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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 033-72810
UNIVERSAL OUTDOOR, INC.
ILLINOIS 36-2827496
---------------------------- --------------------------------
(STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
321 NORTH CLARK STREET, SUITE 1010, CHICAGO, ILLINOIS 60610
REGISTRANT'S TELEPHONE NUMBER: (312) 644-8673
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
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THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK, $0.01
PAR VALUE, AS OF MAY 12, 1997 WAS 10,000 SHARES.
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PART I FINANCIAL INFORMATION
- ------ ---------------------
ITEM 1. FINANCIAL STATEMENTS
UNIVERSAL OUTDOOR, INC.
----------------------
(a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)
March 31, December 31,
1997 1996
--------------- ------------
ASSETS
Current assets:
Cash and equivalents $ 2,102 $ 11,631
Cash held in escrow - 9,455
Accounts receivable, less allowance
for doubtful accounts of $2,123 and $2,849 23,929 20,927
Accounts receivable - Parent - 2,708
Other receivables 2,084 1,445
Prepaid land leases 4,578 4,010
Prepaid insurance and other 4,722 4,173
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Total current assets 37,415 54,349
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Property and equipment, net 513,475 382,555
Goodwill and intangible assets, net 220,107 219,009
Other assets, net 19,845 25,114
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Total assets $790,842 $681,027
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDER,S EQUITY
Current liabilities:
Accounts payable $ 2,816 $ 3,373
Accounts payable - Parent 88 -
Accrued expenses 36,983 26,544
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Total current liabilities 39,887 29,917
-------- --------
Long-term debt and other-obligations 450,020 347,941
Other long-term liabilities 471 485
Long-term deferred income tax liabilities 71,700 71,700
Commitments and contingencies - -
Stockholder's equity:
Common stock, $.01 par value, 1,000,000
shares authorized; 10,000 shares issued
and outstanding - -
Additional paid in capital 274,821 274,821
Accumulated deficit (46,057) (43,837)
-------- --------
Total stockholder's equity 228,764 230,984
-------- --------
Total liabilities and stockholder's equity $790,842 $681,027
-------- --------
-------- --------
See accompanying notes to consolidated financial statements.
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UNIVERSAL OUTDOOR, INC.
(a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
( UNAUDITED)
(Dollars in thousands)
For the Three Months Ended March 31
1997 1996
---- ----
Revenues $ 47,575 $ 9,332
Less agency commissions 3,567 905
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Net revenues 44,008 8,427
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Operating expenses:
Direct advertising expenses 18,445 3,571
General and administrative expenses 4,401 1,154
Depreciation and amortization 12,859 2,032
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35,705 6,757
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Operating income 8,303 1,670
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Other expense:
Interest expense, including net amortization
of bond discount (premium) of $(2) and $18 10,460 2,309
Interest expense - amortization
of deferred financing costs 245 107
Other expenses (182) 11
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Total other expense 10,523 2,427
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Net income (loss) $ (2,220) ($ 757)
--------- -------
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See accompanying notes to consolidated financial statements.
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UNIVERSAL OUTDOOR, INC.
(a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
For Three Months ended March 31
1997 1996
---- ----
Cash flows from operating activities:
Net income (loss) $ (2,220) $ (757)
Depreciation 12,859 2,157
Amortization of Deferred Financing Costs 245 -
Loss on sale of property and equipment - -
Changes in assets and liabilities, net of effects
from acquisitions:
Accounts receivable and other receivables (3,639) 113
Prepaid land leases, insurance and other (632) (336)
Accounts payable and accrued expense (4,084) 126
Accrued interest 8,756 1,892
Deferred Revenue - (200)
Other 534 (3)
Accounts payable - Parent (42) (73)
---------- --------
Net cash from operating activities 11,777 2,919
---------- --------
Cash flows used in investing activities:
Capital expenditures (3,584) (1,966)
Payments for acquisitions, net of cash acquired (128,104) (13,621)
Other payments - (86)
---------- --------
Net cash used in investing activities (131,688) (15,673)
---------- --------
Cash flows from (used in) financing activities:
Long-term debt repayments (497) (33)
Deferred financing costs (606) -
Net borrowings (repayments) under credit agreements 102,030 12,809
Dividends paid to Parent - (30)
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Net cash from financing activities 100,927 12,746
---------- --------
Net increase (decrease) in cash and equivalents (18,984) (8)
Cash and equivalents, at beginning of period 21,086 19
---------- --------
Cash and equivalents, at end of period $ 2,102 $ 11
---------- --------
Supplemental cash flow information:
Interest paid during the period $ 1,336 $ 371
---------- --------
---------- --------
See accompanying notes to consolidated financial statements.
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UNIVERSAL OUTDOOR, INC.
(a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1 - BASIS OF PRESENTATION OF UNAUDITED FINANCIAL STATEMENTS:
The interim financial statements contained herein have been prepared by
management and are unaudited. The financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Annual Report on Form 10-K of Universal Outdoor, Inc. (the "Company") for the
year ended December 31, 1996.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments, which were of a normal recurring nature,
necessary to present fairly the financial position of the Company as of March
31, 1997, and the results of its operations and its cash flows for the periods
presented herein.
Earnings per share calculations have not been presented because the Company
is a wholly-owned subsidiary of Universal Outdoor Holdings, Inc. ("Parent").
NOTE 2 - ACQUISITIONS:
In January 1997, the Company acquired a total of approximately 2,018
advertising display faces located in and around Memphis, Tennessee. The
purchase price was approximately $71 million plus 100,000 shares of common stock
of the Parent.
In January 1997, the Company acquired a total of approximately 1,035
advertising display faces located in three markets in the east coast of the
United States, including Metro New York, Northern New Jersey and Hudson Valley,
for approximately $40 million in cash.
In February 1997, the Company acquired a total of approximately 135
advertising display faces located in and around Evansville, Indiana for
approximately $5.5 million in cash. The Company also acquired 12 existing
advertising display faces and 35 in process display faces in New Jersey for
approximately $5.3 million in cash.
In February 1997, the Company agreed to acquire approximately 1,450
advertising display faces in the Baltimore metropolitan area for $46.5 million
in cash.
In March 1997, the Company acquired a total of approximately 600 bus
shelters and panels in and around Memphis, Tennessee for approximately $8.5
million in cash.
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All completed acquisitions have been accounted for under the purchase
method of accounting and accordingly, the operating results of the acquired
businesses are included in the Company's consolidated financial statements
from the respective dates of acquisition.
The following unaudited pro forma financial information includes the
results of operations of the 1996 and significant 1997 acquisitions, as
described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 and in the notes included herein, as if the acquisitions had
been consummated on January 1, 1996 and after including the impact of certain
adjustments such as depreciation of advertising structures, amortization of good
will and other intangibles, reduction of corporate expenses and interest expense
on debt incurred in connection with such acquisitions.
For the Three Months Ended
March 31
1996 1997
---- ----
PRO FORMA ACTUAL
--------- ------
(unaudited) (unaudited)
Net revenues $40,031 $44,008
Depreciation and amortization 12,705 12,859
Operating income 5,115 8,303
Interest expense 11,059 10,705
Loss before income taxes ($ 5,944) ($ 2,220)
The unaudited pro forma financial information does not purport to present the
actual financial position or results of operations of the Company had the
transactions assumed therein in fact occurred on the date specified, nor are
they necessarily indicative of the results of operations that may be achieved in
the future.
NOTE 3 - RELATED-PARTY TRANSACTIONS:
In June 1994, Parent advanced approximately $1.2 million to the Company in
the form of an inter-company loan which was a portion of the proceeds from the
sale by Parent of its notes and warrants. The Company does not pay interest on
this loan, and as of March 31, 1997, $88,000 was outstanding.
NOTE 4 - COMMITMENTS AND CONTINGENCIES:
The Company, as the successor to Outdoor Advertising Holdings, Inc. and POA
Acquisition Company ("POA"), was a defendant in a case pending in the United
States District Court, Middle District of Florida. The plaintiffs alleged that
POA, among others, conspired to restrain trade and to
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monopolize the market for leases for land on which outdoor advertising
structures can be erected. The case was settled with no significant adverse
financial effect to the Company.
The Company is subject to various litigation in the normal course of
business. Such litigation includes claims by municipalities that certain
outdoor advertising structures should be removed. The ultimate outcome of
current and future litigation cannot be presently determined. Management
believes the outcome of current litigation will not have a significant impact on
the Company.
NOTE 5 - SUBSEQUENT EVENTS:
In April 1997, the Company entered into an agreement to purchase 91
advertising display faces in and around New York, New York for approximately
$51.0 million in cash.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
Universal Outdoor, Inc. (the "Company") is a wholly-owned subsidiary of
Universal Outdoor Holdings, Inc. ("Parent"). The Company and its consolidated
subsidiaries constitute the operating subsidiaries of Parent. As used herein,
references to the "Company" include the consolidated subsidiaries of the
Company, unless the context otherwise requires.
This quarterly report contains forward-looking statements that involve
risks and uncertainties. When used in this quarterly report, the words
"anticipate", "believe", "estimate", and "expect" and similar expressions as
they relate to the Company and its management are intended to identify such
forward-looking statements. The Company's actual results, performance, or
achievements could differ materially from the results expressed in, or
implied by, such forward-looking statements. Factors that could effect such
results, performance or achievement are set forth in "Risk Factors" in
Amendment No. 2 in the Company's Registration Statement on Form S-1 (File No.
333-21717).
Net revenues increased 423.8% to $44.0 million during the first three
months of 1997 compared to $8.4 million in the corresponding 1996 period. This
increase was a result of inclusion of approximately $6.9 million of revenues
from the Minneapolis and Jacksonville markets (the "Naegele Markets") which were
acquired from NOA Holding Company ("Naegele") in April 1996 (the "Naegele
Acquisition") Additionally, $11.9 million of revenues is attributable to
markets acquired from Outdoor Advertising Holdings, Inc. in October 1996 ( the
"POA Acquisition") and $10.2 million is attributable to markets acquired from
Revere Holding Corp. in December 1996 (the "Revere Acquisition") and Matthew
Outdoor Advertising Acquisition Co., L.P. in January 1997 (the "Matthew
Acquisition"). Revenues from markets located in and around Memphis (TN) and
Tunica County (MS) which were acquired by the Company in January 1997 (the
"Memphis/Tunica Acquisition") contributed $4.3 million. The remaining $2.3
million or 27.4% increase in net revenues resulted from higher advertising rates
and occupancy levels on the Company's signboards and inclusion for the full
quarter of signboard revenues from advertising display faces in the Des Moines
(IA) and Dallas (TX) which were acquired in 1996. Overall net revenues from
tobacco advertising increased to $4.4 million in the first three months of 1997
compared to $1.2 million for the first three months in 1996. This increase was
due mainly to the inclusion of tobacco revenues from the acquired markets. As a
percentage of net revenues, tobacco advertising sales decreased to 10.0% in the
first three months of 1997 compared to 14.5% for the first three months in 1996.
Direct cost of revenues increased to $18.4 million in the first three
months of 1997 compared to $3.6 million for the first three months in 1996.
The Naegele Markets and the POA Acquisition accounted for $2.9 million and
$4.1 of the increase, respectively. The Revere Acquisition, the Matthew
Acquisition and the Memphis/Tunica Acquisition accounted for $7.0 million. As
a percentage of net revenues, however, direct cost of revenues decreased to
41.8% in the first three months of 1997 compared to 42.9% in the
corresponding 1996 period as a result of economies of scale associated with
the increased revenues.
General and administrative expenses increased to $4.4 million in the
first three months of 1997 from $1.2 million in the corresponding 1996
period. As a percentage of net revenues, general and administrative expenses
decreased to 10.0% in the first three months of 1997 compared to 14.3%
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in the corresponding 1996 period. This percentage decrease was due to the
addition of the new markets' revenues without a significant increase in
staffing or other corporate overhead expenses.
Depreciation and amortization expense increased to $12.9 million in the
first three months of 1997 compared to $2.0 million in the corresponding 1996
period. This increase was due to significant increases in the fixed assets
and goodwill as a result of the acquisitions.
Total interest expense increased to $10.7 million in the first three
months of 1997 compared to $2.4 million in the corresponding 1996 period.
The increase resulted from increased debt outstanding under the Company's
credit facility which was incurred to finance the Revere, Matthew and
Memphis/Tunica Acquisitions and from the issuance by the Company of $225
million 9 3/4% Senior Subordinated Notes due 2006 in October 1996 and $100
million 9 3/4% Series B Senior Subordinated Notes due 2006 in December 1996.
The foregoing factors contributed to the Company's $2.2 million net loss
in the first three months of 1997 compared to $757,000 net loss in the
corresponding 1996 period.
LIQUIDITY AND CAPITAL RESOURCES
In January 1997, the Company consummated the Memphis/Tunica Acquisition and
as a result acquired 2,018 advertising display faces located in and around
Memphis (TN) and Tunica County (MS) for a purchase price of approximately $71
million plus 100,000 shares of the Company's common stock. Additionally, in
January 1997, the Company consummated the Matthew Acquisition and as a result
acquired 1,035 advertising display faces located in and around Metro New York,
Northern New Jersey and Hudson Valley for a purchase price of approximately
$40 million in cash.
In February 1997, the Company acquired certain assets of (i) Adcraft, Inc.
(the "Evansville Acquisition") for approximately $5.5 million in cash and (ii)
Klein Outdoor Advertising (the "New Jersey Acquisition", and together with the
Evansville Acquisition, the "February Acquisitions")for approximately $5.3
million in cash. As a result of the February Acquisitions, the Company acquired
approximately 135 advertising display faces located in and around Evansville,
Indiana and approximately 12 existing advertising display faces and 35 in
process display faces in New Jersey.
In February 1997, the Company agreed to acquire the stock of
Penn-Baltimore, Inc., from Lamar Advertising Company for approximately $46.5
million in cash (the "Penn Acquisition"). Upon consummation of the Penn
Acquisition, the Company expects to acquire approximately 1,450 advertising
display faces in the Baltimore metropolitan area.
In March 1997, the Company acquired certain assets of TransAd, Inc.(the
"TransAd Acquisition") for approximately $8.5 million in cash. As a result of
the TransAd Acquisition the Company acquired approximately 600 bus shelters and
bus shelter advertising panels in and around Memphis, Tennessee.
In April 1997, the Company agreed to acquire the outdoor advertising
assets of Allied Outdoor Advertising, Inc. for approximately $51.2 million
(the "Allied Acquisition"). Upon consummation of the Allied Acquisition, the
Company expects to acquire approximately 91 outdoor advertising display faces
in New York City and New Jersey.
8
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The Company is a party to a $225 million revolving credit facility, and
as of March 31, 1997, approximately $122.0 million was outstanding under the
credit facility. The Company is negotiating with its current lender for an
additional term loan of $75 million.
Net cash provided by operating activities increased to $11.8 million for
the three months ended March 31, 1997 from $2.9 million for the corresponding
1996 period. 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 $131.7 million for
the three months ended March 31, 1997 includes cash used for acquisitions of
$128.1 million and other capital expenditures of $3.6 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 potential acquisitions in the Midwestern, Southeastern
and Eastern regions and contiguous markets. Management believes that its
internally generated funds, together with available borrowings under its 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 Company's
credit facility are insufficient to satisfy its cash requirements, the Company
may obtain funds from additional sources of indebtedness and/or equity offerings
by Parent to finance its operations, including without limitation, additional
acquisitions.
For the three months ended March 31, 1997, $100.9 million was provided by
financing activities due to increased borrowings under the Company's credit
facility. For the three months ended March 31, 1996, $12.7 million was used
in financing activities primarily due to acquisitions.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Note 4 to the financial statements of the Company included in Part I of
this report is hereby incorporated by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
NUMBER DESCRIPTION
2.1 Asset Purchase Agreement dated as of March 25, 1997 among Transad
Advertising, L.P., Transad, Inc., Memphis Venture Partners and
Universal Outdoor, Inc.
2.2 Asset Purchase Agreement dated as of February 28, 1997 between David
Klein Outdoor Advertising, Inc. and Universal Outdoor, Inc.
2.3 Asset Purchase Agreement dated as of February 5, 1997 between
Ad-Craft, Inc. and Universal Outdoor, Inc.
3.1 Third Amended and Restated Articles of Incorporation of the Registrant
(incorporated herein by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1 (File No. 333-12427) (the
"Registration Statement"))
3.2 Second Amended and Restated By-Laws of the Registrant (incorporated
herein by reference to Exhibit 3.2 of the Registration Statement)
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K - The Registrant filed the following report on Form 8-K
during the quarter ended March 31, 1997:
Form 8-K, filed February 18, 1997, reporting the issuance of press release
disclosing year-end financial results.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIVERSAL OUTDOOR, INC.
/S/ BRIAN T. CLINGEN
---------------------
Brian T. Clingen
Vice President and Chief Financial Officer
/S/ PAUL G. SIMON
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Paul G. Simon
Vice President, Secretary and General Counsel
May 13, 1997
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NUMBER DESCRIPTION
2.1 Asset Purchase Agreement dated as of March 25, 1997 among
Transad Advertising, L.P., Transad, Inc., Memphis Venture
Partners and Universal Outdoor, Inc.
2.2 Asset Purchase Agreement dated as of February 28, 1997
between David Klein Outdoor Advertising, Inc. and
Universal Outdoor, Inc.
2.3 Asset Purchase Agreement dated as of February 5, 1997
between Ad-Craft, Inc. and Universal Outdoor, Inc.
3.1 Third Amended and Restated Articles of Incorporation of
the Registrant (incorporated herein by reference to
Exhibit 3.1 of the Company's Registration Statement on
Form S-1 (File No. 333-12427) (the "Registration Statement"))
3.2 Second Amended and Restated By-Laws of the Registrant
(incorporated herein by reference to Exhibit 3.2 of the
Registration Statement)
27 Financial Data Schedule
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into as of the 25th day of March, 1997, by and
among TRANSAD ADVERTISING, L.P., a Tennessee limited partnership whose F.E.I.N.
is 62-1509040 ("Transad"), Transad's general partner, TRANSAD, INC., a Tennessee
corporation ("General"), Transad's Limited Partners, Memphis Venture Partners, a
Tennessee general partnership composed of Rudi E. Scheidt, Jr., E. Elkan
Scheidt, Susan S. Arney, and Helen S. Gronauer, as "Limited Partner A," and
Randall P. Swaney as "Limited Partner B," E. Elkan Scheidt as "Limited Partner
C," and John P. Curtis as "Limited Partner D" (collectively "Limited") (Transad,
General and Limited 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 herein and other good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, Buyer and Seller agree as follows:
1. TRANSFER OF ASSETS.
1.1 At the Closing, Buyer shall acquire from Seller all of the business
and assets of Seller, whether disclosed or undisclosed, wherever located
and used in the bus shelter advertising market described in Exhibit 1.1
("Market"), including, 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
("Purchase Price"), plus the assumption of certain obligations of Seller as
specified herein. The Assets should specifically exclude cash, cash
equivalencies and accounts receivable, as of Closing, which shall remain
property of Seller.
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 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 bus shelters ("Shelters") and bus shelter advertising
panels ("Panels"), whether owned or leased, and any fixtures, and all
lights, electrical hook ups, and other appurtenant equipment in the
Market ("Displays"). The Displays which are
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owned by Seller are described in Exhibit 1.3.2(a). The Panels which
are owned by Seller but attached to Shelters owned by others are
listed on Exhibit 1.3.2(b).
1.3.3 All future rights and entitlement of Seller in and to
advertising contracts which are listed in Exhibit 1.3.3.
1.3.4 All of Transad's right title, interest and obligations in and
to the contract between Transad and the Memphis Area Transit Authority
("MATA") dated March 13, 1992 as amended January 14, 1997 ("Bus
Shelter Contract") and all other contract rights, entitlement and
obligations of Seller, whether oral or written in excess of Five
Thousand Dollars ($5,000), including those set forth in Exhibit 1.3.4.
1.3.5 All rights and obligations of Seller in and to unbuilt Displays
and sign locations ("Unbuilt Locations"). All such rights to Unbuilt
Locations are listed in Exhibit 1.3.5.
1.3.6 All MATA approvals or authorizations necessary for Seller to
conduct its bus shelter business within the Market. Seller, before and
after Closing, shall cooperate with Buyer in the assignment and
transfer to Buyer of all such approvals or authorizations. All such
approvals or authorizations are listed in Exhibit 1.3.6.
1.3.7 All other assets and property of Seller used in the Market in
Seller's bus shelter advertising business, such as motor vehicles,
office equipment and machinery, bus shelter ad panels, equipment,
furniture, inventories of raw materials, supplies, customer lists,
business records, and work in progress. A list of all other assets is
set out in Exhibit 1.3.7.
1.3.8 All deposits from advertisers or other 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
telephone numbers and listings is attached as Exhibit 1.3.9.
1.3.10 [Intentionally omitted]
1.3.11 [Intentionally Omitted]
1.4 Buyer shall pay to Seller a purchase price for the Assets of: (a)
Eight Million Five Hundred Thousand Dollars ($8,500,000) to be paid as
follows: Seven Million Four Hundred Thousand Dollars ($7,400,000) (plus or
minus adjustments stated below) paid to Seller at Closing; Five Hundred
Thousand Dollars ($500,000) paid to Seller in ten (10) semi-annual
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installments of Fifty Thousand Dollars ($50,000) beginning six (6) months
after closing; and Six Hundred Thousand Dollars ($600,000) paid to MATA at
Closing for approval of the Assignment of the Bus Shelter Agreement
(collectively the "Purchase Price"). The portion of the Purchase Price to
be paid to Seller at Closing is subject to the following adjustments:
1.4.1 Plus an amount which will credit Seller for payments by Seller
to MATA which have been paid in advance for time periods following
Closing ("Prepaid Leases").
1.4.1.1 Plus Ten Thousand Dollars ($10,000) which will credit
Seller for payments made by Seller for the construction of and
improvements to Displays for the time period from February 1,
1997 to Closing.
1.4.2 Minus the amounts which will credit Buyer for the following:
1.4.2.1 Any lease payments for which Buyer becomes obligated
relating to any period of time prior to Closing.
1.4.2.2 Any advertising services delivered after Closing for
which Seller has already billed or otherwise receives payment.
Such Services are listed on Exhibit 1.4.2.2.
1.4.3 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 subsequent to the Closing Date; including without limitation
(a) personal property, real estate, occupancy and other 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) all 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)-(c) 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 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.
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1.5 The Purchase Price to 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 or other provisions of this Agreement, shall be paid by wire
transfer at Closing as designated by Seller on Exhibit 1.5.
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 (except in
the case of Limited Partner A, Limited Partner C and Limited Partner D, the
Non-Interference), Non-Solicitation and Non-Disclosure Agreements
substantially in the form set forth in Exhibit 1.7(a) and 1.7(b).
If Seller violates this Section 1.7 and the Agreements 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 claim
shall not be limited to the amount of any offset available.
1.8 After the Closing, Buyer has the right to use the name Transad 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 Transad to all
checks, which pursuant to the terms of this Agreement, are the property of
Buyer. Buyer shall indemnify and hold harmless Seller, its successors and
assigns from any claims, judgements, lawsuits, causes of action, costs and
expenses, including reasonable attorneys fees, arising from Buyer's use of
the name Transad subsequent to the Closing Date.
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 (each representation and warranty in this Section 2 except Section
2.1 and 2.2 is made only as to the Assets and the Market):
2.1 Transad is a Tennessee limited partnership and General is a Tennessee
corporation, both of which are duly organized, validly existing in good
standing under the laws of that state, and has the requisite authority 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.
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2.2 Transad and General are properly qualified to do business in Shelby
County, Tennessee. These are the only jurisdictions where Transad and
General are required to be qualified in order to conduct business in the
Market.
2.3 To the best of the Seller's knowledge, there are no violations of
applicable laws or regulations, including, but not limited to, zoning
regulations and building permits or other permits related to the Displays.
2.4 Attached as Exhibit 2.4 are unaudited balance sheets and comparative
operating statements of Transad's business in the Market as of December 31,
1996 (the "Financial Statements"). These Financial Statements are in
accordance with the books and records of Seller as kept in the ordinary
course of Seller's business and fairly and accurately present its financial
position as of that date.
2.5 To the best of the Seller's knowledge, since the date of the Financial
Statements, except as disclosed in Exhibit 2.5, there have been no material
adverse changes in the general affairs, management or financial position or
financial condition of Seller with respect to the Market.
2.6 The Exhibits attached to this Agreement are correct in all respects
including specifically the following:
2.6.1 The information about the Bus Shelter Contract and other
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
Exhibits. Said contracts are (1) in full force and effect; (2) have
not been breached by Seller or, to the best of the Seller's knowledge,
any of the parties to the Contracts; and (3) all payments required
under said contracts have been made except those not yet due and
payable as provided in the financial statements.
2.6.2 Exhibit 2.6.2 lists agreements relating to the assets, whether
oral or written requiring payments or performance by Seller or Buyer
after Closing and the following agreements:
(a) Each 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.
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2.7 There are no unfair labor practice charges pending, or to the best of
Seller's knowledge, threatened against Seller. To the best of the Seller's
knowledge, 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 contemplated in this Agreement, have been duly and effectively
authorized and approved by Seller's board of directors, shareholders and
partners and all other persons, business, 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.
2.9 The performance of this Agreement by Seller will not conflict with or
violate the provisions of any agreement or instrument binding upon Seller.
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
Seller or the business. Assets or financial conditions of Seller within the
Market. To the best of the Seller's knowledge, 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 provided in Exhibit 2.11, on the Closing Date, Seller will
convey good and merchantable title to the Assets, which title, except as
provided in Exhibit 2.11, will not be encumbered at such time.
2.12 All Assets are useable in the ordinary course of business with the
exception of ordinary wear and tear, except those listed in Exhibit 2.12.
Seller has no knowledge of any defects in the condition of any of the said
Assets.
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 caused or permitted and has no
knowledge of the release of any hazardous substances that have gone
onto or off-site of any real estate owned or leased by Seller and
Seller has no knowledge that any person or entity has in the past
utilized any real estate owned or leased by Seller in
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a manner which has created any hazardous substance on or off any real
estate owned or leased by Seller. There are no pending and no
threatened claim, suit, administrative proceeding, or other action 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.
2.14 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 so as to preserve and expand their ongoing
business or otherwise disclosed in Exhibit 2.14 attached to this Agreement,
or as otherwise incurred or performed in the ordinary course of business,
Seller has not since the date of the Financial Statements attached as
Exhibit 2.4:
2.14.1 incurred or become subject to any obligations or liabilities
(absolute or contingent) which have a material adverse effect on the
Assets;
2.14.2 mortgaged, pledged or subjected to any lien, charge or
encumbrance any of its assets covered by this Agreement;
2.14.3 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;
2.14.4 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 2.14.4;
2.14.5 made, accrued or become liable in any way for any bonus,
profit sharing, pension, incentive compensation or other similar
payments to any employee;
2.14.6 To the best of the Seller's knowledge, the Seller has not
suffered any other event or condition of any character which has
materially adversely affected Seller's business.
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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 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
Exhibit 2.20.
Buyer Shall collect Seller's accounts receivable existing on the
Closing Date using Buyer's normal and customary collection efforts.
Within ten (10) days following the close of each calendar month ending
after the Closing Date, Buyer shall forward to Seller a complete list
of all Seller's accounts receivable on which or with respect to which
Buyer is charged with collection on behalf of Seller. Buyer shall
forward to Seller, along with such list, a check in the full amount of
the collection of Seller's accounts receivable. Seller reserves the
right to assume the duties of collection for any portion of such
accounts receivable upon written notice to Buyer.
2.16 Except as set forth in Exhibit 2.16, Seller does not sponsor or
participate in any (i) life, health, accident or disability or any other
"employee welfare benefit plan" as defined in Section 3(1) 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.
2.17 Pursuant to the terms of this Agreement, Seller is delivering to
Buyer substantially all of the assets used in the Market by Seller to
operate its business.
2.18 Seller has paid all federal and municipal taxes, including real and
personal property, sales and use taxes it is required to pay.
2.19 Seller has not sublet any property except as disclosed in Exhibit
2.19.
2.20 Seller has not engaged in any "bartering" or "lease trade outs" of
accounts receivable or advertising space except as set forth in Exhibit
2.20.
2.21 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, ordinary wear and tear excepted.
2.22 [Intentionally Omitted]
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2.23 To the best of Seller's knowledge, 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.
2.24 [Intentionally Omitted.]
2.25 To the best of the Seller's knowledge, with respect to the assets
conveyed, Seller has paid all taxes of whatever kind owed when due and
filed all tax returns or other tax reports when due. To the best of the
Seller's knowledge, there are no tax audits threatened or pending against
Seller.
2.26 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 the transaction
set forth in this Agreement.
2.27 All dues owed by Seller to any outdoor advertising association have
been paid and shall be prorated between Seller and Buyer as of the closing
date.
2.28 Except in the ordinary course of business, 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 Assets of Seller.
2.29 To the best of the 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.
2.30 Seller shall have delivered to Buyer under this Agreement Displays
containing, in the aggregate, at least 512 advertising faces.
2.31 Following Closing, neither Seller nor any Affiliate, officer,
director or shareholder of Seller 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 being purchased by
Buyer.
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3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
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. Buyer is duly qualified to conduct business in the
state of Tennessee.
3.2 The performance of this Agreement by Buyer will not conflict with or
violate the provisions of any 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 Except as listed in Exhibit 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 within the
Market which would have any material adverse effect on Buyer's performance
of this Agreement and the transactions contemplated herein. 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 reasonable business 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 the Bus Shelter Contract,
contracts or other agreements affecting the Assets; and which have not
been paid, performed or discharged by Seller.
4.1.2 Post-closing obligation to deliver advertising services
pursuant to advertising contracts purchased pursuant to this Agreement
in the Market.
4.1.3 Buyer shall assume the obligations of Seller associated with
the lease agreements listed on Exhibit 1.3.1 for a period of ninety
(90) days, which period shall begin on the Closing Date.
Notwithstanding the foregoing sentence, Buyer agrees to vacate the
leased premises upon thirty (30) days' written notice from the
landlord.
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4.1.4 Buyer shall assume the obligations of Seller associated with
the agreements listed on Exhibit 2.6.2.
4.1.5 Buyer agrees to employ the employees of Seller listed on
Exhibit 2.14.4 upon the terms and conditions set forth in the sole
discretion of Buyer for a period of ninety (90) days, such period to
begin on the Closing Date.
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
arrangements.
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,
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 and in the sole opinion of counsel an appeal of
such contest is without merit, 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, in
which event, Seller shall give Buyer said written notice within five (5)
business days after Seller begins contesting any such liability.
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In the event that Seller is contesting any liability not assumed by
Buyer under the terms of this Agreement, Seller shall make it clear to the
third party that Seller and not Buyer is the entity disputing the matter.
4.4 [Intentionally Omitted.]
4.5 Prior to the Closing Date and for a period of six months therefrom,
the 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;
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.
Buyer shall be responsible for all workmen's compensation claims associated
with health, illness or injury insofar as they relate to events occurring
after the Closing Date.
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.
4.7 Buyer has obtained all necessary MATA approvals or authorizations
necessary for Buyer to conduct a bus shelter business within the market.
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5. CONDUCT OF BUSINESS PENDING CLOSING.
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 Five Thousand Dollars ($5,000) without the prior written
authorization of Buyer.
5.3 Except in the ordinary course of business, 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, or any permits,
licenses, approvals, or authorization or cancel any debts or
claims;
(iii) knowingly enter into any transaction affecting the Market
which would have an adverse effect on the Assets Buyer is
purchasing;
(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 inconsistent with prior practices or other
than as shown on a Schedule or Exhibit to this Agreement;
(v) make or permit any amendment or termination of any contract;
(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
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(viii) 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.
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
provide, at Seller's place of business, to Buyer and its accountants,
counsel, appraisers and other representatives full access to all
properties, contracts, commitments, books and records of Seller pertaining
to the Market.
Buyer acknowledges that pursuant to the right to inspect Seller's books and
records and other documents and materials that Buyer may become privy to
Seller's Confidential Information, as herein defined, and that
communications of such Confidential Information to third parties could
injure Seller's business if the transactions in this Agreement are not
completed. Buyer, therefore, shall ensure that such information about the
Business obtained by the Buyer or any of its employees, officers, agents,
attorneys or representatives, shall remain confidential and not be
disclosed or revealed to third parties. "Confidential Information" includes
information ordinarily known only to Seller's personnel and includes such
information as financial information, customer lists, trade secrets,
inventory records and other information normally understood to be
confidential or otherwise designated as such by Seller. Notwithstanding
anything contained herein to the contrary, this paragraph shall remain in
effect even in the event that Closing is not consummated.
5.5 [Intentionally Omitted]
5.6 Prior to the Closing Date, 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 hereof and the Closing Date, any parcel of improved
real property being leased as a part of this transaction and the contents
thereof, 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 bus shelters to be purchased herein are materially
damaged or destroyed by fire or other casualty, Buyer or Seller 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. However,
notwithstanding anything contained herein to the contrary, Seller shall
have the right to remedy or repair any such damage within a period of sixty
(60) days and require Buyer to close in accordance with all other
provisions of this Agreement. Seller shall immediately notify the Buyer in
writing of the occurrence of any fire or other casualty. Buyer shall notify
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Seller in writing of Buyer's receipt of Seller's notice and whether or not
Buyer elects to consummate this transaction. For purposes of this paragraph
"material damage" shall mean damage in the excess of Seventy-Five Thousand
Dollars ($75,000).
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 [Intentionally Omitted.]
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 adequately resolved such error,
misstatement or omission. 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.
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, Buyer and Seller 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.
6.5 No court of competent jurisdiction or governmental agency shall have
issued an order, binding on Buyer, enjoining the closing of the
transactions contemplated herein.
6.6 Seller shall have delivered to Buyer the consent of MATA to the
assignment from Seller to Buyer of the Bus Shelter Agreement and an
estoppel certificate by MATA in a form satisfactory to Buyer.
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.
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6.8 There shall be no existing suit, action, arbitration or legal,
administrative or other proceeding or governmental investigation pending
or, after due inquiry, to the best of Seller's or Buyer'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 which has not been listed in Exhibit 2.10
or elsewhere in this Agreement.
6.9 Seller shall deliver a certified copy of the Board of Directors of
General approving this transaction and the execution of this Agreement and
such other documents reasonably requested by Buyer counsel.
6.10 Seller shall deliver to Buyer all books, records and documents
relating to the Assets at the Closing.
6.11 Seller shall have terminated or reassigned all of Seller's employees
in the Market.
6.12 Seller shall have delivered to Buyer the executed Non-Competition
(except in the case of Limited Partner A, Limited Partner C and Limited
Partner D, the Non-Interference), Non-Solicitation and Non-Disclosure
Agreements in the form attached as Exhibit 1.7(a) and 1.7(b).
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 [Intentionally Omitted]
7.2 Seller shall have not discovered any material error, misstatement or
omission in the representations and warranties made by Buyer which alone or
in the aggregate are materially adverse to Buyer or Seller if this
transaction is completed, unless Buyer has adequately resolved such error,
misstatement or omission. 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 has 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 pursuant to the terms hereof shall
have been duly performed in all material respects.
7.3 If required by law, Buyer and Seller 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.
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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.
8. CLOSING.
8.1 The transactions required under this Agreement to be consummated at
the Closing shall take place as of March 25, 1997 or such other date (the
"Closing Date"), and time as Seller and Buyer may agree.
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 [Intentionally Omitted]
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 Such other instruments as counsel for Buyer may reasonably
request.
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 [Intentionally Omitted]
8.3.2 The amount specified in Section 1.4 in the form of an interbank
transfer of immediately available funds to account #1821883 at
National Bank of Commerce Memphis, Tennessee;
8.3.3 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 accounting records and corporate books of Seller for a period of
three (3) 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 enforcing rights
against third parties or enforcing rights under this Agreement.
17
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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.
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 attorney's 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 claiming to have been engaged by Seller or owed
compensation by Seller as a result of the transactions contemplated herein.
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 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 Buyer
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 claiming to have been 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 to a right
of indemnification hereunder. 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 hereunder, 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
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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 hereto 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 results thereof, 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 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 legal expenses of the defendant in that action.
10.5 No claim for indemnification or damages shall be available to Buyer
under this Section 10 unless and only to the extent such claim(s), in the
aggregate, exceed Twenty Thousand Dollars ($20,000). Notwithstanding,
anything contained herein to the contrary, Seller shall not be liable to
Buyer for any claim(s) which in the aggregate, exceed Two Hundred Fifty
Thousand Dollars ($250,000).
11. FINDERS.
Except with respect to Johnsen, Fretty & Co., which shall be paid solely by
Seller, Seller and Buyer represent and warrant 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.
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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 one (1) year, all covenants and agreements shall
also survive the Closing for a period of one (1) year unless they expire by
their terms on or before Closing. No claim for indemnification shall be
available to Buyer after such one (1) 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 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 purpose of this Agreement.
12.7 [Intentionally Omitted.]
12.8 The Exhibits to this Agreement shall be as of the Closing Date unless
otherwise stated.
12.9 This Agreement constitutes the final agreement between the parties
and is controlling over the terms of any prior agreements which are
inconsistent with the terms of this Agreement.
12.10 Buyer and Seller hereby expressly agree to waive compliance with the
applicable bulk transfers law, if any, in any jurisdiction.
12.11 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 certified or registered mail, postage prepaid, return
receipt requested:
If to Seller: Randall P. Swaney
Transad
6047 Executive Centre Drive, #9
Memphis, Tennessee 38134
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With a Copy to: Memphis Venture Partners
54 South White Station Road
Memphis, Tennessee 38117
If for Buyer to: Brian T. Clingen
Paul G. Simon
Universal Outdoor, Inc.
321 North Clark Street, Suite 1010
Chicago, Illinois 60610
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: /s/ Daniel L. Simon
- ---------------------------
As Its: President
-------------------
SELLERS:
TRANSAD ADVERTISING, L.P.
By: /s/ Randall P. Swaney By: /s/ E. Elkan Scheidt
- --------------------------- -----------------------------
As Its: General Partner/President As Its: General Partner/Vice President
------------------------- --------------------------------------
TRANSAD, INC.
By: /s/ Randall P. Swaney
- ----------------------------
As Its: President
--------------------
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MEMPHIS VENTURE PARTNERS,
Limited Partner A
By: /s/ E. Elkan Scheidt By: /s/ Rudi E. Scheidt, Jr. by: E. Elkan Scheidt
------------------------ -------------------------------------------------
E. Elkan Scheidt Rudi E. Scheidt, Jr. Power of Attorney
By: /s/ Helen S. Gronauer By: /s/ Susan S. Arney
------------------------ -----------------------------------------
Helen S. Gronauer Susan S. Arney
/s/ Randall P. Swaney /s/ E. Elkan Scheidt
- ------------------------------------ -----------------------------------
Randall P. Swaney, Limited Partner B E. Elkan Scheidt, Limited Partner C
/s/ John P. Curtis
- ---------------------------------
John P. Curtis, Limited Partner D
22
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, is made on February 28, 1997, between DAVID KLEIN OUTDOOR
ADVERTISING, INC., a New Jersey corporation ("Seller"), and UNIVERSAL OUTDOOR,
INC., an Illinois corporation ("BUYER"). In consideration of the mutual promises
and undertakings contained in this Agreement, and other good and valuable
consideration the receipt of which is acknowledged, SELLER agrees to sell and
BUYER agrees to buy certain specified assets of SELLER, upon the following terms
and conditions:
1. DEFINED TERMS. The terms set forth below are defined in the section
of this Agreement set forth opposite each term:
Assets 3
Broker Agreement 4
Buyer Preamble
Closing 5
Contracts 3.3
Displays 3.1
KOA Preamble
Leases 3.2
Locations 3
Permits 3.4
Prepaid Leases 10
Seller Preamble
Steelgrave 4
Unbuilt Locations 3.5
2. EFFECTIVE DATE. The effective date of the transfer of the assets to
be conveyed shall be the date of Closing.
3. ASSETS TO BE SOLD. SELLER agrees to convey to BUYER at the time of
Closing, good and merchantable title to the assets, by a Bill of Sale and
Assignment and Assumption Agreements, the following property ("Assets") at the
locations listed on Exhibit 3 ("Locations"):
3.1 OUTDOOR ADVERTISING DISPLAYS. All personal property owned by
SELLER used in the operation of the existing bulletin, junior poster, eight-
sheet painted walls or any other outdoor advertising displays ("Displays") as
are more fully described by Location in Exhibit 3 which property shall be
conveyed pursuant to the original
<PAGE>
Bill of Sale which is attached as Exhibit 3.1;
3.2 GROUND LEASES. The title, leases, licenses or agreements for the
rights of use ("Leases"), for the Locations listed on Exhibit 3, which Leases
shall be conveyed pursuant to the original Assignment and Assumption of Leases,
which is attached as Exhibit 3.2;
3.3 ADVERTISING CONTRACTS. The advertising contracts ("Contracts")
for the Locations listed on Exhibit 3, which Contracts shall be conveyed
pursuant to the original Assignment and Assumption of Advertising Contracts,
which is attached as Exhibit 3.3;
3.4 PERMITS. All necessary and requisite permits and governmental
approvals ("Permits") for the Locations listed on Exhibit 3, which Permits shall
be conveyed pursuant to the original Assignment and Assumption of Permits, which
is attached as Exhibit 3.4; and
3.5 UNBUILT LOCATIONS. Any complete or partially complete Displays
and any Leases, Contracts or Permits for locations which have not yet been
constructed ("Unbuilt Locations"). The Unbuilt Locations of SELLER are more
fully described in Exhibit 3.5 and any Leases, Contracts and Permits pertaining
to Unbuilt Locations shall be conveyed by the Bill of Sale and Assignment and
Assumption Agreements attached as Exhibit 3.1 - 3.4.
4. PURCHASE PRICE. BUYER agrees to purchase the assets listed above for
the total sum of $4.7 million (plus or minus prorations specified below) (the
"Purchase Price") payable to SELLER at Closing. Simultaneously with the payment
of the Purchase Price to SELLER, at the direction of SELLER, Buyer shall pay
$600,000 to Steelgrave Investment Corp. ("Steelgrave") in compensation for
amounts due to it by SELLER pursuant to that certain agreement dated as of
January 14, 1997 among SELLER and Steelgrave (the "Broker Agreement"). The
Purchase Price shall be paid by wire transfer as designated on Exhibit 4.
5. CLOSING. This transaction shall be closed ("Closing") on the date
first set forth above or on such date as mutually agreed ("Closing Date"), at a
location to be mutually agreed upon.
6. TRANSFER OF ASSETS.
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6.1 SELLER shall convey all property and assets referred to in
Sections 3 through and including 3.5 to BUYER by delivering to BUYER a Bill of
Sale and Assignment and Assumption Agreements in the form set forth on Exhibits
3.1, 3.2, 3.3, 3.4 and 3.5.
6.2 SELLER shall be entitled to all payments due under the Contracts
for the month of February, 1997 and before. BUYER shall be entitled to all
payments due under the Contracts for the month of March, 1997, and after. BUYER
shall be entitled to a credit at Closing for a prorated amount of the billings
for that portion of the month of February, 1997 beginning the day after Closing
through the end of the month. The parties agree that the February, 1997 billings
were $58,699.96 net of all agency commissions paid or to be paid by SELLER. In
the event SELLER receives payments belonging to BUYER after Closing, those
payments shall be immediately transferred to BUYER and SELLER shall endorse any
such checks payable to the order of BUYER. Any sums due under the Contracts for
any time period before the month of February, 1997, shall remain the property of
the SELLER and shall continue to be receivable of the SELLER, even after
Closing. If there shall be any check received pertaining to both time periods
(before and after February, 1997), BUYER and SELLER agree to promptly distribute
(and in no event later than five (5) days after receipt) the proceeds in a
manner consistent with this paragraph. At Closing, SELLER shall deliver executed
notices from SELLER to advertisers directing payment to BUYER after the Closing
of payments for advertising services after February, 1997, on the Contracts
conveyed. At Closing, SELLER shall deliver executed notices from SELLER to
lessors of the Leases advising the lessors that the SELLER's obligations under
the Leases have been assigned to the BUYER effective as of the Closing Date. All
notices in this Section 6.2 shall be in the form attached as Exhibit 6.2.
6.3 SELLER will, on or after Closing, execute and deliver any other
documents as may be reasonably necessary to transfer or further perfect title to
the assets transferred to BUYER including, without limitation, bills of sale,
assignments, permits and any other documents, sending letters and notices to
advertisers, lessors and appropriate government officials notifying them of the
date of transfer and that future payments, notices, etc., are to be directed to
BUYER or its nominee.
3
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7. CLOSING STATEMENT. At the time of Closing, the parties shall prepare a
Closing Statement which shall be signed by each of the parties and shall
indicate appropriate debits and credits on account of the Purchase Price,
prorations, security deposits and other adjustments as more fully described in
this Agreement.
8. BOOKS AND RECORDS. At the time of Closing, SELLER shall deliver to
BUYER all correspondence, notes, books, records, and other documents in SELLER's
possession or control, relating to the assets purchased including but not
limited to the following: (1) all Leases, (2) all Contracts, (3) all Permits and
(4) all files and computer-generated reports pertaining to the Locations
including the Unbuilt Locations to the extent they exist and to the extent
conveniently available, including a complete list of all ground lease lessors,
advertising customers and their respective mailing addresses and phone numbers,
all photographs of Displays under contract to the extent available and all art
work, sketches, pounce patterns, diagrams, schematics and related materials.
8.1 SELLER may retain copies of and shall continue after Closing to
have access to any books, records or other documents transferred:
8.1.1 which are or may be relevant to any claim or defense
SELLER may have against third persons or which SELLER reasonably deems necessary
in any action or proceeding concerning SELLER's assets, or
8.1.2 which are or may be relevant to SELLER's liability for
taxes in connection with or arising out of the conduct or ownership of the
assets purchased. SELLER shall not deliver to BUYER any books, records, or other
documents relating to ideas SELLER may have had for the conduct of any business
other than the business relating to the assets purchased by BUYER.
8.2 This provision shall not constitute a covenant by or requirement
that the BUYER preserve or retain for more than three (3) years from Closing any
books, records, or other documents delivered under this provision.
9. NO LIENS AT CLOSING. SELLER will, prior to or at the Closing, take
such steps necessary to deliver title to
4
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the assets to be conveyed free of any liens or encumbrances and as otherwise
warranted.
10. PRORATIONS. The Purchase Price set forth in Section 4 is subject to
the following adjustments and prorations.
10.1 Plus an amount which will credit SELLER for lease payments which
have been paid in advance for time periods following Closing ("Prepaid Leases").
10.2 Minus the amounts which will credit BUYER for the following:
10.2.1 Any lease payments for which BUYER becomes obligated
relating to any period of time prior to Closing.
10.2.2 Any advertising services delivered after Closing for
which SELLER has already billed or otherwise receives payment.
10.2.3 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; including without limitation (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; (d)
all rentals that are or would be payable or have accrued pursuant to "percentage
rental" lease provisions with respect to periods after the Closing Date (for
purposes of this Section 10.2.3, the Closing Date shall be the end of any such
periods for accrual purposes); and (e) all items paid or payable on or after the
Closing Date under any obligation specifically assumed to the extent not
specifically referenced in clauses (a) - (d) above which are normally prorated
in connection with similar transactions. A list of percentage leases with the
date of expiration is attached hereto as Exhibit 10.2.3;
5
<PAGE>
10.2.4 If current payments with respect to items to be prorated
pursuant to this Section 10.2 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.
11. SELLER'S WARRANTIES. SELLER represents, warrants and agrees that the
following are true and correct on the date of this Agreement and will continue
to be true and correct on each day until and including the Closing as though
made on and as of each day:
11.1 ORGANIZATION. SELLER is a corporation formed under the laws of
the State of New Jersey, it has complied with all laws concerning the right of
the corporation to conduct its business and is legally qualified to transact
such business. SELLER has the full power and authority to own, lease and operate
its properties and conduct its business as conducted in the places where the
properties are now owned, leased or operated, by SELLER.
11.2 AUTHORIZATION. SELLER is duly authorized to execute, deliver
and complete this Agreement.
11.3 LIABILITIES. As of the date of this Agreement, SELLER has no
knowledge of any liability, absolute or contingent, arising from or in any way
connected with the Assets.
11.4 LITIGATION. To SELLER's knowledge, there is no action,
proceeding, or investigation pending or threatened against SELLER or involving
any of the Assets before any court or before any governmental department,
commission, board, agency, or instrumentality, nor does SELLER know of any basis
for any such action, proceeding or investigation which could result in any
order, injunction or decree against SELLER or involve any of the Assets except
as set forth in Exhibit 11.4.
11.5 AGREEMENTS. This Agreement will not conflict with, result in a
breach of the terms and conditions of, accelerate any provision of, or
constitute any
6
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default under any contract or agreement to which SELLER is now, or may become a
party.
11.6 TITLE OF ASSETS. SELLER has good title to all of the assets,
properties, rights and interest to be sold, subject to no mortgage, pledge,
lien, charge or encumbrance of any nature, except as noted on Exhibit 11.6,
which will be discharged at or before the Closing.
11.7 CONDITION OF DISPLAYS. The Displays and equipment to be sold to
BUYER are in good working order and repair, and comply with all applicable
building codes, zoning or other promulgations of entities having jurisdiction
over the construction and maintenance of the Displays and are fit for intended
purpose in accordance with industry standards.
11.8 COMPLIANCE WITH STATES' CORPORATE LAWS. SELLER will comply with
all the requirements and conditions of the corporate and revenue laws and
ordinances of all states and municipalities in which SELLER transacts business
relative to the sale of the Assets by the date of Closing and will deliver to
BUYER, upon request, proper certified copies of corporate resolutions
authorizing negotiation and consummation of this transaction whether or not
required by applicable law.
11.9 LEASES. The Leases are valid and in full force and effect and
permit the continued presence of the Display. Neither SELLER nor to SELLER's
knowledge any lessor is in default of any Lease. Contractual lease payments will
be made by SELLER for all periods up to and including Closing.
11.10 CONTRACTS. The Contracts are valid and in full force and
effect. Neither SELLER nor to SELLER's knowledge is any advertiser in default of
any Contract.
11.11 PERMITS. SELLER has obtained all necessary permits and other
federal, state and local authorizations necessary to allow the continued
presence of the Displays where located; all applicable fees for such permits
have been paid; all such permits are valid and in effect and to SELLER's
knowledge are fully transferable; and to SELLER's knowledge neither the
execution nor the consummation of this Agreement will terminate any Permit.
7
<PAGE>
SELLER agrees to cooperate fully with BUYER in renewing any Permit after
Closing.
11.12 BROKERS. SELLER is not a party to or in any way obligated
under any contract for payment of fees and expenses to any broker or finder in
connection with the origin, negotiation, execution or consummation of this
Agreement except for Steelgrave, as to which BUYER shall, pursuant to Section 4
hereof, pay such amount as set out in such Section 4 and as to which BUYER shall
incur no further obligation or liability, and notwithstanding Section 16, SELLER
agrees to indemnify and hold BUYER harmless from any liability arising from this
transaction from any loss, liability or obligation incurred by BUYER by reason
of a breach of this representation including reasonable attorneys' fees and
costs.
11.13 DISCLOSURE. No representation or warranty made by SELLER in
this Agreement nor any statement or certificate already furnished or to be
furnished by SELLER in connection with the transactions contemplated, contain
any known untrue statement of or fails to state a known material fact.
11.14 DISPLAY AND ADVERTISING FACES. There are six (6) Displays with
a total of ten (10) advertising faces being purchased by BUYER.
11.15 NO CONTINUING INTEREST. Following Closing, neither SELLER nor
any officer, director or shareholder of SELLER will have any direct, indirect or
beneficial ownership or other financial interest in any real or personal
property which is in any way involved with or related to the operation of the
sign structures being purchased by BUYER.
12. BUYER'S WARRANTIES. BUYER represents, warrants and agrees that the
following are true and correct on the date of this Agreement.
12.1 ORGANIZATION. BUYER is a corporation formed under the laws of
the State of Illinois, it has complied with laws concerning the right of the
corporation to conduct its business and is legally qualified to transact such
business. BUYER has the full power and authority to own, lease and operate its
properties and
8
<PAGE>
conduct its business as conducted in the places where the properties are now
owned, leased or operated, by SELLER.
12.2 AUTHORIZATION. BUYER is duly authorized to execute, deliver and
complete this Agreement.
12.3 COMPLIANCE WITH STATES' CORPORATE LAWS. BUYER will comply with
all the requirements and conditions of the Business Corporation Act ("Act"), in
the state of Illinois relative to the sale of the assets by the date of Closing
and will deliver to SELLER an Officer's Certificate attesting to the authority
of BUYER to negotiate and consummate this transaction whether or not required by
the Act.
12.4 BROKERS. BUYER is not a party to or in any way obligated under
any contract for payment of fees and expenses to any broker or finder in
connection with the origin, negotiation, execution or consummation of this
Agreement, and notwithstanding Paragraph 15, BUYER agrees to indemnify and hold
SELLER harmless from any liability arising from this transaction from any loss,
liability or obligation incurred by SELLER by reason of a breach of this
representation including reasonable attorneys' fees and costs.
13. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of BUYER to close
or perform is subject to the satisfaction of the following conditions, any of
which the BUYER may at its election enforce or waive:
13.1 BUYER shall have completed, prior to Closing and to BUYER's
reasonable satisfaction BUYER's due diligence inspections and investigations,
including BUYER's review of SELLER's books and records specified in Section 8
above, and that such inspections and investigations shall not reveal a breach of
any representation, warranty or covenant in this Agreement.
13.2 All representations and warranties of SELLER shall be true and
correct as of the date of this Agreement and shall be true and correct in all
respects on the Closing Date with the same force as if such representations and
warranties had been made on the Closing Date, all agreements to be performed by
SELLER on or prior to the Closing Date shall have been fully performed, and,
upon request, BUYER shall have received a certificate dated
9
<PAGE>
the Closing Date signed by the duly authorized President or Vice President and
attested by the Secretary or an Assistant Secretary of SELLER to that effect.
13.3 If requested, BUYER shall have received an original certificate
of good standing for the SELLER issued by the states in which SELLER transacts
business; and resolutions of the Board of Directors or unanimous written consent
of the shareholders of SELLER, authorizing the execution, delivery and
performance of this Agreement, certified by the Secretary or an Assistant
Secretary of SELLER.
13.4 There shall not have been any material adverse change in
SELLER's assets or condition, financial or otherwise, including, without
limitation, its relationships with customers, landlords or others, between the
date of this Agreement, and the date of Closing. SELLER agrees to operate and
maintain its business in its regular course from the date of this Agreement to
Closing.
13.5 SELLER shall have maintained its assets to be conveyed,
including the Displays, in at least as good condition and repair as on the date
of this Agreement and will not voluntarily suffer anything to be done that will
decrease the value of its property, ordinary wear and tear excepted.
13.6 Counsel for BUYER shall have approved the form, substance and
sufficiency of all instruments to be delivered by SELLER at or before Closing.
Approval will not be unreasonably withheld, denied or delayed.
13.7 If SELLER cannot timely cure any defect which prevents Closing
after good faith efforts, then either party may rescind this Agreement.
13.8 SELLER shall have executed and delivered to BUYER a
Noncompetition, Nonsolicitation and Nondisclosure Agreement in the form attached
as Exhibit 13.8.
14. GENERAL CONDITIONS.
14.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements made by the Parties to this Agreement
shall
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survive the consummation and/or Closing of this Agreement and any investigation
made at that time by or on behalf of either party.
14.2 SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of SELLER and BUYER.
14.3 NOTICES. All notices shall be in writing and delivered in
person or sent by certified, registered or express mail or by facsimile:
IF FOR SELLER, ADDRESSED TO: David Klein, Outdoor Advertising
David Klein, President
12 Woods Road
West Long Branch, New Jersey 07764
Telephone 908-222-6039
Facsimile 908-728-1655
WITH A COPY TO: Schumann, Hanlon, Doherty,
McCrossin & Paolino
Brian Doherty
30 Montgomery Street, 15th Floor
Jersey City, New Jersey 07302
Telephone: 201-434-2000
Facsimile: 201-434-2676
IF FOR BUYER, ADDRESSED TO: Universal Outdoor, Inc.
Paul G. Simon, Secretary
321 N. Clark Street, Suite 1010
Chicago, Illinois 60610
Telephone 312-644-8673
Facsimile 312-644-8071
WITH A COPY TO: Skadden, Arps, Slate, Meagher
& Flom LLP
Howard Ellin
919 Third Avenue
New York, NY 10022
Telephone: 212-735-3000
Facsimile: 212-735-2000
of such other address for either or both as is stated in a written notice given
in compliance under this clause.
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14.4 HEADINGS. The various headings used in this Agreement as
headings for sections or otherwise are for convenience and shall not be used in
interpreting the text of the section in which they appear.
14.5 PRESS RELEASES. Any press releases or other public announcement
of this transaction, other than any filing that may be required by law, shall be
first approved by BUYER and SELLER.
14.6 GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the law of the State of Illinois.
14.7 SEVERABILITY. The invalidity of any provision of this Agreement
shall not impair the validity of any other provision. If any provision of this
Agreement is determined by a court of competent jurisdiction to be
unenforceable, that provision will be deemed severable and the Agreement shall
be enforced with that provision severed or as modified by the court to the
extent necessary to carry out the present manifest intentions of the parties.
14.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement sets forth
the entire understanding of the parties. It may be amended, modified or
terminated only by instruments signed by the parties.
14.9 COUNTERPARTS. This Agreement is executed in three counterparts,
each of which shall be deemed to be and shall constitute one and the same
instrument.
14.10 FEES AND COSTS. BUYER and SELLER agree that each party shall
bear its own costs and expenses, including attorneys' fees, in connection with
this transaction.
15. INDEMNIFICATION.
15.1 SELLER shall defend, indemnify and hold BUYER harmless against
and in respect of:
15.1.1 Any and all loss, damage, deficiency, or liability from
(i) any misrepresentation, breach of representation, warranty or covenant, or
nonfulfillment of any agreement on the part of SELLER under this Agreement; and
(ii) any liability or obligation incurred by
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SELLER or arising out of any event or circumstances occurring prior to the
Closing Date which is not assumed by BUYER; and
15.1.2 Any and all actions, suits, proceedings, demands,
assessments, costs and expenses, including reasonable attorneys' fees, incident
to Sub-Section 15.1.1.
15.2 BUYER shall defend, indemnify and hold SELLER harmless against
and in respect of:
15.2.1 Any and all loss, damage, deficiency, or liability from
(i) any misrepresentation, breach of representation, warranty or covenant, or
nonfulfillment of any agreement on the part of BUYER under this Agreement; (ii)
any liability or obligation incurred by BUYER or arising out of any event or
circumstances involving the assets occurring after Closing Date; and
15.3 BUYER or SELLER shall, within reasonable time of its receiving
notice of a claim, give written notice to the other party of any claim for which
that party seeks indemnification under Section 15.1 and 15.2, and the indemnitor
shall have the right to contest, defend, or litigate any matter in respect of
which indemnification is claimed. Any delay in or failure to give notice of a
claim for indemnification shall not relieve the indemnitor's obligation except
to the extent that the indemnitor can demonstrate prejudice by such delay or
failure. The indemnitor shall have the exclusive right to settle, either before
or after the initiation of litigation, any matter in respect of which
indemnification is claimed, but, prior to any such settlement, written notice of
not less than ten (10) days of its intention to do so shall be given to the
other party. In the event the indemnitor fails promptly to defend any such claim
as provided in Sections 15.1 or 15.2, the other party may do so and shall then
have the right, in its sole discretion, exercised in good faith and upon the
advice of counsel, to settle, either before or after the initiation of
litigation, any matter in respect of which indemnification is claimed.
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16. SELLER'S BREACH OF WARRANTIES. In addition to any other remedy BUYER
may have at law or equity, if SELLER breaches any of the representations,
warranties and covenants, and the result of the breach of representation,
warranty or covenant by SELLER is that BUYER can no longer maintain the Displays
in their existing locations, SELLER shall refund to BUYER a prorated portion of
the purchase price as the value of the lost Displays bears to the total amount
paid.
17. CORPORATE NAME. BUYER specifically agrees that it is not acquiring
any right to use the name of SELLER in the operation of the assets purchased.
BUYER further agrees that it will cause to be removed any name identification of
the SELLER from the purchased assets within one hundred eighty (180) days of
Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
DAVID KLEIN OUTDOOR ADVERTISING, INC.
By: /s/ David Klein
-----------------------------------
Name: David Klein
Title: President
UNIVERSAL OUTDOOR, INC.
By: /s/ Brian T. Clingen
-----------------------------------
Name: Brian T. Clingen
Title: Vice President
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, is made on February 5, 1997, between AD-CRAFT, INC., an
Indiana corporation whose F.E.I.N. is 35-1461298 ("SELLER") and UNIVERSAL
OUTDOOR, INC., an Illinois corporation whose F.E.I.N. is 36-3951893 ("BUYER").
In consideration of the mutual promises and undertakings contained in this
Agreement, and other good and valuable consideration, the receipt of which is
acknowledged, the SELLER agrees to sell and BUYER agrees to buy certain
specified assets of SELLER, upon the following terms and conditions:
1.0 EFFECTIVE DATE. The effective date of the transfer of the assets to
be conveyed shall be the date of Closing ("Closing Date").
2.0 ASSETS TO BE SOLD. SELLER agrees to convey to the BUYER, at the time
of Closing, good and merchantable title to the assets, by a Bill of Sale and
Assignment and Assumption Agreements, the following property ("Assets") at the
locations listed on Exhibit 2.0 ("Locations"):
2.1 OUTDOOR ADVERTISING DISPLAYS. All outdoor advertising displays
("Displays") at the Locations in Exhibit 2.0 which Displays shall be conveyed
pursuant to the original Bill of Sale in the form attached as Exhibit 2.1;
2.2 GROUND LEASES. The title, leases, licenses or agreements for the
rights of use ("Leases"), for the Locations listed on Exhibit 2.0, which Leases
shall be attached to and shall be conveyed by original Assignment and Assumption
of Leases in the form attached as Exhibit 2.2;
2.3 ADVERTISING CONTRACTS. The advertising contracts ("Contracts")
for the Locations listed on Exhibit 2.0, which Contracts shall be attached to
and shall be conveyed by original Assignment and Assumption of Advertising
Contracts in the form attached as Exhibit 2.3;
2.4 PERMITS. All existing permits ("Permits") for the Locations
listed on Exhibit 2.0, which Permits shall be attached and shall be conveyed by
original Assignment and Assumption of Permits, which is attached as Exhibit 2.4;
2.5 UNBUILT LOCATIONS. The newly built, partially built and unbuilt
Locations of SELLER, including Displays, Leases, Contracts, and Permits for such
locations ("Unbuilt Locations") described on Exhibit 2.5. These shall be
conveyed by appropriate Bills of Sale and Assignment and Assumption Agreements
in the form attached as Exhibits 2.2, 2.3 and 2.4; and
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2.6 All Leases, Contracts, Permits and other rights are transferred
subject to any limitations, terms or restrictions contained in the documents.
3.0 PURCHASE PRICE. BUYER agrees to purchase the assets listed above for
the sum of $5.5 million (plus $51,420.00 for cost reimbursement to Seller for
certain Unbuilt Locations specified on Exhibit 2.5 and plus or minus prorations
specified below) payable to the order of SELLER. The Purchase Price shall be
paid by wire transfer as designated by SELLER on Exhibit 3.0.
4.0 CLOSING. This transaction shall be closed ("Closing") on February 5,
1997, or on such date as mutually agreed, in the office of Universal Outdoor,
Inc., located at 4201 Morgan Avenue, Evansville, Indiana.
5.0 TRANSFER OF ASSETS.
5.1 At Closing, SELLER shall convey all property and assets referred
to in Paragraphs 2.0 through 2.5 to BUYER by delivering to BUYER the Bill of
Sale and Assignment and Assumption Agreements in the form set forth on Exhibits
2.1, 2.2, 2.3, 2.4 and 2.5. At all times prior to Closing, all rights to and
responsibility for the Assets shall remain with SELLER.
5.2 SELLER shall be entitled to all payments due under the Contracts
for the month of January, 1997 and before. BUYER shall be entitled to all
payments due under the Contracts for the month of March, 1997, and after. SELLER
shall issue bills to advertisers under the Contracts for the month of February,
1997 and shall have the right and obligation to collect all sums owed pursuant
to such billings. BUYER shall be entitled to a credit at Closing for a prorated
amount of the February billings for that portion of the month of February
beginning the day after Closing through the end of the month. The parties agree
that the February billings were $70,525. In the event the SELLER receives
payments belonging to BUYER after Closing, those payments shall be immediately
transferred to the BUYER and the SELLER shall endorse any such checks payable to
the order of the BUYER. Any sums due under the Contracts for any time period
before the month of March, 1997, shall remain the property of the SELLER and
shall continue to be a receivable of the SELLER, even after Closing. If there
shall be any check received pertaining to both time periods (before and after
February 28, 1997) BUYER and SELLER agree to distribute the proceeds in a manner
consistent with this paragraph. At Closing, SELLER shall deliver executed
notices from SELLER to advertisers directing payment to BUYER after the Closing
of payments for advertising services after February 28, 1997, on the Contracts
conveyed. At Closing, SELLER shall deliver executed notices from SELLER to
lessors of the Leases advising the lessors that the SELLER's obligations under
the Leases have been assigned to the BUYER effective on the Closing Date. All
notices in this Section 5.2 shall be in the form attached as Exhibit 5.2.
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5.3 SELLER will, on or after Closing, execute and deliver any other
documents as may be reasonably necessary to transfer or further perfect
title to the Assets transferred to BUYER including, without limitation,
bills of sale, assignments, permits and any other documents, sending
letters and notices to advertisers, lessors and appropriate government
officials notifying them of the date of transfer and that future payments,
notices, etc., are to be directed to BUYER or its nominee.
6.0 CLOSING STATEMENT. At the time of Closing, the parties shall execute
the Closing Statement attached as Exhibit 6.0 which reflects appropriate debits
and credits on account of the Purchase Price, prorations, security deposits and
other adjustments as more fully described in this Agreement.
7.0 DOCUMENTATION. At the time of Closing, SELLER shall deliver to BUYER
the original or one copy of the following:
7.0.1 all Leases, Contracts, Permits and previous
bills of sale, assignments or documents reflecting
or relating to the transfer of the Assets;
7.0.2 all communications from lessors,
advertisers, government authorities or third-
parties relating to the Assets or the operation of
Assets;
7.0.3 a complete list of all lessors, advertisers
and their respective mailing addresses and phone
numbers; and
7.0.4 all photographs of Displays and all art
work, sketches, pounce patterns, diagrams,
schematics and related materials.
7.1. SELLER may retain copies of and shall continue after Closing to have
access to any documents provided to the BUYER for the limited purpose of
complying with SELLER's legal or financial obligations. SELLER shall not
use or disclose documents retained for any purpose prohibited by this
Agreement or Exhibit 12.7 or for any other purposes detrimental to BUYER.
7.2 This provision shall not constitute a covenant by or requirement that
the BUYER preserve or retain for more than one year from Closing any
documents delivered under this provision.
8.0 NO LIENS AT CLOSING. SELLER will, prior to or at the Closing, take
such steps necessary to deliver title to the Asset free from any liens or
encumbrances and as other warranted. To the extent any liens or encumbrances as
reflected by updated searches
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of public records remain unreleased at Closing, provision shall be made for the
immediate payment of same from the funds payable from BUYER to SELLER at
Closing.
9.0 PRORATIONS. The Purchase Price set forth in Paragraph 3.0 is subject
to the following adjustments and prorations:
9.1 Plus an amount which will credit SELLER for lease payments which have
been paid in advance for time periods following Closing ("Prepaid Leases"),
including those reflected on Exhibit 9.1.
9.2 Minus the amounts which will credit BUYER for the following:
9.2.1 Any lease payments for which BUYER becomes obligated
relating to any period of time prior to Closing.
9.2.2 Any advertising services delivered after Closing for
which SELLER has already billed or otherwise receives
payment, including those reflected on Exhibit 9.2.2.
9.2.3 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; including without limitation
(a) personal property, real estate, occupancy and water
taxes, if any, on or with respect to the Assets; (b) rent,
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) all rentals that are
or would be payable or have accrued pursuant to lease
provisions requiring lease payments based in whole or in
part upon a percentage of advertising revenue ("Percentage
Leases") and which involve periods prior to the Closing Date
(for purposes of this Section 9.2.3, the Closing Date shall
be the end of any such periods for accrual purposes); (e)
all items paid or payable on or after the Closing Date under
any obligation specifically assumed to the extent not
specifically referenced in clauses (a) - (d) above) which
are normally prorated in connection with similar
transactions. A list of Percentage Leases with the date of
expiration is attached as Exhibit 9.2.3;
9.2.4 If current payments with respect to items to be
prorated pursuant to this Section 9.2 are not ascertainable
on or before
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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
after notice by either party.
10.0 SELLER'S WARRANTIES. SELLER represents, warrants and agrees that the
following are true and correct on the date of this Agreement and will continue
to be true and correct on each day until and including the Closing as though
made on and as of each day:
10.1 ORGANIZATION. SELLER is a corporation formed under the laws of the
State of Indiana, it has complied with all laws concerning the right of the
corporation to conduct its business and is legally qualified to transact
such business. SELLER has the full corporate power and authority to own,
lease and operate its properties and conduct its business as conducted in
the places where the properties are now owned, leased or operated, by
SELLER.
10.2 AUTHORIZATION. SELLER is duly authorized to execute, deliver and
complete this Agreement.
10.3 LIABILITIES. As of the date of this Agreement, SELLER has no
knowledge of any liability, absolute or contingent, arising from or in any
way connected with the Assets, except as set out on Exhibit 10.3.
10.4 LITIGATION. To SELLER's knowledge, there is no action, proceeding,
or investigation pending or threatened against SELLER or involving any of
the Assets before any court or before any governmental department,
commission, board, agency, or instrumentality, nor does SELLER know of any
basis for any such action, proceeding or investigation which could result
in any order, injunction or decree against SELLER or involve any of the
Assets, except as set out in Exhibit 10.4.
10.5 AGREEMENTS. This Agreement will not conflict with, result in a
breach of the terms and conditions of, accelerate any provision of, or
constitute any default under any contract or agreement to which SELLER is
now, or may become a party.
10.6 TITLE OF ASSETS. SELLER has good title to all of the Assets,
including all properties, rights and interests to be conveyed, and the
Assets are subject to no mortgage, pledge, lien, charge or encumbrance of
any nature, except those encumbrances listed on Exhibit 10.7 which will be
discharged at or before the Closing.
10.7 AS-IS SALE. The Displays and Assets to be sold to BUYER have been
inspected and examined by BUYER and BUYER accepts said Displays and Assets
in
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their current condition, as-is, and without any representations by SELLER
as to their condition, design, or compliance with applicable codes.
10.8 COMPLIANCE WITH STATES' CORPORATE LAWS. SELLER has complied with all
the requirements and conditions of all applicable corporation laws, all tax
or revenue acts and all laws pertaining to the transfer of the Assets in
the states of Indiana, Kentucky and elsewhere and, if requested by BUYER
prior to Closing, will deliver to BUYER proper certified copies of
corporate resolutions authorizing negotiation and consummation of this
transaction.
10.9 LEASES. The Leases are valid and in full force and effect and permit
the continued presence of the Display in accordance with the Lease terms.
Neither SELLER, nor to SELLER's knowledge, is any lessor in default of any
Lease. All Leases are freely assignable to BUYER without consent of the
lessors or any other party. Contractual lease payments coming due on or
before Closing have been made by SELLER for all periods up to and including
Closing.
10.10 CONTRACTS. The Contracts are valid and in full force and effect.
Neither SELLER, nor to SELLER's knowledge, is any advertiser in default of
any Contract. All Contracts are freely assignable to BUYER without consent
of the advertisers or any other party.
10.11 PERMITS. SELLER has obtained all permits and other federal, state
and local authorizations necessary to allow the continued presence of the
Displays where located, except as provided on Exhibit 10.11; all applicable
fees for such permits have been paid; all such permits are valid and in
effect and to SELLER's knowledge are fully transferable to BUYER without
the consent of the issuer or any other party; neither the execution nor the
consummation of this Agreement will terminate any Permit. SELLER agrees to
reasonably cooperate with BUYER in providing necessary information to renew
any Permit expiring within one year after Closing.
10.12 BROKERS. SELLER is not a party to or in any way obligated under any
contract for payment of fees and expenses to any broker or finder in
connection with the origin, negotiation, execution or consummation of this
Agreement, and notwithstanding paragraph 15, SELLER agrees to indemnify and
hold BUYER harmless from any liability arising from this transaction from
any loss, liability or obligation incurred by BUYER by reason of a breach
of this representation.
10.13 DISCLOSURE. No representation or warranty made by SELLER in this
Agreement, nor any statement or certificate already furnished or to be
furnished by SELLER in connection with the transactions contemplated,
contain any known untrue statement of or fails to state a known material
fact.
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1. DISPLAY AND ADVERTISING FACES. There are sixty-four (64) Displays with
a total of one hundred forty (140) advertising faces being purchased by
BUYER.
2. NO CONTINUING INTEREST. Following Closing, neither SELLER nor any
officer, director, shareholder or affiliate of SELLER will have any direct,
indirect or beneficial ownership or other financial interest in any real or
personal property which is in any way involved with or related to the
operation of the Assets being purchased by BUYER except as provided on
Exhibit 10.15.
11.0 BUYER'S WARRANTIES. BUYER represents, warrants and agrees that the
following are true and correct on the date of this Agreement and will continue
to be true and correct on each day until and including the Closing as though
remade each day.
11.1 ORGANIZATION. BUYER is a corporation formed under the laws of the
State of Illinois, it has complied with laws concerning the right of the
corporation to conduct its business and is legally qualified to transact
such business. BUYER has the full corporate power and authority to own,
lease and operate its properties and conduct its business as conducted in
the places where the properties are now owned, leased or operated, by
SELLER.
11.2 AUTHORIZATION. BUYER is duly authorized to execute, deliver and
complete this Agreement.
11.3 COMPLIANCE WITH STATES' CORPORATE LAWS. BUYER will comply with all
the requirements and conditions of the Business Corporation Act ("Act"), in
the state of Illinois relative to the purchase of the Assets by the Closing
Date and, if requested by SELLER, will deliver to SELLER an Officer's
Certificate attesting to the authority of BUYER to negotiate and consummate
this transaction whether or not required by the Act.
11.4 BROKERS. BUYER is not a party to or in any way obligated under any
contract for payment of fees and expenses to any broker or finder in
connection with the origin, negotiation, execution or consummation of this
Agreement, and notwithstanding paragraph 15, BUYER agrees to indemnify and
hold SELLER harmless from any liability arising from this transaction from
any loss, liability or obligation incurred by SELLER by reason of a breach
of this representation.
12.0 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of BUYER to
close or perform is subject to the satisfaction of the following conditions, any
of which the BUYER may at its election enforce or waive:
12.1 All representations and warranties of SELLER hereunder shall be true
and correct as of the date of this Agreement and shall be true and correct
in all respects on the Closing Date with the same force as if such
representations and warranties had
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been made on the Closing Date, all agreements to be performed by SELLER on
or prior to the Closing Date shall have been fully performed, and BUYER
shall have received, if requested, a certificate dated on the Closing Date
signed by the duly authorized President or Vice-President and attested to
by the Secretary or an Assistant Secretary of SELLER to that effect.
12.2 If requested by BUYER in writing, BUYER shall have received an
original certificate of good standing for the SELLER issued by the state
of Indiana dated within five (5) days of the Closing Date; and resolutions
of the Board of Directors of SELLER, authorizing the execution, delivery
and performance of this Agreement and the Note, certified by the Secretary
or an Assistant Secretary of SELLER.
12.3 There shall not have been any material adverse change in SELLER's
Assets or conditions, financial or otherwise, including without limitation
its relationships with lessors, advertisers or others, between the date of
this Agreement, and the Closing Date. SELLER agrees to operate and maintain
its business in its regular course from the date of this Agreement to
Closing.
12.4 SELLER shall have maintained its Assets to be conveyed, including the
Displays, in at least as good condition and repair as on the date of this
Agreement and will not voluntarily suffer anything to be done that will
decrease the value of its property, ordinary wear and tear excepted.
12.5 Counsel for BUYER shall have approved the form, substance and
sufficiency of all instruments to be delivered by SELLER at or before
Closing. Approval will not be unreasonably withheld.
12.6 If SELLER cannot timely cure any defect which prevents Closing after
good faith efforts, then either party may rescind this Agreement.
12.7 SELLER shall have executed and delivered to BUYER a Noncompetition,
Nonsolicitation and Nondisclosure Agreement in the form attached as Exhibit
12.7.
12.8 SELLER shall have executed leases or otherwise conveyed to BUYER
property rights for those locations listed on Exhibit 10.15.
13. GENERAL CONDITIONS.
13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements made by the Parties to this
Agreement shall survive the consummation and/or Closing of this Agreement
and any investigation made at that time by or on behalf of either party.
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13.2 SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of SELLER and BUYER.
13.3 NOTICES. All notices shall be in writing and delivered in person or
sent by certified, registered or express mail or by facsimile:
IF FOR SELLER, ADDRESSED TO: David Mounts
Ad-Craft, Inc.
Eastside Industrial Park
P.O. Box 3872
Evansville, IN 47737-6128
Telephone: (812) 479-9660
Facsimile: (812) 479-6128
IF FOR BUYER, ADDRESSED TO: Universal Outdoor, Inc.
Paul G. Simon, Secretary
321 N. Clark St., Suite 1010
Chicago, Illinois 60610
Telephone: (312)-644-8673
Facsimile: (312)-644-8071
or such other address for either or both as is stated in a written notice given
in compliance under this clause.
13.4 HEADINGS. The various headings used in this Agreement as headings
for sections or otherwise are for convenience only and shall not be used in
interpreting the text of the section in which they appear.
13.5 PRESS RELEASES. Any press releases or other public announcement of
this transaction, other than any filing that may be required by law, shall
be first approved by BUYER.
13.6 SEVERABILITY. The invalidity of any provision of this Agreement
shall not impair the validity of any other provision. If any provision of
this Agreement is determined by a court of competent jurisdiction to be
unenforceable, that provision will be deemed severable and the Agreement
shall be enforced with that provision severed or as modified by the court
to the extent necessary to carry out the present manifest intentions of the
parties.
13.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement sets forth the
entire understanding of the parties. It may be amended, modified or
terminated only by instruments signed by the parties.
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13.8 COUNTERPARTS. This Agreement is executed in three counterparts, each
of which shall be deemed to be and shall constitute one and the same
instrument.
13.9 FEES AND COSTS. BUYER and SELLER agree that each party shall bear
its own costs and expenses, including attorneys' fees, in connection with
this transaction.
14. INDEMNIFICATION.
14.1 SELLER shall defend, indemnify and hold BUYER harmless against and in
respect of:
14.1.1 Any and all loss, damage, deficiency, or liability
from (i) any misrepresentation, breach of representation,
warranty or covenant, or nonfulfillment of any agreement on
the part of SELLER contained in this Agreement; and (ii) any
liability or obligation incurred by SELLER or arising out of
any event or circumstances occurring prior to the Closing
Date which is not assumed by BUYER; and
14.1.2 Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including
reasonable attorneys' fees, incident to sub-paragraph 14.1.1.
14.2 BUYER shall defend, indemnify and hold SELLER harmless against and in
respect of:
14.2.1 Any and all loss, damage, deficiency, or liability
from (i) any misrepresentation, breach of representation,
warranty or covenant, or nonfulfillment of any agreement on
the part of BUYER under this Agreement; (ii) any breach or
nonfulfillment of the terms by BUYER of any document
assigned to the BUYER including, without limitation, Leases
and Advertising Contracts assigned to BUYER; (iii) any
liability or obligation incurred by BUYER or arising out of
any event or circumstances involving the assets occurring on
or after the Closing Date; and
14.2.2 Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including
reasonable attorneys' fees, incident to sub-paragraph
14.2.1.
14.3 BUYER or SELLER shall, within reasonable time of its receiving notice
of a claim, give written notice to the other party of any claim for which
that party seeks indemnification under paragraphs 14.1 and 14.2, and the
indemnitor shall have the right to contest, defend, or litigate any matter
in respect of which indemnification is
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claimed. Any delay in or failure to give notice of a claim for
indemnification shall not relieve the indemnitor's obligation, except to
the extent that indemnitor can demonstrate prejudice by such delay or
failure. The indemnitor shall have the exclusive right to settle, either
before or after the initiation of litigation, any matter in respect of
which indemnification is claimed, but prior to any such settlement, written
notice of its intention to do so shall be given to the other party. In the
event the indemnitor fails promptly to defend any such claim as provided in
paragraphs 14.1 or 14.2, the other party may do so and shall then have the
right, in its sole discretion, exercised in good faith and upon the advice
of counsel, to settle, either before or after the initiation of litigation,
any matter in respect of which indemnification is claimed.
15. CORPORATE NAME. BUYER specifically agrees that it is not acquiring
any right to use the name of SELLER in the operation of the Assets purchased.
BUYER further agrees that it will cause to be removed any name identification of
the SELLER from the purchased Assets within one hundred eighty (180) days of
Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
UNIVERSAL OUTDOOR, INC. AD-CRAFT, INC.
By: /s/ Paul G. Simon By: /s/ David Mounts
---------------------------- ----------------------------
Its: Vice-President Its: Treasurer
--------------------------- ---------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND IN
THE COMPANY'S 10-Q FOR THE YEAR TO DATE, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,102
<SECURITIES> 0
<RECEIVABLES> 26,052
<ALLOWANCES> (2,123)
<INVENTORY> 621
<CURRENT-ASSETS> 37,415
<PP&E> 564,382
<DEPRECIATION> (50,907)
<TOTAL-ASSETS> 790,842
<CURRENT-LIABILITIES> 39,887
<BONDS> 450,020
0
0
<COMMON> 0
<OTHER-SE> 228,764
<TOTAL-LIABILITY-AND-EQUITY> 790,842
<SALES> 47,575
<TOTAL-REVENUES> 44,008
<CGS> 0
<TOTAL-COSTS> 35,705
<OTHER-EXPENSES> (182)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,705
<INCOME-PRETAX> (2,220)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,220)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,220)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
