tax) of a
Bank pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located) and all
interest, penalties or similar liabilities with respect thereto (collectively,
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due hereunder, under any Note or under any
other Credit Document, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such Note or
in such other Credit Document. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, then the Borrower shall also reimburse each
Bank, upon the written request of such Bank, for taxes imposed on or measured by
the net income of such Bank pursuant to the laws of the juris-
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diction in which the principal office or applicable lending office of such
Bank is located or of any political subdivision or taxing authority of any
such jurisdiction and for any withholding of income or similar taxes imposed
by the United States of America as such Bank shall determine are payable by,
or withheld from, such Bank in respect of Taxes paid to or on behalf of such
Bank pursuant to this or the preceding sentence. The Borrower will furnish
to the Agent within 45 days after the date the payment of any Taxes, or any
withholding or deduction on account thereof, is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by the
Borrower. The Borrower will indemnify and hold harmless the Agent and each
Bank, and reimburse the Agent or such Bank upon its written request, for the
amount of any Taxes so levied or imposed and paid or withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) to provide to the Borrower on or prior to the Initial Borrowing Date
two original signed copies of Internal Revenue Service Form 4224 or Form 1001
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document and (ii) that, (x) to the extent
legally entitled to do so, with respect to a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section 12.04 hereof
(unless the respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), upon the date of such assignment or transfer to
such Bank, and (y) with respect to any Bank which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax purposes (including, without limitation, any assignee or transferee),
from time to time, upon the reasonable request by the Borrower or the Agent
after the Restatement Effective Date, such Bank will provide to each of the
Borrower and the Agent two original signed copies of Internal Revenue Service
Form 4224 or Form 1001 (or any successor forms) certifying to such Bank's
entitlement to a complete exemption from, or reduction in, United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document. Notwithstanding anything to the
contrary contained in Section 4.04(a), the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or other
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder (without any obligation under Section 4.04(a) to pay the
respective Bank such taxes or any additional amounts with respect thereto) for
the account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for United States federal income tax
purposes and which has not provided to the Borrower such forms required to be
provided to the Borrower by a Bank pursuant to the first sentence of this
Section 4.04(b), provided that if the Borrower shall so deduct or withhold any
such taxes, it shall provide a statement to the Agent and such Bank, setting
forth the amount of such taxes so deducted or withheld, the applicable rate and
any other information or documenta-
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tion which such Bank may reasonably request for assisting such Bank in obtaining
any allowable credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Bank is subject to tax.
Notwithstanding anything to the contrary contained in the preceding sentence,
the Borrower agrees to indemnify each Bank in the manner set forth in Section
4.04(a) in respect of any amounts deducted or withheld by it as described in the
previous sentence as a result of any changes after the Restatement Effective
Date in any applicable law, treaty, governmental rule, regulation, guideline or
order, or in the interpretation thereof, relating to the deducting or
withholding of income or similar Taxes.
SECTION 5. CONDITIONS.
5.01 RESTATEMENT EFFECTIVE DATE. This Agreement shall become
effective on the date (the "Restatement Effective Date") on which all the
following conditions are first satisfied:
(A) EXECUTION OF AGREEMENT. (i) This Agreement shall have been
executed as provided in Section 12.10 and (ii) there shall have been delivered
to the Agent for the account of each Bank the appropriate Revolving Note and, in
the case of BTCo, Swingline Note, in each case, executed by the Borrower, and in
the amount, maturity and as otherwise provided herein.
(B) OFFICER'S CERTIFICATE. On the Restatement Effective Date, the
Agent shall have received a certificate dated such date signed by the President
or any Vice President of the Borrower stating that all of the applicable
conditions set forth in Sections 5.01(G) and (H) and 5.02 exist as of such date.
(C) OPINIONS OF COUNSEL. On the Restatement Effective Date, the
Agent shall have received opinions, addressed to the Agent, and each of the
Banks and dated the Restatement Effective Date, from (i) Winston & Strawn,
counsel to the Borrower, which opinion shall cover the matters contained in
Exhibit C-1 to the AF Credit Agreement, (ii) White & Case, special counsel to
the Agent, which opinion shall cover the matters contained in Exhibit C-2 to the
AF Credit Agreement and (iii) such local counsel, if any, satisfactory to the
Agent as the Agent may request, which opinions shall cover the perfection of the
security interests granted pursuant to the Security Documents and such other
matters incident to the transactions contemplated herein as the Agent may
reasonably request and shall be in form and substance satisfactory to the Agent.
(D) CORPORATE PROCEEDINGS. (a) On the Restatement Effective Date,
the Agent shall have received from the Borrower a certificate, dated the
Restatement Effective Date, signed by the President or any Vice-President of the
Borrower in the form of Exhibit D to the AF Credit Agreement with appropriate
insertions and deletions, together
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with copies of the certificate of formation, the by-laws, or other
organizational documents of the Borrower and the resolutions, or such other
administrative approval, of the Borrower referred to in such certificate and all
of the foregoing (including each such certificate of formation, certificate of
incorporation and by-laws) shall be satisfactory to the Agent.
(b) On the Restatement Effective Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all certificates, documents and papers,
including good standing certificates and any other records of corporate
proceedings and governmental approvals, if any, which the Agent may have
requested in connection therewith, such documents and papers, where appropriate,
to be certified by proper corporate or governmental authorities.
(E) ADVERSE CHANGE, ETC. From August 21, 1996 to the Restatement
Effective Date, nothing shall have occurred (and neither the Banks nor the Agent
shall have become aware of any facts or conditions not previously known) which
the Agent or the Required Banks shall determine (a) has, or is reasonably likely
to have, a material adverse effect on the rights or remedies of the Banks or the
Agent, or on the ability of the Borrower to perform its obligations to them, or
(b) has, or is reasonably likely to have, a Material Adverse Effect.
(F) LITIGATION. On the Restatement Effective Date, there shall be no
actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or the transactions contemplated hereby or
thereby (including the Transaction) or (b) which the Agent or the Required Banks
shall determine has, or is reasonably likely to have (i) a Material Adverse
Effect or (ii) a material adverse effect on the rights or remedies of the Banks
hereunder or under any other Credit Document or on the ability of the Borrower
to perform its obligations to the Banks hereunder or under any other Credit
Document or upon the ability of the parties to consummate the Transaction.
(G) APPROVALS. On the Restatement Effective Date, all material
necessary governmental and third party approvals in connection with the
transactions contemplated by the Credit Documents and the other Transaction
Documents and otherwise referred to herein or therein shall have been obtained
and remain in effect, and all applicable waiting periods shall have expired
without any action being taken by any competent authority which restrains or
prevents such transactions or imposes, in the reasonable judgment of the
Required Banks or the Agent, materially adverse conditions upon the consummation
of such transactions. In addition, the Agent shall have received evidence
satisfactory to it that all permits, leases, licenses and consents material to
the operations of OAH and its Subsidiaries and of the Borrower and its
Subsidiaries shall remain in effect after giving effect to the Transaction
and/or shall have been obtained.
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(H) ACQUISITION. On or prior to the Restatement Effective Date,
there shall have been delivered to the Banks true and complete copies of the
Acquisition Documents and all terms of the Acquisition Agreement and of the
other Acquisition Documents shall be reasonably satisfactory to the Agent. Each
of the conditions precedent to the obligation of the Borrower to consummate the
Acquisition shall have been satisfied, or waived, all to the reasonable
satisfaction of the Agent and the Borrower shall have consummated the
Acquisition in accordance with the Acquisition Agreement and all applicable
laws, rules and regulations and all Indebtedness of OAH and its Subsidiaries
pursuant to their existing credit arrangement shall have been repaid in full.
(I) SECURITY DOCUMENTS. (a) On the Restatement Effective Date, the
Borrower shall have duly authorized, executed and delivered the Borrower Pledge
Agreement, and shall have delivered to the Collateral Agent, as pledgee
thereunder, all of the certificates representing the Pledged Securities referred
to therein, accompanied by executed and undated stock powers, and the Borrower's
Pledge Agreement shall be in full force and effect.
(b) On the Restatement Effective Date, the Borrower and shall have
duly authorized, executed and delivered the Security Agreement covering all of
the Borrower's present and future Security Agreement Collateral.
(c) On the Restatement Effective Date, each of the Designated UOH
Stockholders shall have each duly authorized, executed and delivered the UOH
Pledge Agreement (which shall terminate on the Guaranty Commencement Date and
the execution and delivery of the Holdings Guaranty and the Holdings Pledge
Agreement) and shall have delivered to the Collateral Agent, as pledgee
thereunder, all of the certificates representing the Pledged Securities referred
to therein, accompanied by executed and undated stock powers, and each of the
UOH Pledge Agreement shall be in full force and effect.
(d) On the Restatement Effective Date, the Agent shall have received
(x) such executed amendments (in form and substance reasonably satisfactory to
the Agent) to the Mortgages created pursuant to the Original Credit Agreement
(as so amended, if at all, each a "Mortgage" and collectively, the "Mortgages")
covering all the Mortgaged Properties as the Agent deems necessary or
appropriate to give effect to the transactions contemplated by this Agreement,
and arrangements reasonably satisfactory to the Collateral Agent shall be in
place to provide that counterparts of such amendments shall be recorded on the
Restatement Effective Date or within one Business Day thereafter in all places
where the original Mortgages were filed and (y) such endorsements, if any, to
the Mortgage Policies delivered under the Original Credit Agreement with respect
to the Mortgages as the Agent deems appropriate.
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(J) SOLVENCY. On the Restatement Effective Date, the Borrower shall
have delivered, or shall cause to be delivered to the Agent a solvency letter in
the form of Exhibit H to the AF Credit Agreement from the Chief Financial
Officer of the Borrower and acceptable in form and substance to the Agent.
(K) FEES. On the Restatement Effective Date, the Borrower shall have
paid to the Agent and the Banks all Fees and expenses agreed upon by such
parties to be paid on or prior to such date.
(L) ENVIRONMENTAL REPORTS. On or prior to the Restatement Effective
Date, the Agent shall have received environmental reports from Persons
reasonably satisfactory to the Agent covering the properties of OAH and its
Subsidiaries (other than properties that are solely sign locations), which
reports shall be reasonably satisfactory to the Agent.
(M) AF CREDIT AGREEMENT. On the Restatement Effective Date, the
Restatement Effective Date under and as defined in the AF Credit Agreement shall
have occurred (or would be required to occur in the absence of the condition
specified in Section 5.01(m) of the AF Credit Agreement) and the Acquisition
Facility Termination Date shall not have occurred.
(N) ADJUSTED EBITDA. On or prior to the Restatement Effective Date,
the Agent shall have received evidence satisfactory to it that Holdings and its
Subsidiaries plus OAH and its Subsidiaries shall have attained on a combined
basis an Adjusted EBITDA of at least $57 million for the 12 months ended August
31, 1996.
(O) ORIGINAL CREDIT AGREEMENT. On the Restatement Effective Date and
concurrently with any borrowing hereunder, on such date, the Borrower shall have
(i) repaid all Loans outstanding thereunder, (ii) terminated all letters of
credit issued thereunder (other than the Existing Letters of Credit) and (iii)
paid all accrued but unpaid interest, costs (including pursuant to Section 1.11
thereof) and fees under the Original Credit Agreement, whether or not otherwise
then due and payable.
5.02 CREDIT EVENTS. The obligations of the Banks to make each Loan
and of the Letter of Credit Issuers to issue each Letter of Credit is subject,
at the time thereof, to the satisfaction of the following conditions:
(A) NOTICE. The appropriate Notice of Borrowing, other borrowing
notice or Letter of Credit Request shall have been received by the Agent.
(B) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of
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Default and (ii) all representations and warranties contained herein or in the
other Credit Documents in effect at such time shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Credit Event, except to
the extent that such representations and warranties expressly relate to an
earlier date.
(C) TESTED BORROWINGS. At the time of incurring any Tested
Borrowing, each of the covenants set forth in Sections 8.11 through 8.15 shall
have been satisfied as of, and no Event of Default under Section 9.08(B) or (C)
shall exist as of, the Measurement Date relating to such Tested Borrowing
determined on a PRO FORMA basis as if such Tested Borrowing occurred on such
Measurement Date, and in the case of a Tested Borrowing financing a Permitted
Acquisition, such Permitted Acquisition was consummated on the first day of the
12-month period ending on such Measurement Date.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to the Agent and each of the Banks
that all of the applicable conditions specified above exist as of that time.
All of the certificates, legal opinions and other documents and papers referred
to in Section 5.01, unless otherwise specified, shall be delivered to the Agent
at its Notice Office for the account of each of the Banks and, except for the
Notes, in sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to the Agent.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Banks to enter into this Agreement and to make the Loans, the
Borrower makes the following representations and warranties to, and agreements
with, the Banks, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans (with all representations and warranties
made as of the Restatement Effective Date to be made giving effect to the
Transaction).
6.01 CORPORATE STATUS. Each of Holdings, the Borrower and its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (ii) has
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
6.02 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Transaction Documents to which it is a party. Each Credit Party has duly
executed and delivered each Transaction
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Document to which it is a party and each such Transaction Document constitutes
the legal, valid and binding obligation of such Credit Party enforceable in
accordance with its terms.
6.03 NO VIOLATION. Neither the execution, delivery and performance
by any Credit Party of the Transaction Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of any Credit
Party or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which Holdings, the
Borrower or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the Charter or By-Laws of any Credit Party or any of its
Subsidiaries.
6.04 LITIGATION. There are no actions, suits or proceedings pending
or, to the Borrower's knowledge, threatened with respect to the Borrower or any
of its Subsidiaries (i) that are likely to have a Material Adverse Effect or
(ii) that could reasonably be expected to have a material adverse effect on the
rights or remedies of the Banks or on the ability of the Borrower to perform its
obligations to them hereunder and under the other Credit Documents.
6.05 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all
Loans may be used (i) to refinance on the Restatement Effective Date any
outstandings under the Original Credit Agreement and (ii) for the general
corporate and working capital purposes of the Borrower and its Subsidiaries.
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
and no part of the proceeds of any Loan will be used to purchase or carry any
Margin Stock in violation of Regulation U or to extend credit for the purpose of
purchasing or carrying any Margin Stock.
6.06 GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the Security Documents, [and those items listed on Annex III],
no order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, that has
not been obtained or made is required to authorize or is required in connection
with (i) the execution, delivery and performance of
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any Transaction Document or (ii) the legality, validity, binding effect or
enforceability of any Credit Document.
6.07 INVESTMENT COMPANY ACT. None of Holdings, the Borrower nor any
of its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company," or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.09 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of Holdings,
the Borrower or any of its Subsidiaries in writing to the Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
herein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Person in writing to any Bank will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided. The projections and PRO FORMA financial information
contained in such materials are based on good faith estimates and assumptions
believed by such Persons to be reasonable at the time made, it being recognized
by the Banks that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. There is no fact known to
the Borrower which would have a Material Adverse Effect, which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Banks for use in connection with the transactions contemplated
hereby.
6.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of
the Restatement Effective Date, on a PRO FORMA basis after giving effect to the
Transaction and to all Indebtedness incurred, and to be incurred, and Liens
created, and to be created, in connection therewith, (x) the sum of the assets,
at a fair valuation, of the Borrower and its Subsidiaries, and of Holdings and
is Subsidiaries, taken as a whole will exceed their debts, (y) the Borrower and
its Subsidiaries, and Holdings and its Subsidiaries, taken as a whole will not
have incurred or intended to, or believe that they will, incur debts beyond
their ability to pay such debts as such debts mature and (z) the Borrower and
its Subsidiaries, and Holdings and its Subsidiaries, taken as a whole will not
have unreasonably small capital with which to conduct their business. For
purposes of this Section 6.10, "debt" means any
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liability on a claim, and "claim" means (i) right to payment whether or not such
a right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) (i) The consolidated balance sheet of Holdings and of the
Borrower at December 31, 1994 and December 31, 1995 and at June 30, 1996 and the
related consolidated statements of operations and cash flows of Holdings and of
the Borrower for the fiscal years or six months ended as of said dates, which,
in the case of the annual financial statements, have been examined by Price
Waterhouse LLP, independent certified public accountants, who delivered an
unqualified opinion in respect therewith, (ii) the Financial Statements (as
defined in the Acquisition Agreement) of OAH and its Subsidiaries and (iii) the
PRO FORMA consolidated balance sheet of the Borrower as of June 30, 1996, copies
of which have heretofore been furnished to each Bank, present fairly the
financial position of such entities at the dates of said statements and the
results for the period covered thereby (or, in the case of the PRO FORMA balance
sheet, presents a good faith estimate of the consolidated PRO FORMA financial
condition of the Borrower (after giving effect to the Transaction and the
related financing thereof) at the date thereof) in accordance with GAAP, except
to the extent provided in the notes to said financial statements. All such
financial statements (other than the aforesaid PRO FORMA balance sheets) have
been prepared in accordance with generally accepted accounting principles and
practices consistently applied except to the extent provided in the notes to
said financial statements. Except for the incurrence of Indebtedness to finance
the Acquisition, nothing has occurred since December 31, 1995 that has had or
could reasonably be expected to have a Material Adverse Effect.
(c) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Effective Date no
liabilities or obligations with respect to Holdings, the Borrower or any of its
Subsidiaries of a nature (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower and its Subsidiaries, and to Holdings and its
Subsidiaries, taken as a whole, except as incurred in the ordinary course of
business consistent with past practices subsequent to December 31, 1995 and
except for the Indebtedness incurred pursuant to the AF Credit Agreement
(including prior to the amendment and restatement thereof) or to finance the
Acquisition.
6.11 SECURITY INTERESTS. On and after the Restatement Effective Date
(or the date of the execution and delivery thereof, in the case of all
Additional Security Documents), each of the Security Documents create, as
security for the Obligations purported to be secured thereby, a valid and
enforceable perfected security interest in and
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Lien on all of the Collateral subject thereto, superior to and prior to the
rights of all third Persons and subject to no other Liens (except (x) that
the Security Agreement Collateral may be subject to the security interests
evidenced by Permitted Liens relating thereto and (y) the Mortgaged
Properties may be subject to Permitted Encumbrances relating thereto), in
favor of the Collateral Agent for the benefit of the Banks. No filings or
recordings are required in order to perfect the security interests created
under any Security Document except for filings or recordings required in
connection with any such Security Document (other than the Pledge Agreements)
which shall have been made upon or prior to (or are the subject of
arrangements, satisfactory to the Agent, for filing on or promptly after the
date of) the execution and delivery thereof.
6.12 REPRESENTATIONS AND WARRANTIES IN TRANSACTION DOCUMENTS. All
representations and warranties set forth in the Transaction Documents were true
and correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Restatement Effective Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date.
6.13 CONSUMMATION OF TRANSACTION. As of the Restatement Effective
Date, the Transaction shall have been consummated in accordance with the terms
and conditions of the Transaction Documents and all applicable laws. All
applicable waiting periods with respect thereto have or, prior to the time when
required, will have, expired without, in all such cases, any action being taken
by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the consummation of the Transaction. As of the
Restatement Effective Date, there does not exist any judgment, order, or
injunction prohibiting the consummation of the Transaction, or the making of
Loans or the performance by the Borrower of its obligations under the Documents.
6.14 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
its Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith.
Holdings, the Borrower and its Subsidiaries have paid, or have provided adequate
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal, state and foreign income taxes applicable for all prior
fiscal years and for the current fiscal year to the date hereof.
6.15 COMPLIANCE WITH ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard
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account or has applied for an extension of any amortization period within the
meaning of Section 412 of the Code; neither the Borrower, nor any Subsidiary
nor any ERISA Affiliate has incurred any material liability to or on account
of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980
of the Code or expects to incur any liability (including any indirect,
contingent or secondary liability) under any of the foregoing Sections with
respect to any Plan; no proceedings have been instituted to terminate or
appoint a trustee to administer any Plan; no condition exists which presents
a material risk to the Borrower or any Subsidiary or any ERISA Affiliate of
incurring a liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code; using actuarial assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of ERISA, the
aggregate liabilities of the Borrower and its Subsidiaries and its ERISA
Affiliates to all Plans which are multiemployer plans (as defined in Section
4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of
the close of the most recent fiscal year of each such Plan ended prior to the
date of the most recent Credit Event, would not exceed $150,000; no lien
imposed under the Code or ERISA on the assets of the Borrower or any
Subsidiary or any ERISA Affiliate exists or is likely to arise on account of
any Plan; and Holdings, the Borrower and its Subsidiaries do not maintain or
contribute to any employee welfare benefit plan (as defined in Section 3(1)
of ERISA) which provides benefits to retired employees (other than as
required by Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA), except to the extent that all events
described in the preceding clauses of this Section 6.15 and then in existence
would not, in the aggregate, have or be likely to have a Material Adverse
Effect. With respect to Plans that are multiemployer plans (within the
meaning of Section 4001(a)(3) of ERISA) the representations and warranties in
this Section 6.15 are made to the best knowledge of the Borrower.
6.16 SUBSIDIARIES. (a) Annex IV hereto lists each Subsidiary of the
Borrower existing on the Restatement Effective Date. The Borrower owns 100% of
the outstanding capital stock of each such Subsidiary. The Borrower will at all
times own directly 100% of the outstanding capital stock of all of said entities
except to the extent otherwise permitted pursuant to Section 8.02.
(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or other
assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents, the AF Credit Agreement, the Senior Notes and the
Discount Notes, (ii) applicable law, (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices, (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or
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disposition is permitted under this Agreement, and (v) any documents or
instruments governing the terms of any Indebtedness or other obligations secured
by Liens permitted by Section 8.03, provided that such prohibitions or
restrictions apply only to the assets subject to such Liens.
6.17 PATENTS, ETC. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
6.18 POLLUTION AND OTHER REGULATIONS. (a) Each of Holdings, the
Borrower and its Subsidiaries is in compliance with all Environmental Laws
governing its business for which failure to comply is reasonably likely to have
a Material Adverse Effect, and neither Holdings, the Borrower nor any of its
Subsidiaries is liable for any material penalties, fines or forfeitures for
failure to comply with any of the foregoing in the manner set forth above. All
licenses, permits, registrations or approvals required for the business of the
Borrower and each of its Subsidiaries, as conducted as of the Restatement
Effective Date, under any Environmental Law have been secured and the Borrower
and each of its Subsidiaries is in substantial compliance therewith, except such
licenses, permits, registrations or approvals the failure to secure or to comply
therewith is not likely to have a Material Adverse Effect. Neither Holdings,
the Borrower nor any of its Subsidiaries is in noncompliance with, breach of or
default under any applicable writ, order, judgment, injunction, or decree to
which Holdings, the Borrower or such Subsidiary is a party or which would affect
the ability of the Borrower or such Subsidiary to operate any real property and
no event has occurred and is continuing which, with the passage of time or the
giving of notice or both, would constitute noncompliance, breach of or default
thereunder, except in each such case, such noncompliance, breaches or defaults
as are not likely to, in the aggregate, have a Material Adverse Effect. There
are as of the Restatement Effective Date no Environmental Claims pending or, to
the best knowledge of the Borrower, threatened, which (a) challenge the
validity, term or entitlement of the Borrower or any of its Subsidiaries for any
permit, license, order or registration required for the operation of any
facility under the Environmental Laws which the Borrower or any of its
Subsidiaries operates and (b) wherein an unfavorable decision, ruling or finding
would be reasonably likely to have a Material Adverse Effect. There are no
facts, circumstances, conditions or occurrences concerning Holdings, the
Borrower or any of its Subsidiaries, any of their operations or on any Real
Property or, to the knowledge of the Borrower, on any property adjacent to any
such Real Property that could reasonably be expected (i) to form the basis of an
Environmental Claim against the Borrower, any of its Subsidiaries or any Real
Property of the Borrower or any of its Subsidiaries, or (ii) to cause such Real
Property to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property under any Environmental Law, except in
each such
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case, such Environmental Claims or restrictions that individually or
in the aggregate are not reasonably likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
6.19 PROPERTIES. The Borrower and each of its Subsidiaries have good
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, and the Financial Statements, referred to in Section 6.10(b), free
and clear of all Liens, other than (i) as referred to in the consolidated
balance sheet, or the Financial Statements, or, in either case, in the notes
thereto or (ii) otherwise permitted by Section 8.03. Annex V contains a true
and complete list of each Real Property owned or leased by the Borrower or any
of its Subsidiaries on the Restatement Effective Date (other than properties
that are purely sign locations) and the type of interest therein held by the
Borrower or the respective Subsidiary. Holdings owns no properties or assets
(other than the Tax Sharing Agreement) other than all of the capital stock of
the Borrower.
6.20 LABOR RELATIONS. Holdings, the Borrower and its Subsidiaries
are not engaged in any unfair labor practice that could reasonably be expected
to have a Material Adverse Effect. There is (i) no unfair labor practice
complaint pending against Holdings, the Borrower or any of its Subsidiaries or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any of them or threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
Holdings, the Borrower or any of its Subsidiaries or threatened against any of
them and (iii) no union representation question existing with respect to the
employees of Holdings, the Borrower or any of its Subsidiaries and no union
organizing activities are taking place, except with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate, such as is not reasonably likely to have a Material Adverse Effect.
6.21 EXISTING INDEBTEDNESS. Annex VI sets forth a true and complete
list of all Indebtedness of Holdings, the Borrower and each of its Subsidiaries
as of the Effective Date that is in excess of $5,000 for any one issue and is to
remain outstanding after giving effect to the Transaction (all such
Indebtedness, of whatever size, but excluding Indebtedness hereunder and under
the AF Credit Agreement, the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower (or
issuer) and any other entity which directly or indirectly guaranteed such debt.
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SECTION 7. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that on the Restatement Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Notes or
Letters of Credit are outstanding and the Loans and Unpaid Drawings, together
with interest, Fees and all other Obligations incurred hereunder, are paid in
full:
7.01 INFORMATION COVENANTS. The Borrower will furnish to each Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as at
the end of such fiscal year and the related consolidated statements of
income and retained earnings and of cash flows for such fiscal year, in
each case setting forth comparative consolidated figures for the preceding
fiscal year, and examined by independent certified public accountants of
recognized national standing whose opinion shall not be qualified as to the
scope of audit and as to the status of Holdings, the Borrower or any of its
Subsidiaries as a going concern, together with a certificate of such
accounting firm stating that in the course of its regular audit of the
business of Holdings and of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards, such accounting firm
has obtained no knowledge of any Default or Event of Default which has
occurred and is continuing or, if in the opinion of such accounting firm
such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of
the Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as
at the end of such quarterly period and the related consolidated statements
of income and retained earnings and of cash flows for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, and in each case setting forth comparative
consolidated figures for the related periods in the prior fiscal year, all
of which shall be certified by the chief financial officer or controller of
the Borrower or Holdings, as appropriate, subject to changes resulting from
audit and normal year-end audit adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event within
30 days, after the end of each monthly accounting period of each fiscal
year the consolidated balance sheet of the Borrower and its Subsidiaries
and of Holdings and its Subsidiaries, as at the end of such period, and the
related consolidated statements of income and retained earnings for such
period, setting forth comparative figures for the corresponding period of
the previous year, all of which shall be certified by
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the chief financial officer or controller of the Borrower or Holdings, as
appropriate, subject to changes resulting from audit and normal year-end
audit adjustments.
(d) BUDGETS; ETC. Not more than 60 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its
Subsidiaries in reasonable detail for each of the twelve months of such
fiscal year. Together with each delivery of consolidated financial
statements pursuant to Sections 7.01(a), (b) and (c), a comparison of the
current year to date financial results against the budgets required to be
submitted pursuant to this clause (d) shall be presented.
(e) OFFICER'S CERTIFICATES. (i) At the time of the delivery of the
financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate shall set forth the
calculations required to establish (I) the Modified Holdings Leverage Ratio
for the Relevant Determination Date occurring on the last day of such
fiscal year, quarter or month, (II) whether the Borrower and its
Subsidiaries were in compliance with the provisions of Sections 8.11, 8.12,
8.13, 8.14 and 8.15, as applicable, as at the end of such fiscal period and
(III) whether there was any Event of Default under Section 9.08(B) and/or
9.08(C) as at the end of such fiscal period.
(ii) At the time of any incurrence of Consolidated Debt of Holdings
and its Subsidiaries at a time when the Margin Reduction Discount is (or
based on the last officer's certificate delivered pursuant to clause (i)
above will be) greater than zero, a certificate of any of the persons
specified in clause (i) above setting forth the calculations establishing
the Modified Holdings Leverage Ratio after giving effect to the incurrence
of such Consolidated Debt.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof,
notice of (x) the occurrence of any event which constitutes a Default or
Event of Default which notice shall specify the nature thereof, the period
of existence thereof and what action the Borrower proposes to take with
respect thereto and (y) the commencement of or any significant development
in any litigation or governmental proceeding pending against Holdings, the
Borrower or any of its Subsidiaries which is likely to have a Material
Adverse Effect or is likely to have a material adverse effect on the
ability of the Borrower to perform its obligations hereunder or under any
other Credit Document.
(g) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of each
other final report or "management letter" submitted to Holdings or the
Borrower by its
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independent accountants in connection with any annual, interim or special
audit made by it of the books of Holdings and/or the Borrower.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 20
Business Days after an officer of Holdings, the Borrower or any Subsidiary
obtains knowledge thereof, notice of one or more of the following
environmental matters: (i) any pending or threatened (in writing) material
Environmental Claim against, or for which liability would attach to, the
Borrower or any of its Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Subsidiaries; (ii) any condition or
occurrence on or arising from any Real Property owned or operated by the
Borrower or any of its Subsidiaries that (a) results in material
noncompliance by Holdings, the Borrower or any of its Subsidiaries with any
applicable material Environmental Law or (b) would reasonably be expected
to form the basis of a material Environmental Claim against, or for which
liability would attach to, the Borrower or any of its Subsidiaries or any
such Real Property; (iii) any condition or occurrence on any Real Property
owned or operated by the Borrower or any of its Subsidiaries that could
reasonably be expected to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or transferability
by the Borrower or any of its Subsidiaries of such Real Property under any
Environmental Law; and (iv) the taking of any material removal or remedial
action in response to the actual or alleged presence of any Hazardous
Material on any Real Property owned or operated by the Borrower or any of
its Subsidiaries as required by any Environmental Law or any governmental
or other administrative agency, and all such notices shall describe in
reasonable detail the nature of the claim, investigation, condition,
occurrence or removal or remedial action and the Borrower's or such
Subsidiary's response thereto.
(i) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the
Securities and Exchange Commission or any successor thereto (the "SEC") by
Holdings, the Borrower or any of its Subsidiaries and (ii) with reasonable
promptness, such other information or documents (financial or otherwise) as
the Agent on its own behalf or on behalf of the Required Banks may
reasonably request from time to time.
7.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower officers and
designated representatives of the Agent or the Required Banks to visit and
inspect any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
Holdings, the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings, the Borrower and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants, all at such
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reasonable times and intervals and to such reasonable extent as the Agent or the
Required Banks may desire.
7.03 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice,
provided that in no event will any such deductible or self-insured retention in
respect of liability claims or in respect of casualty damage, exceed, in each
such case, (i) $250,000 per occurrence or (ii) $1,000,000 in the aggregate per
fiscal year. At any time that insurance at the levels described in Annex VII is
not being maintained by the Borrower and its Subsidiaries, the Borrower will
notify the Banks in writing thereof and, if thereafter notified by the Agent to
do so, the Borrower will, and will cause its Subsidiaries to, obtain insurance
at such levels at least equal to those set forth in Annex VII to the extent then
generally available (but in any event within the deductible or self-insured
retention limitations set forth in the preceding sentence) or otherwise as are
acceptable to the Agent. The Borrower will, and will cause each of its
Subsidiaries to, furnish on the Restatement Effective Date and annually
thereafter to the Agent a summary of the insurance carried together with
certificates of insurance and other evidence of such insurance, if any, naming
the Collateral Agent as an additional insured and/or loss payee.
7.04 PAYMENT OF TAXES. The Borrower will pay and discharge, and will
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of Holdings, the Borrower or any of its Subsidiaries,
provided that neither Holdings, the Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves (in the good faith judgment of the management of the Borrower) with
respect thereto in accordance with GAAP.
7.05 CONSOLIDATED CORPORATE FRANCHISES. The Borrower will do, and
will cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights and
authority, provided that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
7.06 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property other than those the non-compliance with which
would not have a Material Adverse Effect or would not have
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a material adverse effect on the ability of the Borrower to perform its
obligations under any Credit Document.
7.07 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has
reason to know of the occurrence of any of the following, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth details as to such occurrence and such action, if any,
which the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant (other than notices relating to an individual participant's
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably likely to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability and there is a failure to make a required
contribution, which gives rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted to terminate a
Plan which has an Unfunded Current Liability; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
incur any liability (including, any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(l) or
502(l) of ERISA or that the Borrower or any Subsidiary or Holdings may incur any
material liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Upon
request of a Bank, the Borrower will deliver to such Bank a complete copy of the
annual report (Form 5500) of each Plan required to be filed with the Internal
Revenue Service. In addition to any certificates or notices delivered to the
Banks pursuant to the first sentence hereof, copies of any annual reports and
any other material notices received by Holdings, the Borrower or any Subsidiary
with respect to a Plan shall be delivered to the Banks no later than 10 days
after the later of the date such notice has been filed with the Internal Revenue
Service or the PBGC, given to Plan participants (other than notices relating to
an individual participant's benefits) or received by Holdings, the Borrower or
such Subsidiary.
7.08 GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in
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whomsoever's possession they may be, are kept in good repair, working order and
condition, normal wear and tear excepted, and, subject to Section 8.05, that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto, to the extent and in the manner useful or customary
for companies in similar businesses.
7.09 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries' fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.10 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) No later than 30
days following the Guaranty Commencement Date, the Borrower shall deliver to the
Agent a duly authorized and executed counterpart or counterparts of: (i) a
guaranty agreement in form and substance reasonably satisfactory to the Agent
(as modified, supplemented or amended from time to time in accordance with the
terms thereof and hereof, the "Subsidiary Guaranty") executed by each Domestic
Subsidiary (except as otherwise agreed by the Agent) guaranteeing the
Obligations; (ii) a pledge agreement executed by each Subsidiary Guarantor in
form substantially the same as the Borrower Pledge Agreement and otherwise
reasonably satisfactory to the Agent (the "Additional Pledge Agreement"),
accompanied by the delivery thereunder of the certificates representing the
Pledged Securities referred to therein and executed and undated stock powers;
(iii) a security agreement executed by each Subsidiary Guarantor in a form
substantially the same as the Security Agreement and otherwise reasonably
satisfactory to the Agent (the "Additional Security Agreement") covering all of
such Subsidiary Guarantor's present and future Security Agreement Collateral,
together with the filings and reports referred to in Section 5.01(K)(b) (i)
through (iv) of the Original Credit Agreement relating thereto; and (iv) deeds
of trust, mortgages and similar documents in form and substance reasonably
satisfactory to the Agent (the "Additional Mortgages") covering all of the Real
Property owned by each of the Subsidiary Guarantors (except as otherwise agreed
by the Agent) (x) which Additional Mortgages shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as permitted by Section 8.03 and (y) which
Additional Mortgages (or instruments related thereto) shall have been duly
recorded or filed in such manner and in such places as are required by law to
establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted thereunder and all taxes, fees and other charges
payable in connection therewith shall have been paid in full, with each such
Additional Mortgage to be accompanied by mortgage policies relating thereto
reasonably satisfactory to the Agent, it being understood that nothing in this
Section 7.10 shall prevent any Domestic Subsidiary from merging with the
Borrower to the extent permitted by Section 8.02.
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(b) The Borrower will, and after the Guaranty Commencement Date, will
cause the Subsidiary Guarantors to, grant to the Collateral Agent security
interests and mortgages (each a "New Mortgage") in such owned Real Property of
the Borrower and the Subsidiary Guarantors acquired (including as a result of
the merger of one or more Subsidiaries with the Borrower) after the Restatement
Effective Date (or in the case of such Subsidiary Guarantors, the date it became
a Subsidiary Guarantor) as may be requested from time to time by the Agent.
Such Mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as are permitted by Section 8.03. The New
Mortgages or instruments related thereto shall have been duly recorded or filed
in such manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens in favor of the Collateral Agent required to be
granted pursuant to the New Mortgages and all taxes, fees and other charges
payable in connection therewith shall have been paid in full.
(c) The Borrower will, and will cause its Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports
and other assurances or instruments and take such further steps relating to the
collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to
the Collateral Agent such opinions of counsel, title insurance and other related
documents as may be requested by the Agent to assure themselves that this
Section 7.10 has been complied with.
(d) The Borrower agrees that each action required above by this
Section 7.10 shall be completed as soon as possible, but in no event later than
60 days after such action is requested to be taken by the Agent or the Required
Banks, provided that in no event shall the Borrower be required to take any
action, other than using its reasonable commercial efforts without any material
expenditure, to obtain consents from third parties with respect to its
compliance with this Section 7.10.
7.11 CORPORATE SEPARATENESS. The Borrower will take, and will cause
each of its Subsidiaries to take, all such action as is necessary to keep the
operations of the Borrower and its Subsidiaries separate and apart from those of
Holdings, including, without limitation, ensuring that all customary formalities
regarding corporate existence, including holding regular board of directors'
meetings and maintenance of corporate records, are followed. All financial
statements of the Borrower and its Subsidiaries provided to creditors will
clearly evidence the corporate separateness of the Borrower and its Subsidiaries
from Holdings. Finally, neither the Borrower nor any of its Subsidiaries will
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take any action, or conduct its affairs in a manner which is likely to result in
the corporate existence of Holdings on the one hand, and the Borrower and its
Subsidiaries on the other, being ignored, or in the assets and liabilities of
the Borrower or any of its Subsidiaries being substantively consolidated with
those of Holdings in a bankruptcy, reorganization or other insolvency
proceeding. No action expressly provided for in this Agreement, the other
Credit Documents, the AF Credit Agreement, the Senior Notes and/or the Discount
Notes will breach this covenant, and this covenant shall cease to be of any
force and effect once (x) the Discount Notes substantially have been paid in
full and (y) Holdings shall have delivered the Holdings Guaranty and the
Holdings Pledge Agreement.
7.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (i) The Borrower will
comply, and the Borrower will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws and (ii) neither the Borrower nor any of its Subsidiaries
will generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of Hazardous Materials
on any Real Property now or hereafter owned, leased or operated by the Borrower
or any of its Subsidiaries, or transport or permit the transportation of
Hazardous Materials to or from any such Real Property, except to the extent that
the failure to comply with the requirements specified in clause (i) or (ii)
above, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. If required to do so under any applicable
directive or order of any governmental agency, the Borrower agrees to undertake,
and cause each of its Subsidiaries to undertake, any clean up, removal, remedial
or other action necessary to remove and clean up any Hazardous Materials from
any Real Property owned, leased or operated by the Borrower or any of its
Subsidiaries in accordance with, in all material respects, the requirements of
all applicable Environmental Laws and in accordance with, in all material
respects, such orders and directives of all governmental authorities, except to
the extent that the Borrower or such Subsidiary is contesting such order or
directive in good faith and by appropriate proceedings and for which adequate
reserves have been established to the extent required by generally accepted
accounting principles.
SECTION 8. NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees, as of the Effective Date and thereafter for so long as this Agreement is
in effect and until the Commitments have terminated, no Notes or Letters of
Credit are outstanding and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full,
that (it being agreed that no provision of Section 8.02, 8.03, 8.04, 8.06, 8.08,
8.09 or 8.10 shall at any time be defaulted by, or shall be interpreted to
prohibit, any action by the Borrower or any of its Subsidiaries to the extent
(x) such action was not prohibited by the LaSalle Loan Agreement and (y) a
restriction on
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any such action is prohibited by Section 3.12 of the Senior Note Indenture
and/or Section 3.13 of the Discount Note Indenture, in each case as in effect on
the Restatement Effective Date, to the extent the Senior Notes and the Discount
Notes, respectively, are then outstanding or have not been amended pursuant to a
Permitted Exit Amendment):
8.01 CHANGES IN BUSINESS. The Borrower will not, and will not permit
any of its Subsidiaries to, engage in any line of business other than the
business of outdoor advertising, including transit and bus shelter, stadium,
transport terminal and other similar out-of-home advertising services and any
administrative or similar activities reasonably related thereto.
8.02 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
sell or otherwise dispose of all or any part of its property or assets (other
than inventory or obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or purchase, lease
or otherwise acquire all or any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases, materials and
equipment in the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) any Subsidiary of the Borrower (other than, prior to the Guaranty
Commencement Date, Naegele or Peterson) may be merged or consolidated with
or into, or be liquidated into, the Borrower (so long as the Borrower is
the surviving corporation) or any other Subsidiary (so long as Naegele or
Peterson, as the case may be, is the surviving corporation if it is such
other Subsidiary), or all or any part of its business, properties and
assets may be conveyed, leased, sold or transferred to the Borrower or any
other Subsidiary;
(b) capital expenditures to the extent within the limitations set
forth in Section 8.05 hereof;
(c) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.06;
(d) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
such lease does not create a Capitalized Lease Obligation not otherwise
permitted by Section 8.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary of
software, customer lists, trademarks and other intellectual property in the
ordinary course of
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business, provided, that such licenses or sublicenses shall not interfere
with the business of the Borrower or any Subsidiary;
(f) other sales or dispositions of assets (I) for cash in an amount
equal to the fair market value thereof as determined by the Borrower and/or
(II) in exchange for other assets permitted to be held under Section 8.01
provided that, in each case, (i) the assets so sold or disposed of,
together with all other assets, previously sold or disposed of pursuant to
this clause (f) after or during the Calculation Period applicable to such
sale or disposition, shall not have generated Adjusted EBITDA of the
Borrower during such Calculation Period (taken as one accounting period)
equal to 15% or more of the aggregate Adjusted EBITDA of the Borrower
during such Calculation Period (taken as one accounting period) and (ii)
the assets so sold or disposed of, together with all other assets
previously sold or disposed of pursuant to this clause (f) after the
Restatement Effective Date, shall not have generated Adjusted EBITDA of the
Borrower during the period (taken as one accounting period) commencing on
the Restatement Effective Date and ending on the last day of the last month
for which financial statements of the Borrower are reasonably available
equal to 25% or more of the aggregate Adjusted EBITDA of the Borrower
during such period (taken as one accounting period), and, provided further,
that (x) the sale or disposition of the capital stock of any Subsidiary of
the Borrower shall be prohibited unless it is for all of the outstanding
capital stock of such Subsidiary owned by the Borrower and (y) neither
Naegele nor Peterson may not be sold or disposed of pursuant to this clause
(f);
(g) other sales or dispositions of assets in each case to the extent
the Required Banks have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary other than, prior to the Guaranty Commencement
Date, Naegele and Peterson may be liquidated into the Borrower; and
(i) Permitted Acquisitions provided that after giving effect thereto
and the related borrowings to finance same there would be no default under
Sections 8.11 through 8.15 or 9.08(B) or (C) determined on a pro forma
basis as if such Permitted Acquisition and the related borrowings were
consummated on the first day of the 12-month period ending on the
Measurement Date last to occur.
8.03 LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase
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such property or assets (including sales of accounts receivable or notes with
recourse to the Borrower or any of its Subsidiaries) or assign any right to
receive income, or file or permit the filing of any financing statement under
the UCC or any other similar notice of Lien under any similar recording or
notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in
the good faith judgment of the management of the Borrower) have been
established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Borrower or any
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement or the other
Credit Documents;
(d) (x) Liens on assets of the Borrower and each Subsidiary existing
on the Restatement Effective Date and listed on Part A of Annex VIII
hereto, without giving effect to any subsequent extensions or renewals
thereof, (y) Liens on assets of Peterson existing on the Restatement
Effective Date and added to Part B of Annex VIII by the Borrower and the
Agent within 30 days after the Restatement Effective Date so long as such
Liens are deemed immaterial by the Agent and (z) immaterial Liens on assets
of the Borrower and each Subsidiary existing on the Restatement Effective
Date at the locations listed on Part B of Annex VIII;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof, except
as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in
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respect of the payment for borrowed money) provided, that the aggregate
amount of deposits at any time pursuant to this clause (f) shall not
exceed $500,000;
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) Purchase money Liens securing payables arising from the purchase
by the Borrower of any equipment or goods in the normal course of business,
provided that such payables shall not constitute Indebtedness;
(k) Any interest or title of a lessor or any Lien on the interest or
title of a lessor under any lease permitted by this Agreement;
(l) Liens arising pursuant to purchase money mortgages relating to,
or security interests securing Indebtedness representing the purchase price
of, assets acquired by the Borrower, Naegele and/or Peterson or any
Subsidiary Guarantor after the Restatement Effective Date, provided that
any such Liens attach only to the assets so acquired and that all
Indebtedness secured by Liens created pursuant to this clause (l) shall not
exceed $5,000,000 at any time outstanding;
(m) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(d);
(n) Liens on assets of Subsidiaries of the Borrower in favor of the
Borrower;
(o) Liens securing Indebtedness permitted by Section 8.04(i) provided
that such Liens attach only to the assets (or to the assets of the Person
whose stock is being) acquired; and
(p) Liens on assets of the Borrower securing Indebtedness not in
excess of $1,000,000 at any time outstanding.
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8.04 INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement, the other
Credit Documents and the AF Credit Agreement;
(b) Indebtedness owing by (i) any Subsidiary to the Borrower or
another Subsidiary and (ii) the Borrower to any Subsidiary;
(c) Indebtedness of the Borrower evidenced by the Senior Notes, in an
aggregate principal amount not to exceed $65,000,000;
(d) Capitalized Lease Obligations of the Borrower, Naegele or
Peterson, provided that the aggregate Capitalized Lease Obligations under
all Capital Leases entered into after the Restatement Effective Date shall
not exceed $10,000,000;
(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Permitted Subordinated Debt and the Additional Subordinated Debt;
(g) to the extent same has been assumed by the Borrower, the
Indebtedness evidenced by the promissory note originally executed by
Holdings in favor of William H. Smith (the "Smith Note");
(h) Indebtedness incurred pursuant to purchase money mortgages
permitted by Section 8.03(l);
(i) Indebtedness of a Person, or secured by assets, acquired after
the Restatement Effective Date pursuant to a Permitted Acquisition provided
that such Indebtedness (x) existed at the time of such Permitted
Acquisition and was not created in connection therewith or in anticipation
thereof, (y) is not guaranteed in any respect by the Borrower or any of its
Subsidiaries, except to the extent such Person merges into, or such assets
are directly acquired by, the Borrower or such Subsidiary and (z) shall not
exceed in the aggregate for all Indebtedness permitted by this clause (i)
$5,000,000 at any time outstanding, without giving effect to any subsequent
extension, renewal or refinancing thereof; and
(j) additional Indebtedness of the Borrower not to exceed an
aggregate outstanding principal amount of $5,000,000 at any time.
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8.05 CAPITAL EXPENDITURES. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower, Naegele, Peterson and any Subsidiary Guarantor may
make Consolidated Capital Expenditures (x) during the period from the
Restatement Effective Date through December 31, 1996 (taken as one accounting
period) in an aggregate amount not in excess of $3,000,000, (y) during the
fiscal year of the Borrower ended December 31, 1997, $12,000,000 and (z) during
each successive fiscal year of the Borrower, in an aggregate amount not in
excess of 105% of the maximum amount for the immediately prior 12-month period.
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section 8.05(a) (without giving effect to this clause (b)) is not
fully expended during such fiscal year, the maximum amount which may be expended
during the immediately succeeding fiscal year pursuant to Section 8.05(a) shall
be increased by such unutilized amount provided that such increase shall not
exceed $5,000,000 in any fiscal year.
(c) In addition to the foregoing, the Borrower, Naegele, Peterson and
any Subsidiary Guarantor may make Consolidated Capital Expenditures in amounts
in excess of those permitted under Sections 8.05(a) and (b) provided that the
amount of such additional Consolidated Capital Expenditures shall not exceed the
sum of (x) the Available ECF Amount and (y) the Available Equity Amount, in each
case as determined at the time of, but immediately prior to, the making thereof.
8.06 INVESTMENTS AND LOANS. The Borrower will not make or permit to
exist any Investments or Loans in or to any other Person or acquire or establish
any Subsidiary, except for Permitted Investments or as permitted by the next
sentence. Notwithstanding anything contained in this Section 8.06 to the
contrary, Borrower may acquire 100% of the Capital Stock of (x) Quantum
Structure & Design, Inc. and (y)] any [other] Person if [, in the case of clause
(y), the following conditions are satisfied: (i) an Event of Default has not
occurred and is continuing under this Agreement and will not occur as a result
of, in connection with or after giving effect to such acquisition; (ii) the
Person being acquired engages exclusively in the business permitted to be
engaged in by Borrower and its Subsidiaries pursuant to Section 8.01; (iii)
title to all of the assets acquired in such acquisition is transferred by
operation of law, assignment, sale or otherwise, to Borrower within 60 days of
the consummation of such acquisition provided that such transfer shall not be
required after the Guaranty Commencement Date if the assets are held by a
Subsidiary Guarantor; and (iv) such acquired assets are expressly made subject
to the Liens created by the Security Documents.
8.07 SUBSIDIARIES; ETC. The Borrower will not (x) sell, assign or
otherwise encumber or dispose of, and will not permit any of its Subsidiaries
directly or indirectly to
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issue, sell, assign, pledge or otherwise encumber or dispose of, any shares of a
Subsidiary's capital stock or other securities (or warrants, rights or options
to acquire shares or other equity securities) of such Subsidiary, except to the
Borrower (to the extent otherwise permitted hereunder) and except for
dispositions permitted by Section 8.02, (y) after the Restatement Effective
Date, create or permit to be created any new Subsidiary except to the extent
created in compliance with the second sentence of Section 8.06 and (z) violate
or breach the provisions of Section 3.11(a) of the Senior Note Indenture as in
effect on the Restatement Effective Date (to the extent such Section is then in
effect).
8.08 PREPAYMENTS OF INDEBTEDNESS, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of the Senior Notes, Subordinated Debt (once
issued)[, the Smith Note] or any other Existing Indebtedness provided that
(I) the Borrower may Purchase Senior Notes (w) in an aggregate amount, at
any time, equal to the Holdback Proceeds at such time, (x) in an amount at
the time of any such Purchase equal to the Available ECF Amount at the time
of, but immediately prior to, such Purchase provided that at such time
(i.e., immediately prior to such Purchase) the Holdings Leverage Ratio is
less than 5.00 to 1.00, (y) in an amount at the time of any such Purchase
equal to the Available Equity Amount at the time of, but immediately prior
to, such Purchase and (z) as otherwise consented to by the Required Banks
and (II) the Borrower may pay Dividends to Holdings to permit it to
purchase Discount Notes as provided for in Section 8.09(a);
(b) amend or modify, or permit the amendment or modification of, any
provisions of (x) any Senior Note Documents (except for Permitted Exit
Amendments), (y) any Subordinated Debt Documents and (z) the AF Credit
Agreement; and/or
(c) amend, modify or change in any manner adverse to the interests of
the Banks the Certificate of Incorporation (including, without limitation,
by the filing of any certificate of designation) or By-Laws of the
Borrower, Naegele or Peterson or any agreement entered into by the
Borrower, with respect to its capital stock, or the Acquisition Documents
or enter into any new agreement in any manner adverse to the interests of
the Banks with respect to the capital stock of the Borrower, Naegele or
Peterson.
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8.09 DIVIDENDS, ETC. (a) The Borrower will not redeem, retire,
purchase or otherwise acquire, directly or indirectly, any Capital Stock of
Borrower or other evidence of ownership interest, or declare or pay dividends
upon any Capital Stock of Borrower or make any distribution of Borrower's
property or assets (any of the foregoing, a "Dividend"), provided that this
Section 8.09 will not prohibit, so long as no Event of Default shall have
occurred and is continuing or would occur as a consequence thereof, (i) the
repurchase, redemption or other acquisition or retirement for value of any
shares of Capital Stock of the Borrower from the estate of Daniel L. Simon
solely out of the proceeds of any policy of insurance maintained to provide
funds for such purpose, (ii) to the extent the Indebtedness evidenced by the
Smith Note has not been assumed by the Borrower, the payment of dividends to
Holdings in an annual amount not to exceed $120,000 to fund payments of interest
on the Smith Note, (iii) the payment of cash Dividends to Holdings to the extent
the proceeds are promptly used to pay administrative costs arising in the
ordinary course of business, (iv) the payment of cash Dividends to Holdings to
be promptly utilized by Holdings to Purchase its Common Stock (or options or
warrants to purchase such Common Stock) from officers, employees and directors
(or their estates) upon the death, permanent disability, retirement or
termination of employment of any such Person or otherwise in accordance with any
stock option plan or any employee stock ownership plan or warrant plan and (v)
the payment of cash Dividends to Holdings to the extent that the proceeds are
used on the date of receipt to Purchase Discount Notes provided that any such
Dividend will not exceed the Modified Available Amount at the time of, but
immediately prior to, the making of such Dividend.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary, (c) transfer any of its properties or assets
to the Borrower or any Subsidiary or (B) the ability of the Borrower or any
other Subsidiary of the Borrower to create, incur, assume or suffer to exist any
Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of: (i) this
Agreement, the other Credit Documents, the AF Credit Agreement, the Senior Note
Documents, the Discount Note Indenture and the Subordinated Debt Documents (once
executed); (ii) applicable law; (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices; (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement; and (v) Liens permitted under Section 8.03 and any
documents or instruments governing the terms of any Indebtedness or other
obligations secured by any such Liens, provided that such prohibitions or
restrictions apply only to the assets subject to such Liens.
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8.10 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will
not permit any Subsidiary to, sell, lease, license, transfer, exchange, or
otherwise dispose of any of its properties, assets or services to, or purchase,
lease, or license the use of any property, assets or services from, or transfer
funds to, or enter into any contract, agreement, understanding, loan, advance or
guarantee with, to or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction," whether constituting one transaction or a series of
related transactions), unless (a) such Affiliate Transaction is on terms that
are no less favorable to the Borrower or the relevant Subsidiary than those that
would have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated person and (b) Borrower delivers to the Agent (i)
with respect to any Affiliate Transaction involving aggregate payments in excess
of $250,000, an officers' certificate setting forth a resolution of the Board of
Directors of the Borrower approved by a majority of the members of the Board of
Directors (and a majority of the disinterested members of the Board of
Directors, if any) certifying that such Affiliate Transaction complies with
clause(a) above and (ii) with respect to any Affiliate Transaction involving
aggregate payments in excess of $3.0 million, an opinion as to the fairness,
from a financial point of view, of such Affiliate Transaction to the Borrower or
such Subsidiary issued by an independent investment banking firm of national
standing with total assets in excess of $1.0 billion. The foregoing limitation
does not limit, and shall not apply to, (i) the payment of reasonable annual
compensation to directors or executive officers of the Borrower or any
Subsidiary thereof, (ii) transactions described in Annex IX hereto, provided
that the fees described in Annex IX shall accrue and not be paid at any time
that a Default or an Event of Default specified in Section 9.01 shall occur and
be continuing or (iii) payments by the Borrower to Holdings under the Tax
Sharing Agreement.
8.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
ratio of (i) Adjusted EBITDA of the Borrower to (ii) Consolidated Fixed Charges
of the Borrower for any 12 month period (taken as one accounting period) ending
on a Measurement Date (or if less the period from the Initial Borrowing Date to
such Measurement Date) to be less than 1.00 to 1.
8.12 MINIMUM ADJUSTED EBITDA. The Borrower will not permit Adjusted
EBITDA of the Borrower for any 12 month period (taken as one accounting period)
ending on a Measurement Date occurring in a period set forth below to be less
than the amount set forth opposite such period [plus (B) the Aggregate Acquired
EBITDA as of such Measurement Date]:
Period Amount
------ -------
Restatement Effective Date through
December 30, 1997 $57,000,000
December 31, 1997 through
December 30, 1998 $58,400,000
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December 31, 1998 through
December 30, 1999 $60,750,000
December 31, 1999 through
December 30, 2000 $65,750,000
December 31, 2000
and thereafter $70,500,000
8.13 BORROWER LEVERAGE RATIO. The Borrower will not permit the
Borrower Leverage Ratio as of any Measurement Date occurring in a period set
forth below to be more than the ratio set forth opposite such period:
Period Ration
------ ------
Period Ratio Restatement Effective Date through
December 30, 1997 6.00 to 1.0
December 31, 1997 and
thereafter 5.00 to 1.0
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8.14 SENIOR LEVERAGE RATIO. On and after the Guaranty Commencement
Date, the Borrower will not permit the Senior Leverage Ratio as of any
Measurement Date occurring in a period set forth below to be more than the ratio
set forth opposite such period:
PERIOD RATIO
------ -----
Restatement Effective Date through
December 30, 1997 5.50 to 1.0
December 31, 1997 through
December 30, 1998 5.00 to 1.0
December 31, 1998 and
thereafter 4.50 to 1.0
8.15 INTEREST RATIO. On and after the Guaranty Commencement Date,
the Borrower will not permit the ratio of (i) Adjusted EBITDA of the Borrower to
(ii) Consolidated Interest Expense of the Borrower for any twelve month period
(taken as one accounting period) ending on a Measurement Date occurring in a
period set forth below to be less than the ratio set forth opposite such period:
PERIOD RATIO
------ -----
Restatement Effective Date through
December 30, 1997 1.50 to 1.0
December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
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9.02 REPRESENTATIONS, ETC. Any representation, warranty or statement
made by the Borrower herein or in any other Credit Document or in any statement
or certificate delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
9.03 COVENANTS. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 7.10, 7.11 or 8, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
9.01, 9.02 or clause (a) of this Section 9.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
notice to the defaulting party by the Agent or the Required Banks; or
9.04 DEFAULT UNDER OTHER AGREEMENTS. (a) Holdings, the Borrower or
any of its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
applicable thereto or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of Holdings, the Borrower or any of its Subsidiaries shall
be declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not constitute an Event of Default pursuant to this
Section 9.04 unless the principal amount of any one issue of such Indebtedness
exceeds $2,500,000 individually or in the aggregate at any one time; or
9.05 BANKRUPTCY, ETC. Holdings, the Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against Holdings, the Borrower or any of its Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Holdings, the Borrower or any of its Subsidiaries; or Holdings, the
Borrower or any of its Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Holdings, the Borrower or any of its
Subsidiaries; or there is commenced against Holdings, the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings, the Borrower or any of its Subsidiaries is adjudicated
insolvent or
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bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; Holdings, the Borrower or any of its Subsidiaries suffers
any appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60 days; or
Holdings, the Borrower or any of its Subsidiaries makes a general assignment for
the benefit of creditors; or any corporate action is taken by Holdings, the
Borrower or any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
9.06 ERISA. (a) A single-employer plan (as defined in Section 4001
of ERISA) established by the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or shall provide security to induce the issuance of such waiver or
extension, (b) any Plan is or shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA or an event has occurred
entitling the PBGC to terminate a Plan under Section 4042(a) of ERISA, (c) any
Plan shall have an Unfunded Current Liability or (d) the Borrower or a
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a material
liability to or on account of a termination of or a withdrawal from a Plan under
Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and there shall result
from any such event or events described in the preceding clauses of this Section
9.06 the imposition of a Lien upon the assets of Holdings, the Borrower or any
Subsidiary, the granting of a security interest, or a liability or a material
risk of incurring a liability to the PBGC or a Plan or a trustee appointed under
ERISA or a penalty under Section 4971 of the Code, in each case which would
have, in the opinion of the Required Banks a Material Adverse Effect; or
9.07 CREDIT DOCUMENTS. Any Credit Document or Guaranty (once
executed) shall cease to be in full force and effect (except as provided for
therein), or shall cease to give the Collateral Agent any Lien encumbering
assets with an aggregate fair market value in excess of $2,500,000 (and, if
encumbering assets with a fair market value of less than $2,500,000, for a
period greater than thirty or more days), or any material rights, powers and
privileges purported to be created thereby in favor of the Collateral Agent or
any Credit Party shall default in any material respect in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document or Guaranty or shall disaffirm
or seek to disaffirm any Guaranty; or
9.08 HOLDINGS. (A) Holdings shall after the Restatement Effective
Date [(i) incur any Indebtedness,] (ii) grant or create any Lien on any of its
assets that secures Indebtedness, (iii) modify or amend the Discount Note
Indenture or Discount Notes (except, in each case, for Permitted Exit
Amendments) or (except with the proceeds of equity contributions from Existing
UOH Stockholders) prepay any of the Discount Notes, (iv)
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engage in any business or activity other than the ownership of all of the
capital stock of the Borrower and administrative activities directly related
thereto, (v) sell or dispose of any of, or otherwise cease to own all of, the
capital stock of the Borrower, (vi) change its fiscal quarters or fiscal year
from those applicable also to the Borrower, (vii) fail to maintain its own
payroll and separate books of account and bank accounts separate from those of
the Borrower and its Subsidiaries, (viii) fail to pay its liabilities, including
all administrative expenses, from its own separate assets, (ix) fail to
separately identify and segregated its assets from the assets of the Borrower
and its Subsidiaries, except in each case (a) as expressly required by any of
the Shareholders' Agreements, Management Agreements, Tax Sharing Agreements,
subscription agreements with members of management and the Discount Notes, all
as in effect on the Restatement Effective Date, (b) as expressly required by
law, (c) Holdings issuing Capital Stock in any initial or subsequent public
offering to the extent the proceeds thereof are used to repay the Loans as
required by Section 4.02(A)(d) hereof and (d) Holdings Purchasing Discount Notes
(w) in an aggregate amount, at any time, equal to the Holdback Proceeds at such
time, (x) in an amount at the time of any such Purchase equal to the Available
ECF Amount at the time of, but immediately prior to, such Purchase provided that
at such time (i.e., immediately prior to such Purchase) the Holdings Leverage
Ratio is less than 5.00 to 1.00 or (y) in an amount at the time of any such
Purchase equal to the Available Equity Amount at the time of, but immediately
prior to, such Purchase and/or (x) amend, modify or change in any way adverse to
the interests of the Banks, its Certificate of Incorporation (including, without
limitation, by the filing or modification of any certificate of designation) or
By-Laws or any agreement entered into by Holdings with respect to its capital
stock; and/or
(B) The Holdings Leverage Ratio as of any Measurement Date occurring
in a period set forth below is more than the ratio set forth opposite such
period:
Period Ratio
------ -----
Restatement Effective Date through
June 29, 1998 6.50 to 1.0
June 30, 1998 through
December 30, 1999 6.25 to 1.0
December 31, 1999 and
thereafter 6.00 to 1.0;
(C) At any time prior to the Guaranty Commencement Date, the ratio of
(i) Adjusted EBITDA of Holdings to (ii) Consolidated Cash Interest Expense of
Holdings for any 12 month period (taken as one accounting period) ending on a
Measurement Date
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occurring in a period set forth below is less than the ratio set forth opposite
such period:
Period Ratio
------ ------
Restatement Date through
December 30,1997 1.50 to 1.0
December 31, 1997 through
December 30, 19981. 75 to 1.0
December 31, 1998 through
Deccember 30, 1999 1.85 to 1.0
December 31, 1999 through
Dececember 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0;
(D) Holdings shall have failed, for more than 15 days following the
Guaranty Commencement Date, to authorize and execute a guaranty agreement (as
modified, amended or supplemented in accordance with the terms thereof or
hereof, the "Holdings Guaranty") in respect of the Obligations hereunder and a
pledge agreement (as modified, amended or supplemented in accordance with the
terms thereof or hereof, the "Holdings Pledge Agreement") pledging all the
capital stock of the Borrower, all in such form as is acceptable to the Agent
and/or to deliver same to the Agent and Collateral Agent, as the case may be,
together with, in pledge under, the Holdings Pledge Agreement, the certificates
representing all the shares of the capital stock of the Borrower, accompanied by
executed and undated stock powers and such opinions of counsel relating thereto
as reasonably requested by the Agent; or
9.09 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings, the Borrower or any of its Subsidiaries involving a liability
of $2,500,000 or more individually or in the aggregate for all such judgments
and decrees for Holdings, the Borrower and its Subsidiaries (not paid or to the
extent not covered by insurance) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within 60 days
from the entry thereof; or
9.10 AF CREDIT AGREEMENT. An Event of Default under and as defined
in the AF Credit Agreement shall have occurred and be continuing;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that, if an Event of Default specified
in Section 9.05 shall occur with respect to the Borrower, the result which would
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occur upon the giving of written notice by the Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any Commitment Commission shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Loans and
all obligations owing hereunder to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; and/or (iii)
enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or
all of the Liens and security interests created pursuant to the Security
Documents.
SECTION 10. DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Acquisition" shall mean the acquisition by the Borrower of 100% of
the outstanding capital stock of Peterson pursuant to the Acquisition Documents
provided that after giving effect to the merger contemplated by the Acquisition
Agreement and the additional mergers consummated on the Restatement Effective
Date, Peterson shall be a direct wholly-owned subsidiary of the Borrower.
"Acquisition Agreement" shall mean the Agreement and Plan of Merger,
dated August __, 1996, among the Borrower, Universal Acquisition Corp., OAH and
the stockholders listed therein as delivered to the Banks pursuant to Section
5.01(H), as the same may be amended or modified in accordance with the
provisions thereof and hereof.
"Acquisition Documents" shall mean the Acquisition Agreement and all
other documents entered into to effectuate the Acquisition.
"Acquisition Facility Termination Date" shall mean the first date
occurring on or after the AR Termination Date under and as defined in the AF
Credit Agreement on which all Acquisition Loans have been repaid in full.
"Acquisition Loans" shall mean and include the AR Loans and the A Term
Loans as defined in the AF Credit Agreement.
"Additional Mortgages", "Additional Pledge Agreement" and "Additional
Security Agreement" shall each have the meaning provided in Section 7.10.
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"Additional Security Documents" shall mean and include the Additional
Pledge Agreement, Additional Security Agreement, Additional Mortgages, New
Mortgages and the Holdings Pledge Agreement.
"Additional Subordinated Debt" shall mean subordinated debt issued by
the Borrower after it has issued $200,000,000 of Permitted Subordinated Debt,
provided that (i) the terms and conditions (other than pricing and maturities,
provided that no scheduled payment of principal shall be due and payable prior
to the Final Maturity Date) are (in the reasonable opinion of the Agent)
substantially the same as those contained in the Permitted Subordinated Debt or
are consented to by the Required Banks [and (ii) the Additional Subordinated
Debt shall not exceed $100 million.]
"Adjusted EBITDA" of any Person shall mean, for any period (x) the
Consolidated EBITDA of such Person for such period plus or minus (y) the
adjustments thereto provided for in Exhibit I to AF Credit Agreement.
"Adjusted Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank such Bank's Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Commitment at such time by the Adjusted Total Revolving
Commitment at such time, it being understood that all references herein to
Revolving Commitments and the Adjusted Total Revolving Commitment at a time when
the Total Revolving Commitment or Adjusted Total Revolving Commitment, as the
case may be, has been terminated shall be references to the Revolving Loan
Commitments or Adjusted Total Revolving Commitment, as the case may be, in
effect immediately prior to such termination, PROVIDED that (A) no Bank's
Adjusted Percentage shall change upon the occurrence of a Bank Default from that
in effect immediately prior to such Bank Default if, after giving effect to such
Bank Default and any repayment of Revolving Loans and Swingline Loans at such
time pursuant to Section 4.02(A)(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-Defaulting Banks plus
(ii) the aggregate outstanding principal amount of Swingline Loans plus (iii)
the Letter of Credit Outstandings, exceeds the Adjusted Total Revolving Loan
Commitment; (B) the changes to the Adjusted Percentage that would have become
effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Bank Default on which the sum of
(i) the aggregate outstanding principal amount of the Revolving Loans of all
Non-Defaulting Banks plus (ii) the aggregate outstanding principal amount of the
Swingline Loans plus (iii) the Letter of Credit Outstandings is equal to or less
than the Adjusted Total Revolving Commitment; and (C) if (i) a Non-Defaulting
Bank's Adjusted Percentage is changed pursuant to the preceding clause (B) and
(ii) any repayment of such Bank's Revolving Loans, or of Unpaid Drawings or of
Swingline Loans, that were made during the period commencing after the date of
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the relevant Bank Default and ending on the date of such change to its Adjusted
Percentage must be returned to the Borrower as a preferential or similar payment
in any bankruptcy or similar proceeding of the Borrower, then the change to such
Non-Defaulting Bank's Adjusted Percentage effected pursuant to said clause (B)
shall be reduced to that positive change, if any, as would have been made to its
Adjusted Percentage if (x) such repayments had not been made and (y) the maximum
change to its Adjusted Percentage would have resulted in the sum of the
outstanding principal of Revolving Loans made by such Bank plus such Bank's new
Adjusted Percentage of the outstanding principal amount of Swingline Loans and
of Letter of Credit Outstandings equalling such Bank's Revolving Commitment at
such time.
"Adjusted Revolving Commitment" for each Non-Defaulting Bank shall
mean at any time the product of such Bank's Adjusted Percentage and the Adjusted
Total Revolving Commitment.
"Adjusted Total Revolving Commitment" shall mean at any time the Total
Revolving Commitment less the aggregate Revolving Commitments of all Defaulting
Banks.
"AF Bank" shall mean at any time a financial institution that is then
an AR Bank under and as defined in the AF Credit Agreement.
"AF Credit Agreement" shall mean the Amendment and Restatement dated
as of the date hereof to the Acquisition Credit Agreement among the Borrower,
the Banks, LaSalle as Co-Agent and BTCo as Agent providing for the credits
specified therein, as in effect on the Restatement Effective Date hereunder and
as the same may be modified, amended or supplemented in accordance with the
terms thereof to the extent permitted hereunder.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 11.09.
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["Aggregate Acquired EBITDA" shall mean, as at any Measurement Date,
an amount equal to the aggregate of 85% of the "12-month Consolidated EBITDA" of
each Person acquired by the Borrower and its Subsidiaries after the Restatement
Effective Date, with the "12-month Consolidated EBITDA" of each such Person to
be the Consolidated EBITDA of such Person for the 12 months last ended prior to
the acquisition of such Person.]
"Agreement" shall mean this Amendment and Restatement to Revolving
Credit Agreement, as the same may be from time to time further modified, amended
and/or supplemented.
"Applicable Base Rate Margin" shall mean 1.75% less the Margin
Reduction Amount, if any, provided that if the Guaranty Commencement Date has
not occurred prior to March 31, 1997 then the Applicable Base Rate Margin for
all Loans shall increase by .25% on March 31, 1997, which increase shall
continue in effect until such time, if any, as the Guaranty Commencement Date
occurs.
"Applicable Eurodollar Margin" shall mean 2.75% less the Margin
Reduction Discount, if any, provided that if the Guaranty Commencement Date has
not occurred prior to March 31, 1997, then the Applicable Eurodollar Margin for
all Loans shall increase by .25% on March 31, 1997, which increase shall
continue in effect until such time, if any, as the Guaranty Commencement Date
occurs.
"AR Loans" shall mean AR Loans under and as defined in the AF Credit
Agreement.
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower in each case to the
extent acceptable to the Agent.
"Available ECF Amount" shall have the meaning provided in the AF
Credit Agreement.
"Available Equity Amount" shall have the meaning provided in the AF
Credit Agreement.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans or
to fund its portion of any unreimbursed payments under Section 2.05(c) or (ii) a
Bank having notified the Agent
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and/or the Borrower that it does not intend to comply with the obligations under
Section 1.01 or under Section 2.05(c), in the case of either (i) or (ii) as a
result of the appointment of a receiver or conservator with respect to such Bank
at the direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher, (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall mean Universal Outdoor, Inc.
"Borrower Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of the Borrower on such date to (y) Adjusted
EBITDA of the Borrower for the 12 month period (taken as one accounting period)
ending on such date.
"Borrower Pledge Agreement" shall mean an Amendment and Restatement to
Pledge Agreement in the form of Exhibit E to the AF Credit Agreement, as in
effect on the Effective Date and as the same may be modified, amended or
supplemented from time to time in accordance with the terms hereof and thereof.
"Borrowing" shall mean the incurrence of (i) Swingline Loans by the
Borrower from BTCo on a given date and (ii) one Type of Revolving Loan by the
Borrower from all of the Banks on a PRO RATA basis on a given date (or resulting
from conversions on a given date), having in the case of Eurodollar Loans the
same Interest Period; provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
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"Calculation Period" shall mean, with respect to any sale or
disposition of assets made pursuant to Section 8.02(f), the last 12 month period
for which financial statements of the Borrower are reasonably available.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, whether or not voting, including but not limited to common stock,
preferred stock, convertible debentures, warrants, options or similar rights to
acquire such capital stock, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an "Approved Bank"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Bank or Approved Bank
or by the parent company of any Bank or Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and
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(v) investments in money market funds substantially all of whose assets are
comprised of securities of the type described in clauses (i) through (iv) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 ET
SEQ.
"Change of Control" shall mean (i) Holdings shall cease to own legally
and beneficially 100% of the outstanding capital stock of the Borrower, (ii)
Management Investors shall cease to be the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act) of 75% or more (on a fully diluted
basis) of (x) the Common Stock beneficially owned by the Management Investors on
the Restatement Effective Date, less (y) the Common Stock (not exceeding 750,000
shares) sold by Management Investor pursuant to the Proposed Equity Offering,
(iii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (ii) above, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 30% of the total
voting and economic ownership interests of Holdings; PROVIDED, HOWEVER, that the
Permitted Holders "beneficially own" (as defined in clause (ii) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting and
economic ownership interests of Holdings than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Holdings, (iv)
during any period of two consecutive years individuals who at the beginning of
such period constituted the Board of Directors of Holdings (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the stockholders of Holdings was approved by either (i) the
Permitted Holders or (ii) a vote of a majority of the directors of Holdings then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of Holdings then
in office or (v) any "Change of Control" or similar term as defined in (I) prior
to the repayment in full of the Discount Notes or Senior Notes, respectively,
the Discount Note Indenture or the Senior Note Indenture except for any such
Change of Control arising from the Proposed Equity Issuance and/or (II) any
Permitted Subordinated Debt Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
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"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Banks.
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Common Stock" shall mean the common stock of Holdings.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with GAAP,
are or are required to be included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, provided
that Consolidated Capital Expenditures shall in any event exclude the purchase
price paid in connection with any Permitted Acquisition (whether or not
allocable to property, plant and equipment).
"Consolidated Cash Interest Expense" of any Person shall mean, for any
period, Consolidated Interest Expense of such Person, but excluding, however,
interest expense not payable in cash and amortization of discount and deferred
issuance and financing costs.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at any
time, the current liabilities of such Person and its Subsidiaries determined on
a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" of any Person shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
such Person and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP.
"Consolidated EBIT" of any Person shall mean, for any period, (A) the
sum of the amounts for such period for such Person of (i) Consolidated Net
Income, (ii)
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provisions for taxes based on income, (iii) Consolidated Interest Expense and
(iv) losses on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary losses LESS (B) the amount for such period of
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains, all as determined on a consolidated basis for
such Person and its Subsidiaries in accordance with GAAP.
"Consolidated EBITDA" of any Person shall mean, for any period, the
sum of the amounts for such period for such Person of (i) Consolidated EBIT,
(ii) depreciation expense and (iii) amortization expense, all as determined on a
consolidated basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" of any Person shall mean, for any period,
the sum, without duplication, for such Person of the amounts for such period of
(i) Consolidated Cash Interest Expense, (ii) Dividends paid to Holdings, (iii)
Consolidated Capital Expenditures (x) made other than pursuant to Section
8.05(c) and (y) paid in cash, (iv) taxes paid or payable in cash and (v)
scheduled payments on the Acquisition Loans and Existing Indebtedness, all as
determined on a consolidated basis for such Person and its Subsidiaries in
accordance with GAAP.
"Consolidated Interest Expense" of any Person shall mean, for any
period, total interest expense (including that attributable to Capital Leases in
accordance with GAAP) of such Person and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of such Person and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements.
"Consolidated Net Income" of any Person (a "Designated Person") shall
mean for any period, the net income (or loss) of such Designated Person and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, provided that there shall
be (A) deducted, in the case of the Borrower, any Dividends paid to Holdings and
(B) excluded (i) the income (or loss) of any Person (other than Subsidiaries of
the Designated Person) in which any other Person (other than the Designated
Person or any of its Subsidiaries) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Designated
Person or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Designated Person or is merged into or consolidated with the Designated
Person or any of its Subsidiaries or that Person's assets are acquired by the
Designated Person or any of its Subsidiaries, (iii) the income of any Subsidiary
of the Designated Person to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
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applicable to that Subsidiary, (iv) Transaction Expenses and (v) compensation
expense resulting from the issuance of capital stock, stock options or stock
appreciation rights issued to employees, including officers, of the Designated
Person or any Subsidiary, or the exercise of such options or rights, in each
case to the extent the obligation (if any) associated therewith is not expected
to be settled by the payment of cash by the Designated Person or any Affiliate
of the Designated Person and compensation expense resulting from the repurchase
of any such capital stock, options and rights.
"Consolidated Senior Debt" of any Person shall mean, as of any date of
determination, (x) the Consolidated Debt of such Person less (y) all Permitted
Subordinated Debt included in determining such Consolidated Debt.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided however, that
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the Security
Documents, any documents executed in connection therewith and (once executed)
the Guaranties.
"Credit Event" shall mean and include the making of a Loan or the
issuance of a Letter of Credit.
"Credit Party" shall mean the Borrower and, upon compliance with the
provisions of Section 7.10(a), each Guarantor.
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"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated UOH Stockholders" shall mean the Management Investors,
Kelso Investment Associates V, L.P. and Kelso Equity Partners V, L.P.
"Discount Note Indenture" shall mean the Indenture entered into by and
between Holdings and United States Trust Company of New York, as trustee
thereunder, with respect to the Discount Notes as in effect on the Effective
Date and as the same may be modified, amended or supplemented from time to time
in accordance with the terms hereof and thereof.
"Discount Notes" shall mean the 14% Series A and Series B Senior
Secured Discount Notes due 2004 issued by Holdings under the Discount Note
Indenture and as the same may be supplemented, amended or modified from time to
time in accordance with the terms hereof and thereof.
"Dividends" shall have the meaning provided in Section 8.09.
"Domestic Subsidiary" shall mean a Subsidiary of the Borrower that is
organized under the laws of the United States or any state thereof.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by the
Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating to any Environmental Law or any permit issued,
or any written approval given, under any such Environmental Law (hereafter,
"Claims"), including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials arising from alleged injury or threat of injury to health,
safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or
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judgment, relating to the environment, health, safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251 ET SEQ.; the Toxic Substances Control
Act, 15 U.S.C. Section 7401 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401
ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3808 ET SEQ.; the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ. and any applicable state
and local or foreign counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the Initial Borrowing Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings, the Borrower or a Subsidiary would be
deemed to be a "single employer" within the meaning of Sections 414(b), (c), (m)
and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the offered quotation to first-class banks in the
interbank Eurodollar market by the Agent for dollar deposits of amounts in same
day funds comparable to the outstanding principal amount of the Eurodollar Loan
of the Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (including
without limitation any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System in respect
of Eurocurrency liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Existing Indebtedness" shall have the meaning provided in Section
6.21.
"Existing Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Expiry Date" shall mean September 30, 2004.
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"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guarantor" shall mean and include each Subsidiary Guarantor and
Holdings upon their execution of a Guaranty.
"Guaranties" shall mean and include the Subsidiary Guaranty and the
Holdings Guaranty.
"Guaranty Commencement Date" shall mean the earlier of (x) the date on
which the Senior Notes and the Discount Notes are repaid in full and (y) the
date on which the covenants contained in the Senior Notes and the Discount Notes
are amended, modified or waived to the satisfaction of (and pursuant to a debt
tender offer and exit consent satisfactory to) the Agent so as to permit the
execution of the Guaranties and the Additional Security Documents.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any Environmental Law.
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"Holdback Proceeds" shall have the meaning provided in the AF Credit
Agreement.
"Holdings" shall mean Universal Outdoor Holdings, Inc., a Delaware
corporation.
"Holdings Guaranty" shall have the meaning provided in Section
9.08(D).
"Holdings Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of Holdings on such date to (y) Adjusted EBITDA
of Holdings for the 12-month period (taken as one accounting period) ending on
such date.
"Holdings Pledge Agreement" shall have the meaning provided in Section
9.08(D).
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, I.E.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrower and/or its Subsidiaries to the extent
such guaranteed obligations do not constitute Indebtedness and are otherwise
permitted hereunder) provided that Indebtedness shall not include trade payables
and accrued expenses, in each case arising in the ordinary course of business.
"Initial Borrowing Date" shall mean the date upon which the initial
incurrence of Revolving Loans occurs.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.
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"Investment" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates and Subsidiaries) in the
forms of loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Capital Stock or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited
partnership doing business as Kelso & Company, Inc.
"Kelso Designees" shall mean William A. Marquard, John F.
McGillicuddy, David M. Roderick, John Rutledge IRA, Michael Rapoport, Patricia
Hetter Kelso and George L. Shinn.
"LaSalle" shall mean LaSalle National Bank.
"LaSalle Loan Agreement" shall mean the Amended and Restated Loan and
Security Agreement dated March 22, 1995 between the Borrower and LaSalle
National Bank, as in effect on the Effective Date immediately prior to the
termination thereof.
"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean BTCo, LaSalle with respect to the
Existing Letter of Credit and/or any Bank which at the request of the Borrower
and with the consent of the Agent agrees, in such Bank's sole discretion, to
become a Letter of Credit Issuer for purposes of issuing Letters of Credit
pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
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"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" means and includes each Revolving Loan and each Swingline Loan.
"Management Agreements" shall have the meaning provided in the
Original Credit Agreement.
"Management Investors" shall mean Daniel Simon and Brian Clingen.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(c).
"Margin Reduction Discount" shall mean zero, provided that the Margin
Reduction Discount shall be increased to 1/4 of 1%, 1/2 of 1%, 1% or 1-1/2%, as
the case may be, as specified in clauses (i), (ii), (iii) or (iv) below, at any
time after the Restatement Effective Date, when, and for so long as, the ratio
set forth in such clause has been satisfied as at the Relevant Determination
Date:
(i) the Margin Reduction Discount shall be 1/4 of 1% in the event that
at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 5.0 to 1 but less than 6.0 to 1;
(ii) the Margin Reduction Discount shall be 3/4 of 1% in the event that
as at the Relevant Determination Date the Modified Holdings
Leverage Ratio is equal to or greater than 4.0 to 1 but less than
5.0 to 1;
(iii) the Margin Reduction Discount shall be 1 1/4% in the event that as
at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 3.0 to 1 but less than 4.0 to 1;
or
(iv) the Margin Reduction Discount shall be 1 3/4% in the event that as
the Relevant Determination Date the Modified Holdings Leverage
Ratio is less than 3.0 to 1.
The Modified Holdings Leverage Ratio shall be determined (x) for the last day of
a fiscal month, quarter or year, by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(i) and (y) for the date of the
incurrence of Consolidated Debt after delivery of the officer's certificate
referred to in clause (x), by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(ii), each of which
certificates shall set forth the calculation of the Modified Holdings Leverage
Ratio. The Margin Reduction Discount so determined shall apply, except as set
forth below, from five
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Business Days after the date on which such officer's certificate is delivered to
the Agent to the earlier of (x) the date on which the next certificate is
delivered to the Agent pursuant to Section 7.01(e)(i) or (ii) and (y) the 30th
day following the end of the fiscal month in which such first certificate was
delivered to the Agent pursuant to Section 7.01(e)(i). Notwithstanding anything
to the contrary contained above, the Margin Reduction Discount shall be zero (x)
if no officer's certificate has been delivered to the Banks pursuant to Section
7.01(e) (i) which sets forth the Modified Holdings Leverage Ratio for the
Relevant Determination Date or the financial statements upon which any such
calculations are based have not been delivered, until such a certificate and/or
financial statements are delivered and (y) at all times when there shall exist a
violation of Section 9.01 or an Event of Default. It is understood and agreed
that the Margin Reduction Discount as provided above shall in no event be
cumulative and only the Margin Reduction Discount applicable under either clause
(i), (ii), (iii) or (iv), if any, contained in this definition shall be
applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of (x) Holdings and its Subsidiaries taken as a whole,
(y) the Borrower and its Subsidiaries taken as a whole and/or (z) with respect
to any reference to such term in Section 5, OAH and its Subsidiaries taken as a
whole.
"Maximum Swingline Amount" shall mean $5,000,000.
"Measurement Date" shall mean (x) the last day of each fiscal quarter
of the Borrower and (y) the last day of the last month ended prior to the date
of a Tested Borrowing.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans
maintained as Base Rate Loans, $500,000, (ii) for Loans maintained as Eurodollar
Loans, $1,000,000 and (iii) for Swingline Loans, $250,000.
"Modified Available Amount" shall have the meaning provided in the AF
Credit Agreement.
"Modified Holdings Leverage Ratio" shall mean, with respect to any
Relevant Measurement Date, the Holdings Leverage Ratio determined as of such
date, modified by the inclusion in the computation thereof of any incremental
Consolidated Debt of Holdings incurred after such Relevant Measurement Date and
prior to the delivery of an officer's certificate pursuant to Section 7.01(e)(i)
in respect of the next Relevant Measurement Date.
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"Mortgage" shall have the meaning provided in Section 5.01(I)(d)(i).
"Mortgage Policies" shall have the meaning provided in the Original
Credit Agreement.
"Mortgaged Properties" shall mean the Real Properties subject to the
Mortgages.
"Naegele" shall mean Naegele Outdoor Advertising Company, a Delaware
corporation.
"New Mortgage" shall have the meaning provided in Section 7.10.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Note" shall mean and include each Revolving Note and each Swingline
Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"OAH" shall mean Outdoor Advertising Holdings, Inc., a Delaware
corporation.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning referred to in the
first recital to this Agreement.
"Original Effective Date" shall mean the Effective Date as defined in
the Original Credit Agreement.
"Participant" shall have the meaning provided in Section 2.05(a).
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"Payment Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean at any time for each Bank the percentage
obtained by dividing such Bank's Revolving Commitment by the Total Revolving
Commitment, PROVIDED that if the Total Revolving Commitment has been terminated,
the Percentage of each Bank shall be determined by dividing such Bank's
Revolving Commitment immediately prior to such termination by the Total
Revolving Commitment immediately prior to such termination.
"Permitted Acquisition" shall mean any acquisition (including through
a stock acquisition) of property or assets of a nature or type, or which will be
used in a business, permitted to be held or engaged in by Section 8.01 provided
that (x) the Holdings Leverage Ratio as of the last Measurement Date prior to
the consummation of such acquisition was less than 5.50 to 1.0 or (y) the
aggregate amount expended for all such acquisitions after the Restatement
Effective Date not effected in compliance with clause (x) above or clause (z)
below does not exceed $50,000,000 or (z) such acquisition has been consented to
in writing by the Super-Majority Banks.
"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent.
"Permitted Exit Amendments" shall mean the exit amendments referred to
in clause (y) of the definition of Guaranty Commencement Date.
"Permitted Holders" means Kelso and its Affiliates, the Kelso
Designees, the Management Investors, any employee stock ownership plan
established by the Borrower for the benefit of the employees of the Borrower or
any Subsidiary and their Permitted Transferees.
"Permitted Investments" shall mean (a) Cash and Cash Equivalents, (b)
Investments in Naegele and/or Peterson, (c) Investments in all other
Subsidiaries up to $1,000,000 in the aggregate, including Investments in a
Person that becomes a Subsidiary of the Borrower immediately after such
Investment, provided (i) an Event of Default has not occurred and is continuing
and will not occur as a result of, in connection with or after giving effect to
such Investment and (ii) such Person, at the time of such Investment or at
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the time such Person becomes a Subsidiary, engages exclusively in the business
permitted to be engaged in by Borrower and its Subsidiaries pursuant to Section
8.01, (c) loans and advances of money in the ordinary course of business and
consistent with past practice to officers and employees of Borrower or any of
its Subsidiaries, (d) investments in receivables owing to the borrower and/or
any Subsidiary, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms, and (e)
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
owing in the ordinary course of business.
"Permitted Liens" shall mean Liens described in clauses (a), (b) and
(d) of Section 8.03.
"Permitted Subordinated Debt" shall mean up to $200 million of
subordinated debt of the Borrower as contemplated by the "red herring"
prospectus dated September 25, 1996 relating to subordinated debt of the
Borrower and issued on the terms and conditions described in such prospectus or
otherwise on terms and conditions reasonably satisfactory to the Required Banks.
"Permitted Subordinated Debt Documents" shall mean all indentures,
agreements, notes and other instruments governing or evidencing Permitted
Subordinated Debt, all of which shall be reasonably satisfactory to the Agent.
"Permitted Transferees" means (i) in the case of Kelso, (A) any
Affiliate thereof (other than any corporation or other Person (except for any
corporation or other Person engaged in a business similar, complementary or
related to the nature or type of the business of Holdings and its Subsidiaries)
controlled by, or any investment fund (other than Kelso Investment Associates V,
L.P. or any investment fund that is solely comprised of current and former
professionals of Kelso) managed by, Kelso), (B) any managing director, general
partner, limited partner, director, officer or employee of Kelso or any
Affiliate thereof (collectively, "Kelso Associates"), (C) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any Kelso
Associate or Kelso Designee and (D) any trust, the beneficiaries of which, or a
corporation or partnership, the stockholders or partners of which, include only
a Kelso Associate or Kelso Designee, his spouse, parents, siblings, or direct
lineal descendants, and (ii) in the case of any Management Investors, (A) his
executor, administrator, testamentary trustee, legatee or beneficiaries, (B) his
spouse, parents, siblings, members of his or her immediate family (including
adopted children) and/or direct lineal descendants or (C) a trust, the
beneficiaries of which, or a corporation or partnership, the stockholders or
partners of which, include only the Management Investor, as the case may be, and
his spouse, parents, siblings,
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members of his or her immediate family (including adopted children) and/or
direct lineal descendants.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Peterson" shall mean Peterson Outdoor Advertising Corp., a Delaware
corporation, and shall include the surviving corporation of a merger between OAH
(as the survivor of the Merger referred to in the Acquisition Agreement) and
Peterson to be effected on or prior to the Restatement Effective Date.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) Holdings, the Borrower, a
Subsidiary or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Holdings, the Borrower, a
Subsidiary, or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreements" shall mean the Borrower Pledge Agreement and the
UOH Pledge Agreement and once executed the Additional Pledge Agreement and the
Holdings Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as defined
in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"Purchase" shall mean repay, redeem, purchase, repurchased or
otherwise acquire for value.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
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"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Relevant Determination Date" shall mean, at any time, (x) the last
day of the then most recently ended fiscal month, quarter or year of Holdings
with respect to which an officer's certificate has been, or is required to be,
delivered to the Banks pursuant to Section 7.01(e)(i) or (y) if the Margin
Reduction Discount is greater than zero, the last date subsequent to the date
specified in clause (x) on which any Consolidated Debt of Holdings and its
Subsidiaries has been incurred.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks whose Adjusted
Percentages exceed 50%.
"Restatement Effective Date" shall have the meaning provided in
Section 5.01.
"Revolving Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I hereto directly below the
column entitled "Revolving Commitment," as the same may be reduced from time to
time pursuant to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to time
as a result of assignments to or from such Bank pursuant to Section 12.04.
"Revolving Loan" shall have the meaning provided in Section 1.01(a).
"Revolving Note" has the meaning provided in Section 1.05(a).
"SEC" shall have the meaning provided in Section 7.01(h).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Security Agreement" shall mean an Amendment and Restatement to
Security Agreement in the form of Exhibit F to the AF Credit Agreement, as in
effect
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on the Restatement Effective Date and as the same may be modified, amended or
supplemented from time to time in accordance with the terms hereof
and thereof.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean each Pledge Agreement, the Security
Agreement, each Mortgage and, once executed, each Additional Security Document,
if any.
"Senior Leverage Ratio" shall mean, at any Measurement Date, the ratio
of (x) Consolidated Senior Debt of the Borrower on such date to (y) Adjusted
EBITDA of the Borrower for the 12-month period (taken as one accounting period)
ending on such date.
"Senior Note Documents" shall mean and include each of the documents,
instruments (including the Senior Notes) and other agreements entered into by
the Borrower (including, without limitation, the Senior Note Indenture) relating
to the issuance by the Borrower of the Senior Notes, as in effect on the
Restatement Effective Date and as the same may be supplemented, amended or
modified from time to time in accordance with the terms hereof and thereof.
"Senior Note Indenture" shall mean the Indenture entered into by and
between the Borrower and United States Trust Company of New York, as trustee
thereunder, with respect to the Senior Notes as in effect on the Restatement
Effective Date and as the same may be modified, amended or supplemented from
time to time in accordance with the terms hereof and thereof.
"Senior Notes" shall mean the 11% Senior Notes due 2003 issued by the
Borrower under the Senior Note Indenture, as in effect on the Restatement
Effective Date and as the same may be supplemented, amended or modified from
time to time in accordance with the terms thereof and hereof.
"Shareholders' Agreements" shall have the meaning provided in the
Original Credit Agreement.
"Smith Note" shall have the meaning provided in Section 8.04(g).
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Subordinated Debt" shall mean and include the Permitted Subordinated
Debt and the Additional Subordinated Debt, in each case once issued.
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"Subordinated Debt Documents" shall mean and include the Permitted
Subordinated Debt Documents and the execution versions of all indentures,
agreements, notes and instruments governing or evidencing Additional
Subordinated Debt.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Subsidiary (x) that executes
and delivers a Subsidiary Guaranty pursuant to Section 7.10(a) and (y) each
Domestic Subsidiary created after the Section 7.10(a) actions are taken that
executes and delivers a counterpart of the Subsidiary Guaranty, provided that at
such time such Subsidiary also takes the other actions that it would have been
required to take under Section 7.10(a) if it were a Subsidiary on the Guaranty
Commencement Date.
"Subsidiary Guaranty" shall have the meaning provided in Section
7.10(a).
"Super-Majority Banks" shall mean the Non-Defaulting Banks which would
constitute the Required Banks if each reference to "50%" in the definition of
Required Banks were to read "66 2/3%."
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Expiry Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(b).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Date" shall mean the earlier of (x) the date which is 90
days after the Restatement Effective Date and (y) the date upon which the Agent
determines in its sole discretion (and notifies the Borrower) that the primary
syndication (and the resulting addition of institutions as Banks pursuant to
Section 12.04) has been completed.
"Taxes" shall have the meaning provided in Section 4.04(a).
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"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of November 18, 1993 between the Borrower and Holdings in the form delivered to
the Banks prior to the Restatement Effective Date and as the same may be
modified with the consent of the Required Banks.
"Tested Borrowing" shall mean any incurrence of Revolving Loans after
the Restatement Effective Date in which the aggregate amount of Revolving Loans
incurred, when added to the aggregate amount of AR Loans and Revolving Loans
incurred during the immediately preceding 30 day period (to the extent (x)
incurred after the Restatement Effective Date, (y) still outstanding and (z) not
included in establishing an earlier Tested Borrowing), equal or exceed
$1,000,000.
"Total Revolving Commitment" shall mean the sum of the Revolving
Commitments of each of the Banks.
"Transaction" shall mean and include (i) the Acquisition, (ii) the
entering into and borrowing under the AF Credit Agreement and (iii) the entering
into and borrowing under this Agreement.
"Transaction Documents" shall mean the Acquisition Documents, the UOH-
Kelso Agreements, the Credit Documents and the AF Credit Agreement.
"Transaction Expenses" shall mean all fees and expenses incurred in
connection with, and payable prior to or substantially concurrently with the
closing of, the Transaction and including all fees paid to any of the Banks and
the Agent hereunder, fees paid to Kelso or its Affiliates permitted hereunder;
attorney's fees, accountants' fees, placement agents' fees, discounts and
commissions and brokerage, and consultant fees. Transaction Expenses shall
include the amortization of any such fees and expenses that are capitalized and
not classified as an expense on the date incurred.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets thereof,
determined in accordance with Section 412 of the Code.
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"Unpaid Drawings" shall have the meaning provided in Section 2.04(a).
"Unutilized Revolving Commitment" for any Bank at any time shall mean
the excess of (i) the Revolving Commitment of such Bank over (ii) the sum of (x)
the aggregate outstanding principal amount of Revolving Loans made by such Bank
plus (y) an amount equal to such Bank's Adjusted Percentage of the Letter of
Credit Outstandings at such time.
"Unutilized Total Revolving Commitment" shall mean, at any time, (i)
the Total Revolving Commitment at such time less (ii) the sum of the aggregate
principal amount of all Revolving Loans and Swingline Loans at such time plus
the Letter of Credit Outstandings at such time.
"UOH Pledge Agreement" shall mean a Pledge Agreement in the form of
Exhibit G to the AF Credit Agreement, as in effect on the Effective Date and as
the same may be modified, amended or supplemented from time to time in
accordance with the terms hereof and thereof.
"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
SECTION 11. THE AGENT.
11.01 APPOINTMENT. The Banks hereby designate Bankers Trust Company
as Agent (for purposes of this Section 11, the term "Agent" shall include BTCo
in its capacity as Collateral Agent pursuant to the Security Documents) to act
as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Agent to take such action on
its behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its respective officers,
directors, agents, employees or affiliates. The Co-Agent shall have no duties
or liabilities in acting in such capacity.
11.02 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security
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Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
11.03 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Holdings, the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Holdings, the Borrower and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower and its Subsidiaries or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Holdings, the Borrower and its
Subsidiaries or the existence or possible existence of any Default or Event of
Default.
11.04 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks (or, where applicable, the Super-Majority
Banks) with respect to any act or action (including failure to act) in
connection with this Agreement or any other Credit Document, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from the Required Banks (or, where
applicable, the Super-Majority Banks); and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
neither any Bank nor the holder of any Note shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder or under any other Credit
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Document in accordance with the instructions of the Required Banks (or, where
appropriate, the Super-Majority Banks).
11.05 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
11.06 INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and indemnify the Agent,
in proportion to their respective Loans and Commitments as used in determining
the Required Banks, for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its respective duties hereunder
or under any other Credit Document, in any way relating to or arising out of
this Agreement or any other Credit Document; provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
11.07 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Letter of Credit Issuer," "Required Banks," "Super-Majority
Banks," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with the Borrower or any Affiliate of the
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower for services in connection
with this Agreement and otherwise without having to account for the same to the
Banks.
11.08 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
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11.09 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Agent hereunder or thereunder who shall be the Co-Agent or such other
commercial bank or trust company as is reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower, shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Banks
appoint a successor Agent as provided above.
SECTION 12. MISCELLANEOUS.
12.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent, the Co-Agent in connection with
the negotiation, preparation, execution and delivery of the Credit Documents and
the documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of their respective counsel) and of the Agent, the Co-Agent and
each of the Banks in connection with the enforcement of the Credit Documents and
the documents and instruments referred to therein (including, without
limitation, the reasonable fees and disbursements of counsel for the Agent, the
Co-Agent and for each of the Banks); (ii) pay and hold each of the Banks
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the Banks harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Bank) to pay
such taxes; and (iii) indemnify each Bank (including in its capacity as the
Agent, Co-Agent or a Letter of Credit Issuer), its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, (a) any investigation, litigation
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or other proceeding (whether or not any Bank is a party thereto) related to the
entering into and/or performance of any Transaction Document or the use of the
proceeds of any Loans hereunder or the Transaction or the consummation of any
transactions contemplated in any Credit Document, or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or on
the surface or subsurface of any Real Property owned or at any time operated by
the Borrower or any of its Subsidiaries, the release, generation, storage,
transportation, handling or disposal of Hazardous Materials at any location,
whether or not owned or operated by the Borrower or any of its Subsidiaries, the
non-compliance of any Real Property with foreign, federal, state and local laws,
regulations, and ordinances (including applicable permits thereunder) applicable
to any Real Property, or any Environmental Claim asserted against the Borrower,
any of its Subsidiaries or any Real Property owned or at any time operated by
the Borrower or any of its Subsidiaries, including, in each case, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified).
12.02 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Bank is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including without limitation by branches and agencies of
such Bank wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations and liabilities of the Borrower to
such Bank under this Agreement or under any of the other Credit Documents,
including, without limitation, all interests in Obligations purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
12.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.
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12.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of the Notes to another financial institution,
provided that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Sections 1.10 and 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been entered into or sold, and, provided further
that no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating (it being understood that any waiver of
the application of any prepayment or the method of any application of any
prepayment to, the amortization of the Loans shall not constitute an extension
of the final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Revolving Commitment over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Revolving Commitment, or a mandatory prepayment, shall
not constitute a change in the terms of any Revolving Commitment), (ii) release
all or substantially all of the Collateral or (iii) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement or any other Credit Document.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its outstanding Revolving Loans and Revolving Commitment and its
rights and obligations hereunder to another Bank, and (y) with the consent of
the Agent and, to the extent such consent shall not be unreasonably withheld,
the Borrower, any Bank may assign all or a portion of its outstanding Revolving
Loans and Revolving Commitment and its rights and obligations hereunder to one
or more commercial banks or other financial institutions (including one or more
Banks). No assignment pursuant to the immediately preceding sentence shall to
the extent such assignment represents an assignment to an institution other than
one or more Banks hereunder, be in an aggregate amount less than $5,000,000
unless the entire Revolving Loans and Revolving Commitment of the assigning Bank
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are so assigned. If any Bank so sells or assigns all or a part of its rights
hereunder or under the Notes, any reference in this Agreement or the Notes to
such assigning Bank shall thereafter refer to such Bank and to the respective
assignee to the extent of their respective interests and the respective assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights and benefits as it would if it were such assigning
Bank. Each assignment pursuant to this Section 12.04(b) shall be effected by
the assigning Bank and the assignee Bank executing an Assignment Agreement
substantially in the form of Exhibit C (appropriately completed). In the event
of any such assignment (x) to a commercial bank or other financial institution
not previously a Bank hereunder, either the assigning or the assignee Bank shall
pay to the Agent a nonrefundable assignment fee of $3,500 (PROVIDED, that in the
event of simultaneous assignments relating to this Agreement and the AF Credit
Agreement, the fees for such assignments shall total $3,500) and (y) to a Bank,
either the assigning or assignee Bank shall pay to Agent a nonrefundable
assignment fee of $2,000 (PROVIDED, that in the event of simultaneous
assignments relating to this Agreement and the AF Credit Agreement, the fees for
such assignments shall total $2,000), and at the time of any assignment pursuant
to this Section 12.04(b), (i) Annex I shall be deemed to be amended to reflect
the Revolving Commitment of the respective assignee (which shall result in a
direct reduction to the Revolving Commitment of the assigning Bank) and of the
other Banks, and (ii) the Borrower will issue new Notes to the respective
assignee and to the assigning Bank in conformity with the requirements of
Section 1.05. Each Bank and the Borrower agree to execute such documents
(including without limitation amendments to this Agreement and the other Credit
Documents) as shall be necessary to effect the foregoing. Nothing in this
clause (b) shall prevent or prohibit any Bank from pledging its Revolving Note
or Revolving Loans to a Federal Reserve Bank in support of borrowings made by
such Bank from such Federal Reserve Bank. Notwithstanding any of the foregoing
provisions of this Section 12.04, no assignment may be made hereunder unless a
concurrent assignment is made by the assigning Bank under the AF Credit
Agreement of a percentage of its Acquisition Loans, A Term Loans (as defined in
the AF Credit Agreement) and Commitments thereunder equal to the percentage of
its Revolving Loans and Revolving Commitment being assigned by it hereunder.
(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby represents,
and each Person that becomes a Bank pursuant to an assignment permitted by this
Section 12 will, upon its becoming party to this Agreement, represent that it is
a commercial lender, other financial institution or other "accredited" investor
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business and that it will make or acquire Loans for its own account in the
ordinary course of such business, provided that subject to the preceding clauses
(a) and (b), the disposition of any promissory notes or other evidences
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of or interests in Indebtedness held by such Bank shall at all times be within
its exclusive control.
12.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrower and the Agent or any Bank shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent or any Bank would
otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or the
Banks to any other or further action in any circumstances without notice or
demand.
12.06 PAYMENTS PRO RATA. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other than
any Bank that has expressly waived its right to receive its pro rata share
thereof) PRO RATA based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations to such Banks in
such amount as shall result in a proportional participation by all of the Banks
in such amount, provided that if all or any portion of such excess amount is
thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
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12.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1995 historical
financial statements of the Borrower delivered to the Banks pursuant to Section
6.10(b) and (y) that if at any time the computations determining compliance with
Section 8 utilize accounting principles different from those utilized in the
financial statements furnished to the Banks, such financial statements shall be
accompanied by reconciliation work-sheets.
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) This Agreement and the other Credit Documents and the rights
and obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the state of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower located outside New York City and by hand delivery to the Borrower
located within New York City, at its address for notices pursuant to Section
12.03, such service to become effective 30 days after such mailing. The
Borrower hereby irrevocably designates appoints and empowers CT Corporation
System, with offices on the date hereof located at 1633 Broadway, New York, New
York 10019, as its agent for service of process in respect of any such action or
proceeding. Nothing herein shall affect the right of the Agent or any Bank to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
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(c) Each of the parties to this agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
12.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
12.10 EXECUTION. This Agreement shall be deemed executed by all
parties when the Borrower and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent at the Payment Office of the Agent or, in the case of the Banks, shall
have given to the Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
12.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12 AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Banks, provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) affected thereby, (i) extend the Expiry Date (it
being understood that any waiver of the application of any prepayment of or the
method of application of any prepayment to the amortization of, the Loans shall
not constitute any such extension), or reduce the rate or extend the time of
payment of interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) or Fees thereon, or reduce the
principal amount thereof, or increase the Revolving Commitment of any Bank over
the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total Revolving
Commitment shall not constitute a change in the terms of any Revolving
Commitment of any Bank), (ii) release or permit the release of all or
substantially all of the Collateral except as expressly provided in the Credit
Documents, (iii) amend, modify or waive any provision of this Section 12.12,
(iv) reduce the percentage specified in, or otherwise modify, the definition of
Required Banks or (v) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement provided further that no
such change, waiver, discharge or termination shall without the consent of the
Super-Majority Banks change directly or indirectly the definition of Permitted
Acquisition or Super-Majority Banks. No provision of Section 11 may be
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amended without the consent of the Agent and to the extent any such amendment
would affect the Co-Agent solely in its capacity as such, the Co-Agent, no
provision of Section 2 may be amended without the consent of the Letter of
Credit Issuer affected thereby and no provision of Section 1.01(b) or (c) or any
other provision applicable to Swingline Loans may be amended without the consent
of BTCo.
12.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 2.06, 4.04, 11.06 or 12.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank, provided that the Borrower shall not be responsible for costs arising
under Section 1.10, 2.06 or 4.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Bank prior to such transfer.
12.15 CONFIDENTIALITY. Subject to Section 12.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any BONA FIDE transferee or participant in
connection with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to abide by the provisions of
this Section 12.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Bank shall notify
the Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information, and provided
further that in no event shall any Bank be obligated or required to return any
materials furnished by the Borrower or any Subsidiary.
12.16 SPECIAL AMENDMENTS. The parties hereto agree that, upon the
occur-rence of the Guaranty Commencement Date and the execution and delivery of
the Holdings Guaranty and the Holdings Pledge Agreement, the AF Credit Agreement
will be modified with the consent of the Borrower, the Required Banks under and
as defined in the AF Credit Agreement and the Required Banks hereunder to (x)
incorporate therein the Total Revolving Commitment, (y) incorporate therein any
representation, covenant or event of default contained herein and not contained
therein and (z) otherwise make such changes as appropriate to reflect the
incorporation of the Total Revolving Commitment therein (e.g., to the definition
of Required Banks therein to reflect same) and to eliminate the restrictions
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imposed on the Borrower and its Subsidiaries by the Senior Notes and/or Discount
Notes and upon such amendment this Agreement will terminate.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
Address
321 N. Clark Street UNIVERSAL OUTDOOR, INC.
Suite 1010 as Borrower
Chicago, Illinois
Attention: Brian T. Clingen
Tel. No.: (312) 644-8673 By:
Fax No.: (312) 644-8071 ---------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
Individually and as Agent
By:
------------------------------------
Name:
Title:
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<PAGE>
LA SALLE NATIONAL BANK,
Individually and as Co-Agent
By:
------------------------------------
Name:
Title:
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<PAGE>
BANK OF AMERICA ILLINOIS
By:
------------------------------------
Name:
Title:
-97-
<PAGE>
FIRST NATIONAL BANK OF BOSTON
By:
------------------------------------
Name:
Title:
<PAGE>
UNION BANK
By:
--------------------------------
Name:
Title:
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<PAGE>
ANNEX I
COMMITMENTS
Revolving
Bank Commitment
---- -----------
Bankers Trust Company
La Salle National Bank
------------
Total: $12,500,000
------------
------------
<PAGE>
ANNEX II
BANK ADDRESSES
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Attention: Dana Klein
Tel. No.: 212-250-1724
Fax No.: 212-250-7218
La Salle National Bank 120 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey D. Steele
Tel. No.: (312) 904-2721
Fax No.: (312) 904-4364
<PAGE>
ANNEX III
GOVERNMENT APPROVALS
<PAGE>
ANNEX IV
SUBSIDIARIES
<PAGE>
ANNEX V
PROPERTIES
<PAGE>
ANNEX VI
EXISTING INDEBTEDNESS
<PAGE>
ANNEX VII
INSURANCE POLICIES
<PAGE>
ANNEX VIII
EXISTING LIENS
<PAGE>
ANNEX IX
MANAGEMENT FEES
<PAGE>
Exhibit 10.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM OF
AMENDED AND RESTATED
ACQUISITION CREDIT AGREEMENT
among
UNIVERSAL OUTDOOR, INC.
VARIOUS LENDING INSTITUTIONS,
LA SALLE NATIONAL BANK,
AS CO-AGENT
and
BANKERS TRUST COMPANY,
AS AGENT
____________________________________
$287,500,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . 1
1.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Borrowing Amounts, etc. . . . . . . . . . . . . . . . . . 2
1.03 Notice of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . 3
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . 3
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . 5
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . 8
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . 10
SECTION 2. Replacement Banks. . . . . . . . . . . . . . . . . . . . . . . . 11
2.01 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. Fees; Commitments. . . . . . . . . . . . . . . . . . . . . . . . 12
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.02 Voluntary Reduction of Commitments. . . . . . . . . . . . . . . . 12
3.03 Mandatory Adjustments of Commitments, etc.. . . . . . . . . . . . 12
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . 13
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . 14
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . 18
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 20
5.01 Conditions Precedent to Restatement Effective Date. . . . . . . . 20
5.02 Conditions Precedent to All Credit Events . . . . . . . . . . . . 24
(i)
<PAGE>
Page
----
SECTION 6. Representations, Warranties and Agreements . . . . . . . . . . . 25
6.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . 25
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . 25
6.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.04 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 26
6.06 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 26
6.07 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 26
6.08 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 26
6.09 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . 26
6.10 Financial Condition; Financial Statements . . . . . . . . . . . . 27
6.11 Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 28
6.12 Representations and Warranties in Transaction Documents . . . . . 28
6.13 Consummation of Transaction . . . . . . . . . . . . . . . . . . . 29
6.14 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . 29
6.15 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 29
6.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.17 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.18 Pollution and Other Regulations . . . . . . . . . . . . . . . . . 30
6.19 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 32
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . 32
7.02 Books, Records and Inspections. . . . . . . . . . . . . . . . . . 35
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.04 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 35
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . . . . 36
7.06 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . 36
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.08 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.09 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . . 37
7.10 Additional Security; Further Assurances . . . . . . . . . . . . . 37
7.11 Corporate Separateness. . . . . . . . . . . . . . . . . . . . . . 39
7.12 Compliance with Environmental Laws. . . . . . . . . . . . . . . . 39
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 40
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . . . . 40
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. . . . . . 40
8.03 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(ii)
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8.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.05 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . 45
8.06 Investments and Loans . . . . . . . . . . . . . . . . . . . . . . 46
8.07 Subsidiaries; etc.. . . . . . . . . . . . . . . . . . . . . . . . 46
8.08 Prepayments of Indebtedness, etc. . . . . . . . . . . . . . . . . 46
8.09 Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 48
8.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . 49
8.12 Minimum Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . 49
8.13 Borrower Leverage Ratio . . . . . . . . . . . . . . . . . . . . . 49
8.14 Senior Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . 49
8.15 Interest Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 50
9.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . 50
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.04 Default Under Other Agreements. . . . . . . . . . . . . . . . . . 51
9.05 Bankruptcy, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 51
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.07 Credit Documents. . . . . . . . . . . . . . . . . . . . . . . . . 52
9.08 Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.10 RF Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . 83
11.03 Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . . 83
11.04 Certain Rights of the Agent. . . . . . . . . . . . . . . . . . . 84
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 84
11.07 The Agent in Its Individual Capacity . . . . . . . . . . . . . . 84
11.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . . 85
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . . 85
12.02 Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 86
(iii)
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12.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . 87
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . 89
12.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . . 89
12.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . 90
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.10 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . 91
12.12 Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . . 91
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . . 92
12.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 92
12.16 Special Amendments . . . . . . . . . . . . . . . . . . . . . . . 93
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Management Fees
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B-1 -- Form of B Term Note
EXHIBIT B-2 -- Form of AR Note
EXHIBIT B-3 -- Form of A Term Note
EXHIBIT C-1 -- Form of Opinion of Counsel for the Borrower
EXHIBIT C-2 -- Form of Opinion of White & Case
EXHIBIT D -- Form of Officers' Certificate
EXHIBIT E -- Form of Borrower Pledge Agreement
EXHIBIT F -- Form of Security Agreement
EXHIBIT G -- Form of UOH Pledge Agreement
EXHIBIT H -- Form of Solvency Opinion
EXHIBIT I -- Form of Consent Letter
[EXHIBIT J -- Adjusted EBITDA]
EXHIBIT K -- Form of Assignment Agreement
(iv)
<PAGE>
AMENDMENT AND RESTATEMENT dated as of October __, 1996, to ACQUISITION
CREDIT AGREEMENT dated as of March 29, 1996, among UNIVERSAL OUTDOOR, INC., an
Illinois corporation, the lending institutions listed from time to time on Annex
I hereto (each a "Bank" and, collectively, the "Banks"), LA SALLE NATIONAL BANK,
as Co-Agent and BANKERS TRUST COMPANY, as agent (the "Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 10 are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower and certain financial institutions are parties
to an Acquisition Credit Agreement, dated as of March 29, 1996 (as the same has
been amended, modified or supplemented prior to the date hereof, the "Original
Credit Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Original
Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows, provided that if the Restatement Effective Date has not occurred on or
prior to November 30, 1996 this amendment and restatement shall be void and of
no further effect, with the Original Credit Agreement to remain in effect;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 COMMITMENT. (A) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make or continue loans (together
with the A Term Loan referred to below, each a "Loan" and, collectively, the
"Loans") to the Borrower, which Loans shall be drawn or continued, as the case
may be, to the extent such Bank has a commitment under such Facility, under the
Term Facility and the AR Facility, as set forth below:
(a) Loans under the Term Facility (each a "B Term Loan" and,
collectively, the "B Term Loans") (i) shall be made pursuant to a single
drawing on the Restatement Effective Date, (ii) shall be made and initially
maintained as a single Borrowing of Base Rate Loans (subject to the option
to convert such B Term Loans
<PAGE>
pursuant to Section 1.06) and (iii) shall not exceed in aggregate principal
amount for any Bank at the time of occurrence thereof the Term Commitment,
if any, of such Bank. Once repaid, B Term Loans may not be reborrowed.
(b) Loans under the AR Facility (each an "AR Loan" and, collectively,
the "AR Loans") (i) shall continue outstanding the AR Loans under and as
defined in the Original Credit Agreement that are outstanding on the
Restatement Effective Date and otherwise may be made at any time and from
time to time on and after the Restatement Effective Date and prior to the
AR Termination Date, (ii) except as hereinafter provided, may, at the
option of the Borrower, be continued, incurred and maintained as, and/or
converted into, Base Rate Loans or Eurodollar Loans, provided that (x) all
AR Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Loans of the same Type and (y) AR
Loans maintained as Eurodollar Loans may not be continued or incurred prior
to the Syndication Date, (iii) may be repaid and, prior to the AR
Termination Date, be reborrowed in accordance with the provisions hereof
and (iv) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when combined with the aggregate
outstanding principal amount of all other AR Loans of such Bank, equals the
AR Commitment, if any, of such Bank at such time.
(B) Notwithstanding the provisions of Section 1.01(A)(b), if on the
first anniversary of the Restatement Effective Date (i) the Borrower has not
issued at least $200 million principal amount of Permitted Subordinated Debt,
(ii) the Guaranty Commencement Date has not occurred and/or (iii) the B Term
Loans have not been repaid in full, then on said first anniversary $100 million
of the AR Loans outstanding on such date (or if less than $100 million of AR
Loans are then outstanding, the full amount of AR Loans then outstanding) shall
be automatically converted (the "Loan Conversion") into term loans (each an "A
Term Loan" and collectively the "A Term Loans"), with the Loan Conversion to
apply PRO RATA to the outstanding AR Loans. The AR Loans so converted will be
those outstanding pursuant to the same Borrowing or Borrowings, with the
Interest Period or Periods (if any) applicable to such Borrowing or Borrowings
to continue in effect after the Loan Conversion as originally scheduled. Once
repaid, A Term Loans may not be reborrowed. Promptly following the Loan
Conversion, should it occur, the Borrower will deliver to each Bank with A Term
Loans the A Term Note provided for in Section 1.05(d).
1.02 MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount. More
than one Borrowing may be incurred on any day, provided that at no time shall
there be outstanding more than seven Borrowings of Eurodollar Loans hereunder
and under the RF Credit Agreement.
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1.03 NOTICE OF BORROWING, ETC. (a) Whenever the Borrower desires to
continue or incur Loans hereunder, it shall give the Agent at its Notice Office,
prior to 11:00 A.M. (New York time), at least three Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Eurodollar Loans and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be made hereunder. Each such notice (each a "Notice of Borrowing")
shall be in the form of Exhibit A and shall be irrevocable and shall specify (i)
the Facility pursuant to which each Borrowing is being made, (ii) the aggregate
principal amount of the Loans to be made pursuant to each Borrowing, (iii) the
date of Borrowing (which shall be a Business Day) and (iv) whether any
respective Borrowing shall consist of Base Rate Loans or (to the extent
permitted) Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall promptly give each Bank written
notice (or telephonic notice promptly confirmed in writing) of each proposed
Borrowing, of such Bank's proportionate share thereof and of the other matters
covered by the Notice of Borrowing.
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent may prior to receipt of written confirmation act without liability upon
the basis of such telephonic notice, believed by the Agent in good faith to be
from an Authorized Officer of the Borrower. In each such case, the Borrower
hereby waives the right to dispute the Agent's record of the terms of such
telephonic notice.
1.04 DISBURSEMENT OF FUNDS. (a) No later than 1:00 P.M. (New York
time) on the date specified in a Notice of Borrowing, each Bank with a
Commitment under the respective Facility will make available its PRO RATA share
(as provided in Section 1.07) of each Borrowing requested to be made on such
date (other than in respect of any AR Loans being continued on such date) in the
manner provided below. All such amounts shall be made available to the Agent in
U.S. dollars and immediately available funds at the Payment Office and the Agent
promptly will make available to the Borrower by depositing to its account at the
Payment Office the aggregate of the amounts so made available in the type of
funds received. Unless the Agent shall have been notified by any Bank prior to
the date of Borrowing that such Bank does not intend to make available to the
Agent its portion of the Borrowing or Borrowings to be made on such date, the
Agent may assume that such Bank has made such amount available to the Agent on
such date of Borrowing, and the Agent, in reliance upon such assumption, may (in
its sole discretion and without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Bank and the Agent has made available same
to the Borrower, the Agent shall be entitled to recover such corresponding
amount from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding amount to
the Agent. The
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<PAGE>
Agent shall also be entitled to recover on demand from such Bank
or the Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Agent to the Borrower to the date such corresponding amount is recovered
by the Agent, at a rate per annum equal to (x) if paid by such Bank, the
overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the then
applicable rate of interest, calculated in accordance with Section 1.08, for the
respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made to it by each Bank shall be evidenced (i) if B
Term Loans, by a promissory note substantially in the form of Exhibit B-1 with
blanks appropriately completed in conformity herewith (each a "B Term Note" and,
collectively, the "B Term Notes"), (ii) if AR Loans, by a promissory note
substantially in the form of Exhibit B-2 with blanks appropriately completed in
conformity herewith (each an "AR Note" and, collectively, the "AR Notes") and
(iii) if A Term Loans, by a promissory note substantially in the form of Exhibit
B-3 with blanks appropriately completed in conformity herewith (each an "A Term
Note" and collectively the "A Term Notes").
(b) The B Term Note issued to each Bank that makes a B Term Loan
shall (i) be executed by the Borrower, (ii) be payable to the order of such Bank
and be dated the Restatement Effective Date, (iii) be in a stated principal
amount equal to the B Term Loans made by such Bank on the Restatement Effective
Date (or subsequently purchased by such Bank) and be payable in the principal
amount of B Term Loans evidenced thereby, (iv) mature on the Final Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(c) The AR Note issued to each Bank with an AR Commitment shall (i)
be executed by the Borrower, (ii) be payable to the order of such Bank and be
dated the Restatement Effective Date, (iii) be in a stated principal amount
equal to the AR Commitment of such Bank and be payable in the principal amount
of the AR Loans evidenced thereby, (iv) mature on the AR Maturity Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
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<PAGE>
(d) The A Term Note issued to each Bank that makes an A Term Loan as
provided in Section 1.01(B) shall (i) be executed by the Borrower, (ii) be
payable to the order of such Bank and be dated the date of the Loan Conversion,
(iii) be in a stated principal amount equal to the A Term Loans made by such
Bank pursuant to the Loan Conversion (or subsequently purchased by such Bank)
and be payable in the principal amount of the A Term Loans evidenced thereby,
(iv) mature on the AR Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of such
Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert on
any Business Day occurring on and after the Syndication Date all or a portion at
least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of the Loans owing pursuant to a single Facility into a
Borrowing or Borrowings pursuant to such Facility of another Type of Loan,
provided that (i) except as otherwise provided in Section 1.10(b), Eurodollar
Loans may be converted into Base Rate Loans only on the last day of an Interest
Period applicable thereto and no partial conversion of a Borrowing of Eurodollar
Loans shall reduce the outstanding principal amount of the Eurodollar Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Base Rate Loans may not be converted into Eurodollar Loans if any
violation of Section 9.01 or any Event of Default is then in existence to the
extent that the Agent or the Required Banks have determined that any such
conversion at such time would be disadvantageous to the Banks and (iii)
Borrowings of Eurodollar Loans resulting from this Section 1.06 shall be limited
in number as provided in Section 1.02. Each such conversion shall be effected
by the Borrower giving the Agent at its Notice Office, prior to 11:00 A.M. (New
York time), at least three Business Days' (or two Business Days', in the case of
a conversion into Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) (each a "Notice of Conversion") specifying the
Loans to be so converted, the Type of Loans to be converted into and, if to be
converted into a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall give each Bank prompt notice of
any such proposed conversion affecting any of its Loans.
1.07 PRO RATA BORROWINGS. All B Term Loans and all AR Loans shall be
continued and/or made by the Banks PRO RATA on the basis of their Term
Commitments and AR Commitments, as the case may be, provided at any time that a
Bank with an AR
-5-
<PAGE>
Commitment is a Defaulting Bank, AR Loans will be incurred from
the Banks with AR Commitments that are Non-Defaulting Banks PRO RATA on the
basis of their AR Commitments. All A Term Loans shall be made by the Banks with
AR Loans outstanding at the time of a Loan Conversion PRO RATA on the basis of
such outstanding AR Loans. It is understood that no Bank shall be responsible
for any default by any other Bank in its obligation to make Loans hereunder and
that each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.08 INTEREST. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity (whether
by acceleration or otherwise) at a rate per annum less than 2% plus the rate of
interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each February, May, August and November, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period of six months, on the date occurring three
months after the first day of such Interest Period and (iii) in respect of each
Loan, on any prepayment or conversion (other than the prepayment and conversion
of AR Loans that are Base Rate Loans) (on the amount prepaid or converted), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
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<PAGE>
1.09 INTEREST PERIODS. (a) At the time the Borrower gives a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 10:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond (x) in the case of AR
Loans and A Term Loans, the AR Maturity Date and (y) in the case of B Term
Loans, the Final Maturity Date;
(v) no Interest Period with respect to any Borrowing of A Term Loans,
B Term Loans or AR Loans, respectively, may be elected that would extend
beyond any date upon which a Scheduled Repayment is required to be made in
respect of such Loans if, after giving effect to the selection of such
Interest Period, the aggregate principal amount of A Term Loans, B Term
Loans or AR Loans, as the case may be, maintained as Eurodollar Loans with
Interest Periods ending after such date would exceed the aggregate
principal amount of A Term Loans, B Term Loans or AR Loans, as the case may
be, permitted to be outstanding after such Scheduled Repayment; and
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<PAGE>
(vi) no Interest Period may be elected at any time when a violation of
Section 9.01 or an Event of Default is then in existence if the Agent or
the Required Banks have determined that such an election at such time would
be disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the Restatement
Effective Date affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Restatement Effective Date in any applicable law, governmental rule,
regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to,
a change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Bank in good faith with any
law, governmental rule, regulation, guideline (or would conflict with any
such governmental rule, regulation, guideline or order not having the force
of law but with which such Bank customarily complies even though the
failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring
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after the Restatement Effective Date which materially and adversely affects
the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) on such date and (y) within ten Business Days of the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and to the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks). Thereafter (x)
in the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to
such Bank, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the additional amounts owed
to such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan, provided that if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Bank's capital or assets as a consequence of
its
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commitments or obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy), then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction. Each Bank,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 COMPENSATION. (a) The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans but excluding in any event the loss of
anticipated profits) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Agent) a Borrowing of Eurodollar Loans does
not occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any prepayment, repayment or conversion of
any of its Eurodollar Loans occurs on a date which is not the last day of an
Interest Period applicable thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay its Eurodollar Loans when required by the terms of this
Agreement or (y) an election made pursuant to Section 1.10(b).
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10 or 4.04 is given by any Bank more
than 180 days after such Bank obtained, or reasonably should have obtained,
knowledge of the occurrence of the event giving rise to the additional costs of
the type described in such Section, such Bank shall not be entitled to
compensation under Section 1.10 or 4.04 for any amounts incurred or accruing
prior to the giving of such notice to the Borrower.
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c) or 4.04 with respect to such Bank, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Bank) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Bank and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the
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operation of any such Section. Nothing in this Section 1.12 shall affect or
postpone any of the obligations of the Borrower or the right of any Bank
provided in Section 1.10 or 4.04.
SECTION 2. REPLACEMENT BANKS.
2.01 REPLACEMENT OF BANKS. (w) Upon any RF Bank being replaced under
Section 1.13 of the RF Credit Agreement, (x) upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c) or
Section 4.04 with respect to any Bank which results in such Bank charging to the
Borrower increased costs in excess of those being generally charged by the other
Banks, (y) if a Bank becomes a Defaulting Bank and/or (z) in the case of a
refusal by a Bank to consent to a proposed change, waiver, discharge or
termination with respect to this Agreement which has been approved by the
Required Banks or Super Majority Banks, as the case may be, as provided in
Section 12.12, the Borrower shall have the right, if no Default or Event of
Default then exists, to replace (and, in the case of clause (w) above, shall
replace) such Bank (the "Replaced Bank") with one or more other transferee or
transferees who shall be acceptable to the Agent and none of whom shall
constitute a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank") reasonably acceptable to the Agent, provided that (i) any AR
Bank replaced pursuant to this Section 2.01 must also be replaced as an RF Bank
at the same time under Section 1.13 of the RF Credit Agreement by the same
Replacement Bank (and in the same pro rata amounts if more than one Replacement
Bank), (ii) any Bank that is replaced as an RF Bank pursuant to Section 1.13 of
the RF Credit Agreement must also be replaced at the same time as an AR Bank
hereunder by the same Replacement Bank (and in the same pro rata amounts if more
than one Replacement Bank), (iii) at the time of any replacement pursuant to
this Section 2.01, the Replacement Bank shall enter into one or more Assignment
Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to
said Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans of
the Replaced Bank and, in connection therewith, shall pay to the Replaced Bank
in respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Bank and (B) an amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank pursuant to Section 3.01 and (iv) all obligations of the
Borrower owing to the Replaced Bank (other than those specifically described in
clause (iii) above in respect of which the assignment purchase price has been,
or is concurrently being, paid) shall be paid in full to such Replaced Bank
concurrently with such replacement. Upon the execution of the respective
Assignment Agreement, the payment of amounts referred to in clauses (iii) and
(iv) above and, if so requested by the Replacement Bank, delivery to the
Replacement Bank of the appropriate Note or Notes executed by the Borrower, the
Replacement Bank shall become a Bank hereunder and the Replaced Bank shall cease
to constitute a Bank
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hereunder, except with respect to indemnification
provisions applicable to the Replaced Bank under this Agreement, which shall
survive as to such Replaced Bank.
SECTION 3. FEES; COMMITMENTS.
3.01 FEES. (a) The Borrower agrees to pay to the Agent a commitment
commission ("Commitment Commission") for the account of each Non-Defaulting Bank
with an AR Commitment for the period from and including the Restatement
Effective Date to, but not including, the AR Termination Date, or, if earlier,
the date upon which the Total AR Commitment has been terminated, computed at a
rate for each day equal to 1/2 of 1% per annum on such Bank's unutilized AR
Commitment on such day. Such Commitment Commission shall be due and payable in
arrears on the last Business Day of each February, May, August and November and
on the AR Termination Date.
(b) The Borrower shall pay to the Agent (x) on the Restatement
Effective Date for its own account and/or for distribution to the Banks such
fees as heretofore agreed by the Borrower and the Agent and (y) for its own
account such other fees as agreed to between the Borrower and the Agent, when
and as due.
(c) All computations of Fees shall be made in accordance with Section
12.07(b).
3.02 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Agent at its Notice Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate or partially reduce the unutilized Total AR
Commitment, provided that (x) any such termination shall apply to
proportionately and permanently reduce the AR Commitment of each Bank, (y) no
such reduction shall reduce any Non-Defaulting Bank's AR Commitment to an amount
that is less than the outstanding AR Loans of such Bank and (z) any partial
reduction pursuant to this Section 3.02 shall be in the amount of at least
$1,000,000.
3.03 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total Term
Commitment shall terminate on the Restatement Effective Date (after giving
effect to the making of the B Term Loans on such date).
(b) The Total AR Commitment shall terminate on the earliest of (x)
the AR Termination Date, (y) the Revolving Facility Termination Date and (z) the
date on which any Change of Control occurs.
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(c) The Total AR Commitment shall be reduced on the date, if any,
upon which the Loan Conversion occurs in an aggregate amount of $100 million.
(d) The Total AR Commitment shall be reduced at the time that any
required mandatory repayment of Term Loans and AR Loans would be made prior to
the AR Termination Date pursuant to Section 4.02(A)(c), (d), (e), (f) or (g) if
Term Loans and AR Loans were then outstanding in an amount, if any, by which the
amount of such required repayment (determined as if an unlimited amount of such
Loans were then outstanding) exceeds the aggregate amount of Term Loans and AR
Loans then outstanding.
(e) Each partial reduction of the Total AR Commitment pursuant to
this Section 3.03 shall apply (x) if made pursuant to clause (c) above, to each
Bank in an amount equal to the AR Loans of such Bank converted into A Term Loans
pursuant to the Loan Conversion and, if such reduction is in excess of such
converted AR Loans, then as provided in clause (y) below, and (y) to the extent
clause (x) is not applicable, proportionately to the AR Commitment, if any, of
each Bank.
SECTION 4. PAYMENTS.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent at
the Payment Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, whether such Loans are A Term Loans,
B Term Loans or AR Loans, the amount of such prepayment and (in the case of
Eurodollar Loans) the specific Borrowing(s) pursuant to which made, which notice
shall be given by the Borrower at least one Business Day prior to the date of
such prepayment with respect to Base Rate Loans and two Business Days prior to
the date of such prepayment with respect to Eurodollar Loans, which notice shall
promptly be transmitted by the Agent to each of the Banks; (ii) each partial
prepayment of any Borrowing shall be in an aggregate principal amount of at
least $500,000 and, if greater in an integral multiple of $100,000, provided
that no partial prepayment of Eurodollar Loans made pursuant to a Borrowing
shall reduce the aggregate principal amount of the Eurodollar Loans outstanding
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto; (iii) at the time of any prepayment of Eurodollar Loans
pursuant to this Section 4.01 on any date other than the last day of the
Interest Period applicable thereto, the Borrower shall pay the amounts required
pursuant to Section 1.11; (iv) each prepayment in respect of any Loans made
pursuant to a Borrowing shall be applied PRO RATA among such Loans, provided,
that at the Borrower's election in connection with any prepayment of AR Loans
pursuant to this Section 4.01 prior to the AR Termination Date, such prepayment
shall not be applied to any AR Loans of a Defaulting Bank; and (v) each
prepayment of A Term Loans, B Term Loans or, to the extent made after the AR
Termination Date, AR Loans pursuant to this Section
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4.01 shall reduce the remaining Scheduled Repayments of the A Term Loans,
B Term Loans or AR Loans, as the case may be, on a PRO RATA basis (based upon
the then remaining principal amount of each such Scheduled Repayment).
4.02 MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(a) (i) If on any date prior to the AR Termination Date the aggregate
outstanding principal amount of AR Loans made by Non-Defaulting Banks exceeds
the Adjusted Total AR Commitment as then in effect, the Borrower shall repay on
such date the principal of AR Loans of Non-Defaulting Banks in an aggregate
amount equal to such excess.
(ii) If on any date prior to the AR Termination Date the aggregate
outstanding principal amount of the AR Loans made by a Defaulting Bank exceeds
the AR Commitment of such Defaulting Bank, the Borrower shall repay principal of
the AR Loans of such Defaulting Bank in an amount equal to such excess.
(b) (I) On each date set forth below, the Borrower shall be required
to repay the principal amount of B Term Loans set forth opposite such date (each
such repayment, together with each repayment of AR Loans required by clause
(b)(II) below and each repayment of A Term Loans required by clause (b)(III)
below, a "Scheduled Repayment"):
DATE AMOUNT
March 31, 1997 $187,500
June 30, 1997 $187,500
September 30, 1997 $187,500
December 31, 1997 $187,500
March 31, 1998 $187,500
June 30, 1998 $187,500
September 30, 1998 $187,500
December 31, 1998 $187,500
March 31, 1999 $187,500
June 30, 1999 $187,500
September 30, 1999 $187,500
December 31, 1999 $187,500
March 31, 2000 $187,500
June 30, 2000 $187,500
September 30, 2000 $187,500
December 31, 2000 $187,500
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DATE AMOUNT
March 30, 2001 $187,500
June 30, 2001 $187,500
September 30, 2001 $187,500
December 31, 2001 $187,500
March 31, 2002 $187,500
June 30, 2002 $187,500
September 30, 2002 $375,000
December 31, 2002 $7,625,000
March 31, 2003 $7,625,000
June 30, 2003 $7,625,000
September 30, 2003 $7,625,000
December 31, 2003 $10,000,000
March 31, 2004 $10,000,000
June 30, 2004 $10,000,000
Final Maturity Date $10,000,000
(II) On each date set forth below, the Borrower shall be required to
repay the AR Repayment Percentage of the principal amount of AR Loans set forth
opposite such date:
REPAYMENT DATE AMOUNT
December 31, 1999 $10,625,000
March 31, 2000 $10,625,000
June 30, 2000 $10,625,000
September 30, 2000 $10,625,000
December 31, 2000 $13,281,250
March 31, 2001 $13,281,250
June 30, 2001 $13,281,250
September 30, 2001 $13,281,250
December 31, 2001 $14,609,375
March 31, 2002 $14,609,375
June 30, 2003 $14,609,375
September 30, 2002 $14,609,375
December 31, 2002 $14,609,375
March 31, 2003 $14,609,375
June 30, 2003 $14,609,375
AR Maturity Date $14,609,375
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(III) On the last day of each calendar quarter, commencing on December
31, 1997 and ending on the AR Maturity Date, the Borrower shall be required to
repay the A Term Loans (if made) in an amount equal to the ATL Repayment
Percentage of $4,166,666 ($4,166,682 on the AR Maturity Date).
(c) On the Business Day following the date of receipt thereof by
Holdings, the Borrower and/or any of its Subsidiaries of the Cash Proceeds from
any Asset Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset
Sale shall be applied as a mandatory repayment of FIRST, the principal of the
then outstanding Term Loans and SECOND, if no Term Loans remain outstanding and
the AR Termination Date has occurred, the principal of the then outstanding AR
Loans, provided that such Net Cash Proceeds from Permitted Asset Sales shall
not be required to be used to so repay Loans to the extent the Borrower elects,
as hereinafter provided, to cause such Net Cash Proceeds to be reinvested in
Reinvestment Assets (a "Reinvestment Election"). The Borrower may exercise its
Reinvestment Election (within the parameters specified in the preceding
sentence) with respect to an Asset Sale if (x) no Default or Event of Default
exists and (y) the Borrower delivers a Reinvestment Notice to the Agent on the
Business Day following the date of the consummation of the respective Asset
Sale, with such Reinvestment Election being effective with respect to the Net
Cash Proceeds of such Asset Sale equal to the Anticipated Reinvestment Amount
specified in such Reinvestment Notice.
(d) On the date of the receipt thereof by Holdings or the Borrower,
as the case may be, an amount equal to 75% of the cash proceeds (net of
underwriting discounts and commissions and other reasonable costs associated
therewith but excluding any Holdback Proceeds) (or, in the case of the Proposed
Equity Offering, 100% of such proceeds to the extent not Holdback Proceeds) of
any sale or issuance of equity by Holdings or the Borrower, respectively (other
than equity issued to management and other employees of Holdings, the Borrower
or its Subsidiaries, the exercise of any warrants outstanding on the Restatement
Effective Date and/or any amount of cash received by Holdings or the Borrower in
connection with any capital contributions made by any of the Designated UOH
Stockholders or, in the case of the Borrower, by Holdings) shall be applied as a
mandatory repayment of FIRST, the principal of the then outstanding Term Loans
and SECOND, if no Term Loans remain outstanding and the AR Termination Date has
occurred, the principal of the then outstanding AR Loans provided that such
proceeds received prior to the AR Termination Date shall not be so applied but
shall be applied as a mandatory repayment of FIRST, the principal of the then
outstanding A Term Loans and SECOND, if no A Term Loans remain outstanding, the
principal of the then outstanding AR Loans (with any such payment not to reduce
the Total AR Commitment) and (y) the first $5,000,000 of such proceeds in the
aggregate do not have to be so applied to repay Loans.
(e) (i) On the date of the receipt thereof by the Borrower, an amount
equal to 100% of the cash proceeds (net of underwriting discounts and
commissions and other
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reasonable costs associated therewith but excluding any
Holdback Proceeds) of any sale or issuance of Permitted Subordinated Debt shall
be applied as a mandatory repayment of FIRST, the principal of the then
outstanding Term Loans and SECOND, if no Term Loans remain outstanding, the
principal of the then outstanding AR Loans (with any such payment not to reduce
the Total AR Commitment).
(ii) On the date when the amount of the Holdback Proceeds is reduced
to zero, an amount equal to the Holdback Proceeds not theretofore applied to
Purchase Senior Notes and Discount Notes shall be applied as a mandatory
repayment of FIRST, the principal of the then outstanding Term Loans and SECOND,
if no Term Loans remain outstanding, the principal of the then outstanding AR
Loans (with any such payment not to reduce the Total AR Commitment).
(f) On each date which is 90 days after the last day of each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
1999), 50% of Excess Cash Flow for the fiscal year then last ended shall be
applied as a mandatory repayment of FIRST, the principal of the then outstanding
Term Loans and SECOND, if no Term Loans remain outstanding and the AR
Termination Date has occurred, the principal of the then outstanding AR Loans.
(g) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment Amount, if
any, for such Reinvestment Election shall be applied as a repayment of FIRST,
the principal of the then outstanding Term Loans and SECOND, if no Term Loans
remain outstanding and the AR Termination Date has occurred, the principal of
the then outstanding AR Loans.
(h) On the date on which any Change of Control occurs, the
outstanding principal amount of all Loans shall become due and payable in full.
(i) On the Revolving Facility Termination Date, the outstanding
principal amount of all Loans shall become due and payable in full.
(B) APPLICATION:
(a) Each mandatory repayment of "Term Loans" required to be made
pursuant to Section 4.02(A) (other than pursuant to clause (b) thereof) shall be
applied to the outstanding A Term Loans and B Term Loans PRO RATA between same
on the basis of their respective aggregate outstanding principal amounts. Each
mandatory repayment of A Term Loans, B Term Loans and, to the extent made after
the AR Termination Date, AR Loans required to be made pursuant to Sections
4.02(A) (other than pursuant to clause (a) or (b) thereof) shall be applied to
reduce the Scheduled Repayments of A Term Loans, B Term Loans and AR Loans,
respectively, on a PRO RATA basis (based upon the then
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remaining outstanding principal amount of each such Scheduled Repayment of A
Term Loans, B Term Loans and AR Loans, respectively).
(b) With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) under the affected Facility pursuant to which made,
provided that (i) Eurodollar Loans may so be designated for prepayment pursuant
to this Section 4.02 only on the last day of an Interest Period applicable
thereto unless all Eurodollar Loans made pursuant to such Facility with Interest
Periods ending on such date of required prepayment and all Base Rate Loans made
pursuant to such Facility have been paid in full; (ii) if any prepayment of
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount for such Borrowing, such Borrowing shall be immediately
converted into Base Rate Loans; (iii) each prepayment of any AR Loans made by
Non-Defaulting Banks pursuant to a Borrowing shall be applied PRO RATA among
such AR Loans; and (iv) each prepayment of any AR Loans made by Defaulting Banks
pursuant to a Borrowing shall be applied PRO RATA among such AR Loans. In the
absence of a designation by the Borrower as described in the preceding sentence,
the Agent shall, subject to the above, make such designation in its sole
discretion with a view, but no obligation, to minimize breakage costs owing
under Section 1.11.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Agent
for the ratable (based on its PRO RATA share) account of the Banks entitled
thereto, not later than 1:00 P.M. (New York time) on the date when due and shall
be made in immediately available funds and in lawful money of the United States
of America at the Payment Office, it being understood that written notice by the
Borrower to the Agent to make a payment from the funds in the Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account. Any payments under this Agreement which are
made later than 1:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in Section 4.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority
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thereof or therein (but excluding, except as provided in the second
succeeding sentence, any tax imposed on or measured by the net income (or any
franchise tax) of a Bank pursuant to the laws of the jurisdiction in which
the principal office or applicable lending office of such Bank is located or
under the laws of any political subdivision or taxing authority of any such
jurisdiction in which the principal office or applicable lending office of
such Bank is located) and all interest, penalties or similar liabilities with
respect thereto (collectively, "Taxes"). If any Taxes are so levied or
imposed, the Borrower agrees to pay the full amount of such Taxes and such
additional amounts as may be necessary so that every payment of all amounts
due hereunder, under any Note or under any other Credit Document, after
withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note or in such other Credit
Document. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, then the Borrower shall also reimburse each Bank, upon
the written request of such Bank, for taxes imposed on or measured by the net
income of such Bank pursuant to the laws of the jurisdiction in which the
principal office or applicable lending office of such Bank is located or of
any political subdivision or taxing authority of any such jurisdiction and
for any withholding of income or similar taxes imposed by the United States
of America as such Bank shall determine are payable by, or withheld from,
such Bank in respect of Taxes paid to or on behalf of such Bank pursuant to
this or the preceding sentence. The Borrower will furnish to the Agent
within 45 days after the date the payment of any Taxes, or any withholding or
deduction on account thereof, is due pursuant to applicable law certified
copies of tax receipts evidencing such payment by the Borrower. The Borrower
will indemnify and hold harmless the Agent and each Bank, and reimburse the
Agent or such Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid or withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) to provide to the Borrower on or prior to the Initial Borrowing Date
two original signed copies of Internal Revenue Service Form 4224 or Form 1001
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document and (ii) that, (x) to the extent
legally entitled to do so, with respect to a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section 12.04 hereof
(unless the respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), upon the date of such assignment or transfer to
such Bank, and (y) with respect to any Bank which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax purposes (including, without limit-ation, any assignee or
transferee), from time to time, upon the reasonable request by the Borrower or
the Agent after the Restatement Effective Date, such Bank will provide to each
of the Borrower and the Agent two original signed copies of Internal Revenue
Service Form 4224 or Form 1001 (or any successor forms) certifying to such
Bank's entitlement to a
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complete exemption from, or reduction in, United States withholding tax with
respect to payments to be made under this Agreement, under any Note and under
any other Credit Document. Notwithstanding anything to the contrary
contained in Section 4.04(a), the Borrower shall be entitled, to the extent
it is required to do so by law, to deduct or withhold income or other similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder (without any obligation under Section 4.04(a) to pay the respective
Bank such taxes or any additional amounts with respect thereto) for the
account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for United States federal income
tax purposes and which has not provided to the Borrower such forms required
to be provided to the Borrower by a Bank pursuant to the first sentence of
this Section 4.04(b), provided that if the Borrower shall so deduct or
withhold any such taxes, it shall provide a statement to the Agent and such
Bank, setting forth the amount of such taxes so deducted or withheld, the
applicable rate and any other information or documentation which such Bank
may reasonably request for assisting such Bank in obtaining any allowable
credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Bank is subject to tax.
Notwithstanding anything to the contrary contained in the preceding sentence,
the Borrower agrees to indemnify each Bank in the manner set forth in Section
4.04(a) in respect of any amounts deducted or withheld by it as described in
the previous sentence as a result of any changes after the Restatement
Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the
deducting or withholding of income or similar Taxes.
SECTION 5. CONDITIONS PRECEDENT.
5.01 CONDITIONS PRECEDENT TO RESTATEMENT EFFECTIVE DATE. This
Agreement shall become effective on the date (the "Restatement Effective Date")
on which all of the following conditions are first satisfied:
(a) EFFECTIVENESS; NOTES. On or prior to the Restatement Effective
Date, (i) this Agreement shall have been executed as provided in Section 12.10
and (ii) there shall have been delivered to the Agent for the account of each
Bank the appropriate Note or Notes executed by the Borrower, in each case, in
the amount, maturity and as otherwise provided herein.
(b) OFFICER'S CERTIFICATE. On the Restatement Effective Date, the
Agent shall have received a certificate dated such date signed by the President
or any Vice President of the Borrower stating that all of the applicable
conditions set forth in Sections 5.01(g) and (h) and 5.02 exist as of such date.
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(c) OPINIONS OF COUNSEL. On the Restatement Effective Date, the
Agent shall have received opinions, addressed to the Agent, and each of the
Banks and dated the Restatement Effective Date, from (i) Winston & Strawn,
counsel to the Borrower, which opinion shall cover the matters contained in
Exhibit C-1 hereto, (ii) White & Case, special counsel to the Agent, which
opinion shall cover the matters contained in Exhibit C-2 hereto and (iii) such
local counsel, if any, satisfactory to the Agent as the Agent may request, which
opinions shall cover the perfection of the security interests granted pursuant
to the Security Documents and such other matters incident to the transactions
contemplated herein as the Agent may reasonably request and shall be in form and
substance satisfactory to the Agent.
(d) CORPORATE PROCEEDINGS. (I) On the Restatement Effective Date,
the Agent shall have received from the Borrower a certificate, dated the
Restatement Effective Date, signed by the President or any Vice-President of the
Borrower in the form of Exhibit D with appropriate insertions and deletions,
together with copies of the certificate of formation, the by-laws, or other
organizational documents of the Borrower and the resolutions, or such other
administrative approval, of the Borrower referred to in such certificate and all
of the foregoing (including each such certificate of formation, certificate of
incorporation and by-laws) shall be satisfactory to the Agent.
(II) On the Restatement Effective Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all certificates, documents and papers,
including good standing certificates and any other records of corporate
proceedings and governmental approvals, if any, which the Agent may have
requested in connection therewith, such documents and papers, where appropriate,
to be certified by proper corporate or governmental authorities.
(e) ADVERSE CHANGE, ETC. From August 21, 1996 to the Restatement
Effective Date, nothing shall have occurred (and neither the Banks nor the Agent
shall have become aware of any facts or conditions not previously known) which
the Agent or the Required Banks shall determine (a) has, or is reasonably likely
to have, a material adverse effect on the rights or remedies of the Banks or the
Agent, or on the ability of the Borrower to perform its obligations to them, or
(b) has, or is reasonably likely to have, a Material Adverse Effect.
(f) LITIGATION. On the Restatement Effective Date, there shall be no
actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or the transactions contemplated hereby or
thereby (including the Transaction) or (b) which the Agent or the Required Banks
shall determine has, or is reasonably likely to have (i) a Material Adverse
Effect or (ii) a material adverse effect on the rights or
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remedies of the Banks hereunder or under any other Credit Document or on the
ability of the Borrower to perform its obligations to the Banks hereunder or
under any other Credit Document or upon the ability of the parties to
consummate the Transaction.
(g) APPROVALS. On the Restatement Effective Date, all material
necessary governmental and third party approvals in connection with the
transactions contemplated by the Credit Documents and the other Transaction
Documents and otherwise referred to herein or therein shall have been obtained
and remain in effect, and all applicable waiting periods shall have expired
without any action being taken by any competent authority which restrains or
prevents such transactions or imposes, in the reasonable judgment of the
Required Banks or the Agent, materially adverse conditions upon the consummation
of such transactions. In addition, the Agent shall have received evidence
satisfactory to it that all permits, leases, licenses and consents material to
the operations of OAH and its Subsidiaries and of the Borrower and its
Subsidiaries shall remain in effect after giving effect to the Transaction
and/or shall have been obtained.
(h) ACQUISITION. On or prior to the Restatement Effective Date,
there shall have been delivered to the Banks true and complete copies of the
Acquisition Documents and all terms of the Acquisition Agreement and of the
other Acquisition Documents shall be reasonably satisfactory to the Agent. Each
of the conditions precedent to the obligation of the Borrower to consummate the
Acquisition shall have been satisfied, or waived, all to the reasonable
satisfaction of the Agent and, concurrently with the making of AR Loans
hereunder on the Restatement Effective Date, the Borrower shall have consummated
the Acquisition in accordance with the Acquisition Agreement and all applicable
laws, rules and regulations and all Indebtedness of OAH and its Subsidiaries
pursuant to their existing credit arrangements shall have been repaid in full.
(i) SECURITY DOCUMENTS. (I) On the Restatement Effective Date, the
Borrower shall have duly authorized, executed and delivered an amended and
restated Pledge Agreement in the form of Exhibit E (as modified, amended or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Borrower Pledge Agreement"), and shall have delivered to the Collateral
Agent, as pledgee thereunder, all of the certificates representing the Pledged
Securities referred to therein, accompanied by executed and undated stock
powers, and the Borrower's Pledge Agreement shall be in full force and effect.
(II) On the Restatement Effective Date, the Borrower shall have duly
authorized, executed and delivered an amended and restated Security Agreement
substantially in the form of Exhibit F (as modified, supplemented or amended
from time to time in accordance with the terms thereof and hereof, the "Security
Agreement") covering all of the Borrower's present and future Security Agreement
Collateral.
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(III) On the Restatement Effective Date, each of the Designated UOH
Stockholders shall have each duly authorized, executed and delivered a Pledge
Agreement in the form of Exhibit G (as modified, amended or supplemented from
time to time in accordance with the terms thereof and hereof, the "UOH Pledge
Agreement") (which agreement shall terminate by its terms upon the occurrence of
the Guaranty Commencement Date and the execution and delivery of the Holdings
Guaranty and the Holdings Pledge Agreement) and shall have delivered to the
Collateral Agent, as pledgee thereunder, all of the certificates representing
the Pledged Securities referred to therein, accompanied by executed and undated
stock powers, and each of the UOH Pledge Agreement shall be in full force and
effect.
(IV) On the Restatement Effective Date, the Agent shall have
received (x) such executed amendments (in form and substance reasonably
satisfactory to the Agent) to the Mortgages created pursuant to the Original
Credit Agreement (as so amended, if at all, each a "Mortgage" and collectively
the "Mortgages") covering all the Mortgaged Properties as the Agent deems
necessary or appropriate to give effect to the transactions contemplated by this
Agreement and arrangements reasonably satisfactory to the Collateral Agent shall
be in place to provide that counterparts of such amendments shall be recorded on
the Restatement Effective Date or within one Business Day thereafter in all
places where the original Mortgages were filed and (y) such endorsements, if
any, to the Mortgage Policies delivered under the Original Credit Agreement with
respect to the Mortgages as the Agent deems appropriate.
(j) SOLVENCY. On the Restatement Effective Date, the Borrower shall
have delivered, or shall cause to be delivered to the Agent a solvency letter in
the form of Exhibit H hereto from the Chief Financial Officer of the Borrower
and acceptable in form and substance to the Agent.
(k) FEES. On the Restatement Effective Date, the Borrower shall have
paid to the Agent and the Banks all Fees and expenses agreed upon by such
parties to be paid on or prior to such date.
(l) ENVIRONMENTAL REPORTS. On or prior to the Restatement Effective
Date, the Agent shall have received environmental reports from Persons
reasonably satisfactory to the Agent covering the properties of OAH and its
Subsidiaries (other than properties that are solely sign locations), which
reports shall be reasonably satisfactory to the Agent.
(m) RF CREDIT AGREEMENT. On the Restatement Effective Date, the
Restatement Effective Date under and as defined in the RF Credit Agreement shall
have occurred (or would be required to occur in the absence of the condition
specified in Section 5.01(m) of the RF Credit Agreement) and the Revolving
Facility Termination Date shall not have occurred.
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(n) ADJUSTED EBITDA. On or prior to the Restatement Effective Date,
the Agent shall have received evidence satisfactory to it that Holdings and its
Subsidiaries plus OAH and its Subsidiaries shall have attained on a combined
basis an Adjusted EBITDA of at least $57 million for the 12 months ended on
August 31, 1996.
(o) ORIGINAL CREDIT AGREEMENT. On the Restatement Effective Date and
concurrently with the initial borrowing hereunder, the Borrower shall have paid
all accrued but unpaid interest, costs (including pursuant to Section 1.11
thereof) and fees under the Original Credit Agreement, whether or not otherwise
then due and payable.
5.02 CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligation of
the Banks to make each Loan is subject, at the time thereof, to the satisfaction
of the following conditions:
(a) NOTICE OF BORROWING. The Agent shall have received a Notice of
Borrowing meeting the requirements of Section 1.02.
(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Credit Event, except to
the extent that such representations and warranties expressly relate to an
earlier date.
(c) TESTED BORROWINGS. At the time of incurring any Tested
Borrowing, each of the covenants set forth in Sections 8.11 through 8.15 shall
have been satisfied as of, and no Event of Default under Section 9.08(B) or (C)
shall exist as of, the Measurement Date relating to such Tested Borrowing
determined on a PRO FORMA basis as if such Tested Borrowing occurred on such
Measurement Date and, in the case of a Tested Borrowing financing a Permitted
Acquisition, such Permitted Acquisition was consummated on the first day of the
12-month period ending on such Measurement Date.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to the Agent and each of the Banks
that all of the applicable conditions specified above exist as of that time.
All of the certificates, legal opinions and other documents and papers referred
to in Section 5.01, unless otherwise specified, shall be delivered to the Agent
at its Notice Office for the account of each of the Banks and, except for the
Notes, in sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to the Agent.
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SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Banks to enter into this Agreement and to make the Loans, the
Borrower makes the following representations and warranties to, and agreements
with, the Banks, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans (with all representations and warranties
made as of the Restatement Effective Date to be made giving effect to the
Transaction).
6.01 CORPORATE STATUS. Each of Holdings, the Borrower and its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (ii) has
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
6.02 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Transaction Documents to which it is a party. Each Credit Party has duly
executed and delivered each Transaction Document to which it is a party and each
such Transaction Document constitutes the legal, valid and binding obligation of
such Credit Party enforceable in accordance with its terms.
6.03 NO VIOLATION. Neither the execution, delivery and performance
by any Credit Party of the Transaction Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of any Credit
Party or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which Holdings, the
Borrower or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the Charter or By-Laws of any Credit Party or any of its
Subsidiaries.
6.04 LITIGATION. There are no actions, suits or proceedings pending
or, to the Borrower's knowledge, threatened with respect to the Borrower or any
of its Subsidiaries (i) that are likely to have a Material Adverse Effect or
(ii) that could reasonably be expected to have a material adverse effect on the
rights or remedies of the
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Banks or on the ability of the Borrower to perform its obligations to them
hereunder and under the other Credit Documents.
6.05 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of (x)
the B Term Loans shall be used to finance the Acquisition, including related
fees and expenses and (y) all AR Loans initially incurred on or after the
Restatement Effective Date may be used (i) on the Restatement Effective Date to
pay certain fees and expenses relating to the Acquisition and (ii) to finance
Permitted Acquisitions (including the Acquisition).
(b) Neither the making or continuance of any Loan hereunder, nor the
use of the proceeds thereof, will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System and no part of the proceeds of any Loan will be used to purchase or carry
any Margin Stock in violation of Regulation U or to extend credit for the
purpose of purchasing or carrying any Margin Stock.
6.06 GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the Security Documents, and those items listed on Annex III, no
order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, that has
not been obtained or made is required to authorize or is required in connection
with (i) the execution, delivery and performance of any Transaction Document or
(ii) the legality, validity, binding effect or enforceability of any Credit
Document.
6.07 INVESTMENT COMPANY ACT. None of Holdings, the Borrower nor any
of its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company," or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.09 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of Holdings,
the Borrower or any of its Subsidiaries in writing to the Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
herein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Person in writing to any Bank will be,
true and accurate in all material respects on the date
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as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information (taken
as a whole) not misleading at such time in light of the circumstances under
which such information was provided. The projections and PRO FORMA financial
information contained in such materials are based on good faith estimates and
assumptions believed by such Persons to be reasonable at the time made, it
being recognized by the Banks that such projections as to future events are
not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected
results. There is no fact known to the Borrower which would have a Material
Adverse Effect, which has not been disclosed herein or in such other
documents, certificates and statements furnished to the Banks for use in
connection with the transactions contemplated hereby.
6.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of
the Restatement Effective Date, on a PRO FORMA basis after giving effect to the
Transaction and to all Indebtedness incurred, and to be incurred, and Liens
created, and to be created, in connection therewith, (x) the sum of the assets,
at a fair valuation, of the Borrower and its Subsidiaries, and of Holdings and
is Subsidiaries, taken as a whole will exceed their debts, (y) the Borrower and
its Subsidiaries, and Holdings and its Subsidiaries, taken as a whole will not
have incurred or intended to, or believe that they will, incur debts beyond
their ability to pay such debts as such debts mature and (z) the Borrower and
its Subsidiaries, and Holdings and its Subsidiaries, taken as a whole will not
have unreasonably small capital with which to conduct their business. For
purposes of this Section 6.10, "debt" means any liability on a claim, and
"claim" means (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) (i) The consolidated balance sheet of Holdings and of the
Borrower at December 31, 1994 and December 31, 1995 and at June 30, 1996 and the
related consolidated statements of operations and cash flows of Holdings and of
the Borrower for the fiscal years or six months ended as of said dates, which,
in the case of the annual financial statements, have been examined by Price
Waterhouse LLP, independent certified public accountants, who delivered an
unqualified opinion in respect therewith, (ii) the Financial Statements (as
defined in the Acquisition Agreement) of OAH and its Subsidiaries and (iii) the
PRO FORMA consolidated balance sheet of the Borrower as of June 30, 1996, copies
of which have heretofore been furnished to each Bank, present fairly the
financial position of such entities at the dates of said statements and the
results for the period covered thereby (or, in the case of the PRO FORMA balance
sheet, presents a good faith estimate of the consolidated PRO FORMA financial
condition of the Borrower (after giving effect to the Transaction and the
related financing thereof) at the date thereof) in accordance with
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GAAP, except to the extent provided in the notes to said financial
statements. All such financial statements (other than the aforesaid PRO
FORMA balance sheets) have been prepared in accordance with generally
accepted accounting principles and practices consistently applied except to
the extent provided in the notes to said financial statements. Except for
the incurrence of Indebtedness to finance the Acquisition, nothing has
occurred since December 31, 1995 that has had or could reasonably be expected
to have a Material Adverse Effect.
(c) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Initial Borrowing
Date no liabilities or obligations with respect to Holdings, the Borrower or any
of its Subsidiaries of a nature (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to the Borrower and its Subsidiaries, and to Holdings and its
Subsidiaries, taken as a whole, except as incurred in the ordinary course of
business consistent with past practices subsequent to December 31, 1995 and
except for the Indebtedness incurred pursuant to the Original Credit Agreement
or to finance the Acquisition.
6.11 SECURITY INTERESTS. On and after the Restatement Effective Date
(or the date of the execution and delivery thereof, in the case of all
Additional Security Documents), each of the Security Documents create, as
security for the Obligations purported to be secured thereby, a valid and
enforceable perfected security interest in and Lien on all of the Collateral
subject thereto, superior to and prior to the rights of all third Persons and
subject to no other Liens (except (x) that the Security Agreement Collateral may
be subject to the security interests evidenced by Permitted Liens relating
thereto and (y) the Mortgaged Properties may be subject to Permitted
Encumbrances relating thereto), in favor of the Collateral Agent for the benefit
of the Banks. No filings or recordings are required in order to perfect the
security interests created under any Security Document except for filings or
recordings required in connection with any such Security Document (other than
the Pledge Agreements) which shall have been made upon or prior to (or are the
subject of arrangements, satisfactory to the Agent, for filing on or promptly
after the date of) the execution and delivery thereof.
6.12 REPRESENTATIONS AND WARRANTIES IN TRANSACTION DOCUMENTS. All
representations and warranties set forth in the Transaction Documents were true
and correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Restatement Effective Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date.
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6.13 CONSUMMATION OF TRANSACTION. As of the Restatement Effective
Date, the Transaction shall have been consummated in accordance with the terms
and conditions of the Transaction Documents and all applicable laws. All
applicable waiting periods with respect thereto have or, prior to the time when
required, will have, expired without, in all such cases, any action being taken
by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the consummation of the Transaction. As of the
Restatement Effective Date, there does not exist any judgment, order, or
injunction prohibiting the consummation of the Transaction, or the making of
Loans or the performance by the Borrower of its obligations under the Documents.
6.14 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
its Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith.
Holdings, the Borrower and its Subsidiaries have paid, or have provided adequate
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal, state and foreign income taxes applicable for all prior
fiscal years and for the current fiscal year to the date hereof.
6.15 COMPLIANCE WITH ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; neither the Borrower, nor any Subsidiary nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any
liability (including any indirect, contingent or secondary liability) under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary or any ERISA Affiliate of incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the Code; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans
(as defined in Section 4001(a)(3) of ERISA) in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan ended prior to the date of the most recent Credit Event, would not
exceed $150,000; no lien imposed under the Code or ERISA on the assets of the
Borrower or any Subsidiary or any ERISA Affiliate exists or is likely to arise
on account of any Plan; and Holdings, the Borrower and its Subsidiaries do not
maintain or contribute to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to
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retired employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA), except
to the extent that all events described in the preceding clauses of this
Section 6.15 and then in existence would not, in the aggregate, have or be
likely to have a Material Adverse Effect. With respect to Plans that are
multiemployer plans (within the meaning of Section 4001(a)(3) of ERISA) the
representations and warranties in this Section 6.15 are made to the best
knowledge of the Borrower.
6.16 SUBSIDIARIES. (a) Annex IV hereto lists each Subsidiary of the
Borrower existing on the Restatement Effective Date. The Borrower owns 100% of
the outstanding capital stock of each such Subsidiary. The Borrower will at all
times own directly 100% of the outstanding capital stock of all of said entities
except to the extent otherwise permitted pursuant to Section 8.02.
(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or other
assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents, the RF Credit Agreement, the Senior Notes and the
Discount Notes, (ii) applicable law, (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices, (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement, and (v) any documents or instruments governing the terms
of any Indebtedness or other obligations secured by Liens permitted by Section
8.03, provided that such prohibitions or restrictions apply only to the assets
subject to such Liens.
6.17 PATENTS, ETC. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
6.18 POLLUTION AND OTHER REGULATIONS. (a) Each of Holdings, the
Borrower and its Subsidiaries is in compliance with all Environmental Laws
governing its business for which failure to comply is reasonably likely to have
a Material Adverse Effect, and neither Holdings, the Borrower nor any of its
Subsidiaries is liable for any material penalties, fines or forfeitures for
failure to comply with any of the foregoing in the manner set forth above. All
licenses, permits, registrations or approvals required for the business of the
Borrower and each of its Subsidiaries, as conducted as of the Restatement
Effective Date, under any Environmental Law have been secured and the Borrower
and each of its Subsidiaries is in substantial compliance therewith, except such
licenses, permits, registrations
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or approvals the failure to secure or to comply therewith is not likely to
have a Material Adverse Effect. Neither Holdings, the Borrower nor any of
its Subsidiaries is in noncompliance with, breach of or default under any
applicable writ, order, judgment, injunction, or decree to which Holdings,
the Borrower or such Subsidiary is a party or which would affect the ability
of the Borrower or such Subsidiary to operate any real property and no event
has occurred and is continuing which, with the passage of time or the giving
of notice or both, would constitute noncompliance, breach of or default
thereunder, except in each such case, such noncompliance, breaches or
defaults as are not likely to, in the aggregate, have a Material Adverse
Effect. There are as of the Restatement Effective Date no Environmental
Claims pending or, to the best knowledge of the Borrower, threatened, which
(a) challenge the validity, term or entitlement of the Borrower or any of its
Subsidiaries for any permit, license, order or registration required for the
operation of any facility under the Environmental Laws which the Borrower or
any of its Subsidiaries operates and (b) wherein an unfavorable decision,
ruling or finding would be reasonably likely to have a Material Adverse
Effect. There are no facts, circumstances, conditions or occurrences
concerning Holdings, the Borrower or any of its Subsidiaries, any of their
operations or on any Real Property or, to the knowledge of the Borrower, on
any property adjacent to any such Real Property that could reasonably be
expected (i) to form the basis of an Environmental Claim against the
Borrower, any of its Subsidiaries or any Real Property of the Borrower or any
of its Subsidiaries, or (ii) to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law, except in each such case, such
Environmental Claims or restrictions that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
6.19 PROPERTIES. The Borrower and each of its Subsidiaries have good
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, and the Financial Statements, referred to in Section 6.10(b), free
and clear of all Liens, other than (i) as referred to in the consolidated
balance sheet, or the Financial Statements, or, in either case, in the notes
thereto or (ii) otherwise permitted by Section 8.03. Annex V contains a true
and complete list of each Real Property owned or leased by the Borrower or any
of its Subsidiaries on the Restatement Effective Date (other than properties
that are solely sign locations) and the type of interest therein held by the
Borrower or the respective Subsidiary. Holdings owns no properties or assets
(other than the Tax Sharing Agreement) other than all of the capital stock of
the Borrower.
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6.20 LABOR RELATIONS. Holdings, the Borrower and its Subsidiaries
are not engaged in any unfair labor practice that could reasonably be expected
to have a Material Adverse Effect. There is (i) no unfair labor practice
complaint pending against Holdings, the Borrower or any of its Subsidiaries or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any of them or threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
Holdings, the Borrower or any of its Subsidiaries or threatened against any of
them and (iii) no union representation question existing with respect to the
employees of Holdings, the Borrower or any of its Subsidiaries and no union
organizing activities are taking place, except with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate, such as is not reasonably likely to have a Material Adverse Effect.
6.21 EXISTING INDEBTEDNESS. Annex VI sets forth a true and complete
list of all Indebtedness of Holdings, the Borrower and each of its Subsidiaries
as of the Restatement Effective Date that is in excess of $5,000 for any one
issue and is to remain outstanding after giving effect to the Transaction (all
such Indebtedness, of whatever size, but excluding Indebtedness hereunder and
under the RF Credit Agreement, the "Existing Indebtedness"), in each case
showing the aggregate principal amount thereof and the name of the respective
borrower (or issuer) and any other entity which directly or indirectly
guaranteed such debt.
SECTION 7. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that on the Restatement Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Notes are
outstanding and the Loans, together with interest, Fees and all other
Obligations incurred hereunder, are paid in full:
7.01 INFORMATION COVENANTS. The Borrower will furnish to each Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated balance sheet of the Borrower
and its Subsidiaries and of Holdings and its Subsidiaries, as at the end of such
fiscal year and the related consolidated statements of income and retained
earnings and of cash flows for such fiscal year, in each case setting forth
comparative consolidated figures for the preceding fiscal year, and examined by
independent certified public accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit and as to the status of
Holdings, the Borrower or any of its Subsidiaries as a going concern, together
with a certificate of such accounting firm stating that in the course of its
regular audit of the business of Holdings and of the Borrower, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of any Default or Event of Default
which has occurred and is continuing or, if in the opinion
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of such accounting firm such a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of the
Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as at the
end of such quarterly period and the related consolidated statements of income
and retained earnings and of cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, and in each case setting forth comparative consolidated figures for the
related periods in the prior fiscal year, all of which shall be certified by the
chief financial officer or controller of the Borrower or Holdings, as
appropriate, subject to changes resulting from audit and normal year-end audit
adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event within
30 days, after the end of each monthly accounting period of each fiscal year the
consolidated balance sheet of the Borrower and its Subsidiaries and of Holdings
and its Subsidiaries, as at the end of such period, and the related consolidated
statements of income and retained earnings for such period, setting forth
comparative figures for the corresponding period of the previous year, all of
which shall be certified by the chief financial officer or controller of the
Borrower or Holdings, as appropriate, subject to changes resulting from audit
and normal year-end audit adjustments.
(d) BUDGETS; ETC. Not more than 60 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its Subsidiaries
in reasonable detail for each of the twelve months of such fiscal year.
Together with each delivery of consolidated financial statements pursuant to
Sections 7.01(a), (b) and (c), a comparison of the current year to date
financial results against the budgets required to be submitted pursuant to this
clause (d) shall be presented.
(e) OFFICER'S CERTIFICATES. (i) At the time of the delivery of the
financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate, shall set forth the calculations required to
establish (I) the Modified Holdings Leverage Ratio for the Relevant
Determination Date occurring on the last day of such fiscal year, quarter or
month, (II) whether the Borrower and its Subsidiaries were in compliance with
the provisions of Sections 8.11, 8.12, 8.13, 8.14 and 8.15, as applicable, as at
the end of such fiscal period or year, as the case may be and (III) whether
there was any Event of Default under Section 9.08(B) and/or 9.08(C) as at the
end of such fiscal period.
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(ii) At the time of any incurrence of Consolidated Debt of Holdings
and its Subsidiaries at a time when the Margin Reduction Discount is (or based
on the last officer's certificate delivered pursuant to clause (i) above will
be) greater than zero, a certificate of any of the persons specified in clause
(i) above setting forth the calculations establishing the Modified Holdings
Leverage Ratio after giving effect to the incurrence of such Consolidated Debt.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof, notice
of (x) the occurrence of any event which constitutes a Default or Event of
Default which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto and
(y) the commencement of or any significant development in any litigation or
governmental proceeding pending against Holdings, the Borrower or any of its
Subsidiaries which is likely to have a Material Adverse Effect or is likely to
have a material adverse effect on the ability of the Borrower to perform its
obligations hereunder or under any other Credit Document.
(g) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of each
other final report or "management letter" submitted to Holdings or the Borrower
by its independent accountants in connection with any annual, interim or special
audit made by it of the books of Holdings and/or the Borrower.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 20
Business Days after an officer of Holdings, the Borrower or any Subsidiary
obtains knowledge thereof, notice of one or more of the following environmental
matters: (i) any pending or threatened (in writing) material Environmental
Claim against, or for which liability would attach to, the Borrower or any of
its Subsidiaries or any Real Property owned or operated by the Borrower or any
of its Subsidiaries; (ii) any condition or occurrence on or arising from any
Real Property owned or operated by the Borrower or any of its Subsidiaries that
(a) results in material noncompliance by Holdings, the Borrower or any of its
Subsidiaries with any applicable material Environmental Law or (b) would
reasonably be expected to form the basis of a material Environmental Claim
against, or for which liability would attach to, the Borrower or any of its
Subsidiaries or any such Real Property; (iii) any condition or occurrence on any
Real Property owned or operated by the Borrower or any of its Subsidiaries that
could reasonably be expected to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or transferability by the
Borrower or any of its Subsidiaries of such Real Property under any
Environmental Law; and (iv) the taking of any material removal or remedial
action in response to the actual or alleged presence of any Hazardous Material
on any Real Property owned or operated by the Borrower or any of its
Subsidiaries as required by any Environmental Law or any governmental or other
administrative agency, and all such notices shall describe in reasonable detail
the nature of the claim, investigation, condition,
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occurrence or removal or remedial action and the Borrower's or such
Subsidiary's response thereto.
(i) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by Holdings, the
Borrower or any of its Subsidiaries and (ii) with reasonable promptness, such
other information or documents (financial or otherwise) as the Agent on its own
behalf or on behalf of the Required Banks may reasonably request from time to
time.
7.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower officers and
designated representatives of the Agent or the Required Banks to visit and
inspect any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
Holdings, the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings, the Borrower and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Agent or the Required Banks may desire.
7.03 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice,
provided that in no event will any such deductible or self-insured retention in
respect of liability claims or in respect of casualty damage, exceed, in each
such case, (i) $250,000 per occurrence or (ii) $1,000,000 in the aggregate per
fiscal year. At any time that insurance at the levels described in Annex VII is
not being maintained by the Borrower and its Subsidiaries, the Borrower will
notify the Banks in writing thereof and, if thereafter notified by the Agent to
do so, the Borrower will, and will cause its Subsidiaries to, obtain insurance
at such levels at least equal to those set forth in Annex VII to the extent then
generally available (but in any event within the deductible or self-insured
retention limitations set forth in the preceding sentence) or otherwise as are
acceptable to the Agent. The Borrower will, and will cause each of its
Subsidiaries to, furnish on the Restatement Effective Date and annually
thereafter to the Agent a summary of the insurance carried together with
certificates of insurance and other evidence of such insurance, if any, naming
the Collateral Agent as an additional insured and/or loss payee.
7.04 PAYMENT OF TAXES. The Borrower will pay and discharge, and will
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims
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which, if unpaid, might become a Lien or charge upon any properties of
Holdings, the Borrower or any of its Subsidiaries, provided that neither
Holdings, the Borrower nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if it has maintained adequate reserves (in the good
faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP.
7.05 CONSOLIDATED CORPORATE FRANCHISES. The Borrower will do, and
will cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights and
authority, provided that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
7.06 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not have a
Material Adverse Effect or would not have a material adverse effect on the
ability of the Borrower to perform its obligations under any Credit Document.
7.07 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has
reason to know of the occurrence of any of the following, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth details as to such occurrence and such action, if any,
which the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant (other than notices relating to an individual participant's
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably likely to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability and there is a failure to make a required
contribution, which gives rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted to terminate a
Plan which has an Unfunded Current Liability; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
incur any liability (including, any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201,
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4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409, 502(l) or 502(l) of ERISA or
that the Borrower or any Subsidiary or Holdings may incur any material
liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Upon
request of a Bank, the Borrower will deliver to such Bank a complete copy of
the annual report (Form 5500) of each Plan required to be filed with the
Internal Revenue Service. In addition to any certificates or notices
delivered to the Banks pursuant to the first sentence hereof, copies of any
annual reports and any other material notices received by Holdings, the
Borrower or any Subsidiary with respect to a Plan shall be delivered to the
Banks no later than 10 days after the later of the date such notice has been
filed with the Internal Revenue Service or the PBGC, given to Plan
participants (other than notices relating to an individual participant's
benefits) or received by Holdings, the Borrower or such Subsidiary.
7.08 GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in whomsoever's possession they may be, are kept in good repair,
working order and condition, normal wear and tear excepted, and, subject to
Section 8.05, that from time to time there are made in such properties and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the manner
useful or customary for companies in similar businesses.
7.09 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries' fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.10 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) No later than 30
days following the Guaranty Commencement Date, the Borrower shall deliver to the
Agent a duly authorized and executed counterpart or counterparts of: (i) a
guaranty agreement in form and substance reasonably satisfactory to the Agent
(as modified, supplemented or amended from time to time in accordance with the
terms thereof and hereof, the "Subsidiary Guaranty") executed by each Domestic
Subsidiary (except as otherwise agreed by the Agent) guaranteeing the
Obligations; (ii) a pledge agreement executed by each Subsidiary Guarantor in
form substantially the same as the Borrower Pledge Agreement and otherwise
reasonably satisfactory to the Agent (the "Additional Pledge Agreement"),
accompanied by the delivery thereunder of the certificates representing the
Pledged Securities referred to therein and executed and undated stock powers;
(iii) a security agreement executed by each Subsidiary Guarantor in a form
substantially the same as the Security Agreement and otherwise reasonably
satisfactory to the Agent (the "Additional Security Agreement") covering all of
such Subsidiary Guarantor's present and future
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Security Agreement Collateral, together with the filings and reports referred
to in Section 5.12(b) (i) through (iv) of the Original Credit Agreement
relating thereto; and (iv) deeds of trust, mortgages and similar documents in
form and substance reasonably satisfactory to the Agent (the "Additional
Mortgages") covering all of the Real Property owned by each of the Subsidiary
Guarantors (except as otherwise agreed by the Agent) (x) which Additional
Mortgages shall constitute valid and enforceable Liens superior to and prior
to the rights of all third Persons and subject to no other Liens except as
permitted by Section 8.03 and (y) which Additional Mortgages (or instruments
related thereto) shall have been duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and
protect the Liens in favor of the Collateral Agent required to be granted
thereunder and all taxes, fees and other charges payable in connection
therewith shall have been paid in full, with each such Additional Mortgage to
be accompanied by mortgage policies relating thereto reasonably satisfactory
to the Agent, it being understood that nothing in this Section 7.10 shall
prevent any Domestic Subsidiary from merging with the Borrower to the extent
permitted by Section 8.02.
(b) The Borrower will, and, after the Guaranty Commencement Date,
will cause the Subsidiary Guarantors to, grant to the Collateral Agent security
interests and mortgages (each a "New Mortgage") in such owned Real Property of
the Borrower and the Subsidiary Guarantors acquired (including as a result of
the merger of one or more Subsidiaries with the Borrower) after the Restatement
Effective Date (or in the case of such Subsidiary Guarantors, the date it became
a Subsidiary Guarantor) as may be requested from time to time by the Agent.
Such New Mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as are permitted by Section 8.03. The New
Mortgages or instruments related thereto shall have been duly recorded or filed
in such manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens in favor of the Collateral Agent required to be
granted pursuant to the New Mortgages and all taxes, fees and other charges
payable in connection therewith shall have been paid in full.
(c) The Borrower will, and will cause its Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports
and other assurances or instruments and take such further steps relating to the
collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to
the Collateral Agent such opinions of counsel, title insurance and other related
documents as may be requested by the Agent to assure themselves that this
Section 7.10 has been complied with.
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(d) The Borrower agrees that each action required above by this
Section 7.10 shall be completed as soon as possible, but in no event later than
60 days after such action is requested to be taken by the Agent or the Required
Banks, provided that in no event shall the Borrower be required to take any
action, other than using its reasonable commercial efforts without any material
expenditure, to obtain consents from third parties with respect to its
compliance with this Section 7.10.
7.11 CORPORATE SEPARATENESS. The Borrower will take, and will cause
each of its Subsidiaries to take, all such action as is necessary to keep the
operations of the Borrower and its Subsidiaries separate and apart from those of
Holdings, including, without limitation, ensuring that all customary formalities
regarding corporate existence, including holding regular board of directors'
meetings and maintenance of corporate records, are followed. All financial
statements of the Borrower and its Subsidiaries provided to creditors will
clearly evidence the corporate separateness of the Borrower and its Subsidiaries
from Holdings. Finally, neither the Borrower nor any of its Subsidiaries will
take any action, or conduct its affairs in a manner which is likely to result in
the corporate existence of Holdings on the one hand, and the Borrower and its
Subsidiaries on the other, being ignored, or in the assets and liabilities of
the Borrower or any of its Subsidiaries being substantively consolidated with
those of Holdings in a bankruptcy, reorganization or other insolvency
proceeding. No action expressly provided for in this Agreement, the other
Credit Documents, the RF Credit Agreement, the Senior Notes and/or the Discount
Notes will breach this covenant, and this covenant shall cease to be of any
force and effect once (x) the Discount Notes substantially have been paid in
full and (y) Holdings shall have delivered the Holdings Guaranty and the
Holdings Pledge Agreement.
7.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (i) The Borrower will
comply, and the Borrower will cause each of its Subsidiaries to comply, with
all Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, and will keep or cause
to be kept all such Real Property free and clear of any Liens imposed
pursuant to such Environmental Laws and (ii) neither the Borrower nor any of
its Subsidiaries will generate, use, treat, store, release or dispose of, or
permit the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
operated by the Borrower or any of its Subsidiaries, or transport or permit
the transportation of Hazardous Materials to or from any such Real Property,
except to the extent that the failure to comply with the requirements
specified in clause (i) or (ii) above, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect. If required to do so under any applicable directive or order of any
governmental agency, the Borrower agrees to undertake, and cause each of its
Subsidiaries to undertake, any clean up, removal, remedial or other action
necessary to remove and clean up any Hazardous Materials from any Real
Property owned,
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leased or operated by the Borrower or any of its Subsidiaries in accordance
with, in all material respects, the requirements of all applicable
Environmental Laws and in accordance with, in all material respects, such
orders and directives of all governmental authorities, except to the extent
that the Borrower or such Subsidiary is contesting such order or directive in
good faith and by appropriate proceedings and for which adequate reserves
have been established to the extent required by generally accepted accounting
principles.
SECTION 8. NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees, as of the Initial Borrowing Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Notes are
outstanding and the Loans, together with interest, Fees and all other
Obligations incurred hereunder, are paid in full, that (it being agreed that no
provision of Section 8.02, 8.03, 8.04, 8.06, 8.08, 8.09 or 8.10 shall at any
time be defaulted by, or shall be interpreted to prohibit, any action by the
Borrower or any of its Subsidiaries (other than Naegele or Peterson) to the
extent (x) such action was not prohibited by the LaSalle Loan Agreement and (y)
a restriction on any such action is prohibited by Section 3.12 of the Senior
Note Indenture and/or Section 3.13 of the Discount Note Indenture, in each case
as in effect on the Restatement Effective Date, to the extent the Senior Notes
and the Discount Notes, respectively, are then outstanding or have not been
amended pursuant to a Permitted Exit Amendment):
8.01 CHANGES IN BUSINESS. The Borrower will not, and will not permit
any of its Subsidiaries to, engage in any line of business other than the
business of outdoor advertising, including transit and bus shelter, stadium,
transport terminal and other similar out-of-home advertising services and any
administrative or similar activities reasonably related thereto.
8.02 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
sell or otherwise dispose of all or any part of its property or assets (other
than inventory or obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or purchase, lease
or otherwise acquire all or any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases, materials and
equipment in the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) any Subsidiary of the Borrower (other than, prior to the Guaranty
Commencement Date, Naegele and Peterson) may be merged or consolidated with
or into, or be liquidated into, the Borrower (so long as the Borrower is
the surviving corporation) or any other Subsidiary (so long as Naegele or
Peterson, as the case may be, is the surviving corporation if it is such
other Subsidiary), or all
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or any part of its business, properties and assets may be conveyed,
leased, sold or transferred to the Borrower or any other Subsidiary;
(b) capital expenditures to the extent within the limitations set
forth in Section 8.05 hereof;
(c) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.06;
(d) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
such lease does not create a Capitalized Lease Obligation not otherwise
permitted by Section 8.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary of
software, customer lists, trademarks and other intellectual property in the
ordinary course of business, provided, that such licenses or sublicenses
shall not interfere with the business of the Borrower or any Subsidiary;
(f) other sales or dispositions of assets (I) for cash in an amount
equal to the fair market value thereof as determined by the Borrower and/or
(II) in exchange for other assets permitted to be held under Section 8.01
provided that, in each case, (i) the assets so sold or disposed of,
together with all other assets, previously sold or disposed of pursuant to
this clause (f) after or during the Calculation Period applicable to such
sale or disposition, shall not have generated Adjusted EBITDA of the
Borrower during such Calculation Period (taken as one accounting period)
equal to 15% or more of the aggregate Adjusted EBITDA of the Borrower
during such Calculation Period (taken as one accounting period), (ii) the
assets so sold or disposed of, together with all other assets previously
sold or disposed of pursuant to this clause (f) after the Restatement
Effective Date, shall not have generated Adjusted EBITDA of the Borrower
during the period (taken as one accounting period) commencing on the
Restatement Effective Date and ending on the last day of the last month for
which financial statements of the Borrower are reasonably available equal
to 25% or more of the aggregate Adjusted EBITDA of the Borrower during such
period (taken as one accounting period) and (iii) the Net Cash Proceeds, if
any, of any such sale are applied to repay the Loans to the extent required
by Section 4.02(A)(c), and, provided further, that (x) the sale or
disposition of the capital stock of any Subsidiary of the Borrower shall be
prohibited unless it is for all of the outstanding capital stock of such
Subsidiary owned by the Borrower and (y) neither Naegele nor Peterson may
be sold or disposed of pursuant to this clause (f);
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(g) other sales or dispositions of assets in each case to the extent
the Required Banks have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary other than, prior to the Guaranty Commencement
Date, Naegele and Peterson may be liquidated into the Borrower; and
(i) Permitted Acquisitions provided that after giving effect thereto
and the related borrowings to finance same there would be no default under
Sections 8.11 through 8.15 or 9.08(B) or (C) determined on a pro forma
basis as if such Permitted Acquisition and the related borrowings were
consummated on the first day of the 12-month period ending on the
Measurement Date last to occur.
8.03 LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in
the good faith judgment of the management of the Borrower) have been
established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Borrower or any
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement or the other
Credit Documents;
(d) (x) Liens on assets of the Borrower and each Subsidiary existing
on the Restatement Effective Date and listed on Part A of Annex VIII
hereto, without
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giving effect to any subsequent extensions or renewals thereof, (y)
Liens on assets of Peterson existing on the Restatement Effective Date
and added to Part B of Annex VIII by the Borrower and the Agent within
30 days after the Restatement Effective Date so long as such Liens are
deemed immaterial by the Agent and (z) immaterial Liens on assets of the
Borrower and each Subsidiary existing on the Restatement Effective Date
at the locations listed on Part B of Annex VIII;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof, except
as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money) provided, that the aggregate amount of deposits
at any time pursuant to this clause (f) shall not exceed $500,000;
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) Purchase money Liens securing payables arising from the purchase
by the Borrower of any equipment or goods in the normal course of business,
provided that such payables shall not constitute Indebtedness;
(k) Any interest or title of a lessor or any lien on the interest or
title of a lessor under any lease permitted by this Agreement;
(l) Liens arising pursuant to purchase money mortgages relating to,
or security interests securing Indebtedness representing the purchase price
of, assets acquired by the Borrower, Naegele and/or Peterson or any
Subsidiary Guarantor
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after the Restatement Effective Date, provided that any such Liens
attach only to the assets so acquired and that all Indebtedness secured
by Liens created pursuant to this clause (l) shall not exceed $5,000,000
at any time outstanding;
(m) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(d);
(n) Liens on assets of Subsidiaries of the Borrower other than, prior
to the Guaranty Commencement Date, Naegele or Peterson in favor of the
Borrower;
(o) Liens securing Indebtedness permitted by Section 8.04(i) provided
that such Liens attach only to the assets (or to the assets of the Person
whose stock is being) acquired; and
(p) Liens on assets of the Borrower securing Indebtedness not in
excess of $1,000,000 at any time outstanding.
8.04 INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement, the other
Credit Documents and the RF Credit Agreement;
(b) Indebtedness owing by (i) any Subsidiary (other than, prior to
the Guaranty Commencement Date, Naegele or Peterson) to the Borrower or
another Subsidiary other than, prior to the Guaranty Commencement Date,
Naegele or Peterson, (ii) if prior to the Guaranty Commencement Date,
Naegele or Peterson to the Borrower to the extent not in excess of
$2,000,000 at any time outstanding and (iii) the Borrower to any Subsidiary
(provided that no such Indebtedness owing to Naegele or Peterson may be
incurred while an Event of Default exists);
(c) Indebtedness of the Borrower evidenced by the Senior Notes, in an
aggregate principal amount not to exceed $65,000,000;
(d) Capitalized Lease Obligations of the Borrower, Naegele or
Peterson, provided that the aggregate Capitalized Lease Obligations under
all Capital Leases entered into after the Restatement Effective Date shall
not exceed $10,000,000;
(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Permitted Subordinated Debt and the Additional Subordinated Debt;
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(g) to the extent same has been assumed by the Borrower, Indebtedness
evidenced by the promissory note originally executed by Holdings in favor
of William H. Smith (the "Smith Note");
(h) Indebtedness incurred pursuant to purchase money mortgages
permitted by Section 8.03(l);
(i) Indebtedness of a Person, or secured by assets, acquired after
the Restatement Effective Date pursuant to a Permitted Acquisition provided
that such Indebtedness (x) existed at the time of such Permitted
Acquisition and was not created in connection therewith or in anticipation
thereof, (y) is not guaranteed in any respect by the Borrower or any of its
Subsidiaries, except to the extent such Person merges into, or such assets
are directly acquired by, the Borrower or such Subsidiary and (z) shall not
exceed in the aggregate for all Indebtedness permitted by this clause (i)
$5,000,000 at any time outstanding, without giving effect to any subsequent
extension, renewal or refinancing thereof; and
(j) additional Indebtedness of the Borrower not to exceed an
aggregate outstanding principal amount of $5,000,000 at any time.
8.05 CAPITAL EXPENDITURES. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower, Naegele, Peterson and any Subsidiary Guarantor may
make Consolidated Capital Expenditures (x) during the period from the
Restatement Effective Date through December 31, 1996 (taken as one accounting
period) in an aggregate amount not in excess of $3,000,000, (y) during the
fiscal year of the Borrower ended December 31, 1997, $12,000,000 and (z) during
each successive fiscal year of the Borrower, in an aggregate amount not in
excess of 105% of the maximum amount for the prior 12-month period.
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section 8.05(a) (without giving effect to this clause (b)) is not
fully expended during such fiscal year, the maximum amount which may be expended
during the immediately succeeding fiscal year pursuant to Section 8.05(a) shall
be increased by such unutilized amount provided that such increase shall not
exceed $5,000,000 in any fiscal year.
(c) In addition to the foregoing, the Borrower, Naegele, Peterson and
any Subsidiary Guarantor may make Consolidated Capital Expenditures in amounts
in excess of those permitted under Sections 8.05(a) and (b) provided that the
amount of such additional Consolidated Capital Expenditures shall not exceed the
sum of (x) the Available ECF Amount and (y) the Available Equity Amount in each
case as determined at the time of, but immediately prior to, the making thereof.
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8.06 INVESTMENTS AND LOANS. The Borrower will not make or permit to
exist any Investments or Loans in or to any other Person or acquire or establish
any Subsidiary, except for Permitted Investments or as permitted by the next
sentence. Notwithstanding anything contained in this Section 8.06 to the
contrary, Borrower may acquire 100% of the Capital Stock of (x) Quantum
Structure & Design, Inc. and (y)] any [other] Person if[, in the case of clause
(y), the following conditions are satisfied: (i) an Event of Default has not
occurred and is continuing under this Agreement and will not occur as a result
of, in connection with or after giving effect to such acquisition; (ii) the
Person being acquired engages exclusively in the business permitted to be
engaged in by Borrower and its Subsidiaries pursuant to Section 8.01; (iii)
title to all of the assets acquired in such acquisition is transferred by
operation of law, assignment, sale or otherwise, to Borrower within 60 days of
the consummation of such acquisition provided that such transfer shall not be
required after the Guaranty Commencement Date if the assets are held by a
Subsidiary Guarantor; and (iv) such acquired assets are expressly made subject
to the Liens created by the Security Documents.
8.07 SUBSIDIARIES; ETC. The Borrower will not (x) sell, assign or
otherwise encumber or dispose of, and will not permit any of its Subsidiaries
directly or indirectly to issue, sell, assign, pledge or otherwise encumber or
dispose of, any shares of a Subsidiary's capital stock or other securities (or
warrants, rights or options to acquire shares or other equity securities) of
such Subsidiary, except to the Borrower (to the extent otherwise permitted
hereunder) and except for dispositions permitted by Section 8.02, (y) after the
Restatement Effective Date, create or permit to be created any new Subsidiary
except to the extent created in compliance with the second sentence of Section
8.06 and (z) violate or breach the provisions of Section 3.11(a) of the Senior
Note Indenture as in effect on the Restatement Effective Date (to the extent
such Section is then in effect).
8.08 PREPAYMENTS OF INDEBTEDNESS, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of the Senior Notes, Subordinated Debt (once issued),
[the Smith Note] or any other Existing Indebtedness provided that (I) the
Borrower may Purchase Senior Notes (w) in an aggregate amount, at any time,
equal to the Holdback Proceeds at such time, (x) in an aggregate amount at
the time of any such Purchase equal to the Available ECF Amount at the time
of, but immediately prior to, such Purchase provided that at such time
(i.e., immediately prior to such Purchase) the Holding Leverage Ratio is
less than 5.00 to 1.0, (y) in an amount at the time of any such
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Purchase equal to the Available Equity Amount at the time of, but
immediately prior to, such Purchase and (z) as otherwise consented to by
the Required Banks and (II) the Borrower may pay Dividends to Holdings
to permit it to purchase Discount Notes as provided for in Section
8.09(a);
(b) amend or modify, or permit the amendment or modification of, any
provisions of (x) any Senior Note Documents (except for Permitted Exit
Amendments), (y) any Subordinated Debt Documents and (z) the RF Credit
Agreement; and/or
(c) amend, modify or change in any manner adverse to the interests of
the Banks the Certificate of Incorporation (including, without limitation,
by the filing of any certificate of designation) or By-Laws of the
Borrower, Naegele or Peterson or any agreement entered into by the
Borrower, with respect to its capital stock, or the Acquisition Documents
or enter into any new agreement in any manner adverse to the interests of
the Banks with respect to the capital stock of the Borrower, Naegele or
Peterson.
8.09 DIVIDENDS, ETC. (a) The Borrower will not redeem, retire,
purchase or otherwise acquire, directly or indirectly, any Capital Stock of
Borrower or other evidence of ownership interest, or declare or pay dividends
upon any Capital Stock of Borrower or make any distribution of Borrower's
property or assets (any of the foregoing, a "Dividend"), provided that this
Section 8.09 will not prohibit, so long as no Event of Default shall have
occurred and is continuing or would occur as a consequence thereof, (i) the
repurchase, redemption or other acquisition or retirement for value of any
shares of Capital Stock of the Borrower from the estate of Daniel L. Simon
solely out of the proceeds of any policy of insurance maintained to provide
funds for such purpose, (ii) to the extent the Indebtedness evidenced by such
Note has not been assumed by the Borrower, the payment of dividends to Holdings
in an annual amount not to exceed $120,000 to fund payments of interest on the
Smith Note, (iii) the payment of cash Dividends to Holdings to the extent the
proceeds are promptly used to pay administrative costs arising in the ordinary
course of business, (iv) the payment of cash Dividends to Holdings to be
promptly utilized by Holdings to purchase its Common Stock (or options or
warrants to purchase such Common Stock) from officers, employees and directors
(or their estates) upon the death, permanent disability, retirement or
termination of employment of any such Person or otherwise in accordance with any
stock option plan or any employee stock ownership plan or any warrant plan and
(v) the payment of cash Dividends to Holdings to the extent that the proceeds
are used on the date of receipt to Purchase Discount Notes provided that any
such Dividend will not exceed the Modified Available Amount at the time of, but
immediately prior to, the making of such Dividend.
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(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary, (c) transfer any of its properties or assets
to the Borrower or any Subsidiary or (B) the ability of the Borrower or any
other Subsidiary of the Borrower to create, incur, assume or suffer to exist any
Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of: (i) this
Agreement, the other Credit Documents, the RF Credit Agreement, the Senior Note
Documents, the Discount Note Indenture and the Subordinated Debt Documents (once
executed); (ii) applicable law; (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices; (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement; and (v) Liens permitted under Section 8.03 and any
documents or instruments governing the terms of any Indebtedness or other
obligations secured by any such Liens, provided that such prohibitions or
restrictions apply only to the assets subject to such Liens.
8.10 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will
not permit any Subsidiary to, sell, lease, license, transfer, exchange, or
otherwise dispose of any of its properties, assets or services to, or purchase,
lease, or license the use of any property, assets or services from, or transfer
funds to, or enter into any contract, agreement, understanding, loan, advance or
guarantee with, to or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction", whether constituting one transaction or a series of
related transactions), unless (a) such Affiliate Transaction is on terms that
are no less favorable to the Borrower or the relevant Subsidiary than those that
would have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated person and (b) Borrower delivers to the Agent (i)
with respect to any Affiliate Transaction involving aggregate payments in excess
of $250,000, an officers' certificate setting forth a resolution of the Board of
Directors of the Borrower approved by a majority of the members of the Board of
Directors (and a majority of the disinterested members of the Board of
Directors, if any) certifying that such Affiliate Transaction complies with
clause(a) above and (ii) with respect to any Affiliate Transaction involving
aggregate payments in excess of $3.0 million, an opinion as to the fairness,
from a financial point of view, of such Affiliate Transaction to the Borrower or
such Subsidiary issued by an independent investment banking firm of national
standing with total assets in excess of $1.0 billion. The foregoing limitation
does not limit, and shall not apply to, (i) the payment of reasonable annual
compensation to directors or executive officers of the Borrower or any
Subsidiary thereof, (ii) transactions described in Annex IX hereto, provided
that the fees described in Annex IX shall accrue and not be paid at any time
that
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a Default or an Event of Default specified in Section 9.01 shall occur and
be continuing or (iii) payments by the Borrower to Holdings under the Tax
Sharing Agreement.
8.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
ratio of (i) Adjusted EBITDA of the Borrower to (ii) Consolidated Fixed Charges
of the Borrower for any 12 month period (taken as one accounting period) ending
on a Measurement Date (or if less the period from the Initial Borrowing Date to
such Measurement Date) to be less than 1.00 to 1.
8.12 MINIMUM ADJUSTED EBITDA. The Borrower will not permit Adjusted
EBITDA of the Borrower for any 12 month period (taken as one accounting period)
ending on a Measurement Date occurring in a period set forth below to be less
than (A) the amount set forth opposite such period [plus (B) the Aggregate
Acquired EBITDA as of such Measurement Date]:
Period Amount
------ ------
Restatement Effective Date through
December 30, 1997 $57,000,000
December 31, 1997 through
December 30, 1998 $58,400,000
December 31, 1998 through
December 30, 1999 $60,750,000
December 31, 1999 through
December 30, 2000 $65,750,000
December 31, 2000 and
thereafter $70,500,000
8.13 BORROWER LEVERAGE RATIO. Prior to the Guaranty Commencement
Date, the Borrower will not permit the Borrower Leverage Ratio as of any
Measurement Date occurring in a period set forth below to be more than the ratio
set forth opposite such period:
Period Ratio
------ -----
Restatement Effective Date through
December 30, 1997 6.00 to 1.0
December 31, 1997
and thereafter 5.00 to 1.0
8.14 SENIOR LEVERAGE RATIO. On and after the Guaranty Commencement
Date, the Borrower will not permit the Senior Leverage Ratio as of any
Measurement Date
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occurring in a period set forth below to be more than the ratio set forth
opposite such period:
Period Ratio
------ -----
Restatement Effective Date through
December 30, 1997 5.50 to 1.0
December 31, 1997 through
December 30, 1998 5.00 to 1.0
December 31, 1998 and
thereafter 4.50 to 1.0
8.15 INTEREST RATIO. On and after the Guaranty Commencement Date,
the Borrower will not permit the ratio of (i) Adjusted EBITDA of the Borrower to
(ii) Consolidated Interest Expense of the Borrower for any twelve month period
(taken as one accounting period) ending on a Measurement Date occurring in a
period set forth below to be less than the ratio set forth opposite such period:
Period Ratio
------ -----
Restatement Effective Date through
December 30, 1997 1.50 to 1.0
December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
9.02 REPRESENTATIONS, ETC. Any representation, warranty or statement
made by the Borrower herein or in any other Credit Document or in any statement
or certificate
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delivered or required to be delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made; or
9.03 COVENANTS. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 7.10, 7.11 or 8, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
9.01, 9.02 or clause (a) of this Section 9.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
notice to the defaulting party by the Agent or the Required Banks; or
9.04 DEFAULT UNDER OTHER AGREEMENTS. (a) Holdings, the Borrower or
any of its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
applicable thereto or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of Holdings, the Borrower or any of its Subsidiaries shall
be declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not constitute an Event of Default pursuant to this
Section 9.04 unless the principal amount of such Indebtedness exceeds $2,500,000
individually or in the aggregate at any one time; or
9.05 BANKRUPTCY, ETC. Holdings, the Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against Holdings, the Borrower or any of its Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Holdings, the Borrower or any of its Subsidiaries; or Holdings, the
Borrower or any of its Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Holdings, the Borrower or any of its
Subsidiaries; or there is commenced against Holdings, the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings, the Borrower or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; Holdings, the Borrower or any of its Subsidiaries
suffers any appointment of any
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custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or Holdings, the
Borrower or any of its Subsidiaries makes a general assignment for the
benefit of creditors; or any corporate action is taken by Holdings, the
Borrower or any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
9.06 ERISA. (a) A single-employer plan (as defined in Section 4001
of ERISA) established by the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or shall provide security to induce the issuance of such waiver or
extension, (b) any Plan is or shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA or an event has occurred
entitling the PBGC to terminate a Plan under Section 4042(a) of ERISA, (c) any
Plan shall have an Unfunded Current Liability or (d) the Borrower or a
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a material
liability to or on account of a termination of or a withdrawal from a Plan under
Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and there shall result
from any such event or events described in the preceding clauses of this Section
9.06 the imposition of a Lien upon the assets of Holdings, the Borrower or any
Subsidiary, the granting of a security interest, or a liability or a material
risk of incurring a liability to the PBGC or a Plan or a trustee appointed under
ERISA or a penalty under Section 4971 of the Code, in each case which would
have, in the opinion of the Required Banks a Material Adverse Effect; or
9.07 CREDIT DOCUMENTS. Any Security Document or Guaranty (once
executed) shall cease to be in full force and effect (except as provided for
therein), or any Security Document shall cease to give the Collateral Agent any
Lien encumbering assets with an aggregate fair market value in excess of
$2,500,000 (and, if encumbering assets with a fair market value of less than
$2,500,000, for a period greater than thirty or more days), or any material
rights, powers and privileges purported to be created thereby in favor of the
Collateral Agent or any Credit Party shall default in any material respect in
the due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to any such Security Document or Guaranty
or shall disaffirm or seek to disaffirm any Guaranty; or
9.08 HOLDINGS. (A) Holdings shall after the Restatement Effective
Date [(i) incur any Indebtedness,] (ii) grant or create any Lien on any of its
assets that secures Indebtedness, (iii) modify or amend the Discount Note
Indenture or Discount Notes (except, in each case, for Permitted Exit
Amendments) or (except with the proceeds of equity contributions from Designated
UOH Stockholders) prepay any of the Discount Notes, (iv) engage in any business
or activity other than the ownership of all of the capital stock of the Borrower
and administrative activities directly related thereto, (v) sell or dispose of
any of,
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or otherwise cease to own all of, the capital stock of the Borrower, (vi)
change its fiscal quarters or fiscal year from those applicable also to the
Borrower, (vii) fail to maintain its own payroll and books of account and
bank accounts separate from those of the Borrower and its Subsidiaries,
(viii) fail to pay its liabilities, including all administrative expenses,
from its own separate assets, (ix) fail to separately identify and segregated
its assets from the assets of the Borrower and its Subsidiaries, except in
each case (a) as expressly required by any of the Shareholders' Agreements,
Management Agreements, Tax Sharing Agreements, subscription agreements with
members of management and the Discount Notes, all as in effect on the
Restatement Effective Date, (b) as expressly required by law, (c) Holdings
issuing Capital Stock in any public offering to the extent the proceeds
thereof are used to repay the Loans as required by Section 4.02(A)(d) hereof
and (d) Holdings Purchasing Discount Notes (w) in an aggregate amount, at any
time, equal to the Holdback Proceeds at such time, (x) in an amount at the
time of any such Purchase equal to the Available ECF Amount at the time of,
but immediately prior to, such Purchase provided that at such time (i.e.,
immediately prior to such Purchase) the Holdings Leverage Ratio is less than
5.00 to 1.0 or (y) in an amount at the time of any such Purchase equal to the
Available Equity Amount at the time of, but immediately prior to, such
Purchase and/or (x) amend, modify or change in any way adverse to the
interests of the Banks, its Certificate of Incorporation (including, without
limitation, by the filing or modification of any certificate of designation)
or By-Laws or any agreement entered into by Holdings with respect to its
capital stock; and/or
(B) The Holdings Leverage Ratio as of any Measurement Date occurring
in a period set forth below is more than the ratio set forth opposite such
period:
Period Ratio
------ -----
Restatement Effective Date through
June 29, 1998 6.50 to 1.0
June 30, 1998 through
December 30, 1999 6.25 to 1.0
December 31, 1999 and
thereafter 6.00 to 1.0
(C) At any time prior to the Guaranty Commencement Date, the ratio of
(i) Adjusted EBITDA of Holdings to (ii) Consolidated Cash Interest Expense of
Holdings for any 12 month period (taken as one accounting period) ending on a
Measurement Date occurring in a period set forth below is less than the ratio
set forth opposite such period:
Period Ratio
------ -----
Restatement Date through
December 30, 1997 1.50 to 1.0
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December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
(D) Holdings shall have failed, for more than 15 days following the
Guaranty Commencement Date, to authorize and execute a guaranty agreement (as
modified, amended or supplemented in accordance with the terms thereof or
hereof, the "Holdings Guaranty") in respect of the Obligations hereunder and a
pledge agreement (as modified, amended or supplemented in accordance with the
terms thereof or hereof, the "Holdings Pledge Agreement") pledging all the
capital stock of the Borrower, all in such form as is acceptable to the Agent
and/or to deliver same to the Agent and Collateral Agent, as the case may be,
together with, in pledge under, the Holdings Pledge Agreement, the certificates
representing all the shares of the capital stock of the Borrower, accompanied by
executed and undated stock powers and such opinions of counsel relating thereto
as reasonably requested by the Agent; or
9.09 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings, the Borrower and/or any of its Subsidiaries involving a
liability of $2,500,000 or more or in the aggregate (not paid or to the extent
not covered by insurance) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof; or
9.10 RF CREDIT AGREEMENT. An Event of Default under and as defined
in the RF Credit Agreement shall have occurred and be continuing;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that, if an Event of Default specified
in Section 9.05 shall occur with respect to the Borrower, the result which would
occur upon the giving of written notice by the Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any Commitment Commission shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Loans and
all obligations owing hereunder to be, whereupon the
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same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; and/or (iii) enforce, as Collateral Agent (or direct the Collateral
Agent to enforce), any or all of the Liens and security interests created
pursuant to the Security Documents.
SECTION 10. DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"A Term Commitment" shall mean, with respect to each Bank with an AR
Commitment, such Bank's obligation to convert a portion of its AR Loans
outstanding on the date of the Loan Conversion into, and to thereafter maintain
such Loans as, A Term Loans as provided in Section 1.01(B).
"A Term Loan" shall have the meaning provided in Section 1.01(B).
"A Term Loan Facility" shall mean the Facility evidenced by the A Term
Loans.
"A Term Note" shall have the meaning provided in Section 1.05(a).
"Acquisition" shall mean the acquisition by the Borrower of 100% of
the outstanding capital stock of Peterson pursuant to the Acquisition Documents
provided that after giving effect to the merger contemplated by the Acquisition
Agreement and the additional mergers consummated on the Restatement Effective
Date, Peterson shall be a direct wholly-owned subsidiary of the Borrower.
"Acquisition Agreement" shall mean the Agreement and Plan of Merger,
dated August __, 1996, among the Borrower, Universal Acquisition Corp, OAH and
the stockholders listed therein as delivered to the Banks pursuant to Section
5.01(h), as the same may be amended or modified in accordance with the
provisions thereof and hereof.
"Acquisition Documents" shall mean the Acquisition Agreement and all
other documents entered into to effectuate the Acquisition.
"Additional Mortgages," "Additional Pledge Agreement" and "Additional
Security Agreement" shall each have the meaning provided in Section 7.10.
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"Additional Security Documents" shall mean and include the Additional
Pledge Agreement, Additional Security Agreement, Additional Mortgages, New
Mortgages and the Holdings Pledge Agreement.
"Additional Subordinated Debt" shall mean subordinated debt issued by
the Borrower after it has issued $200,000,000 of Permitted Subordinated Debt,
provided that (i) the terms and conditions (other than pricing and maturities,
provided that no scheduled payment of principal shall be due and payable prior
to the Final Maturity Date) are (in the reasonable opinion of the Agent)
substantially the same as those contained in the Permitted Subordinated Debt or
are consented to by the Required Banks [and (ii) the Additional Subordinated
Debt shall not exceed $100 million in the aggregate.]
"Adjusted Cash Flow" for any fiscal year shall mean Consolidated Net
Income of the Borrower for such fiscal year (after provision for taxes) plus the
amount of all net non-cash charges (including, without limitation, depreciation,
deferred tax expense, non-cash interest expense, amortization and other non-cash
charges) that were deducted in arriving at such Consolidated Net Income for such
fiscal year, minus the amount of all non-cash gains and gains from sales of
assets (other than sales of inventory and equipment in the normal course of
business) that were added in arriving at such Consolidated Net Income for such
fiscal year.
"Adjusted EBITDA" of any Person shall mean, for any period (x) the
Consolidated EBITDA of such Person for such period plus or minus (y) the
adjustments thereto provided for in Exhibit I.
"Adjusted Total AR Commitment" shall mean at any time the Total AR
Commitment less the aggregate AR Commitments of all Defaulting Banks.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 11.09.
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["Aggregate Acquired EBITDA" shall mean, as at any Measurement Date,
an amount equal to the aggregate of 85% of the "12-month Consolidated EBITDA" of
each Person acquired by the Borrower and its Subsidiaries after the Restatement
Effective Date, with the "12-month Consolidated EBITDA" of each such Person to
be the Consolidated EBITDA of such Person for the 12 months last ended prior to
the acquisition of such Person.]
"Agreement" shall mean this Amendment and Restatement of the
Acquisition Credit Agreement, as the same may be from time to time further
modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Permitted Asset Sale that the Borrower intends to use to
purchase, construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean (x) for B Term Loans, 2% and
(y) for all other Loans, 1.75% less the Margin Reduction Discount, if any,
provided that if the Guaranty Commencement Date has not occurred prior to March
31, 1997 then the Applicable Base Rate Margin for all Loans shall increase by
.25% on March 31, 1997, which increase shall continue in effect until such time,
if any, as the Guaranty Commencement Date occurs.
"Applicable Eurodollar Margin" shall mean (x) for B Term Loans, 3% and
(y) for all other Loans, 2.75% less the Margin Reduction Discount, if any,
provided that if the Guaranty Commencement Date has not occurred prior to March
31, 1997, then the Applicable Eurodollar Margin for all Loans shall increase by
.25% on March 31, 1997, which increase shall continue in effect until such time,
if any, as the Guaranty Commencement Date occurs.
"AR Bank" shall mean a Bank hereunder to the extent it has an AR
Commitment and/or A Term Loans outstanding.
"AR Commitment" shall mean, with respect to each Bank, the amount set
forth opposite such Bank's name in Annex I hereto directly below the column
entitled "AR Commitment," as the same may be reduced from time to time pursuant
to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 12.04.
"AR Facility" shall mean the Facility evidenced by the Total AR
Commitment.
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"AR Loan" shall have the meaning provided in Section 1.01(A)(b).
"AR Maturity Date" shall mean September 30, 2003.
"AR Note" shall have the meaning provided in Section 1.05(a).
"AR Repayment Percentage" shall mean the percentage obtained by
dividing (x) the aggregate principal amount of AR Loans outstanding on the AR
Termination Date by (y) $212,500,000.
"AR Termination Date" shall mean September 30, 1999 or if earlier the
date on which the Total AR Commitment is terminated.
"Asset Sale" shall mean and include (x) the sale, transfer or other
disposition by the Borrower or any Subsidiary to any Person other than the
Borrower or any Subsidiary of any asset of the Borrower or such Subsidiary
(other than sales, transfers or other dispositions in the ordinary course of
business of inventory and/or obsolete or excess equipment and other than sales
in which the Net Cash Proceeds are $50,000 or less) and/or (y) the receipt by
the Borrower or any Subsidiary of any insurance, condemnation or similar
proceeds in connection with a casualty or taking of any of its assets.
"ATL Repayment Percentage" shall mean the percentage obtained by
dividing (x) the aggregate principal amount of AR Loans converted into A Term
Loans pursuant to the Loan Conversion by (y) $100,000,000.
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower in each case to the
extent acceptable to the Agent.
"Available ECF Amount" shall mean at any time, an amount equal to (A)
50% of Excess Cash Flow determined for the fiscal year of the Borrower
(commencing with the fiscal year ending on December 31, 1999) then last ended
less (B) the sum of (i) the aggregate Consolidated Capital Expenditures
theretofore made during the then current fiscal year pursuant to Section
8.05(c)(x) and (ii) the aggregate amount theretofore expended, as permitted by
Section 8.08(a)(x) or 9.08(A)(d)(x), as the case may be, during the then current
fiscal year to Purchase Senior Notes or Discount Notes, as the case may be.
"Available Equity Amount" shall mean at any time (A) an amount equal
to the aggregate net cash proceeds at such time from the sale or issuance of
equity by Holdings or the Borrower after the Restatement Effective Date (other
than the Proposed Equity Issuance) not required to be utilized to repay Loans
under Section 4.02(A)(d)
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(whether or not Loans are then outstanding) less (B) the sum of (x) the
aggregate amounts theretofore expended after the Restatement Effective Date
to Purchase Senior Notes and/or Discount Notes pursuant to Section 8.08(a)(y)
or 9.08(A)(d)(y), as the case may be, of this Agreement plus (y) the
aggregate of any amounts theretofore expended after the Restatement Effective
Date pursuant to Section 8.05(c)(y) of this Agreement to the extent in excess
of the Available ECF Amount at such time.
"B Term Loan" shall have the meaning provided in Section 1.01(A).
"B Term Note" shall have the meaning provided in Section 1.05(a).
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of AR Loans
or (ii) a Bank having notified the Agent and/or the Borrower that it does not
intend to comply with the obligations under Section 1.01, in the case of either
(i) or (ii) as a result of the appointment of a receiver or conservator with
respect to such Bank at the direction or request of any regulatory agency or
authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher, (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall mean Universal Outdoor, Inc., an Illinois
corporation.
"Borrower Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of the Borrower on such date to (y) Adjusted
EBITDA of the Borrower for the 12 month period (taken as one accounting period)
ending on such date.
"Borrower Pledge Agreement" shall have the meaning provided in Section
5.01(i)(I).
"Borrowing" shall mean the incurrence or continuance of one Type of
Loan pursuant to a single Facility by the Borrower from all of the Banks having
Commitments with respect to such Facility on a PRO RATA basis on a given date
(or resulting from conversions on a given date), having in the case of
Eurodollar Loans the same Interest
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Period; provided that Base Rate Loans incurred pursuant to Section 1.10(b)
shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Calculation Period" shall mean, with respect to any sale or
disposition of assets made pursuant to Section 8.02(f), the last 12 month period
for which financial statements of the Borrower are reasonably available.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, whether or not voting, including but not limited to common stock,
preferred stock, convertible debentures, warrants, options or similar rights to
acquire such capital stock, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an
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"Approved Bank"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Bank or Approved Bank
or by the parent company of any Bank or Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) and/or insurance or condemnation proceeds received by the
Borrower and/or any Subsidiary from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 ET
SEQ.
"Change of Control" shall mean (i) Holdings shall cease to own legally
and beneficially 100% of the outstanding capital stock of the Borrower, (ii)
Management Investors shall cease to be the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) of 75% or more (on a fully diluted
basis) of (x) the Common Stock beneficially owned by the Management Investors on
the Restatement Effective Date less (y) the Common Stock (not exceeding 750,000
shares) sold by Management Investors pursuant to the Proposed Equity Offering,
(iii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (ii) above, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 30% of the total
voting and economic ownership interests of Holdings; PROVIDED, HOWEVER, that the
Permitted Holders "beneficially own" (as defined in clause (ii) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting and
economic ownership interests of Holdings than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Holdings, (iv)
during any period of two consecutive years individuals who at the beginning of
such period constituted the Board of
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Directors of Holdings (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of
Holdings was approved by either (i) the Permitted Holders or (ii) a vote of a
majority of the directors of Holdings then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Holdings then in office or (v) any
"Change of Control" or similar term as defined in (I) prior to the repayment
in full of the Discount Notes or Senior Notes, respectively, the Discount
Note Indenture or the Senior Note Indenture except for any such Change of
Control arising from the Proposed Equity Issuance and/or (II) any Permitted
Subordinated Debt Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Banks.
"Commitment" shall mean, with respect to each Bank, such Bank's Term
Commitment, AR Commitment and A Term Commitment, if any.
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Common Stock" shall mean the common stock of Holdings.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with GAAP,
are or are required to be included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, provided
that Consolidated Capital Expenditures shall in any event exclude the purchase
price paid in connection with any Permitted Acquisition (whether or not
allocable to property, plant and equipment).
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"Consolidated Cash Interest Expense" of any Person shall mean, for any
period, Consolidated Interest Expense of such Person, but excluding, however,
interest expense not payable in cash and amortization of discount and deferred
issuance and financing costs.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at any
time, the current liabilities of such Person and its Subsidiaries determined on
a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" of any Person shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
such Person and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP.
"Consolidated EBIT" of any Person shall mean, for any period, (A) the
sum of the amounts for such period for such Person of (i) Consolidated Net
Income, (ii) provisions for taxes based on income, (iii) Consolidated Interest
Expense and (iv) losses on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary losses LESS (B) the amount for such
period of gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated EBITDA" of any Person shall mean, for any period, the
sum of the amounts for such period for such Person of (i) Consolidated EBIT,
(ii) depreciation expense and (iii) amortization expense, all as determined on a
consolidated basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" of any Person shall mean, for any period,
the sum, without duplication, for such Person of the amounts for such period of
(i) Consolidated Cash Interest Expense, (ii) Dividends paid to Holdings, (iii)
Consolidated Capital Expenditures (x) made other than pursuant to Section
8.05(c) and (y) paid in cash, (iv) taxes paid or payable in cash and (v)
scheduled payments on the Loans and Existing Indebtedness, all as determined on
a consolidated basis for such Person and its Subsidiaries in accordance with
GAAP.
"Consolidated Interest Expense" of any Person shall mean, for any
period, total interest expense (including that attributable to Capital Leases in
accordance with
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GAAP) of such Person and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of such Person and its Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and net costs under Interest Rate Agreements.
"Consolidated Net Income" of any Person (a "Designated Person") shall
mean for any period, the net income (or loss) of such Designated Person and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, provided that there shall
be (A) deducted, in the case of the Borrower, any Dividends paid to Holdings and
(B) excluded (i) the income (or loss) of any Person (other than Subsidiaries of
the Designated Person) in which any other Person (other than the Designated
Person or any of its Subsidiaries) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Designated
Person or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Designated Person or is merged into or consolidated with the Designated
Person or any of its Subsidiaries or that Person's assets are acquired by the
Designated Person or any of its Subsidiaries, (iii) the income of any Subsidiary
of the Designated Person to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) Transaction Expenses and (v) compensation
expense resulting from the issuance of capital stock, stock options or stock
appreciation rights issued to employees, including officers, of the Designated
Person or any Subsidiary, or the exercise of such options or rights, in each
case to the extent the obligation (if any) associated therewith is not expected
to be settled by the payment of cash by the Designated Person or any Affiliate
of the Designated Person and compensation expense resulting from the repurchase
of any such capital stock, options and rights.
"Consolidated Senior Debt" of any Person shall mean, as of any date of
determination, (x) the Consolidated Debt of such Person less (y) all Permitted
Subordinated Debt included in determining such Consolidated Debt.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily
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for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(d) otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof, provided however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the Security
Documents, any documents executed in connection therewith and (once executed)
the Guaranties.
"Credit Event" shall mean the making or continuance of a Loan.
"Credit Party" shall mean the Borrower and, upon compliance with the
provisions of Section 7.10(a), each Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated UOH Stockholders" shall mean the Management Investors,
Kelso Investment Associates V, L.P. and Kelso Equity Partners V, L.P.
"Discount Note Indenture" shall mean the Indenture entered into by and
between Holdings and United States Trust Company of New York, as trustee
thereunder, with respect to the Discount Notes as in effect on the Restatement
Effective Date and as the same may be modified, amended or supplemented from
time to time in accordance with the terms hereof and thereof.
"Discount Notes" shall mean the 14% Series A and Series B Senior
Secured Discount Notes due 2004 issued by Holdings under the Discount Note
Indenture and as the same may be supplemented, amended or modified from time to
time in accordance with the terms hereof and thereof.
"Dividends" shall have the meaning provided in Section 8.09.
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"Domestic Subsidiary" shall mean a Subsidiary of the Borrower that is
organized under the laws of the United States or any state thereof.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by the
Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating to any Environmental Law or any permit issued,
or any written approval given, under any such Environmental Law (hereafter,
"Claims"), including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials arising from alleged injury or threat of injury to health,
safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section 7401 ET SEQ.;
the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water Act,
42 U.S.C. Section 3808 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section
2701 ET SEQ. and any applicable state and local or foreign counterparts or
equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the Initial Borrowing Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings, the Borrower or a Subsidiary would be
deemed to be a "single employer" within the meaning of Sections 414(b), (c), (m)
and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the offered quotation to first-class banks in the
interbank Eurodollar
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market by the Agent for dollar deposits of amounts in same day funds
comparable to the outstanding principal amount of the Eurodollar Loan of the
Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two
Business Days prior to the commencement of such Interest Period divided (and
rounded upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage
equal to 100% minus the then stated maximum rate of all reserve requirements
(including without limitation any marginal, emergency, supplemental, special
or other reserves) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Excess Cash Flow" shall mean, for any fiscal year, the remainder of
(i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y) the decrease,
if any, in Working Capital from the first day to the last day of such fiscal
year, plus (ii) to the extent not included in (i) above, any amounts received by
the Borrower and its Subsidiaries in settlement of, or in payment of any
judgments resulting from, actions, suits or proceedings with respect to the
Borrower and/or its Subsidiaries from the first day to the last day of such
fiscal year, plus (iii) to the extent not included in (i) above, any amounts
received by the Borrower and/or its Subsidiaries in connection with the
repayment or redemption of any long-term promissory notes and/or preferred stock
of other Persons held by them, minus (iv) the sum of (x) the amount of
Consolidated Capital Expenditures (except to the extent (x) financed through the
incurrence of Indebtedness other than Revolving Loans or (y) made pursuant to
Section 8.05(c)) made during such fiscal year and (y) the increase, if any, in
Working Capital from the first day to the last day of such fiscal year and (z)
any repayments or prepayments of the principal amount of (I) Existing
Indebtedness (other than Purchases of Senior Notes made as provided by Section
8.08(a)) or (II) Term Loans and, if after the AR Termination Date, AR Loans,
except prepayments of the principal amount of Loans made pursuant to Sections
4.02(A)(c), (d), (e), (f) or (g).
"Existing Indebtedness" shall have the meaning provided in Section
6.21.
"Existing Tenders" shall mean the Offers to Purchase and Consent
Solicitations of the Borrower and Holdings, respectively, in respect of the
Senior Notes and Discount Notes, respectively, that are outstanding on the
Restatement Effective Date as the same may be amended or extended.
"Facility" shall mean any of the credit facilities established under
this Agreement, I.E., the Term Facility, the AR Facility, or if the Loan
Conversion occurs, the A Term Facility.
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"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Final Maturity Date" shall mean September 30, 2004.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guarantor" shall mean and include each Subsidiary Guarantor and
Holdings upon their execution of a Guaranty.
"Guaranties" shall mean and include the Subsidiary Guaranty and the
Holdings Guaranty.
"Guaranty Commencement Date" shall mean the earlier of (x) the date on
which the Senior Notes and the Discount Notes are repaid in full and (y) the
date on which the covenants contained in the Senior Notes and the Discount Notes
are amended, modified or waived to the satisfaction of (and pursuant to a debt
tender offer and exit consent satisfactory to) the Agent so as to permit the
execution of the Guaranties and the Additional Security Documents.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any Environmental Law.
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"Holdback Proceeds" shall mean (A) if the Proposed Equity Issuance is
consummated prior to (or concurrently with) the issuance of Permitted
Subordinated Debt, (i) the net cash proceeds of the Proposed Equity Issuance in
an aggregate amount equal to the lesser of (x) the full amount of such net cash
proceeds and (y) the Maximum Purchase Amount at the time of the receipt of such
proceeds plus (ii) the portion, if any, of the net cash proceeds of any
Permitted Subordinated Debt issued prior to the Termination Date referred to
below equal to the excess of (x) the Maximum Purchase Amount at the time of the
consummation of the Proposed Equity Issuance over (y) the original amount of
Holdback Proceeds resulting from the Proposed Equity Issuance or (B) if the
Permitted Subordinated Debt is issued prior to earliest of (I) the date on which
the Proposed Equity Issuance is consummated, (II) the Business Day following the
termination of the Existing Tenders and (III) November 30, 1996, the portion of
the net cash proceeds of such issuance equal to the Maximum Purchase Amount on
the date of such issuance, provided that the Holdback Proceeds shall be reduced
(a) by all amounts expended after the Restatement Effective Date to Purchase
Senior Notes and Discount Notes and (b) to zero (I) in the case of the Holdback
Proceeds described in clause (A) above, on the date (the "Termination Date")
which is 50 days after the date of the consummation of the Proposed Equity
Issuance (or if earlier the date on which all Senior Notes and Discount Notes
have been repaid in full) or (II) in the case of the Holdback Proceeds described
in clause (B) above, on the date which is 20 days after the date of the issuance
of the Permitted Subordinated Debt, it being understood that all Holdback
Proceeds shall be immediately deposited in, and thereafter maintained in, an
Escrow Account maintained at the Payment Office and otherwise satisfactory to
the Agent, with the terms of the Escrow Account to provide, inter alia, that
Holdback Proceeds shall be released therefrom only (i) to fund the Purchase of
Senior Notes and Discount Notes and (ii) on the date the Holdback Proceeds are
reduced to zero as provided in clause (b) above, to repay Loans as provided for
in Section 4.02(A)(e)(ii).
"Holdings" shall mean Universal Outdoor Holdings, Inc., a Delaware
corporation.
"Holdings Guaranty" shall have the meaning provided in Section
9.08(D).
"Holdings Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of Holdings on such date to (y) Adjusted EBITDA
of Holdings for the 12-month period (taken as one accounting period) ending on
such date.
"Holdings Pledge Agreement" shall have the meaning provided in Section
9.08(D).
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the
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balance sheet of such Person, (iii) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts
drawn thereunder, (iv) all Indebtedness of a second Person secured by any
Lien on any property owned by such first Person, whether or not such
indebtedness has been assumed, (v) all Capitalized Lease Obligations of such
Person, (vi) all obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted, I.E., take-or-pay
and similar obligations, (vii) all net obligations of such Person under
Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrower and/or its Subsidiaries to the
extent such guaranteed obligations do not constitute Indebtedness and are
otherwise permitted hereunder) provided that Indebtedness shall not include
trade payables and accrued expenses, in each case arising in the ordinary
course of business.
"Initial Borrowing Date" shall have the meaning provided in the
Original Credit Agreement.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.
"Investment" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates and Subsidiaries) in the
forms of loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Capital Stock or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited
partnership doing business as Kelso & Company.
"Kelso Designees" shall mean William A. Marquard, John F.
McGillicuddy, David M. Roderick, John Rutledge IRA, Michael Rapoport, Patricia
Hetter Kelso and George L. Shinn.
"LaSalle" shall mean LaSalle National Bank.
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"LaSalle Loan Agreement" shall mean the Amended and Restated Loan and
Security Agreement made as of March 22, 1995 by and between the Borrower and
LaSalle, as in effect on the Initial Borrowing Date immediately prior to
termination thereof.
"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
"Loan Conversion" shall have the meaning provided in Section 1.01(B).
"Management Agreements" shall have the meaning provided in the
Original Credit Agreement.
"Management Investors" shall mean Daniel Simon and Brian Clingen.
"Margin Reduction Discount" shall mean zero, provided that the Margin
Reduction Discount shall be increased to 1/4 of 1%, 1/2 of 1%, 1% or 1-1/2%, as
the case may be, as specified in clauses (i), (ii), (iii) or (iv) below, at any
time after the Restatement Effective Date, when, and for so long as, the ratio
set forth in such clause has been satisfied as at the Relevant Determination
Date:
(i) the Margin Reduction Discount shall be 1/4 of 1% in the event
that at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 5.0 to 1 but less than 6.0 to 1;
(ii) the Margin Reduction Discount shall be 3/4 of 1% in the event
that as at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 4.0 to 1 but less than 5.0 to 1;
(iii) the Margin Reduction Discount shall be 1-1/4% in the event
that as at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 3.0 to 1 but less than 4.0 to 1; or
(iv) the Margin Reduction Discount shall be 1-3/4% in the event that
as at the Relevant Determination Date the Modified Holdings Leverage Ratio
is less than 3.0 to 1.
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The Modified Holdings Leverage Ratio shall be determined (x) for the last day of
a fiscal month, quarter or year, by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(i) and (y) for the date of the
incurrence of Consolidated Debt after delivery of the officer's certificate
referred to in clause (x), by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(ii), each of which
certificates shall set forth the calculation of the Modified Holdings Leverage
Ratio. The Margin Reduction Discount so determined shall apply, except as set
forth below, from five Business Days after the date on which such officer's
certificate is delivered to the Agent to the earlier of (x) the date on which
the next certificate is delivered to the Agent pursuant to Section 7.01(e)(i) or
(ii) and (y) the 30th day following the end of the fiscal month in which such
first certificate was delivered to the Agent pursuant to Section 7.01(e)(i).
Notwithstanding anything to the contrary contained above, the Margin Reduction
Discount shall be zero (x) if no officer's certificate has been delivered to the
Banks pursuant to Section 7.01(e) (i) which sets forth the Modified Holdings
Leverage Ratio for the Relevant Determination Date or the financial statements
upon which any such calculations are based have not been delivered, until such a
certificate and/or financial statements are delivered and (y) at all times when
there shall exist a violation of Section 9.01 or an Event of Default. It is
understood and agreed that the Margin Reduction Discount as provided above shall
in no event be cumulative and only the Margin Reduction Discount applicable
under either clause (i), (ii), (iii) or (iv), if any, contained in this
definition shall be applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of (x) Holdings and its Subsidiaries taken as a whole,
(y) the Borrower and its Subsidiaries taken as a whole and/or (z) with respect
to any reference to such term in Section 5, OAH and its Subsidiaries taken as a
whole.
"Maximum Purchase Amount" shall mean the maximum aggregate amount that
will be expended by Holdings and the Borrower to Purchase Senior Notes and
Discount Notes (x) within 50 days after the date of the consummation of the
Proposed Equity Issuance if the Maximum Purchase Amount is to be determined at
the time of such consummation and (y) within 20 days after the date of the
issuance of Permitted Subordinated Debt if the Maximum Purchase Amount is to be
determined at such time of such issuance, in each case to equal the aggregate
principal amount of all Senior Notes and Discount Notes then outstanding plus an
amount to pay premiums in respect of such Purchases (including consent fees) as
estimated in good faith by the Borrower and agreed to by the Agent.
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"Measurement Date" shall mean (x) the last day of each fiscal quarter
of the Borrower and (y) the last day of the last month ended prior to the date
of a Tested Borrowing.
"Minimum Borrowing Amount" shall mean (i) for Loans maintained as Base
Rate Loans, $500,000 and (ii) for Loans maintained as Eurodollar Loans,
$1,000,000.
"Modified Available Amount" shall mean, with respect to any Dividend
to be paid under Section 8.09(a)(v) (and as determined prior to Holdings making
any Purchase of Discount Notes with the proceeds of such Dividend), (x) an
amount equal to the Holdback Proceeds at such time, (y) if the Holdings Leverage
Ratio is less than 5.00 to 1.0 at the time, the Available ECF Amount at such
time plus (z) the Available Equity Amount at such time less the portion thereof
attributable to proceeds of equity issued by Holdings to the extent not
theretofore contributed as common equity to the Borrower.
"Modified Holdings Leverage Ratio" shall mean, with respect to any
Relevant Measurement Date, the Holdings Leverage Ratio determined as of such
date, modified by the inclusion in the computation thereof of any incremental
Consolidated Debt of Holdings incurred after such Relevant Measurement Date and
prior to the delivery of an officer's certificate pursuant to Section 7.01(e)(i)
in respect of the next Relevant Measurement Date.
"Mortgage" shall have the meaning provided in Section 5.01(i)(IV).
"Mortgage Policies" shall have the meaning provided in the Original
Credit Agreement.
"Mortgaged Properties" shall mean the Real Properties subject to the
Mortgages.
"Naegele" shall mean Naegele Outdoor Advertising Company, a Delaware
corporation.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale or recovery (including
payment of principal, premium and interest of Indebtedness secured by the assets
which are the subject of the Asset Sale and required to be, and which is, repaid
under the terms thereof as a result of such Asset Sale), and incremental taxes
paid or payable as a result thereof.
"New Mortgage" shall have the meaning provided in Section 7.10.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
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"Note" shall mean and include each B Term Note, each AR Note and each
A Term Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"OAH" shall mean Outdoor Advertising Holdings, Inc., a Delaware
corporation.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning provided in the
first recital to this Agreement.
"Payment Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any acquisition (including through
a stock acquisition) of property or assets of a nature or type, or which will be
used in a business, permitted to be held or engaged in by Section 8.01 provided
that (x) the Holdings Leverage Ratio as of the last Measurement Date prior to
the consummation of such acquisition was less than 5.50 to 1.0 or (y) aggregate
amount expended for all such acquisitions after the Restatement Effective Date
to the extent not effected in compliance with clause (x) above or clause (z)
below does not exceed $50,000,000 or (z) consented to in writing by the Super-
Majority Banks.
"Permitted Asset Sale" shall mean an Asset Sale (x) permitted by the
expressed language of Section 8.02 (and not by the parenthetical in the lead in
paragraph of Section 8) and (y) resulting from a casualty or taking of assets of
the Borrower or any Subsidiary.
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"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent.
"Permitted Exit Amendments" shall mean the exit amendments referred to
in clause (y) of the definition of Guaranty Commencement Date.
"Permitted Holders" means Kelso and its Affiliates, the Kelso
Designees, the Management Investors, any employee stock ownership plan
established by the Borrower for the benefit of the employees of the Borrower or
any Subsidiary and their Permitted Transferees.
"Permitted Investments" shall mean (a) cash and Cash Equivalents, (b)
Investments in Naegele and/or Peterson, (c) Investments in all other
Subsidiaries up to $1,000,000 in the aggregate, including Investments in a
Person that becomes a Subsidiary of the Borrower immediately after such
Investment, provided (i) an Event of Default has not occurred and is continuing
and will not occur as a result of, in connection with or after giving effect to
such Investment and (ii) such Person, at the time of such Investment or at the
time such Person becomes a Subsidiary, engages exclusively in the business
permitted to be engaged in by Borrower and its Subsidiaries pursuant to Section
8.01, (c) loans and advances of money in the ordinary course of business and
consistent with past practice to officers and employees of Borrower or any of
its Subsidiaries, (d) investments in receivables owing to the Borrower and/or
any Subsidiary, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms, and (e)
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business.
"Permitted Liens" shall mean Liens described in clauses (a), (b) and
(d) of Section 8.03.
"Permitted Subordinated Debt" shall mean up to $200 million of
subordinated debt of the Borrower as contemplated by the "red herring"
prospectus dated September 25, 1996 relating to subordinated debt of the
Borrower and issued on the terms and conditions described in such prospectus or
otherwise on terms and conditions reasonably satisfactory to the Required Banks.
"Permitted Subordinated Debt Documents" shall mean all indentures,
agreements, notes and other instruments governing or evidencing Permitted
Subordinated Debt, all of which shall be reasonably satisfactory to the Agent.
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"Permitted Transferees" means (i) in the case of Kelso, (A) any
Affiliate thereof (other than any corporation or other Person (except for any
corporation or other Person engaged in a business similar, complementary or
related to the nature or type of the business of Holdings and its Subsidiaries)
controlled by, or any investment fund (other than Kelso Investment Associates V,
L.P. or any investment fund that is solely comprised of current and former
professionals of Kelso) managed by, Kelso), (B) any managing director, general
partner, limited partner, director, officer or employee of Kelso or any
Affiliate thereof (collectively, "Kelso Associates"), (C) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any Kelso
Associate or Kelso Designee and (D) any trust, the beneficiaries of which, or a
corporation or partnership, the stockholders or partners of which, include only
a Kelso Associate or Kelso Designee, his spouse, parents, siblings, or direct
lineal descendants, and (ii) in the case of any Management Investors, (A) his
executor, administrator, testamentary trustee, legatee or beneficiaries, (B) his
spouse, parents, siblings, members of his or her immediate family (including
adopted children) and/or direct lineal descendants or (C) a trust, the
beneficiaries of which, or a corporation or partnership, the stockholders or
partners of which, include only the Management Investor, as the case may be, and
his spouse, parents, siblings, members of his or her immediate family (including
adopted children) and/or direct lineal descendants.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Peterson" shall mean Peterson Outdoor Advertising Corp., a Delaware
corporation, and shall include the surviving corporation of a merger between OAH
(as the survivor of the Merger referred to in the Acquisition Agreement) and
Peterson to be effected on or prior to the Restatement Effective Date.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) Holdings, the Borrower, a
Subsidiary or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Holdings, the Borrower, a
Subsidiary, or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreements" shall mean the Borrower Pledge Agreement and the
UOH Pledge Agreement and once executed the Additional Pledge Agreement and the
Holdings Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as defined
in the relevant Pledge Agreement.
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"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"Proposed Equity Issuance" shall mean the issuance by Holdings of
Common Stock of Holdings as contemplated by the "red herring prospectus" dated
September 25, 1996 relating to Common Stock of Holdings, provided that, if the
Permitted Subordinated Debt has not yet then been issued, such issuance occurs
on or prior to November 30, 1996.
"Purchase" shall mean repay, redeem, purchase, repurchase or otherwise
acquire for value.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as permitted by Section 8.01.
"Reinvestment Election" shall have the meaning provided in Section
4.02(A)(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of a Permitted Asset Sale to purchase, construct or otherwise acquire
Reinvestment Assets.
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"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Banks, shall have delivered a written
termination notice to the Borrower, provided that such notice may only be given
while an Event of Default exists, (ii) the date occurring 180 days after such
Reinvestment Election and (iii) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, proceed with the purchase,
construction or other acquisition of Reinvestment Assets with the related
Anticipated Reinvestment Amount.
"Relevant Determination Date" shall mean, at any time, (x) the last
day of the then most recently ended fiscal month, quarter or year of Holdings
with respect to which an officer's certificate has been, or is required to be,
delivered to the Banks pursuant to Section 7.01(e)(i) or (y) if the Margin
Reduction Discount is then greater than zero, the last date subsequent to the
date specified in clause (x) on which any Consolidated Debt of Holdings and its
Subsidiaries has been incurred.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks whose outstanding
Term Loans and AR Commitments (or, if after the AR Termination Date, outstanding
AR Loans) constitute greater than 50% of the sum of (i) the total outstanding
Term Loans of Non-Defaulting Banks and (ii) the Adjusted Total AR Commitment
(or, if after the AR Termination Date, the total outstanding AR Loans of Non-
Defaulting Banks).
"Restatement Effective Date" shall have the meaning provided in
Section 5.01.
"Revolving Facility Termination Date" shall mean the date on which the
Total Revolving Commitment under and as defined in the RF Credit Agreement has
been terminated, whether by action of the Borrower, the Agent, in accordance
with the expressed terms of the RF Credit Agreement or otherwise.
"Revolving Loans" shall mean the Revolving Loans under and as defined
in the RF Credit Agreement.
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"RF Bank" shall mean at any time a financial institution that is then
a Bank under and as defined in the RF Credit Agreement.
"RF Credit Agreement" shall mean the Amendment and Restatement dated
as of the date hereof to the Revolving Credit Agreement among the Borrower, the
Banks, LaSalle as Co-Agent and BTCo as Agent providing for the revolving credit
specified therein, as in effect on the Restatement Effective Date hereunder and
as the same may be modified, amended or supplemented in accordance with the
terms thereof to the extent such amendment is permitted hereunder.
"Scheduled Repayment" shall have the meaning provided in Section
4.02(A)(b).
"SEC" shall have the meaning provided in Section 7.01(h).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Security Agreement" shall have the meaning provided in Section
5.01(i)(II).
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean each Pledge Agreement, the Security
Agreement, each Mortgage and, once executed, each Additional Security Document,
if any.
"Senior Leverage Ratio" shall mean, at any Measurement Date, the ratio
of (x) Consolidated Senior Debt of the Borrower on such date to (y) Adjusted
EBITDA of the Borrower for the 12-month period (taken as one accounting period)
ending on such date.
"Senior Note Documents" shall mean and include each of the documents,
instruments (including the Senior Notes) and other agreements entered into by
the Borrower (including, without limitation, the Senior Note Indenture) relating
to the issuance by the Borrower of the Senior Notes, as in effect on the
Restatement Effective Date and as the same may be supplemented, amended or
modified from time to time in accordance with the terms hereof and thereof.
"Senior Note Indenture" shall mean the Indenture entered into by and
between the Borrower and United States Trust Company of New York, as trustee
thereunder, with respect to the Senior Notes as in effect on the Restatement
Effective Date and as the same may be modified, amended or supplemented from
time to time in accordance with the terms hereof and thereof.
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"Senior Notes" shall mean the 11% Senior Notes due 2003 issued by the
Borrower under the Senior Note Indenture, as in effect on the Restatement
Effective Date and as the same may be supplemented, amended or modified from
time to time in accordance with the terms thereof and hereof.
"Shareholders' Agreements" shall have the meaning provided in the
Original Credit Agreement.
"Smith Note" shall have the meaning provided in Section 8.04(g).
"Subordinated Debt" shall mean and include the Permitted Subordinated
Debt and the Additional Subordinated Debt, in each case once issued.
"Subordinated Debt Documents" shall mean and include the Permitted
Subordinated Debt Documents and the execution version of all indentures,
agreements, notes and instruments governing, or evidencing Additional
Subordinated Debt.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Subsidiary (x) that executes
and delivers a Subsidiary Guarantor pursuant to Section 7.10(a) and (y) each
Domestic Subsidiary created after the Section 7.10(a) actions are taken that
executes and delivers a counterpart of the Subsidiary Guaranty, provided that at
such time such Subsidiary also takes the other actions that it would have been
required to take under Section 7.10(a) if it were a Subsidiary on the Guaranty
Commencement Date.
"Subsidiary Guaranty" shall have the meaning provided in Section
7.10(a).
"Super-Majority Banks" shall mean the Non-Defaulting Banks which would
constitute the Required Banks if the reference to "50%" in the definition of
Required Banks were to read "66 2/3%."
"Syndication Date" shall mean the earlier of (x) the date which is 90
days after the Restatement Effective Date and (y) the date upon which the Agent
determines in
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its sole discretion (and notifies the Borrower) that the primary syndication
(and the resulting addition of institutions as Banks pursuant to Section
12.04) has been completed.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of November 18, 1993 between the Borrower and Holdings in the form delivered to
the Banks prior to the Restatement Effective Date and as the same may be
modified with the consent of the Required Banks.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Commitment" shall mean, with respect to each Bank, the amount,
if any, set forth opposite such Bank's name on Annex I hereto directly below the
column entitled "Term Commitment" as the same may be reduced or terminated
pursuant to Section 3.03.
"Term Facility" shall mean the Facility evidenced by the Total Term
Commitment.
"Term Loans" shall mean and include the A Term Loans and the B Term
Loans.
"Tested Borrowing" shall mean any incurrence of AR Loans after the
Restatement Effective Date in which the aggregate amount of AR Loans incurred,
when added to the aggregate amount of AR Loans and Revolving Loans incurred
during the immediately preceding 30 day period (to the extent (x) incurred after
the Restatement Effective Date, (y) still outstanding and (z) not included in
establishing an earlier Tested Borrowing), equal or exceed $1,000,000.
"Total A Term Commitment" shall mean the sum of the A Term Commitments
of each of the Banks.
"Total AR Commitment" shall mean the sum of the AR Commitments of each
of the Banks.
"Total Commitment" shall mean the sum of the Total A Term Commitment,
the Total Term Commitment and the Total AR Commitment.
"Total Term Commitment" shall mean the sum of the Term Commitments of
each of the Banks.
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"Transaction" shall mean and include (i) the Acquisition, (ii) the
entering into and borrowing under the RF Credit Agreement and (iii) the entering
into and borrowing under this Agreement.
"Transaction Documents" shall mean the Acquisition Documents, the
Credit Documents and the RF Credit Agreement.
"Transaction Expenses" shall mean all fees and expenses incurred in
connection with, and payable prior to or substantially concurrently with the
closing of, the Transaction and including all fees paid to any of the Banks and
the Agent hereunder, fees paid to Kelso or its Affiliates permitted hereunder;
attorney's fees, accountants' fees, placement agents' fees, discounts and
commissions and brokerage, and consultant fees. Transaction Expenses shall
include the amortization of any such fees and expenses that are capitalized and
not classified as an expense on the date incurred.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets thereof,
determined in accordance with Section 412 of the Code.
"UOH Pledge Agreement" shall have the meaning provided in Section
5.01(i)(III).
"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
SECTION 11. THE AGENT.
11.01 APPOINTMENT. The Banks hereby designate Bankers Trust Company
as Agent (for purposes of this Section 11, the term "Agent" shall include BTCo
in its capacity as Collateral Agent pursuant to the Security Documents) to act
as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each
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holder of any Note by the acceptance of such Note shall be deemed irrevocably
to authorize, the Agent to take such action on its behalf under the
provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The
Agent may perform any of its duties hereunder by or through its respective
officers, directors, agents, employees or affiliates. The Co-Agent shall
have no duties or liabilities in acting in such capacity hereunder.
11.02 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
11.03 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Holdings, the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Holdings, the Borrower and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower and its Subsidiaries or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Holdings,
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the Borrower and its Subsidiaries or the existence or possible existence of
any Default or Event of Default.
11.04 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks (or, where applicable, the Super-Majority
Banks) with respect to any act or action (including failure to act) in
connection with this Agreement or any other Credit Document, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from the Required Banks (or, where
applicable, the Super-Majority Banks); and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
neither any Bank nor the holder of any Note shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks (or, where applicable, the Super-Majority
Banks).
11.05 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
11.06 INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and indemnify the Agent,
in proportion to their respective Loans and Commitments as used in determining
the Required Banks, for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its respective duties hereunder
or under any other Credit Document, in any way relating to or arising out of
this Agreement or any other Credit Document; provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
11.07 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "Super-Majority Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other
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business with the Borrower or any Affiliate of the Borrower as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
11.08 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
11.09 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Agent hereunder or thereunder who shall be the Co-Agent or such other
commercial bank or trust company as is reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower, shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Banks
appoint a successor Agent as provided above.
SECTION 12. MISCELLANEOUS.
12.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent and the Co-Agent in connection
with the negotiation, preparation, execution and delivery of the Credit
Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto
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(including, without limitation, the reasonable fees and disbursements of
their respective counsel) and of the Agent, the Co-Agent and each of the
Banks in connection with the enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Agent, the Co-Agent
and for each of the Banks); (ii) pay and hold each of the Banks harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Bank) to pay such
taxes; and (iii) indemnify each Bank (including in its capacity as the Agent
or Co-Agent), its officers, directors, employees, representatives and agents
from and hold each of them harmless against any and all losses, liabilities,
claims, damages or expenses incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Bank is a
party thereto) related to the entering into and/or performance of any
Transaction Document or the use of the proceeds of any Loans hereunder or the
Transaction or the consummation of any transactions contemplated in any
Credit Document, or (b) the actual or alleged presence of Hazardous Materials
in the air, surface water or groundwater or on the surface or subsurface of
any Real Property owned or at any time operated by the Borrower or any of its
Subsidiaries, the release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by the Borrower or any of its Subsidiaries, the non-compliance of
any Real Property with foreign, federal, state and local laws, regulations,
and ordinances (including applicable permits thereunder) applicable to any
Real Property, or any Environmental Claim asserted against the Borrower, any
of its Subsidiaries or any Real Property owned or at any time operated by the
Borrower or any of its Subsidiaries, including, in each case, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified).
12.02 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Bank is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including without limitation by branches and agencies of
such Bank wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations and liabilities of the Borrower to
such Bank under this Agreement or under any of the other Credit Documents,
including, without limitation, all interests in Obligations purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement
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or any other Credit Document, irrespective of whether or not such Bank shall
have made any demand hereunder and although said Obligations, liabilities or
claims, or any of them, shall be contingent or unmatured.
12.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.
12.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of the Notes to another financial institution,
provided that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Sections 1.10 and 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been entered into or sold, and, provided further
that no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating (it being understood that any waiver of
the application of any prepayment or the method of any application of any
prepayment to, the amortization of the Loans shall not constitute an extension
of the final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory reduction in
the Total Commitment, or a mandatory prepayment, shall not constitute a change
in the terms of any Commitment), (ii) release all or substantially all of the
Collateral or (iii) consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement or any other Credit Document.
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(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its outstanding Term Loans and/or AR Loans and/or AR Commitment and
its rights and obligations hereunder to another Bank, and (y) with the consent
of the Agent and, to the extent such consent shall not be unreasonably withheld,
the Borrower, any Bank may assign all or a portion of its outstanding Term Loans
and/or AR Loans and/or AR Commitment and its rights and obligations hereunder to
one or more commercial banks or other financial institutions (including one or
more Banks), provided that all assignments hereunder (other than assignments of
the B Term Loans) must be PRO RATA between the A Term Loans, if any, on one hand
and the AR Loans and AR Commitments on the other hand. No assignment pursuant
to the immediately preceding sentence shall to the extent such assignment
represents an assignment to an institution other than one or more Banks
hereunder, be in an aggregate amount less than $5,000,000 unless the entire
Loans and Commitment of the assigning Bank are so assigned. If any Bank so
sells or assigns all or a part of its rights hereunder or under the Notes, any
reference in this Agreement or the Notes to such assigning Bank shall thereafter
refer to such Bank and to the respective assignee to the extent of their
respective interests and the respective assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights and
benefits as it would if it were such assigning Bank. Each assignment pursuant
to this Section 12.04(b) shall be effected by the assigning Bank and the
assignee Bank executing an Assignment Agreement substantially in the form of
Exhibit K (appropriately completed). In the event of any such assignment (x) to
a commercial bank or other financial institution not previously a Bank
hereunder, either the assigning or the assignee Bank shall pay to the Agent a
nonrefundable assignment fee of $3,500 (PROVIDED, that in the event of
simultaneous assignments relating to this Agreement and the RF Credit Agreement,
the fees for such assignments shall total $3,500) and (y) to a Bank, either the
assigning or assignee Bank shall pay to Agent a nonrefundable assignment fee of
$2,000 (PROVIDED, that in the event of simultaneous assignments relating to this
Agreement and the RF Credit Agreement, the fees for such assignments shall total
$2,000), and at the time of any assignment pursuant to this Section 12.04(b),
(i) Annex I shall be deemed to be amended to reflect the Commitment of the
respective assignee (which shall result in a direct reduction to the Commitment
of the assigning Bank) and of the other Banks, and (ii) the Borrower will issue
new Notes to the respective assignee and to the assigning Bank in conformity
with the requirements of Section 1.05. Each Bank and the Borrower agree to
execute such documents (including without limitation amendments to this
Agreement and the other Credit Documents) as shall be necessary to effect the
foregoing. Nothing in this clause (b) shall prevent or prohibit any Bank from
pledging its Notes or Loans to a Federal Reserve Bank in support of borrowings
made by such Bank from such Federal Reserve Bank. Notwithstanding any of the
foregoing provisions of this Section 12.04, no assignment may be made hereunder
of A Term Loans and/or AR Loans and AR Commitments unless a concurrent
assignment is made by the assigning Bank under the RF Credit Agreement of a
percentage of its Revolving Commitment thereunder equal to the percentage of its
A Term Loans, AR Loans and AR Commitment being assigned by it hereunder.
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(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby represents,
and each Person that becomes a Bank pursuant to an assignment permitted by this
Section 12 will, upon its becoming party to this Agreement, represent that it is
a commercial lender, other financial institution or other "accredited" investor
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business and that it will make or acquire Loans for its own account in the
ordinary course of such business, provided that subject to the preceding clauses
(a) and (b), the disposition of any promissory notes or other evidences of or
interests in Indebtedness held by such Bank shall at all times be within its
exclusive control.
12.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrower and the Agent or any Bank shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent or any Bank would
otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or the
Banks to any other or further action in any circumstances without notice or
demand.
12.06 PAYMENTS PRO RATA. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other than
any Bank that has expressly waived its right to receive its pro rata share
thereof) PRO RATA based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation
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then owed and due to such Bank bears to the total of such Obligation then
owed and due to all of the Banks immediately prior to such receipt, then such
Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations to such Banks
in such amount as shall result in a proportional participation by all of the
Banks in such amount, provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
12.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1995 historical
financial statements of the Borrower delivered to the Banks pursuant to Section
6.10(b) and (y) that if at any time the computations determining compliance with
Section 8 utilize accounting principles different from those utilized in the
financial statements furnished to the Banks, such financial statements shall be
accompanied by reconciliation work-sheets.
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) This Agreement and the other Credit Documents and the rights
and obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the state of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower located outside New York City and by hand delivery to the Borrower
located within New York City, at its address for notices pursuant to Section
12.03, such service to become effective
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30 days after such mailing. The Borrower hereby irrevocably designates
appoints and empowers CT Corporation System, with offices on the date hereof
located at 1633 Broadway, New York, New York 10019, as its agent for service
of process in respect of any such action or proceeding. Nothing herein shall
affect the right of the Agent or any Bank to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(c) Each of the parties to this agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
12.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
12.10 EXECUTION. This Agreement shall be deemed executed by all
parties when the Borrower and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent at the Payment Office of the Agent or, in the case of the Banks, shall
have given to the Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
12.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Banks, provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) affected thereby, (i) extend the Final Maturity
Date, the AR Maturity Date or AR Termination Date, as the case may be (it being
understood that any waiver of the application of any
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prepayment of or the method of application of any prepayment to the
amortization of, the Loans shall not constitute any such extension), or
reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any post-default increase in interest
rates) or Fees thereon, or reduce the principal amount thereof, or increase
the Commitment of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default, or the Loan
Conversion or of a mandatory reduction in the Total Commitment, shall not
constitute a change in the terms of any Commitment of any Bank), (ii) release
or permit the release of all or substantially all of the Collateral except as
expressly provided in the Credit Documents, (iii) amend, modify or waive any
provision of this Section 12.12, (iv) reduce the percentage specified in, or
otherwise modify, the definition of Required Banks or (v) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement provided further that no such change, waiver, discharge
or termination shall without the consent of the Super-Majority Banks change
directly or indirectly the definition of Permitted Acquisition or
Super-Majority Banks. No provision of Section 11 may be amended without the
consent of the Agent and to the extent any such amendment would affect the
Co-Agent solely in its capacity as such, the Co-Agent.
12.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 4.04, 11.06 or 12.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank, provided that the Borrower shall not be responsible for costs arising
under Section 1.10 or 4.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Bank prior to such transfer.
12.15 CONFIDENTIALITY. Subject to Section 12.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any BONA FIDE transferee or participant in
connection with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to abide by the provisions of
this Section 12.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Bank shall notify
the Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) for disclosure of any such
non-public information prior to disclosure
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of such information, and provided further that in no event shall any Bank be
obligated or required to return any materials furnished by the Borrower or
any Subsidiary.
12.16 SPECIAL AMENDMENTS. The parties hereto agree that, upon the
occurrence of the Guaranty Commencement Date and the execution and delivery of
the Holdings Guaranty and the Holdings Pledge Agreement, this Agreement will be
modified with the consent of the Borrower, the Required Banks under and as
defined in the RF Credit Agreement and the Required Banks hereunder to (x)
incorporate herein the Total Revolving Commitment as defined in the RF Credit
Agreement, (y) incorporate herein any representation, covenant or event of
default in the RF Credit Agreement not contained herein and (z) otherwise make
such changes as appropriate to reflect the incorporation of such Total Revolving
Commitment herein (e.g., to the definition of Required Banks to reflect same)
and to eliminate the restrictions imposed on the Borrower and its Subsidiaries
by the Senior Notes and/or Discount Notes and upon such amendment the RF Credit
Agreement shall terminate.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
Address
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321 N. Clark Street UNIVERSAL OUTDOOR, INC.
Suite 1010 as Borrower
Chicago, Illinois
Attention: Brian T. Clingen
Tel. No.: (312) 644-8673 By:
Fax No.: (312) 644-8071 ------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
Individually and as Agent
By
---------------------------------
Name:
Title:
<PAGE>
LA SALLE NATIONAL BANK,
Individually and as Agent
By
---------------------------------
Name:
Title:
<PAGE>
BANK OF AMERICA ILLINOIS
By
---------------------------------
Name:
Title:
<PAGE>
FIRST NATIONAL BANK OF BOSTON
By
---------------------------------
Name:
Title:
<PAGE>
UNION BANK
By
---------------------------------
Name:
Title:
<PAGE>
ANNEX I
COMMITMENTS
Term AR
Bank Commitment Commitment
---- ---------- ----------
Bankers Trust
Company
La Salle National
Bank
----------- ------------
Total: $75,000,000 $212,500,000
----------- ------------
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<PAGE>
ANNEX II
BANK ADDRESSES
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Attention: Dana Klein
Tel. No.: (212) 250-1724
Fax No.: (212) 250-7218
La Salle National Bank 120 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey D. Steele
Tel. No.: (312) 904-2721
Fax No.: (312) 904-4364
<PAGE>
ANNEX III
GOVERNMENT APPROVALS
<PAGE>
ANNEX IV
SUBSIDIARIES
<PAGE>
ANNEX V
PROPERTIES
<PAGE>
ANNEX VI
EXISTING INDEBTEDNESS
<PAGE>
ANNEX VII
INSURANCE POLICIES
<PAGE>
ANNEX VIII
EXISTING LIENS
<PAGE>
ANNEX IX
MANAGEMENT FEES
FIRST NATIONAL BANK OF BOSTON
By
Name:
Title:
<PAGE>
Exhibit 21.1
(i) Quantum Structures & Designs, Inc., an Illinois corporation
(ii) Naegele Outdoor Advertising Company, a Delaware corporation
(iii) Outdoor Advertising Holdings, Inc., a Delaware corporation
(iv) Tanner Acquisition Corporation, a Delaware corporation
(v) Universal Outdoor Management Company, a Delaware corporation
(vi) Matthew Acquisition Corp., a Delaware corporation
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* The Company owns 100% of the outstanding shares of the entities set forth
in (i) through (vi).
