<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 1997
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
UNIVERSAL OUTDOOR, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
ILLINOIS 7312 36-2827496
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation) Industrial Classification Identification No.)
Code Number)
</TABLE>
----------------
321 NORTH CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
----------------
PAUL G. SIMON
GENERAL COUNSEL
UNIVERSAL OUTDOOR HOLDINGS, INC.
321 NORTH CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
WITH COPIES TO:
<TABLE>
<S> <C>
LELAND E. HUTCHINSON STACY J. KANTER
WINSTON & STRAWN SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
35 WEST WACKER DRIVE 919 THIRD AVENUE
CHICAGO, ILLINOIS 60601 NEW YORK, NEW YORK 10022
(312) 558-5600 (212) 735-3000
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Section 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE (1) REGISTRATION FEE
<S> <C> <C>
9 3/4% Series B Senior Subordinated Exchange Notes due 2006..... $100,000,000 $30,304
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act of 1933.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED , 1997
OFFER FOR ALL OUTSTANDING
[LOGO]
9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
IN EXCHANGE FOR
9 3/4% SERIES B SENIOR SUBORDINATED EXCHANGE NOTES DUE 2006
OF
UNIVERSAL OUTDOOR, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON MARCH , 1997, UNLESS EXTENDED
--------------
Universal Outdoor, Inc., an Illinois corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (which together constitute
the "Exchange Offer"), to exchange an aggregate principal amount of up to
$100,000,000 of 9 3/4% Series B Senior Subordinated Exchange Notes Due 2006 (the
"New Notes") of the Company, which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), for a like principal amount of the
issued and outstanding 9 3/4% Series B Senior Subordinated Notes Due 2006 (the
"Old Notes" and, with the New Notes, the "Notes") of the Company from the
holders thereof. The terms of the New Notes are substantially identical
(including principal amount, interest rate, maturity, security and ranking) to
the terms of the Old Notes for which they may be exchanged pursuant to the
Exchange Offer, except that such New Notes will not contain terms with respect
to certain transfer restrictions and registration rights relating to the Old
Notes. The Old Notes were issued on December 16, 1996 pursuant to the Indenture
(as defined) and sold in an offering (the "Offering") exempt from registration
under the Securities Act.
The Notes will be redeemable for cash at the option of the Company, in whole
or in part, on or after October 15, 2001 at the redemption prices set forth
herein. Until October 15, 1999, up to $35 million aggregate principal amount of
the Notes will be redeemable, at the option of the Company, from the net
proceeds of a public equity offering or equity private placement of Universal
Outdoor Holdings, Inc., the parent of the Company ("Parent"), in each case
resulting in net proceeds of $100 million or more.
The Old Notes are, and the New Notes will be, unsecured senior subordinated
obligations of the Company and will rank PARI PASSU in right of payment with all
other unsecured senior subordinated indebtedness of the Company. The Notes will
rank PARI PASSU with the $225 million of 9 3/4% Senior Subordinated Notes due
2006 issued by the Company in October 1996 (the "October Notes"). The Notes will
be subordinated to all existing and future Senior Debt (as defined) of the
Company, including senior indebtedness under a $225 million bank credit
facility. The amount of Senior Debt outstanding at December 31, 1996, after
giving effect to the Transactions (as defined), the Offering, and the October
Offerings (as defined), would have been approximately $136.5 million.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest at the rate of 9 3/4% per annum,
payable semi-annually on April 15 and October 15 of each year, commencing April
15, 1997. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on the
Old Notes, from December 16, 1996. Accordingly, if the relevant record date for
interest payment occurs after the consummation of the Exchange Offer registered
holders of New Notes on such record date will receive interest accruing from the
most recent date to which interest has been paid or, if no interest has been
paid, from December 16, 1996. If, however, the relevant record date for interest
payment occurs prior to the consummation of the Exchange Offer, registered
holders of Old Notes on such record date will receive interest accruing from the
most recent date to which interest has been paid or, if no interest has been
paid, from December 16, 1996. Old Notes accepted for exchange will cease to
accrue interest from and after the date of consummation of the Exchange Offer,
except as set forth in the immediately preceding sentence. Holders of Old Notes
whose Old Notes are accepted for exchange will not receive any payment in
respect of interest on such Old Notes otherwise payable on any interest payment
date the record date for which occurs on or after consummation of the Exchange
Offer.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
December 16, 1996 by and among the Company and the other signatories thereto
(the "Registration Rights Agreement"). See "The Exchange Offer -- Consequences
of Exchanging Old Notes" for a discussion of the Company's belief, based on
interpretations by the staff of the Securities and Exchange Commission (the
"SEC") as set forth in no action letters issued to third parties, as to the
transferability of the New Notes upon satisfaction of certain conditions. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 180 days after the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. In the event the Company terminates the Exchange Offer and does
not accept for exchange any Old Notes, the Company will promptly return the Old
Notes to the holders thereof. See "The Exchange Offer -- Terms of the Exchange
Offer; Period for Tendering Old Notes."
There is no existing trading market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes, or the
ability of holders of the New Notes to sell their New Notes or the price at
which such holders may be able to sell their New Notes. Bear, Stearns & Co. Inc.
and BT Securities Corporation (the "Initial Purchasers") have advised the
Company that they currently intend to make a market in the New Notes. The
Initial Purchasers are not obligated to do so, however, and any market-making
with respect to the New Notes may be discontinued at any time without notices.
The Company does not intend to apply for listing or quotation of the New Notes
on any securities exchange or stock market.
HOLDERS OF OLD NOTES SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH IN
"RISK FACTORS" COMMENCING ON PAGE 13 OF THIS PROSPECTUS PRIOR TO MAKING A
DECISION WITH RESPECT TO THE EXCHANGE OFFER.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is , 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Exchange Act,
and, in accordance therewith, files periodic reports and other information with
the SEC. The Company has filed with the SEC a Registration Statement (which term
shall include all amendments thereto) on Form S-1 under the Securities Act, with
respect to the New Notes. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Statements contained in this Prospectus as
to the contents of any contract, agreement or other document referred to herein
are not necessarily complete.
With respect to each report or other information filed with the SEC pursuant
to the Exchange Act, and such contract, agreement or document filed as an
exhibit to the Registration Statement, reference is made to such exhibit for a
more complete description, and each such statement is deemed to be qualified in
all respects by such reference.
Reference is hereby made to such reports, the Registration Statement and
other information which can be inspected and copied at the public reference
facilities maintained by the SEC at Room 1025, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's Regional Offices located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may also be obtained
at prescribed rates from the Public Reference Section of the SEC at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549. The SEC maintains a World Wide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http:// www.sec.gov.
2
<PAGE>
PROPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED HEREIN, THE "COMPANY" MEANS
UNIVERSAL OUTDOOR, INC., TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES, UNLESS THE
CONTEXT OTHERWISE REQUIRES. "PARENT" REFERS TO UNIVERSAL OUTDOOR HOLDINGS, INC.
AND ITS CONSOLIDATED SUBSIDIARIES, WHICH CONSTITUTE THE OPERATING SUBSIDIARIES
OF PARENT. THE COMPANY IS A WHOLLY-OWNED SUBSIDIARY OF PARENT. UNLESS OTHERWISE
SPECIFIED, THE PROSPECTUS ASSUMES THE COMPLETION OF THE TRANSACTIONS (AS
DEFINED) SCHEDULED OR ANTICIPATED TO OCCUR. THE TERM "OCTOBER OFFERINGS" REFERS
TO THE OFFERING BY THE COMPANY OF THE OCTOBER NOTES AND THE OFFERING BY THE
PARENT OF 6.5 MILLION SHARES OF PARENT COMMON STOCK. THE "TRANSACTIONS" CONSIST
OF THE POA ACQUISITION (AS DEFINED), THE DEBT TENDER OFFERS (AS DEFINED), THE
EXECUTION OF THE NEW CREDIT FACILITY (AS DEFINED), THE MEMPHIS/TUNICA
ACQUISITION (AS DEFINED), THE REVERE ACQUISITION (AS DEFINED), THE MATTHEW
ACQUISITION (AS DEFINED) AND THE ADDITIONAL ACQUISITIONS (AS DEFINED). SEE "THE
TRANSACTIONS." "ACQUISITIONS" MEANS, COLLECTIVELY, THE POA ACQUISITION, THE
MEMPHIS/TUNICA ACQUISITION, THE REVERE ACQUISITION, THE MATTHEW ACQUISITION AND
THE ADDITIONAL ACQUISITIONS. "OPERATING CASH FLOW" HAS THE MEANING SET FORTH IN
FOOTNOTE 2 ON PAGE 11 HEREOF AND "OPERATING CASH FLOW MARGIN" HAS THE MEANING
SET FORTH IN FOOTNOTE 3 ON PAGE 11 HEREOF. THE TERM "MARKET" REFERS TO THE
GEOGRAPHIC AREA CONSTITUTING A DESIGNATED MARKET AREA AS DEFINED BY THE A.C.
NIELSON COMPANY.
THE COMPANY
The Company is a leading outdoor advertising company operating approximately
31,202 advertising display faces in three distinct regions: the Midwest
(Chicago, Minneapolis/St. Paul, Indianapolis, Milwaukee, Des Moines, Evansville
(IN) and Dallas), the Southeast (Orlando, Jacksonville, Palm Beach, Ocala and
the Atlantic Coast and Gulf Coast areas of Florida, Memphis/Tunica and
Chattanooga (TN), and Myrtle Beach (SC)) and the East Coast (New York,
Washington, D.C., Philadelphia, Northern New Jersey, Wilmington (DE), Salisbury
(MD) and Hudson Valley (NY)). After giving effect to the Acquisitions, the
Company is the third largest pure-play outdoor advertising company in the United
States on the basis of net revenues. For the year ended December 31, 1996, on a
pro forma basis the Company had net revenues and Operating Cash Flow of $176.6
million and $85.8 million, respectively, which compare favorably to the pro
forma results for the same period in 1995 of $162.8 million and $76.1 million,
respectively. The Company believes that its 1995 Operating Cash Flow Margin of
49.9%, or 46.7% on a pro forma basis after giving effect to the Acquisitions, is
among the highest in the industry.
3
<PAGE>
The Acquisitions have significantly expanded and diversified the Company's
presence into new major metropolitan markets. The following table sets forth, as
of October 31, 1996, certain information with respect to the Company's outdoor
markets after giving effect to the Acquisitions:
<TABLE>
<CAPTION>
1995 % OF 1995 TOTAL
PRO FORMA PRO FORMA 30-SHEET 8-SHEET DISPLAY
MARKET NET REVENUES NET REVENUES BULLETINS POSTERS POSTERS FACES
- ------------------------- ---------------------- ------------ --------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
MIDWEST:
Chicago................ $ 16,579 10.1% 657 -- 3,671 4,328
Minneapolis/St. Paul... 16,320 10.0 453 1,362 -- 1,815
Indianapolis........... 9,897 6.0 257 1,385 142 1,927
Milwaukee.............. 4,686 2.9 259 -- 334 593
Des Moines............. 3,141 1.9 85 590 9 684
Evansville............. 3,028 1.9 146 694 -- 840
Dallas................. 1,738 1.1 245 -- 1,205 1,450
SOUTHEAST:
Orlando................ 22,253 13.7 849 1,088 -- 1,937
Jacksonville........... 8,528 5.2 367 899 -- 1,266
Palm Beach............. 290 0.2 103 21 -- 124
Ocala.................. 5,011 3.1 858 199 -- 1,057
Memphis/Tunica......... 13,104 8.1 706 1,179 133 2,018
Chattanooga............ 4,582 2.8 359 663 -- 1,022
Myrtle Beach........... 7,931 4.9 733 466 -- 1,199
Atlantic Coast area
(FL)................. 2,784 1.7 569 -- -- 569
Gulf Coast area (FL)... 1,095 0.7 485 -- -- 485
EAST COAST:
Philadelphia........... 13,511 8.3 364 2,117 -- 2,669
Washington, D.C........ 6,289 3.9 87 587 -- 674
Salisbury.............. 3,435 2.1 402 471 -- 873
Wilmington............. 4,576 2.8 163 930 45 1,138
Baltimore.............. 2,295 1.4 -- -- -- 1,917
Mall Media............. 2,636 1.6 -- -- -- 1,582
Northern NJ............ 4,362 2.7 158 5 6 169
Metro New York......... 3,375 2.1 53 384 -- 437
Hudson Valley.......... 1,312 0.8 145 257 27 429
-------- ----- --------- -------- ------- -------
Total................ $162,758 100.0% 8,503 13,297 5,572 31,202(1)
-------- ----- --------- -------- ------- -------
-------- ----- --------- -------- ------- -------
</TABLE>
- ------------------------
(1) Includes 143 transit display faces located in Indianapolis, 188 bus shelters
in Philadelphia, 1,917 transit display faces in Baltimore and 1,582 kiosk
displays in malls throughout the United States.
4
<PAGE>
OPERATING STRATEGY
The Company's objective is to be the leading provider of outdoor advertising
services in each of its three regional operating areas and to expand its
presence in attractive new markets. The Company believes that regional clusters
provide it with significant opportunities to increase revenue and achieve cost
savings by delivering to local and national advertisers efficient access to
multiple markets or highly targeted areas. Management intends to implement the
following operating strategy:
- MAXIMIZE RATES AND OCCUPANCY. Through continued emphasis on customer
sales and service, quality displays and inventory management, the Company seeks
to maximize advertising rates and occupancy levels in each of its markets. The
Company has recruited and trained a strong local sales staff supported by local
managers operating under specific, sales-based compensation targets designed to
obtain the maximum potential from the Company's display inventory.
- INCREASE MARKET PENETRATION. The Company seeks to expand operations
within its existing markets through new construction, with an emphasis on
painted bulletins, which generally command higher rates and longer term
contracts from advertisers than other types of display faces. In addition, the
Company historically has acquired, and intends to continue to acquire,
additional advertising display faces in its existing markets as opportunities
become available.
- PURSUE STRATEGIC ACQUISITIONS. In addition to improved penetration of
its existing markets, the Company also seeks to grow by acquiring additional
advertising display faces in new, closely proximate markets. Such new markets
allow the Company to capitalize on the operating efficiencies and cross-market
sales opportunities associated with operating in multiple markets within
distinct regions. The Company intends to develop new regional operating areas in
regions where attractive growth and consolidation opportunities exist.
- CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its ability to
effectively respond to its customers' needs. The Company's continued investment
in equipment and technology provides for greater ongoing benefits in the areas
of sales, production and operation.
- MAINTAIN LOW COST STRUCTURE. Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its Operating Cash Flow
Margin, which it believes to be among the highest in the industry. The Company
believes that its centralized administration provides opportunities for
significant operating leverage from further expansion in existing markets and
from future acquisitions.
- DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other
forms of out-of-home media such as bus shelter or transit advertising in order
to enhance revenues in existing markets or provide access to new markets.
The Company believes that its experienced senior management team is an
important asset in the successful implementation of its operating strategy.
Daniel L. Simon, President and Chief Executive Officer and the founder of the
Company, has spent his entire professional career of 23 years in the outdoor
advertising business. Brian T. Clingen, Vice President and Chief Financial
Officer, and Paul G. Simon, Vice President and General Counsel, together possess
over 24 years of experience in the industry. As of October 31, 1996, this
management team has successfully completed and integrated 16 acquisitions since
1989.
RECENT ACQUISITIONS
Consistent with its operating strategy, the Company has recently acquired
the assets or capital stock of four outdoor advertising companies. The Company
believes that these acquisitions will significantly strengthen its market
presence in the midwest and southeast regions of the United States, give the
Company a substantial presence in the east coast region and allow the Company to
capitalize on the operating efficiencies and cross-market sales opportunities
associated with operating in closely proximate markets.
5
<PAGE>
THE POA ACQUISITION. The Company has acquired the outstanding capital stock
of Outdoor Advertising Holdings, Inc. ("OAH"), pursuant to a merger of OAH with
and into a subsidiary of the Company for approximately $240 million in cash (the
"POA Acquisition"). As a result of the POA Acquisition, the Company acquired a
total of approximately 6,337 advertising display faces located in five markets
in the southeast United States.
The Company believes that the POA Acquisition will substantially strengthen
the Company's operations in the southeast United States, particularly in
Florida, where the Company believes it has the largest number of outdoor
advertising display faces and the largest market share in each of its markets,
except Palm Beach. The Company believes that the southeast United States is a
particularly attractive region due to its (i) high concentration of destination
cities and resorts; (ii) above average population growth; (iii) extensive
highway/roadway systems; and (iv) temperate climate that promotes outdoor
lifestyles.
THE REVERE ACQUISITION. The Company recently acquired the outstanding
capital stock of Revere Holding Corp. ("Revere") for approximately $125 million
in cash (the "Revere Acquisition"). As a result of the Revere Acquisition, the
Company acquired a total of approximately 8,853 advertising display faces
located in markets in the east coast of the United States, including
Philadelphia, Washington D.C., Wilmington and Salisbury, as well as 1,917
transit display faces located in Baltimore and 1,582 kiosk displays located in
malls throughout the United States.
THE MEMPHIS/TUNICA ACQUISITION. The Company, through a newly-formed
subsidiary, acquired certain assets located in and around Memphis, Tennessee and
Tunica County, Mississippi (the "Memphis/ Tunica Acquisition"). The purchase
price of the Memphis/Tunica Acquisition was approximately $71 million plus
100,000 shares of Common Stock of Parent. As a result of the Memphis/Tunica
Acquisition, the Company acquired a total of approximately 2,018 advertising
display faces located in and around Memphis, Tennessee. A significant number of
these display faces were previously owned by Naegele (as defined).
The Company believes that the Memphis/Tunica Acquisition will complement the
Chattanooga operations which were acquired by the Company in the POA
Acquisition. This gives the Company a leading presence in two of the largest
markets in Tennessee and strengthens its presence in the southeast United
States.
THE MATTHEW ACQUISITION. Pursuant to the Asset Purchase Agreement between
Matthew Outdoor Advertising Acquisition Co. L.P. ("Matthew") and Matthew
Acquisition Corporation, a wholly-owned subsidiary of the Company ("Matthew
Acquisition Corp."), the Company recently acquired certain assets of Matthew for
approximately $40 million in cash and assumption by the Company of certain
liabilities of Matthew (the "Matthew Acquisition"). As a result of the Matthew
Acquisition 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.
THE ADDITIONAL ACQUISITIONS. The Company has acquired certain assets of (i)
Iowa Outdoor Displays for approximately $1.8 million in cash (the "Iowa
Acquisition") and (ii) The Chase Company for approximately $5.8 million in cash
(the "Dallas Acquisition," and together with the Iowa Acquisition, the
"Additional Acquisitions"). As a result of the Additional Acquisitions, the
Company acquired approximately 160 advertising display faces consisting
primarily of posters in and around Des Moines and approximately 245 advertising
display faces consisting primarily of bulletins in and around Dallas.
The Company believes that the Additional Acquisitions will further enhance
the Company's current presence in each of its Des Moines and Dallas markets and
provide increased revenue opportunities in its Midwest market cluster. See "The
Transactions" and "Description of Indebtedness and Other Commitments -- New
Credit Facility."
6
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered.............. Up to $100,000,000 aggregate principal amount of 9 3/4%
Series B Senior Subordinated Exchange Notes due 2006 which
have been registered under the Securities Act. The form
and terms of the New Notes are substantially identical
(including principal amount, interest rate, maturity,
security and ranking) to the Old Notes for which they may
be exchanged pursuant to the Exchange Offer, except that
the New Notes will not contain terms with respect to
certain transfer restrictions and registration rights
relating to the Old Notes. See The "Exchange Offer --
Consequences of Exchanging Old Notes."
The Exchange Offer.............. The New Notes are being offered in exchange for up to
$100,000,000 aggregate principal amount of the Company's
outstanding 9 3/4% Series B Senior Subordinated Notes due
2006 that were issued and sold in a transaction exempt
from registration under the Securities Act. The Old Notes
were sold by the Company on December 16, 1996 to Bear
Stearns & Co. Inc. and BT Securities Corporation as
initial purchasers (the "Initial Purchasers") pursuant to
a purchase agreement dated December 11, 1996 between the
Company and the Initial Purchasers (the "Purchase
Agreement"). The Initial Purchasers subsequently placed
the Old Notes with certain institutional and accredited
investors at a price of 101.5% of the principal amount
thereof. Pursuant to the Purchase Agreement, the Company
and the Initial Purchasers entered into a Registration
Rights Agreement dated December 16, 1996 (the
"Registration Rights Agreement") which grants the holders
of Old Notes certain exchange and registration rights. See
"Description of Notes -- Exchange Offer; Registration
Rights; Liquidated Damages." This Exchange Offer is
intended to satisfy obligations of the Company contained
in the Registration Rights Agreement.
Minimum Condition............... The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Old Notes being tendered or
accepted for exchange.
Expiration Date................. The Exchange Offer will expire at 5:00 p.m., New York City
time, on March , 1997, or such later date and time to
which it is extended by the Company in its sole
discretion.
Conditions to the Exchange
Offer......................... The obligation of the Company to consummate the Exchange
Offer is subject to certain conditions. See "The Exchange
Offer -- Certain Conditions to the Exchange Offer." The
Company reserves the right to terminate or amend the
Exchange Offer at any time prior to the Expiration Date
upon the occurrence of any such condition.
Procedures for Tendering Old
Notes......................... See "The Exchange Offer -- Procedures for Tendering Old
Notes."
Withdrawal Rights............... Tenders of Old Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date. Any
Old Notes not accepted for any reason will be returned
without expense to the tendering holders thereof as
promptly as practicable after the expiration or
termination of the Exchange Offer.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Federal Income Tax
Consequences.................. The exchange of Old Notes for New Notes by tendering
holders will not be a taxable exchange for federal income
tax purposes, and such holders should not recognize any
taxable gain or loss or any interest income as a result of
such exchange. See "Certain United States Federal Income
Tax Consequences."
Use of Proceeds................. There will be no proceeds to the Company from the exchange
pursuant to the Exchange Offer.
</TABLE>
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register Old Notes under the Securities Act. See "Description of Notes
- -- Exchange Offer; Registration Rights; Liquidated Damages." Based on
interpretations by the staff of the SEC, as set forth in no-action letters
issued to third parties, the Company believes that New Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
or otherwise transferred by holders thereof (other than any holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such New Notes. However, the
Company does not intend to request the SEC to consider, and the SEC has not
considered, the Exchange Offer in the context of a no-action letter and there
can be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offer as in such other circumstances. Each holder,
other than a broker-dealer, must acknowledge that it is not engaged in, and does
not intend to engage in, a distribution of New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes must
acknowledge that such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities and that it will deliver
a prospectus in connection with any resale of such New Notes. See "Plan of
Distribution." In addition, to comply with state securities laws, the New Notes
may not be offered or sold in any state unless they have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and is complied with. The offer and sale of the New
Notes to "qualified institutional buyers" (as such term is defined under Rule
144A of the Securities Act) is generally exempt from registration or
qualification under state securities laws. The Company currently does not intend
to register or qualify the sale of the New Notes in any state where an exemption
from registration or qualification is required and not available. See "The
Exchange Offer -- Consequences of Exchanging Old Notes" and "Description of
Notes -- Exchange Offer; Registration Rights; Liquidated Damages."
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are substantially identical in
all material respects, except for certain transfer restrictions and registration
rights relating to the Old Notes. The New Notes will bear interest from the most
recent date to which interest has been paid on the Old Notes or, if no interest
has been paid on the Old Notes, from December 16, 1996. Accordingly, if the
relevant record date for interest payment occurs after the consummation of the
Exchange Offer registered holders of New Notes on such record date will receive
interest accruing from the most recent date to which interest has been paid or,
if no interest has been paid, from December 16, 1996. If, however, the relevant
record date for interest payment occurs prior to the consummation of the
Exchange Offer registered holders of Old Notes on such
8
<PAGE>
record date will receive interest accruing from the most recent date to which
interest has been paid or, if no interest has been paid, from December 16, 1996.
Old Notes accepted for exchange will cease to accrue interest from and after the
date of consummation of the Exchange Offer, except as set forth in the
immediately preceding sentence. Holders of Old Notes whose Old Notes are
accepted for exchange will not receive any payment in respect of interest on
such Old Notes otherwise payable on any interest payment date the record date
for which occurs on or after consummation of the Exchange Offer.
<TABLE>
<S> <C>
Securities Offered.............. Up to $100,000,000 aggregate principal amount of 9 3/4%
Series B Senior Subordinated Exchange Notes due 2006 that
have been registered under the Securities Act.
Maturity Date................... October 15, 2006.
Interest Payment Dates.......... April 15 and October 15 of each year, commencing April 15,
1997.
Ranking......................... The Notes will be unsecured senior subordinated
obligations of the Company and will rank PARI PASSU in
right of payment with all other unsecured senior
subordinated indebtedness of the Company. The Notes will
rank PARI PASSU with the October Notes. The Notes will be
subordinated to all existing and future Senior Debt (as
defined) of the Company, including senior indebtedness
under the New Credit Facility. The Company will have the
ability, subject to meeting certain financial ratios, to
incur additional Indebtedness (as defined), including
Senior Debt.
Mandatory Redemption............ The Company is not required to make mandatory redemption
or sinking fund payments prior to the maturity of the
Notes.
Optional Redemption............. The Notes will be redeemable at the option of the Company,
in whole or in part, at any time on or after October 15,
2001 at the redemption prices set forth herein plus
accrued and unpaid interest, if any, thereon to the date
of redemption. Until October 15, 1999, up to $35 million
aggregate principal amount of the Notes will be redeemable
at the option of the Company from the net proceeds of a
public equity offering or equity private placement by
Parent, in each case resulting in net cash proceeds of
$100 million or more, at 110% of the principal amount plus
accrued and unpaid interest, if any, thereon to the date
of redemption. See "Description of Notes -- Optional
Redemption."
Change of Control............... Upon a Change of Control (as defined), holders of the
Notes will have the right to require the Company to
purchase any or all of the Notes at a purchase price equal
to 101% of the aggregate principal amount of the Notes
plus accrued and unpaid interest thereon, if any, to the
date of purchase. See "Description of Notes -- Certain
Covenants -- Repurchase of Notes at the Option of the
Holder upon a Change of Control."
Certain Covenants............... The indenture governing the Notes (the "Indenture")
contains covenants restricting or limiting the ability of
the Company and its Subsidiaries (which term, as defined
in the Indenture, does not include any Unrestricted
Subsidiaries) to, among other things, (i) pay dividends or
make other restricted payments, (ii) incur additional
indebtedness or issue certain redeemable stock, (iii)
create liens, (iv) create dividend or other payment
restrictions affecting Subsidiaries, (v) enter into
mergers or consolidations or make sales of all or
substantially all assets of the Company, and (vi) enter
into transactions with affiliates. In addition, in the
event
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
of certain Asset Sales (as defined), the Company will be
required to use the proceeds to reinvest in the Company's
business, to repay certain debt or to offer to purchase
Notes at 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of
purchase. See "Description of Notes -- Certain Covenants."
Use of Proceeds................. The Company will not receive any proceeds from the
Exchange Offer. The net proceeds to the Company of the
Offering were approximately $98,000,000 after deducting
estimated discounts to the Initial Purchasers and
commissions and expenses. The Company used the net
proceeds of the Offering to finance a portion of the
purchase price payable in connection with certain of the
Acquisitions.
</TABLE>
RISK FACTORS
Prospective holders of New Notes should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate the
specific factors set forth under "Risk Factors" before making a decision to
tender their Old Notes in the Exchange Offer.
RECENT DEVELOPMENTS
In February 1997, the Company agreed to acquire the stock of Penn-Baltimore,
Inc. ("Penn") in Baltimore (MD) from Lamar Advertising Company ("Lamar"). Such
acquisition (the "Penn Acquisition") will be consummated upon the consummation
of Lamar's acquisition of Penn. When the Penn Acquisition is completed, the
Company will acquire approximately 1,450 advertising display faces in the
Baltimore metropolitan area for $46.5 million in cash.
10
<PAGE>
SUMMARY PRO FORMA FINANCIAL INFORMATION
The following sets forth summary unaudited combined pro forma financial
information derived from the information contained under the caption "Pro Forma
Financial Information" elsewhere in this Prospectus. The summary unaudited pro
forma combined statement of operations for the year ended December 31, 1996 give
effect to (i) the Transactions, (ii) the Offering and the October Offerings and
the application of the estimated net proceeds therefrom, (iii) the acquisitions
of NOA Holding Company ("Naegele"), Ad-Sign, Inc., Image Media, Inc. and
consummation of the IPO (as hereafter defined) and the application of the
estimated net proceeds therefrom, and (iv) the net reduction in operating
expenses of the businesses acquired as if each had occurred at the beginning of
the respective periods. The summary unaudited pro forma combined balance sheet
as of December 31, 1996 has been prepared as if the Memphis/Tunica Acquisition
and Matthew Acquisition had occurred on December 31, 1996.
The summary unaudited combined pro forma financial information does not
purport to present the actual financial position or results of operations of the
Company had the transactions and events assumed therein in fact occurred on the
dates specified, nor are they necessarily indicative of the results of
operations that may be achieved in the future. The summary unaudited pro forma
combined financial information is based on certain assumptions and adjustments
described in the notes contained in "Pro Forma Financial Information" and should
be read in conjunction therewith. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition," the Consolidated Financial
Statements and the Notes thereto of the Company, the Consolidated Financial
Statements and the Notes thereto of NOA Holding Company, the Statement of
Revenues and Direct Expenses and the Notes thereto of Ad-Sign, the Financial
Statements and Notes thereto of POA Acquisition Corporation, and the
Consolidated Financial Statements and Notes thereto of Revere Holding Corp.
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED
DECEMBER 31, 1996
---------------------
(DOLLARS IN
THOUSANDS)
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(1)........................................................................... $ 176,611
Direct cost of revenues................................................................... 69,988
General and administrative expenses....................................................... 20,796
Depreciation and amortization............................................................. 50,818
Operating income.......................................................................... 35,009
Interest expense.......................................................................... 44,235
Other expense (income).................................................................... 1,811
Income (loss) before income taxes and extraordinary items................................. (11,037)
OTHER DATA:
Operating Cash Flow(2).................................................................... $ 85,827
Operating Cash Flow Margin(3)............................................................. 48.6%
Deficiency in earnings to cover fixed charges............................................. 11,037
Ratio of total indebtedness to Operating Cash Flow(4)..................................... 5.38
Ratio of Operating Cash Flow to total interest(5)......................................... 1.9
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------
PRO FORMA
ACTUAL AS ADJUSTED
----------------- -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................................... $ 17,981 $ 22,220
Total assets............................................................. 681,301 797,582
Total long-term debt..................................................... 347,941 461,641
Common stockholders' equity.............................................. 230,984 233,484
</TABLE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) "Operating Cash Flow" is operating income before depreciation and
amortization and other noncash charges. Operating Cash Flow is not intended
to represent net cash flow provided by operating activities as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income (loss) as an indicator of the Company's operating
performance or to net cash provided by operating activities as a measure of
liquidity. The Company believes Operating Cash Flow is a measure commonly
reported and widely used by analysts, investors and other interested parties
in the media industry. Accordingly, this information has been disclosed
herein to permit a more complete comparative analysis of the Company's
operating performance relative to other companies in the media industry.
(3) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
(4) Amounts represent (i) total long-term debt divided by (ii) Operating Cash
Flow.
(5) Amounts represent the ratio of (i) Operating Cash Flow (ii) interest expense
on funded debt.
11
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues.............................................. $ 21,435 $ 27,896 $ 28,710 $ 33,180 $ 38,101 $ 84,939
Net revenues(1)............................................. 18,835 24,681 25,847 29,766 34,148 76,138
Direct advertising expenses................................. 7,638 10,383 10,901 11,806 12,864 26,468
General and administrative expenses......................... 3,515 3,530 3,357 3,873 4,244 10,596
Depreciation and amortization............................... 5,530 7,817 8,000 7,310 7,402 18,286
Operating income............................................ 2,152 2,951 3,589 6,777 9,638 20,788
Interest expense............................................ 6,599 9,591 8,965 8,314 8,627 15,730
Income (loss) before extraordinary items(2)................. (4,500) (6,349) (5,727) (1,671) 969 3,660
Income (loss) before income tax............................. (4,500) (6,349) (8,987) (1,671) 969 (10,788)
OTHER DATA:
Operating Cash Flow(3)...................................... $ 7,682 $ 10,768 $ 11,589 $ 14,087 $ 17,040 $ 39,074
Operating Cash Flow Margin(4)............................... 40.8% 43.6% 44.8% 47.3% 49.9% 51.3%
Capital expenditures........................................ 2,047 2,352 2,004 4,668 5,620 6,987
Deficiency in earnings to cover fixed charges............... 4,500 6,349 8,987 1,671 -- --
FINANCIAL RATIOS:
Ratio of earnings to fixed charges(5)....................... -- -- -- -- 1.1x 1.2x
Percentage of indebtedness to total capitalization(6)....... 121.4% 142.8% 116.1% 118.1% 115.8% 60.1%
Ratio of total indebtedness to Operating Cash Flow(7)....... 8.5x 5.5x 5.9x 5.2x 4.5x NM(8)
Ratio of Operating Cash Flow to total interest(9)........... 1.2x 1.1x 1.3x 1.7x 2.0x 2.5x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------
PRO FORMA
ACTUAL AS ADJUSTED(11)
--------- ---------------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital................................................................. $ 17,981 $ 22,220
Total assets.................................................................... 681,301 797,582
Total long-term debt(10)........................................................ 347,941 461,641
Common stockholders' equity..................................................... 230,984 233,484
</TABLE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary loss represents loss on early extinguishment of debt.
(3) "Operating Cash Flow" is operating income before depreciation and
amortization and other non cash charges. Operating Cash Flow is not intended
to represent net cash provided by operating activities as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income (loss) as an indicator of the Company's operating
performance or to net cash provided by operating activities as a measure of
liquidity. The Company believes Operating Cash Flow is a measure commonly
reported and widely used by analysts, investors and other interested parties
in the media industry. Accordingly, this information has been disclosed
herein to permit a more complete comparative analysis of the Company's
operating performance relative to other companies in the media industry.
(4) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
(5) Amounts represent the ratio of (i) the sum of income before income taxes
and extraordinary items plus interest expense to (ii) interest expense on
total long-term debt.
(6) Amounts represent (i) total long-term debt divided by (ii) total long-term
debt plus common stockholders' equity (deficit).
(7) Amounts represent (i) total long-term debt divided by (ii) Operating Cash
Flow.
(8) Ratio of total indebtedness to Operating Cash Flow for the year ended
December 31, 1996 is not meaningful as a result of significant acquisitions
during 1996.
(9) Amounts represent the ratio of (i) Operating Cash Flow to (ii) interest
expense on total long-term debt.
(10) Long-term debt does not include current maturities.
(11) Represents actual amounts to give effect to the Memphis/Tunica and Matthew
Acquisitions.
12
<PAGE>
RISK FACTORS
IN ADDITION TO OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS, BEFORE TENDERING THEIR OLD NOTES FOR THE NEW NOTES OFFERED
HEREBY, HOLDERS OF OLD NOTES SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS,
WHICH MAY BE GENERALLY APPLICABLE TO THE OLD NOTES AS WELL AS THE NEW NOTES:
CONSEQUENCES OF FAILURE TO EXCHANGE AND REQUIREMENTS FOR TRANSFER OF NEW
NOTES. Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register Old Notes under the Securities Act. Based on interpretations by
the staff of the SEC, as set forth in no-action letters issued to third parties,
the Company believes that New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold or otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such New Notes. However, the
Company does not intend to request the SEC to consider, and the SEC has not
considered, the Exchange Offer in the context of a no-action letter and there
can be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offer as in such other circumstances. Each holder,
other than a broker-dealer, must acknowledge that it is not engaged in, and does
not intend to engage in, a distribution of New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If any holder is an
affiliate of the Company, is engaged in or intends to engage in or has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on
the applicable interpretations of the staff of the SEC and (ii) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution." However, to comply with state securities laws, the New
Notes may not be offered or sold in any state unless they have been registered
or qualified for sale in such state or an exemption from registration or
qualification is available and is met. The offer and sale of the New Notes to
"qualified institutional buyers" (as such term is defined under Rule 144A of the
Securities Act) is generally exempt from registration or qualification under
state securities laws. The Company currently does not intend to register or
qualify the sale of the New Notes in any state where an exemption from
registration or qualification is required and not available. See "The Exchange
Offer -- Consequences of Exchanging Old Notes."
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS. The Company has
substantial indebtedness. On a pro forma basis after giving effect to the
Acquisitions and indebtedness incurred as a result of the Acquisitions, the
October Offerings and the issuance of the Notes as of December 31, 1996, the
Company's total long-term debt was approximately $461.6 million, interest
expense was approximately $44.2 million, or 25.0% of net revenues. The Company's
level of consolidated indebtedness could have important consequences to the
holders of the Notes, including the following: (i) a substantial portion of the
13
<PAGE>
Company's cash flow from operations must be dedicated to the payment of the
principal of and interest on its indebtedness and will not be available for
other purposes; (ii) the ability of the Company to obtain financing in the
future for working capital needs, capital expenditures, acquisitions,
investments, general corporate purposes or other purposes may be materially
limited or impaired; and (iii) the Company's level of indebtedness may reduce
the Company's flexibility to respond to changing business and economic
conditions. Subject to certain limitations contained in its outstanding debt
instruments and the Notes, the Company or its subsidiaries may incur additional
indebtedness to finance working capital or capital expenditures, investments or
acquisitions or for other purposes. See "Description of Indebtedness and Other
Commitments" and "Description of Notes." Although historically the Company's
Operating Cash Flow has been sufficient to service its fixed charges, there can
be no assurance that the Company's Operating Cash Flow will continue to exceed
its fixed charges. A decline in Operating Cash Flow could impair the Company's
ability to meet its obligations, including for debt service, and to make
scheduled principal repayments. See "Selected Consolidated Financial and
Operating Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
ACQUISITION STRATEGY. The Company's growth has been facilitated by
strategic acquisitions that have substantially increased the Company's inventory
of advertising display faces. One element of the Company's operating strategy is
to make acquisitions in new and existing markets. While the Company believes
that the outdoor advertising industry is highly fragmented and that significant
acquisition opportunities are available, there can be no assurance that suitable
acquisition candidates can be found. The Company is likely to face competition
from other outdoor advertising and media companies for acquisition opportunities
that are available. In addition, if the prices sought by sellers of outdoor
advertising display faces and companies continue to rise, the Company may find
fewer acceptable acquisition opportunities. There can be no assurance that the
Company will have sufficient capital resources to complete acquisitions or that
acquisitions can be completed on terms acceptable to the Company. Also, in the
Minneapolis/St. Paul market, the Company is subject to a consent judgment that
restricts the Company's ability to purchase outdoor advertising display faces
until February 1, 2001. See "Business -- Government Regulation." As part of its
regular on-going evaluation of strategic acquisition opportunities, the Company
may from time to time engage in discussions concerning possible acquisitions,
some of which may be material in size. The purchase price of such acquisitions
may require additional debt or equity financing on the part of the Company.
THE ACQUISITIONS; CHALLENGES OF INTEGRATION. The Company will face
significant challenges in integrating the operations acquired in connection with
the Acquisitions with those of the Company, particularly in geographic regions
where the Company has not previously operated. The Company has never integrated
an acquisition the size of the POA Acquisition or the Revere Acquisition.
Integration of such operations will require substantial attention from the
Company's management. Diversion of management attention from the Company's
existing business could have an adverse impact on the revenues and operating
results of the Company. There can be no assurance the Company will be able to
integrate such operations successfully.
TOBACCO INDUSTRY REGULATION. On a pro forma basis taking into account the
Acquisitions, approximately 10.8% of the Company's net revenues in 1995 were
derived from tobacco advertising. In August 1996, the U.S. Food and Drug
Administration issued final regulations governing certain marketing practices in
the tobacco industry. Among other things, the regulations prohibit tobacco
product billboard advertisements within 1,000 feet of schools and playgrounds
and require that tobacco product advertisements on billboards be in black and
white and contain only text. In addition, one major tobacco manufacturer
recently proposed federal legislation banning 8-sheet billboard advertising and
transit advertising of tobacco products. There can be no assurance as to the
effect of these regulations or this legislation on the Company's business and on
its net revenues, Operating Cash Flow and financial position. A reduction in
billboard advertising by the tobacco industry could cause an immediate reduction
in the Company's direct revenue from such advertisers and would simultaneously
increase the available space on the existing inventory of billboards in the
outdoor advertising industry. This could in turn result in a lowering of rates
throughout the industry or limit the ability of industry participants to
increase rates for
14
<PAGE>
some period of time. Any such consequence could have the effect of reducing the
Company's Operating Cash Flow, which could in turn reduce the Company's ability
to meet its financial obligations under the Indenture, the indenture governing
the October Notes and the New Credit Facility (as defined in "The
Transactions"). See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business -- Customers" and "Business --
Government Regulation."
PRIOR PERIOD LOSSES. The Company has historically had net losses which have
resulted in significant part from substantial depreciation and amortization
expenses relating to assets purchased in the Company's acquisitions, interest
expense associated with related indebtedness and deferred financing costs
charged to extraordinary losses. Moreover, additional acquisitions will result
in increased depreciation, amortization and interest expenses. There can be no
assurance that the Company will generate net income in the future.
RESTRICTIONS IMPOSED BY THE COMPANY'S INDEBTEDNESS. The banks under the New
Credit Facility have a lien on substantially all of the assets of the Company,
including the capital stock of its subsidiaries, to secure the indebtedness of
the Company under such credit facility. In the event the Company's subsidiaries
merge with and into the Company, the banks will have a lien on substantially all
of the assets of the Company previously held by such subsidiaries. The Company's
debt instruments contain restrictions on the Company's ability to incur
additional indebtedness, create liens, pay dividends, sell assets and make
acquisitions. Furthermore, the New Credit Facility contains certain maintenance
tests. There can be no assurance that the Company and its subsidiaries will be
able to comply with the provisions of their respective debt instruments,
including compliance by the Company with the financial ratios and tests
contained in the New Credit Facility. Breach of any of these covenants or the
failure to fulfill the obligations thereunder and the lapse of any applicable
grace periods would result in an event of default under the applicable debt
instruments, and the holders of such indebtedness could declare all amounts
outstanding under the applicable instruments to be due and payable immediately.
There can be no assurance that the assets or cash flow of the Company or the
Company's subsidiaries, as the case may be, would be sufficient to repay in full
borrowings under their outstanding debt instruments whether upon maturity or
earlier or if such indebtedness were to be accelerated upon an event of default
or certain repurchase events or that the Company would be able to refinance or
restructure its payments on such indebtedness or repurchase the Notes or the
October Notes. If such indebtedness were not so repaid, refinanced or
restructured, the lenders could proceed to realize on their collateral. In
addition, any event of default or declaration of acceleration under one debt
instrument could also result in an event of default under one or more of the
Company's other debt instruments. See "-- Substantial Leverage; Ability to
Service Indebtedness" and "Description of Indebtedness and Other Commitments."
SUBORDINATION OF NOTES. The Notes will be unsecured and subordinated to the
prior right of payment of all existing and future Senior Debt of the Company,
including obligations under the New Credit Facility. The Notes will rank PARI
PASSU with the October Notes. Subject to certain limitations, the Indenture will
permit the Company to incur additional indebtedness, including Senior Debt. See
"Description of Notes -- Certain Covenants -- Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock." In addition, the
indebtedness under the New Credit Facility will become due prior to the maturity
of the Notes. As a result of the subordination provisions contained in the
Indenture, in the event of a liquidation or insolvency, the assets of the
Company will be available to pay obligations on the Notes and the October Notes
only after all Senior Debt has been paid in full, and there may not be
sufficient assets remaining to pay amounts due on any or all of the Notes and
the October Notes then outstanding. See "Description of Indebtedness and Other
Commitments" and "Description of Notes."
REGULATION OF OUTDOOR ADVERTISING. Outdoor advertising displays are subject
to governmental regulation at the federal, state and local levels. These
regulations, in some cases, limit the height, size, location and operation of
billboards and, in limited circumstances, regulate the content of the
advertising copy displayed on the billboards. Some governmental regulations
prohibit the construction of new billboards or the replacement, relocation,
enlargement or upgrading of existing structures. Some cities have adopted
amortization ordinances under which, after the expiration of a specified period
of time, billboards must be
15
<PAGE>
removed at the owner's expense and without the payment of compensation.
Ordinances requiring the removal of a billboard without compensation, whether
through amortization or otherwise, are being challenged in various state and
federal courts with conflicting results. Other than in the Company's newly
acquired Jacksonville market, amortization ordinances have not materially
affected operations in the Company's markets. As a result of a settlement of
litigation related to certain assets in the Jacksonville market prior to their
acquisition, the Company has removed 165 outdoor advertising structures in 1995
and is required to remove an additional 546 (of its total of 1,493) outdoor
advertising structures over the next 19 years with 317 of such structures to be
removed between 1995 and 1998. There can be no assurance that these removals
will not adversely affect the Company's results of operations. In addition, no
assurance can be given as to the effect on the Company of existing laws and
regulations or of new laws and regulations that may be adopted in the future.
See "-- Tobacco Industry Regulation" and "Business -- Customers" and "Business
- -- Government Regulation."
ECONOMIC CONDITIONS; ADVERTISING TRENDS. The Company relies on sales of
advertising space for its revenues and its operating results therefore are
affected by general economic conditions as well as trends in the advertising
industry. A reduction in advertising expenditures available for the Company's
displays could result from a general decline in economic conditions, a decline
in economic conditions in particular markets where the Company conducts business
or a reallocation of advertising expenditures to other available media by
significant users of the Company's displays.
COMPETITION. The Company faces competition for advertising revenues from
other outdoor advertising companies, as well as from other media such as radio,
television, print media and direct mail marketing. The Company also competes
with a wide variety of other out-of-home advertising media, the range and
diversity of which has increased substantially over the past several years,
including advertising displays in shopping centers and malls, airports,
stadiums, movie theaters and supermarkets, and on taxis, trains, buses and
subways. Some of the Company's competitors are substantially larger, better
capitalized and have access to greater resources than the Company. There can be
no assurance that outdoor advertising media will be able to compete with other
types of media, or that the Company will be able to compete either within the
outdoor advertising industry or with other media. See "Business -- Competition."
LITIGATION. The Company, as the successor to POA Acquisition Company
("POA"), is a defendant in a case entitled IMPACT COMMUNICATIONS OF CENTRAL
FLORIDA, INC., ET. AL. vs. NATIONAL OUTDOOR ADVERTISING, ET. AL. pending in the
United States District Court, Middle District of Florida. Impact Communications
has alleged that POA, among others, conspired to restrain trade and to
monopolize the market for leases for land on which outdoor advertising
structures can be erected. The case has been set for trial in February 1997. The
plaintiffs have alleged that the acts of the defendants resulted in harm to the
plaintiffs and damages of $4 to 12 million, which could be trebled under the
applicable laws. The Company intends to defend the case vigorously. There can be
no assurance, however, as to the ultimate outcome of this litigation.
RELIANCE ON KEY EXECUTIVES. The Company's success depends to a significant
extent upon the continued services of its executive officers and other key
management and sales personnel, in particular its President and Chief Executive
Officer, Daniel L. Simon. Although the Company believes it has incentive and
compensation programs designed to retain key employees, the Company has few
employment contracts with its employees, and very few of its employees are bound
by non-competition agreements. The Company maintains key man insurance on Daniel
L. Simon. The unavailability of the continuing services of its executive
officers and other key management and sales personnel could have a material
adverse effect on the Company's business. See "Management."
ABSENCE OF PUBLIC MARKET. There is currently no established trading market
for the Notes and the Company does not intend to list the Notes on any
securities exchange. The Old Notes are eligible for trading in the PORTAL market
of the National Association of Securities Dealers, Inc. The Company has been
advised that the Initial Purchasers currently intend to make a market in the
Notes (and, if issued, the New Notes (as defined) ), but they are not obligated
to do so and may discontinue any such market making
16
<PAGE>
at any time without notice. In addition, such market making activity in the
Notes may be limited during the pendency of the Exchange Offer. See "Description
of Notes -- Exchange Offer; Registration Rights; Liquidated Damages" and "Plan
of Distribution." There can be no assurance that an active trading market will
develop for, or as to the liquidity of, the Notes.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Prospectus contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this Prospectus, the words
"anticipate," "believe," "estimate," and "expect" and similar expressions as
they relate to the Company or 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, these forward-looking statements. Factors that could cause or contribute to
such differences include those discussed in "Risk Factors."
THE TRANSACTIONS
THE ACQUISITIONS
THE POA ACQUISITION. On August 27, 1996, the Company entered into the
Agreement and Plan of Merger pursuant to which it agreed to acquire the
outstanding capital stock of OAH for approximately $240 million in cash. The POA
Acquisition was effectuated pursuant to a merger of a subsidiary of the Company
with and into OAH with OAH continuing as the surviving corporation following the
merger. As a result of the POA Acquisition, the Company acquired a total of
approximately 6,337 advertising display faces consisting of bulletins and
posters in five markets located in the southeast United States, including
Orlando, Ocala, Palm Beach, Myrtle Beach and Chattanooga, as well as the
Atlantic Coast and Gulf Coast areas of Florida.
The Company believes that the POA Acquisition will substantially strengthen
its operations in the southeast United States, particularly in Florida, where
the Company believes it has the largest number of outdoor advertising display
faces and the largest market share in each of its markets, except Palm Beach.
The Company believes that the southeast United States is a particularly
attractive region due to its (i) high concentration of destination cities and
resorts; (ii) above average population growth; (iii) extensive highway/roadway
systems; and (iv) temperate climate that promotes outdoor lifestyles.
THE REVERE ACQUISITION. The Company acquired the outstanding capital stock
of Revere for approximately $125 million in cash. As a result of the Revere
Acquisition, the Company acquired a total of approximately 8,853 advertising
display faces located in four markets in the northeast United States.
THE MEMPHIS/TUNICA ACQUISITION. On September 12, 1996, the Company entered
into the Option and Asset Purchase Agreement with Tanner-Peck, L.L.C., TOA
Enterprises, L.P., William B. Tanner, WBT Outdoor, Inc. and The Weatherley
Tanner Trust (collectively, the "Memphis/Tunica Sellers") pursuant to which a
newly-formed subsidiary of the Company acquired the Memphis/Tunica Option which
gave it the option to purchase certain assets of the Memphis/Tunica Sellers. The
Company exercised the Memphis/ Tunica Option and the acquisition closed on
January 2, 1997. The purchase price in connection with the purchase of the
assets was approximately $71 million, including $5 million previously paid in
connection with the Memphis/Tunica Option, plus 100,000 shares of Common Stock
of Parent.
As a result of the Memphis/Tunica Acquisition, the Company acquired a total
of approximately 2,018 advertising display faces consisting of bulletins and
posters in and around Memphis, Tennessee and Tunica County, Mississippi. A
significant portion of these display faces were purchased by the Memphis/Tunica
Sellers from Naegele in November, 1995. The Company believes that the
Memphis/Tunica Acquisition will complement the Chattanooga operations which are
being acquired by the Company in the POA Acquisition. This will give the Company
a leading presence in two of the largest markets in Tennessee and strengthen its
presence in the southeast United States.
17
<PAGE>
THE MATTHEW ACQUISITION. In mid-January, 1997, Matthew Acquisition Corp.
acquired certain assets of Matthew for approximately $40 million in cash and the
assumption by the Company of certain liabilities of Matthew. As a result of the
Matthew Acquisition, the Company acquired a total of approximately 1,035
advertising display faces located in three markets in the northeast United
States.
THE ADDITIONAL ACQUISITIONS. On September 12, 1996, the Company entered
into the Asset Purchase Agreement with Iowa Outdoor Displays pursuant to which
the Company agreed to purchase certain assets of Iowa Outdoor Displays for
approximately $1.8 million in cash. The Iowa Acquisition was consummated on
September 16, 1996. On September 11, 1996, the Company entered into the Asset
Purchase Agreement with The Chase Company pursuant to which the Company agreed
to purchase certain assets of The Chase Company for approximately $5.8 million
in cash. The Dallas Acquisition was consummated on September 19, 1996.
As a result of the Additional Acquisitions, the Company acquired
approximately 160 advertising display faces consisting primarily of posters in
and around Des Moines and approximately 245 advertising display faces consisting
primarily of bulletins in and around Dallas. The Company believes that the
Additional Acquisitions will further enhance its current presence in each of the
Des Moines and Dallas markets and provide increased revenue opportunities in the
midwest United States.
THE NEW CREDIT FACILITY
The Company financed the purchase price of certain of the Acquisitions and
the related refinancing of certain existing bank indebtedness of the Company and
paid the fees and expenses associated with the Acquisitions in part through a
total commitment of $300 million under a new credit facility (the "New Credit
Facility"). Following the completion of the October Offerings, the outstanding
amounts under the New Credit Facility were repaid in full, and the maximum
commitment of the New Credit Facility was reduced to $225 million. As of January
1997, the Company's borrowings under the New Credit Facility totalled
approximately $115 million.
THE DEBT TENDER OFFERS
In October 1996, the Company completed a tender offer (the "Company Tender
Offer") to purchase all of its then outstanding 11% Senior Notes due 2003 (the
"Existing Company Notes"). Simultaneously, Parent completed a tender offer (the
"Parent Tender Offer") to purchase all of its then outstanding 14% Senior
Secured Discount Notes due 2004 (the "Existing Parent Notes"). These tender
offers are sometimes referred to herein collectively as the "Debt Tender
Offers." The Existing Company Notes and the Existing Parent Notes are sometimes
referred to herein as the "Existing Notes."
18
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The net
proceeds to the Company of the Offering were approximately $98,000,000 after
deducting estimated discounts to the Initial Purchasers and commissions and
expenses. The Company used the net proceeds of the Offering to finance a portion
of the purchase price payable in connection with certain of the Acquisitions.
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on March , 1997; PROVIDED, HOWEVER, that if the Company, in
its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
As of the date of this Prospectus, $100,000,000 aggregate principal amount
of Old Notes is outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about February ___, 1997, to all holders
of Old Notes known to the Company. The Company's obligation to accept Old Notes
for exchange pursuant to the Exchange Offer is subject to certain conditions as
set forth below under "-- Certain Conditions to the Exchange Offer."
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the holders thereof as described below.
During any such extension, all Old Notes previously tendered will remain subject
to the Exchange Offer and may be accepted for exchange by the Company. Any Old
Notes not accepted for exchange for any reason will be returned without expense
to the tendering holder thereof as promptly as practicable after the expiration
or termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 and any integral multiple thereof.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the events specified below under "--
Certain Conditions to the Exchange Offer." The Company will give oral or written
notice of any extension, amendment, non-acceptance or termination to the holders
of the Old Notes as promptly as practicable, such notice in the case of any
extension to be issued by means of a press release or other public announcement
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to United States Trust Company of New
York, as Exchange Agent, at the address set forth below under "-- Exchange
Agent" on or prior to the Expiration Date. In addition, either (i) certificates
for such Old Notes must be received by the Exchange Agent along with the Letter
of Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility")
19
<PAGE>
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date, or (iii) the holder
must comply with the guaranteed delivery procedures described below. THE METHOD
OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY
MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO
THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of Old Notes who has
not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined herein). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by, the registered holder of the Old Notes with
the signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any holder who seeks to tender Old Notes in
the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered holder or holder of Old Notes, such Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly as
the name or names of the registered holder or holders that appear on the Old
Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
By tendering, each holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person receiving such New Notes,
whether or not such person is the holder, and that neither the holder, nor such
other person, has any arrangement or understanding with any person to
participate in the distribution of the New Notes. In the case of a holder that
is not a broker-dealer, each such holder, by tendering, will also represent to
the Company that such holder is not engaged in, or intends to engage in, a
20
<PAGE>
distribution of the New Notes. If any holder or any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company, or
is engaged in or intends to engage in or has an arrangement or understanding
with any person to participate in a distribution of such New Notes to be
acquired pursuant to the Exchange Offer, such holder or any such other person
(i) could not rely on the applicable interpretations of the staff of the SEC and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See "Plan of
Distribution." The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "-- Certain Conditions to the Exchange Offer." For purposes of
the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Company has given oral or
written notice thereof to the Exchange Agent, with written confirmation of any
oral notice to be given promptly thereafter.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or , if no interest has been paid, from
December 16, 1996. Accordingly, if the relevant record date for interest payment
occurs after the consummation of the Exchange Offer, registered holders of New
Notes on such record date will receive interest accruing from the most recent
date to which interest has been paid or, if no interest has been paid, from
December 16, 1996. If, however, the relevant record date for interest payment
occurs prior to the consummation of the Exchange Offer, registered holders of
Old Notes on such record date will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from December 16, 1996. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer, except
as set forth in the immediately preceding sentence. Holders of Old Notes whose
Old Notes are accepted for exchange will not receive any payment in respect of
accrued interest on such Old Notes otherwise payable on any interest payment
date the record date for which occurs on or after consummation of the Exchange
Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desired to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry procedures described
below, such non-exchanged Old Notes will be credited to an account maintained
with such Book-Entry Transfer Facility) as promptly as practicable after the
expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's
21
<PAGE>
systems may make book-entry delivery of Old Notes by causing the Book Entry
Transfer Facility to transfer such Old Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Old Notes may
be effected through book-entry transfer at the Book-Entry Transfer Facility, the
Letter of Transmittal or facsimile thereof, with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the Exchange Agent at one of the addresses set forth below
under "-- Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration date, the Exchange
Agent received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates for all physically tendered Old Notes,
in proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Notes, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under "--
Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder (or,
in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility for the Old Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by
22
<PAGE>
following one of the procedures described under "-- Procedures for Tendering Old
Notes" above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order of decree shall have been issued
by, any court or governmental agency or other governmental regulatory or
administrative agency or commission, (i) seeking to restrain or prohibit the
making or consummation of the Exchange Offer or any other transaction
contemplated by the Exchange Offer, or assessing or seeking any damages as a
result thereof, or (ii) resulting in a material delay in the ability of the
Company to accept for exchange or exchange some or all of the Old Notes
pursuant to the Exchange Offer; or any statute, rule, regulation, order or
injunction shall be sought, proposed, introduced, enacted, promulgated or
deemed applicable to the Exchange Offer or any of the Transactions
contemplated by the Exchange Offer by any government or governmental
authority, domestic or foreign, or any action shall have been taken,
proposed or threatened, by any government, governmental authority, agency or
court, domestic or foreign, that in the sole judgment of the Company might
directly or indirectly result in any of the consequences referred to in
clauses (i) or (ii) above or, in the sole judgment of the Company, might
result in the holders of New Notes having obligations with respect to
resales and transfers of New Notes which are greater than those described in
the interpretation of the SEC referred to on the cover page of this
Prospectus, or would otherwise make it inadvisable to proceed with the
Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by any governmental agency or authority which may adversely affect the
ability of the Company to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving the
United States, or, in the case of any of the foregoing existing at the time
of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company and its subsidiaries taken as a whole that, in the
sole judgment of the Company, is or may be adverse to the Company, or the
Company shall have become aware of facts that, in the sole judgment of the
Company, have or may have adverse significance with respect to the value of
the Old Notes or the New Notes;
which in the sole judgment of the Company in any case, and regardless of the
circumstances (including any action by the Company) giving rise to any event
described above, makes it inadvisable to proceed with the Exchange Offer and/or
with such acceptance for exchange or with such exchange.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
23
<PAGE>
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes,
if, at such time, any stop order shall be threatened or in effect with respect
to the Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA").
EXCHANGE AGENT
United States Trust Company of New York has been appointed as the Exchange
Agent for the Exchange Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent at (800) 548-6565 or addressed as follows:
<TABLE>
<S> <C>
BY MAIL: BY OVERNIGHT COURIER:
United States Trust Company of New York United States Trust Company of New York
Post Office Box 844 770 Broadway Street, 7th Floor
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attention:
Corporate Trust and Agency Services
BY HAND: BY FACSIMILE:
United States Trust Company of New York (212) 420-6152
111 Broadway Attention:
Lower Level Corporate Trust and Agency Services
Corporate Trust Window Confirm by Telephone:
New York, New York 10006 (800) 548-6565
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The Company
will, however, pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding tenders for their customers. The expenses to be
incurred in connection with the Exchange Offer, including the fees and expenses
of the Exchange Agent and printing, accounting, legal fees and miscellaneous
expenses will be paid by the Company and are estimated to be approximately
$250,304.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Old Notes in any jurisdiction in which
the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Company may, at its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Old Notes
in such jurisdiction. In any jurisdiction the securities laws or blue sky laws
of which require the Exchange Offer to be made by a
24
<PAGE>
licensed broker or dealer, the Exchange Offer is being made on behalf of the
Company by one or more registered brokers or dealers that are licensed under the
laws of such jurisdiction.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that holders who instruct the
Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register Old Notes under the Securities Act. See "Description of Notes
- -- Exchange Offer; Registration Rights; Liquidated Damages." The Company may in
the future seek to acquire untendered Old Notes in open market or privately
negotiated transactions, through subsequent exchange offers or otherwise. The
Company has no present plan to acquire any Old Notes that are not tendered in
the Exchange Offer.
Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to third parties, the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold or otherwise transferred by holders thereof (other than any such
holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with any person to participate in
the distribution of such New Notes. However, the Company does not intend to
request the SEC to consider, and the SEC has not considered, the Exchange Offer
in the context of a no-action letter and there can be no assurance that the
staff of the SEC would make a similar determination with respect to the Exchange
Offer as in such other circumstances. Each holder, other than a broker-dealer,
must acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of New Notes and has no arrangement or understanding to participate
in a distribution of New Notes. If any holder is an affiliate of the Company, is
engaged in or intends to engage in or has any arrangement or understanding with
respect to the distribution of the New Notes to be acquired pursuant to the
Exchange Offer, such holder (i) could not rely on the applicable interpretations
of the staff of the SEC and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." In addition, to
comply with state securities laws, the New Notes may not be offered or sold in
any state unless they have been registered or qualified for sale in such state
or an exemption from registration or qualification is available and is complied
with. The offer and sale of the New Notes to "qualified institutional buyers"
(as such term is defined under Rule 144A of the Securities Act) is generally
exempt from registration or qualification under state securities laws. The
Company currently does not intend to register or qualify the sale of the New
Notes in any state where an exemption from registration or qualification is
required and not available.
25
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The exchange of Old Notes for New Notes by tendering holders will not be a
taxable exchange for federal income tax purposes, and such holders should not
recognize any taxable gain or loss or any interest income as a result of such
exchange. See "Certain United States Federal Income Tax Consequences."
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
at December 31, 1996 and as adjusted to give effect to the Memphis/Tunica and
Matthew Acquisitions, the Offering and the October Offerings. The table should
be read in conjunction with the Consolidated Financial Statements and related
notes included elsewhere herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------
PRO FORMA
ACTUAL AS ADJUSTED(1)
---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Existing Credit Facilities:
Revolving Credit Loan............................................................. $ -- $ --
Acquisition Term Loan............................................................. 20,000 136,543
9 3/4% Senior Subordinated Notes due 2006........................................... 223,611 223,611
9 3/4% Senior Series B Subordinated Notes due 2006.................................. 101,487 101,487
Notes............................................................................... 2,843 --
Other obligations................................................................... -- --
---------- --------------
Total long-term debt and other obligations...................................... 347,941 461,641
Common stockholders' equity........................................................... 230,984 233,484
---------- --------------
Total capitalization............................................................ $ 578,925 $ 695,125
---------- --------------
---------- --------------
</TABLE>
- ------------------------
(1) Represents actual amounts adjusted to give effect to the Memphis/Tunica and
Matthew Acquisitions.
26
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following sets forth unaudited combined pro forma financial information
for the Company. The unaudited pro forma combined statement of operations for
the year ended December 31, 1996, gives effect to (i) the Transactions, (ii) the
Offering and the October Offerings and the application of the estimated net
proceeds therefrom, (iii) the acquisitions of Naegele, Ad-Sign, Inc., Image
Media, Inc. and consummation of the IPO and the application of the estimated net
proceeds therefrom, and (iv) the net reduction in operating expenses of the
businesses acquired as if each had occurred at the beginning of the period. The
unaudited pro forma combined balance sheet as of December 31, 1996 has been
prepared as if the Memphis/Tunica and Matthew Acquisitions had occurred on
December 31, 1996.
The detail assumptions used to prepare the unaudited combined pro forma
financial information are contained in the notes to unaudited combined pro forma
financial information. The unaudited combined pro forma financial information
reflects the use of the purchase method of accounting for all acquisitions
during 1996.
Pro forma adjustments for all acquisitions are based upon preliminary
estimates, available information and certain assumptions that management of the
Company deems appropriate. Final adjustments may differ from the pro forma
adjustments presented herein. The unaudited combined pro forma financial
information does not purport to present the actual financial position or results
of operations of the Company had the transactions and events assumed therein in
fact occurred on the dates specified, nor are they necessarily indicative of the
results of operations that may be achieved in the future. The unaudited pro
forma combined financial information is based on certain assumptions and
adjustments described in the notes thereto and should be read in conjunction
with the notes to unaudited combined pro forma financial information and the
separate historical financial statements and notes which are contained elsewhere
herein. Income (loss) is shown before income taxes and extraordinary items
because the Company has sufficient net operating loss carryforwards to offset
taxable income for the periods presented. Therefore, the presentation of income
taxes is neither required nor meaningful. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition," the Consolidated
Financial Statements and the Notes thereto of the Company, the Consolidated
Financial Statements and the Notes thereto of NOA Holding Company, the Statement
of Revenues and Direct Expenses and the Notes thereto of Ad-Sign, the Financial
Statements and Notes thereto of POA Acquisition Corporation, and the
Consolidated Financial Statements and Notes thereto of Revere Holding Corp.
included elsewhere in this Prospectus.
The unaudited combined pro forma information includes certain adjustments
relating to the acquisitions of the common stock of Naegele, POA Corporation and
Revere Holding Corp. The unaudited pro forma adjustments reflect an allocation
of a portion of the total acquisition cost to goodwill and the establishment of
acquisition liabilities and deferred tax liabilities for the effects of the
significant differences between the tax basis of the assets acquired and the
estimated fair value of the assets, primarily property and equipment, recorded
for financial statement purposes. No deferred taxes are required to be recorded
for amounts allocated to nondeductible goodwill. The unaudited pro forma
adjustments in previous filings were prepared on the belief that the recordable
differences in book and tax bases of the assets acquired would not be
significant. As a result of the allocation of total acquisition cost in this
filing, depreciation expense has been decreased by approximately $9.1 million
and goodwill amortization increased by approximately $14.6 million. Pro forma
adjustments for all acquisitions are based upon preliminary estimates, available
information and certain assumptions that the management of the Company deems
appropriate. Final adjustments may differ from the pro forma adjustments
presented herein.
27
<PAGE>
UNIVERSAL OUTDOOR INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL AD-SIGN, INC POA MEMPHIS/
OUTDOOR, AND IMAGE ACQUISITION TUNICA ADDITIONAL REVERE
INC. MEDIA NAEGELE CORPORATION(1) ACQUISITION ACQUISITIONS ACQUISITION
--------- ------------ ------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue............ 76,138 $ 842 $5,832 $35,815 14,705 $1,166 29,047
--------- ------ ------- ----------- ----------- ------ -----------
Operating expenses:
Direct cost of
revenues........... 26,468 322 2,616 10,788 6,315 564 17,333
General and
administrative
expenses........... 10,596 100 1,459 9,613 2,743 304 4,118
Depreciation and
amortization....... 18,286 160 1,053 6,004 1,546 38 5,542
--------- ------ ------- ----------- ----------- ------ -----------
55,530 582 5,128 26,405 10,604 906 26,993
--------- ------ ------- ----------- ----------- ------ -----------
Operating income....... 20,788 260 704 9,410 4,101 260 2,054
Interest expense....... 15,730 -- 468 5,558 89 52 3,392
Other expense.......... 1,398 -- -- (21) -- (84) (8,410)
--------- ------ ------- ----------- ----------- ------ -----------
Income (loss) before
income taxes and
extraordinary
items................ 3,660 $ 260 $ 236 $ 3,873 4,012 $ 292 7,072
--------- ------ ------- ----------- ----------- ------ -----------
--------- ------ ------- ----------- ----------- ------ -----------
Operating cash flow.... 39,074 $ 420 $1,757 $15,414 5,647 $ 298 7,596
--------- ------ ------- ----------- ----------- ------ -----------
--------- ------ ------- ----------- ----------- ------ -----------
<CAPTION>
JULY AND OCTOBER PRO FORMA
MATTHEW OFFERINGS PRO FORMA OFFERING AS
ACQUISITION ACQUISITION ADJUSTMENTS ADJUSTMENTS AS ADJUSTED ADJUSTMENTS ADJUSTED
----------- ------------ ------------------ ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net revenue............ 8,943 $ 4,123(2)(3) $ -- 176,611 $ -- $176,611
----------- -------- -------- ------------ ----------- --------
Operating expenses:
Direct cost of
revenues........... 3,558 2,024(2)(3) -- 69,988 -- 69,988
General and
administrative
expenses........... 1,550 (9,687)(2)(3)(4) -- 20,796 -- 20,796
Depreciation and
amortization....... 993 17,196(2)(3)(5) -- 50,818 -- 50,818
----------- -------- -------- ------------ ----------- --------
6,101 9,533 -- 141,602 -- 141,602
----------- -------- -------- ------------ ----------- --------
Operating income....... 2,842 (5,410) -- 35,009 -- 35,009
Interest expense....... -- 37,869(2)(3)(6)(7) (20,101)(9)(10) 43,057 1,178(11) 44,235
Other expense.......... -- 8,928(2)(3)(8) -- 1,811 -- 1,811
----------- -------- -------- ------------ ----------- --------
Income (loss) before
income taxes and
extraordinary
items................ 2,842 $ (52,207) $ 20,101 $ (9,859) $ (1,178) $(11,037)
----------- -------- -------- ------------ ----------- --------
----------- -------- -------- ------------ ----------- --------
Operating cash flow.... 3,835 $ 11,786 $ -- 85,827 $ -- 85,827
----------- -------- -------- ------------ ----------- --------
----------- -------- -------- ------------ ----------- --------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
28
<PAGE>
NOTES TO UNAUDITED COMBINED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma results of operations
of the Company giving effect to the Transactions, the Offering, the October
Offerings and the application of the estimated net proceeds therefrom, the
related acquisitions and consummation of the IPO (as defined herein) and the
application of the estimated net proceeds therefrom and the net reduction in
operating expenses of the businesses acquired as if each had occurred at the
beginning of the period.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<C> <S> <C>
1. POA Acquisition Corporation acquired certain assets and liabilities in the outdoor advertising
industry in Florida during May 1996. The historical financial information includes revenues
and expenses associated with the new market prior to the acquisition:
$ 955
Net revenues..............................................................................
710
Direct cost of revenues...................................................................
2. Prior to acquisition by the Company, Revere disposed of certain assets and liabilities in the
outdoor advertising industry in Texas. The following entry eliminates revenues and expenses
associated with the Texas market prior to the acquisition:
$ (3,661)
Net revenue...............................................................................
(2,128)
Direct cost of revenues...................................................................
(568)
General and administrative expenses.......................................................
(765)
Depreciation and amortization.............................................................
(367)
Interest expense..........................................................................
(853)
Other.....................................................................................
3. Entry records statement of operations activity of Revere from September 30, 1996 through the
date of closing (December 10, 1996):
$ 7,784
Net revenue.................................................................................
4,152
Direct cost of revenues.....................................................................
1,081
General and administrative..................................................................
1,764
Depreciation and amortization...............................................................
770
Interest expense............................................................................
848
Other expense...............................................................................
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<C> <S> <C>
4. Entry records reduction in general and administrative expenses relating to
elimination of certain duplicate corporate expenses, principally relating
to employee costs and costs relating to other corporate activities. Amounts
have been determined based upon specific employees identified for
termination plus actual benefits costs incurred, and expenses associated
with leased facilities which will not be assumed or will be canceled upon
consummation of the acquisition.
$ 1,875
Naegele, Ad-Sign and Image Media.........................................
-----------
-----------
$ 2,100
POA Acquisition..........................................................
1,000
Memphis/Tunica Acquisition...............................................
255
Additional Acquisitions..................................................
-----------
$ 3,355
-----------
-----------
$ 3,770
Revere Acquisition.......................................................
1,200
Matthew Acquisition......................................................
-----------
$ 4,970
-----------
-----------
5. Entry records the increase in depreciation and amortization expense arising
from purchase accounting adjustments to advertising structures and goodwill
amortized over a period of 15 years:
$ 460
Naegele, Ad-Sign and Image Media (acquired in March 1996)................
-----------
-----------
$ 8,480
POA Acquisition (acquired in October 1996)...............................
3,101
Memphis/Tunica Acquisition (acquired in January 1997)....................
236
Additional Acquisitions (acquired in September 1996).....................
-----------
$ 11,817
-----------
-----------
$ 2,210
Revere Acquisition (acquired in December 1996)...........................
1,710
Matthew Acquisition (acquired in January 1997)...........................
-----------
$ 3,920
-----------
-----------
6. Entry records additional interest expense at an assumed rate of 8.25% per $ 5,604
annum to be incurred in connection with the acquisition of Naegele, Ad-Sign
and Image Media which occurred in March of 1996 (debt incurred of $60.0
million less $1.4 million of interest expense for debt not assumed)........
-----------
-----------
7. Entry to record additional interest expense at an assumed rate of 8.5% per
annum in connection with the Transactions:
$ 20,400
POA Acquisition (debt incurred of $240.0 million)........................
6,018
Memphis/Tunica Acquisition (debt incurred of $70.8 million)..............
646
Additional Acquisitions..................................................
-----------
27,064
(5,699)
Actual interest expense for POA Acquisition, Memphis/Tunica Acquisition
and Additional Acquisitions............................................
-----------
$ 21,365
-----------
-----------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER
31, 1996
-----------
<C> <S> <C> <S> <C>
$ 10,489
Revere Acquisition (debt incurred of $123.4 million)........................................
3,400
Matthew Acquisition (debt incurred of $40.0 million)........................................
------------
13,889
(3,392)
Actual interest expense for Revere Acquisition and Matthew Acquisition......................
------------
$ 10,497
------------
------------
8. Entry to reduce other income from Revere for the gain recognized on the sale of the Texas $ 8,933
markets.......................................................................................
------------
------------
9. Entry to record the changes in interest expense to reflect the October Offerings and the
application of the net proceeds:
$ 21,938
October Notes at 9.75%......................................................................
3,840
New Credit Facility at an assumed rate of 8.5%..............................................
599
Amortization of deferred financing costs....................................................
(43,757)
Less pro-formas as adjusted interest expense................................................
------------
$ (17,380)
------------
------------
10. Entry to record the reduction in interest expense from the application of the net proceeds of $ (2,721)
the IPO to the repayment of long-term debt....................................................
------------
------------
11. Entry to record the changes in interest expense to reflect the Offering and the application of
the net proceeds therefrom:
$ 9,750
Notes at 9.75%..............................................................................
21,938
October Notes at 9.75%......................................................................
11,606
New Credit Facility at an assumed rate of 8.5%..............................................
941
Amortization of deferred financing costs....................................................
(43,057)
Less pro-forma as adjusted interest expense.................................................
------------
$ 1,178
------------
------------
</TABLE>
12. The above pro-forma statement of
operations do not reflect the following
extraordinary losses on the early
retirement of debt:
14% Series A Senior Secured Discount
Notes due 2004:
September 1996...................... $ 1,400
October 1996........................ 10,725
11% Series A Senior Secured Discount
Notes due 2003:
October 1996........................ 14,448
--------
$26,573
--------
--------
31
<PAGE>
UNIVERSAL OUTDOOR, INC.
PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL MEMPHIS/
OUTDOOR TUNICA ACQUISITION PRO FORMA
INC. ACQUISITION ADJUSTMENTS AS ADJUSTED
---------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Current assets........... $ 48,517 $ 9,320 $ (5,000)(3) $ 52,837
Property and equipment... 385,782 20,389 91,572(1) 497,743
Goodwill................. 217,831 -- -- 217,831
Other assets............. 29,171 -- -- 29,171
---------- ----------- --------------- -----------
Total assets............. $681,301 $29,709 $ 86,572 $797,582
---------- ----------- --------------- -----------
---------- ----------- --------------- -----------
Current liabilities,
excluding current
maturities............. $ 30,536 $ 5,081 $ (5,000)(3) $ 30,617
Current maturities of
long-term debt......... -- -- -- --
Long-term debt........... 347,941 1,121 112,579(1) 461,641
Deferred income taxes
liabilities............ 71,700 -- -- 71,700
Other long-term
liabilities............ 140 -- -- 140
---------- ----------- --------------- -----------
Total liabilities........ 450,317 6,202 107,579 564,098
---------- ----------- --------------- -----------
Stockholders' equity..... 230,984 23,507 (21,007) (1)(2) 233,484
---------- ----------- --------------- -----------
Total liabilities and
stockholders' equity... $681,301 $29,709 $ 86,572 $797,582
---------- ----------- --------------- -----------
---------- ----------- --------------- -----------
</TABLE>
See accompanying notes to pro forma combined balance sheet.
32
<PAGE>
NOTES TO UNAUDITED COMBINED PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma financial position of
the Company after giving effect to the Memphis/ Tunica and Matthew Acquisitions.
1. Entry records the effects of the Memphis/Tunica and Matthew acquisitions.
<TABLE>
<CAPTION>
MEMPHIS/TUNICA MATTHEW
ACQUISITION ACQUISITION TOTAL
--------------- ----------- ----------
<S> <C> <C> <C>
Purchase price...................................................... $ 73,700 $ 40,000 $ 113,700
Debt assumed........................................................ (1,121) (1,121)
--------------- ----------- ----------
Increase in long-term debt.......................................... $ 72,579 $ 40,000 $ 112,579
Changes in assets and liabilities resulting from allocation of
purchase price:
Property and equipment.............................................. 51,572 40,000 91,572
Stockholders' equity................................................ (23,507) (23,507)
</TABLE>
<TABLE>
<C> <S> <C>
2. Entry to record 100,000 shares of common stock to be issued in connection with the Memphis/Tunica
Acquisition at an assumed price of $25:
$ 2,500
Stockholders' equity...............................................................................
--------
--------
</TABLE>
<TABLE>
<C> <S> <C>
3. Entry to record the reduction of the deposit paid by the Company ($ 5,000)
in connection with the Memphis/Tunica Acquisition..................................................
--------
--------
</TABLE>
33
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected financial data presented below as of and for the year ended
December 31, 1996 are derived from the Consolidated Financial Statements of the
Company. The selected financial data as of and for the years ended December 31,
1992, 1993, 1994 and 1995 are derived from the financial statements of the
Company. Certain of such financial statements were unaudited. The financial
statements of the Company for the three years in the period ended December 31,
1995 were audited by Price Waterhouse LLP, independent accountants, as indicated
in their report included elsewhere in this Prospectus. The selected financial
data as of and for the year ended December 31, 1996 are derived from the
combined financial statements included herein and include all normal and
recurring adjustments necessary for a fair presentation of such data. The data
set forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements, including the Notes thereto, appearing elsewhere in this
Prospectus. Due to the significant development and acquisition of additional
structures, the data set forth below is not necessarily comparable on a
year-to-year basis and data set forth for certain periods is not indicative of
results for the full year.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue........................... $ 21,435 $ 27,896 $ 28,710 $ 33,180 $ 38,101 $ 84,939
Net revenues(1)......................... 18,835 24,681 25,847 29,766 34,148 76,138
Direct advertising expenses............. 7,638 10,383 10,901 11,806 12,864 26,468
General and administrative expenses..... 3,515 3,530 3,357 3,873 4,244 10,596
Depreciation and amortization........... 5,530 7,817 8,000 7,310 7,402 18,286
Operating income........................ 2,152 2,951 3,589 6,777 9,638 20,788
Interest expense........................ 6,599 9,591 8,965 8,314 8,627 15,730
Other (expense) income, net............. (53) 291 (351) (134) (42) 1,398
Income (loss) before income taxes and
extraordinary item(2)................. (4,500) (6,349) (5,727) (1,671) 969 3,660
Net income (loss)....................... (4,500) (6,349) (8,987) (1,671) 969 (10,788)
Operating Cash Flow(3).................. $ 7,682 $ 10,768 $ 11,589 $ 14,087 $ 17,040 $ 39,074
Operating Cash Flow Margin(4)........... 40.8% 43.6% 44.8% 47.3% 49.9% 51.3%
Capital expenditures.................... 2,047 2,352 2,004 4,668 5,620 6,987
Deficiency in coverage of earnings...... 4,500 6,349 8,987 1,671 -- --
FINANCIAL RATIOS:
Ratio of earnings to fixed charges(5)... -- -- -- -- 1.1x 1.2x
Percentage of indebtedness to total
capitalization(6)..................... 121.4% 142.8% 116.1% 118.1% 115.8% 60.1%
Ratio of total indebtedness to Operating
Cash Flow(7).......................... 8.5x 5.5x 5.9x 5.2x 4.5x NM(8)
Ratio of Operating Cash Flow to total
interest(9)........................... 1.2x 1.1x 1.3x 1.7x 2.0x 2.5x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
DECEMBER 31, -------------------------
----------------------------------------------------- PRO FORMA(11)
1991 1992 1993 1994 1995 ACTUAL AS ADJUSTED
--------- --------- --------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital(10).......................... $ 2,365 $ 1,326 $ 1,730 $ 2,119 $ 3,961 $ 17,981 $ 22,220
Total assets................................. 71,682 65,754 61,816 66,190 69,133 681,301 797,582
Total long-term debt and other obligations... 65,076 59,363 68,054 73,304 76,079 347,941 461,641
Redeemable preferred stock................... 13,442 15,055 -- -- --
Common stockholders' equity (deficit)........ (11,450) (17,799) (9,452) (11,243) (10,394) 230,984 233,484
</TABLE>
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
34
<PAGE>
(FOOTNOTES FOR PREVIOUS TABLE)
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary loss represents loss on early extinguishment of debt.
(3) "Operating Cash Flow" is operating income before depreciation and
amortization and other non-cash charges. Operating Cash Flow is not intended
to represent net cash flow provided by operating activities as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income (loss) as an indicator of the Company's operating
performance or to net cash provided by operating activities as a measure of
liquidity. The Company believes Operating Cash Flow is a measure commonly
reported and widely used by analysts, investors and other interested parties
in the media industry. Accordingly this information has been disclosed
herein to permit a more complete comparative analysis of the Company's
operating performance relative to other companies in the media industry.
(4) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
(5) Amounts represent the ratio of (i) the sum of income before income taxes
and extraordinary items plus interest expense to (ii) interest expense.
(6) Amounts represent (i) total long-term debt divided by (ii) total long-term
debt plus common stockholders' equity (deficit).
(7) Amounts represent (i) total long-term debt divided by (ii) Operating Cash
Flow.
(8) Ratio of total indebtedness to Operating Cash Flow for the year ended
December 31, 1996 is not meaningful as a result of significant acquisitions
during 1996.
(9) Amounts represent the ratio of (i) Operating Cash Flow to (ii) interest
expense on total long-term debt.
(10) Working capital is current assets less current liabilities (excluding
current maturities of long-term debt and other obligations). Other
obligations totalled $2,850 at December 31, 1992.
(11) Represents actual amounts adjusted to give effect to the Memphis/Tunica and
Matthew Acquisitions.
35
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the consolidated results of operations of the
Company for the three years ended December 31, 1995 and financial condition at
December 31, 1995 should be read in conjunction with the Consolidated Financial
Statements of the Company and the related notes included elsewhere in this
Prospectus.
Except as otherwise indicated, the following discussion relates to the
Company on an historical basis, without giving effect to the Acquisitions, the
Offering or the October Offerings.
GENERAL
The Company has grown significantly since 1989 through the acquisition of
outdoor advertising businesses and individual display faces in specific markets,
improvements in occupancy and advertising rates, and the development of new
display faces in existing markets. Between January 1, 1989 and October 31, 1996,
the Company spent in excess of $300 million to acquire additional display faces,
increasing the number of its display faces from approximately 600 in 1989 to
approximately 18,944 at October 31, 1996. During this period, the Company's net
revenues increased from $10.3 million in 1989 to $34.1 million in 1995. The
following table lists the Company's acquisitions between January 1, 1989 and
October 31, 1996:
<TABLE>
<CAPTION>
APPROXIMATE NUMBER AND TYPE
OF DISPLAY FACES ACQUIRED
------------------------------------------------
YEAR OF 30-SHEET 8-SHEET
ACQUISITION MARKETS BULLETINS POSTERS POSTERS TOTAL
- ----------------- ------------------------------------------------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1989............. Milwaukee, Chicago 270 -- -- 270
1990............. Chicago 12 -- -- 12
1991............. Indianapolis, Des Moines, Evansville, Chicago 421 2,480 140 3,041
1994............. Chicago, Milwaukee 20 -- 4,151 4,171
1995............. Chicago, Dallas 9 -- 1,127 1,136
1996............. Chicago, Minneapolis/St. Paul, Jacksonville, Dallas,
Iowa, POA 5,186 5,128 -- 10,314
----- ----- ----- ---------
Total................................................................. 5,918 7,608 5,418 18,944
----- ----- ----- ---------
----- ----- ----- ---------
</TABLE>
The Company's acquisitions have been financed through bank borrowings and
the issuance of long-term debt, as well as with internally-generated funds. The
Acquisitions were financed, in part, from the proceeds of the Offering and the
New Credit Facility. All acquisitions (including the Acquisitions) have been
accounted for using the purchase method of accounting, and consequently,
operating results from acquired operations are included from the respective
dates of those acquisitions. As a result of these acquisitions and the effects
of consolidation of operations following each acquisition, the operating
performance of certain markets and of the Company as a whole reflected in the
Company's Consolidated Financial Statements and other financial and operating
data included herein are not necessarily comparable on a year-to-year basis.
36
<PAGE>
HISTORICAL RESULTS OF OPERATIONS
The following table presents certain operating statement items in the
Consolidated Statements of Operations as a percentage of net revenues:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1993 1994 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues........................................................... 100.0% 100.0% 100.0% 100.0%
Direct advertising expenses............................................ 42.2 39.7 37.7 34.8
General and administrative expenses.................................... 13.0 13.0 12.4 13.9
----- ----- ----- -----
Operating Cash Flow(1)................................................. 44.8 47.3 49.9 51.3
Depreciation and amortization.......................................... 30.9 24.5 21.7 24.0
----- ----- ----- -----
Operating income....................................................... 13.9 22.8 28.2 27.3
Other expense, primarily interest...................................... 36.1 28.4 25.4 22.5
----- ----- ----- -----
Income (loss) before income taxes and extraordinary items.............. (22.2) (5.6) 2.8 4.8
----- ----- ----- -----
</TABLE>
- ------------------------
(1) As defined herein.
Revenues are a function of both the occupancy of the Company's display faces
and the rates that the Company charges for their use. The Company focuses its
sales effort on maximizing occupancy levels while maintaining rate integrity in
its markets. Additionally, the Company believes it is important to the overall
sales effort to continually attempt to develop new inventory in growth areas of
its existing markets in order to enhance overall revenues.
Net revenues represent gross revenues less commissions paid to advertising
agencies that contract for the use of advertising displays on behalf of
advertisers. Approximately 77% of the Company's gross revenues are contracted
for directly from local advertisers. Agency commissions on those revenues which
are contracted through agencies are typically 15% of gross revenues on local
sales and 16 2/3% of gross revenues on national sales. The Company considers
agency commissions as a reduction in gross revenues, and measures its operating
performance based upon percentages of net revenues rather than gross revenues.
Direct advertising expenses consist of the following five categories: lease,
production, sales, maintenance and illumination. The lease expense consists
mainly of rental payments to owners of the land underlying the signs. The
production category consists of all of the costs to produce advertising copy and
install it on the display faces. Sales expense consists mainly of the cost of
staffing a sales force to sell within a specific market. The maintenance
category includes minor repair and miscellaneous maintenance of the sign
structures and the illumination category consists mainly of electricity costs to
light the display faces. The majority of these direct expenses are variable
costs (other than lease costs) that will fluctuate with the overall level of
revenues. In 1995, these expenses amounted to the following approximate
percentages of net revenues: lease 14.2%, production 11.3%, sales 6.8%,
maintenance 3.3% and illumination 2.1%.
General and administrative expenses occur at both the market and corporate
levels. At the market level these expenses contain various items of office
overhead pertaining to both the personnel and the facility required to
administer a given market. The corporate general and administrative costs
represent staff and facility expenses for the executive offices and the
centralized accounting function. Both types of general and administrative
expenses are primarily fixed expenses in the operation of the business.
The Company had federal income tax net operating losses ("NOLs") of
approximately $14.6 million as of December 31, 1995, which will expire over a
period of years beginning in 2005. Use of these NOLs is subject to an annual
limit of approximately $2.4 million under Section 382 of the Internal Revenue
Code of 1986, as amended, and may be subject to further restriction under the
rules applicable to corporations filing consolidated federal income tax returns.
Management believes that recent actions taken, including the consummation of the
Transactions, will enhance its ability to generate sufficient taxable income to
use
37
<PAGE>
the $14.6 million of NOLs prior to their expiration between 2005 and 2010.
However, at this time there can be no assurance that sufficient taxable income
will be generated in the future.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995
Net revenues increased 123.2% to $76.1 million during 1996 compared to $34.1
million in the corresponding 1995 period. This increase was a result of
inclusion of approximately $20.2 million of revenues from the Minneapolis and
Jacksonville markets (the "Naegele Markets") which were acquired in the Naegele
Acquisition (as defined) and approximately 13.0 million of revenues from the
markets acquired in the POA Acquisition. The remaining $8.8 million or 25.8%
increase in net revenues was a result of higher advertising rates and occupancy
levels on the Company's signboards and inclusion of three quarters of signboard
revenues from the acquisitions of Image Media, Inc. and Ad-Sign, Inc. and a full
quarter of signboard revenues from the Additional Acquisitions. Overall net
revenues from tobacco advertising increased to $7.2 million in 1996 compared to
$4.5 million in the 1995 period. This increase was due mainly to the inclusion
of tobacco revenues from the Acquisitions. As a percentage of net revenues,
tobacco advertising sales decreased to 9.5% in 1996 compared to 13.2% in the
1995 period.
Direct cost of revenues increased to $26.5 million in 1996 compared to $12.9
million in the 1995 period. The Naegele Markets and the POA Acquisition,
accounted for $7.3 million and $3.0 million, respectively, of the increase. As a
percentage of net revenues, however, direct cost of revenues decreased to 34.8%
in 1996 compared to 37.8% in the 1995 period as a result of economies of scale
associated with the increased revenues.
General and administrative expenses increased to $10.6 million in 1996 from
$4.2 million in the 1995 period. As a percentage of net revenues, general and
administrative expenses increased to 13.9% in 1996 compared to 12.3% in the 1995
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 $18.3 million in 1996
compared to $7.4 million in the 1995 period. This increase was due to
significant increases in the fixed assets as a result of the acquisitions
consummated in such period.
Total interest expense increased to $15.7 million in 1996 compared to $8.6
million in the 1995 period. The increase resulted from increased debt
outstanding under the Existing Credit Facility (as defined below) which was
incurred to finance the Naegele Acquisition.
Other expenses increased to $1.4 million in 1996, consisting of $1.7 million
one-time charge for expenses arising out of the Naegele Acquisition.
An extraordinary charge of $14.4 million arose out of the early retirement
of the Existing Company Notes.
The foregoing factors contributed to the Company's $10.8 million net loss in
1996 compared to $969,000 net income in the 1995 period.
COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1994
Net revenues increased 14.7% to $34.1 million during 1995 from $29.8 million
in 1994, reflecting higher advertising rates and occupancy levels particularly
in the Chicago and Indianapolis markets.
Direct advertising expenses increased to $12.9 million in 1995 from $11.8
million in 1994 as a result of higher sales during the 1995 period. As a
percentage of net revenues, however, direct advertising expenses decreased to
37.7% in 1995 as a result of economies of scale associated with increased
revenues.
General and administrative expenses in 1995 increased to $4.2 million from
$3.9 million in 1994 due to the incremental payroll costs associated with
additional employees and expenses related to acquisitions. As a percentage of
net revenues, general and administrative expenses decreased to 12.4%.
38
<PAGE>
As a result of the above factors, Operating Cash Flows increased by 20.9% to
$17.0 million in 1995 from $14.1 million in 1994.
Depreciation and amortization expenses increased slightly to $7.4 million in
1995 from $7.3 million in 1994 due to large increases in the fixed assets offset
by reduced depreciation of the older fixed assets.
Total interest expense increased to $8.6 million in 1995 from $8.3 million
in 1994 due to interest expense associated with additional borrowings and the
accretion of interest due to a larger amount of principal outstanding, partially
offset by the elimination of the accretion of dividends on redeemable preferred
stock.
The foregoing factors contributed to the Company's $969,000 net income in
1995 compared to a net loss of $1.7 million in 1994. Because the Company
incurred net losses in 1995, 1994 and 1993, it had no provision for income taxes
in those years.
COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993
Net revenues increased 15.2% to $29.8 million during 1994 from $25.8 million
in 1993, reflecting higher advertising rates and occupancy levels and increased
sales to local advertisers. Increases in revenue from the advertising structures
acquired in certain acquisitions, offset by declines in revenues from the
January 1994 sale of the Company's 97 bulletin display faces in Jacksonville,
accounted for approximately $700,000 of the increased revenues in 1994.
Direct advertising expenses increased to $11.8 million in 1994 from $10.9
million in 1993 as a result of higher sales during the 1994 period. As a
percentage of net revenues, however, direct advertising expenses decreased to
39.7% in 1994 as a result of economies of scale associated with increased
revenues.
General and administrative expenses in 1994 increased to $3.9 million from
$3.4 million in 1993 due to the incremental payroll costs associated with
additional employees. As a percentage of net revenues, however, general and
administrative expenses remained flat at 13.0%.
As a result of the above factors, Operating Cash Flow increased by 21.6% to
$14.1 million in 1994 from $11.6 million in 1993.
Depreciation and amortization expenses decreased to $7.3 million (24.5% of
net revenues) in 1994 from $8.0 million (30.9% of the net revenues) in 1993 due
to scheduled depreciation of the fixed assets.
Total interest expense decreased to $8.3 million in 1994 from $9.0 million
in 1993 due to the elimination of the accretion of dividends on redeemable
preferred stock (which was assumed by Parent), which was partially offset by
interest associated with additional borrowings.
The foregoing factors contributed to the Company's $1.7 million net loss in
1994 compared to a net loss of $9.0 million in 1993 (which included a $3.3
million extraordinary charge recorded in the fourth quarter of 1993). Because
the Company incurred net losses in 1994 and 1993, it had no provision for income
taxes in those years.
39
<PAGE>
QUARTERLY COMPARISONS
The following table sets forth certain quarterly financial information of
the Company for each quarter of 1994 and 1995 and for the first, second and
third quarter of 1996. The information has been derived from the quarterly
financial statements of the Company which are unaudited but which, in the
opinion of management, have been prepared on the same basis as the financial
statements included herein and include all adjustments (consisting only of
normal recurring items) necessary for a fair presentation of the financial
result for such periods. This information should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto and the other financial
information appearing elsewhere in this Prospectus. The operating results for
any quarter are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30,
1994 1994 1994 1994 1995 1995 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................ $ 6,102 $ 7,803 $ 7,973 $ 7,888 $ 7,236 $ 9,175 $ 8,940
Operating income.................... 924 2,333 2,002 1,518 1,348 3,109 2,674
Net income (loss)................... (1,276) 294 (141) (548) (747) 903 509
PERCENTAGE OF NET REVENUES:
Operating income.................... 15.1% 29.9% 25.1% 19.2% 18.6% 33.9% 29.9%
Net income (loss)................... (20.9) 3.8 (1.8) (6.9) (10.3) 9.8 5.7
OTHER DATA:
Operating Cash Flow(1).............. $ 2,709 $ 3,998 $ 3,885 $ 3,495 $ 3,085 $ 4,910 $ 4,524
Operating Cash Flow Margin(2)....... 44.4% 51.2% 48.7% 44.3% 42.6% 53.5% 50.6%
<CAPTION>
DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1995 1996 1996 1996 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................ $ 8,797 $ 8,427 $ 17,812 $ 18,643 $ 31,256
Operating income.................... 2,507 1,670 7,299 5,890 5,929
Net income (loss)................... 304 (757) 1,966 3,077 (15,074)
PERCENTAGE OF NET REVENUES:
Operating income.................... 28.5% 19.8% 41.0% 31.6% 19.0%
Net income (loss)................... 3.5 (9.0) 11.0 16.5 (48.2)%
OTHER DATA:
Operating Cash Flow(1).............. $ 4,521 $ 3,702 $ 9,941 $ 10,422 $ 15,009
Operating Cash Flow Margin(2)....... 51.4% 43.9% 55.8% 55.9% 48.0%
</TABLE>
- ------------------------------
(1) Operating Cash Flow is operating income before depreciation and
amortization. Operating Cash Flow is not intended to represent net cash
provided by operating activities as defined by generally accepted accounting
principles and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to net cash
provided by operating activities as a measure of liquidity. The Company
believes Operating Cash Flow is a measure commonly reported and widely used
by analysts, investors and other interested parties in the media industry.
Accordingly, this information has been disclosed herein to permit a more
complete comparative analysis of the Company's operating performance
relative to other companies in the media industry.
(2) Operating Cash Flow Margin is Operating Cash Flow stated as a percentage of
net revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds and, to a lesser extent, with the
issuance of stock.
In connection with an acquisition consummated in April 1996, the Company,
its then current lender, LaSalle National Bank ("LaSalle"), and an additional
bank, Bankers Trust Company ("Bankers Trust"); together with LaSalle, the
"Lenders"), agreed to (i) refinance the Company's existing credit facility with
a revolving credit facility (the "Existing Revolving Credit Facility") and (ii)
provide an additional extension of credit for purposes of acquisition financing
(the "Existing Acquisition Credit Facility", and together with the Existing
Revolving Credit Facility, the "Existing Credit Facilities") and, specifically,
the financing, in part, of the Naegele Acquisition (as hereafter defined). The
Lenders extended an acquisition term loan in the amount of $75 million and an
acquisition revolving credit line in the amount of $12.5 million for a total
commitment of $87.5 million, of which $84.5 million was drawn at the closing of
the Naegele Acquisition. In addition, the Lenders extended a working capital
revolving credit line in the amount of $12.5 million, of which no amount was
drawn. In addition to the amounts drawn under the Existing Acquisition Credit
Facility, Parent sold a minority portion of its capital stock for $30 million in
cash proceeds which was used to finance the remaining amount of the Naegele
Acquisition and to refinance existing indebtedness.
40
<PAGE>
Parent completed its initial public offering ("IPO") of 4,630,000 shares of
its Common Stock (including 930,000 shares sold pursuant to the exercise of the
Underwriters' over-allotment option) on July 26, 1996, resulting in proceeds to
Parent of $62.4 million. Parent used a portion of the net proceeds to redeem
$9.5 million of the Company's outstanding 11% Senior Notes due 2003 (the
"Redeemed Parent Notes") and repaid a portion of the amounts then outstanding
under the Existing Acquisition Credit Facility (as hereafter defined).
In October 1996, the Parent and the Company completed the October Offerings
with net proceeds of $420.5 million. The net proceeds of the October Offerings
were used to complete the Transactions.
In October 1996, the Company amended and restated the Existing Credit
Facilities which became the New Credit Facility. The New Credit Facility
provided for a total loan commitment of $300 million, $75 million of which could
only be borrowed once in connection with financing the Acquisitions. The New
Credit Facility was drawn upon in order to finance, in part, the Acquisitions
and was repaid with the proceeds of the October Offerings. In October 1996, the
maximum commitment under the New Credit Facility was reduced to $225 million.
See "Description of Indebtedness and Other Commitments"
Net cash provided by operating activities increased to $15.9 million in 1996
from $7.0 million for the 1995 period. Net cash provided by operating activities
increased to $7.0 million in 1995 from $5.8 million in 1994. Net cash provided
by operating activities reflects the Company's net loss adjusted for non-cash
items and the use or source of cash for the net change in working capital.
The Company's net cash used in investing activities of $496.4 million in
1996 includes cash used for acquisitions of $489.4 million and other capital
expenditures of $7.0 million. The Company's net cash used in investing
activities of $9.1 million for the year ended December 31, 1995 includes cash
used for acquisitions of $1.9 million and other capital expenditures of $5.6
million. Capital expenditures have been made primarily to develop new structures
in each of its markets. The Company intends to continue to develop new
structures in its markets and to consider other potential acquisitions.
Management established the Existing Credit Facilities and New Credit Facility
for the purpose of financing acquisitions and capital expenditures relating to
the development and improvement of advertising structures. The Company believes
that its cash from operations, together with available borrowings under the New
Credit Facility, will be sufficient to satisfy its cash requirements, including
anticipated capital expenditures, for the foreseeable future. However, in the
event cash from operations, together with available funds under the New Credit
Facility are insufficient to satisfy its cash requirements, the Company may
incur additional indebtedness to finance its operations including, without
limitation, additional acquisitions.
For the year ended December 31, 1996, $500.7 million was provided by
financing activities primarily due to the issuance of senior subordinated debt,
increased borrowings under the Existing Credit Facilities and the sale of
capital stock. In 1995, net cash of $2.0 million was provided by financing
activities, primarily due to borrowings under the prior credit facility. For the
years ended December 31, 1995 and 1994, $2.0 million and $2.4 million,
respectively, was provided by financing activities, primarily as a result of
additional borrowings under the prior credit facility.
In March 1994, the Company completed an offering of $65 million of the
Existing Company Notes. The Existing Company Notes accrued interest at a rate of
11% per annum. The Company completed a tender offer for 100% of the outstanding
Existing Company Notes in October 1996.
The Company expects to fund its capital expenditures primarily with cash
from operations and expects its capital expenditures to be primarily for
development of additional structures. The Company intends to utilize its cash
from operations to continue to develop new advertising structures in each of its
markets, and, as appropriate opportunities arise, to acquire additional outdoor
advertising operations in its existing markets, in geographically proximate
markets and in contiguous markets. The Company is also exploring the development
of other forms of out-of-home media, such as bus shelter advertising and transit
advertising that management believes would complement the Company's existing
outdoor operations. The restrictions imposed by the New Credit Facility, the
indenture governing the October Notes and the Indenture may limit the Company's
use of cash from operations for these purposes.
41
<PAGE>
INFLATION
Inflation has not had a significant impact on the Company over the past
three years. The floating rate on the New Credit Facility could increase in an
inflationary environment, but management believes that because a significant
portion of the Company's costs are fixed, inflation will not have a material
adverse effect on its operations. However, there can be no assurance that a high
rate of inflation in the future will not have an adverse effect on the Company's
operations.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS No. 121, ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF, which established a new accounting principle for accounting for the
impairment of certain loans, certain investments in debt and equity securities,
long-lived assets that will be held and used including certain identifiable
intangibles and goodwill related to those assets, and long-lived assets and
certain identifiable intangibles to be disposed of. While the Company has not
completed its evaluation of the impact that will result from adopting this
statement, it does not believe that adoption of the statement will have a
significant impact on the Company's financial position and results of
operations.
42
<PAGE>
BUSINESS
GENERAL
The Company, which was incorporated in 1975, is a leading outdoor
advertising company operating approximately 31,202 advertising display faces in
3 large, regional operating areas: the Midwest (Chicago, Minneapolis/St. Paul,
Indianapolis, Milwaukee, Des Moines, Evansville and Dallas), the Southeast
(Orlando, Jacksonville, Palm Beach, Ocala and the Atlantic Coast and Gulf Coast
areas of Florida, Memphis/Tunica, Chattanooga, and Myrtle Beach) and the East
Coast (New York, Washington, D.C., Philadelphia, Northern New Jersey, Wilmington
(DE), Salisbury (MD) and Hudson Valley (NY)).
INDUSTRY OVERVIEW
The outdoor advertising industry has experienced increased advertiser
interest and revenue growth in recent years. Outdoor advertising generated total
revenues of approximately $1.8 billion in 1995, or approximately 1.1% of the
total advertising expenditures in the United States, and the out-of-home
advertising industry generated revenues in excess of $3.0 billion in 1995,
according to estimates by the Outdoor Advertising Association of America (the
"OAAA"), the trade association for the outdoor advertising industry. Outdoor
advertising's 1995 revenue represents growth of approximately 8.2% over
estimated total revenues for 1994, which compares favorably to the growth of
total U.S. advertising expenditures of approximately 7.7% during the same
period.
Advertisers purchase outdoor advertising for a number of reasons. Outdoor
advertising offers repetitive impact and a relatively low cost
per-thousand-impressions, a commonly used media measurement, as compared to
television, radio, newspapers, magazines and direct mail marketing. Accordingly,
because of its cost-effective nature, outdoor advertising is a good vehicle to
build mass market support. In addition, outdoor advertising can be used to
target a defined audience in a specific location and, therefore, can be relied
upon by local businesses concentrating on a particular geographic area where
customers have specific demographic characteristics. For instance, restaurants,
motels, service stations and similar roadside businesses may use outdoor
advertising to reach potential customers close to the point of sale and provide
directional information. Other local businesses such as television and radio
stations and consumer products companies may wish to appeal more broadly to
customers and consumers in the local market. National brand name advertisers may
use the medium to attract customers generally and build brand awareness. In all
cases, outdoor advertising can be combined with other media such as radio and
television to reinforce messages being provided to consumers.
The outdoor advertising industry has experienced significant change in
recent periods due to a number of factors. First, the entire "out-of-home"
advertising category has expanded to include, in addition to traditional
billboards and roadside displays, displays in shopping centers and malls,
airports, stadiums, movie theaters and supermarkets, as well as on taxis,
trains, buses, blimps and subways. Second, while the outdoor advertising
industry has experienced a decline in the use of outdoor advertising by tobacco
companies, it has increased its visibility with and attractiveness to local
advertisers as well as national retail and consumer product-oriented companies.
Third, the industry has benefitted significantly from improvements in production
technology, including the use of computer printing, vinyl advertising copy and
improved lighting techniques, which have facilitated a more dynamic, colorful
and creative use of the medium. These technological advances have permitted the
outdoor advertising industry to respond more promptly and cost effectively to
the changing needs of its advertising customers and make greater use of
advertising copy used in other media. Lastly, the outdoor advertising industry
has benefitted from the growth in automobile travel time for business and
leisure due to increased highway congestion and continued demographic shifts of
residences and businesses from the cities to outlying suburbs.
The outdoor advertising industry is comprised of several large outdoor
advertising and media companies with operations in multiple markets, as well as
many smaller and local companies operating a limited number of structures in a
single or few local markets. While the industry has experienced some
consolidation within the past few years, the OAAA estimates that there are still
approximately 1,000
43
<PAGE>
companies in the outdoor advertising industry operating approximately 396,000
billboard displays. The Company expects the trend of consolidation in the
outdoor advertising industry to continue.
OPERATING STRATEGY
The Company's objective is to be the leading provider of outdoor advertising
services in each of its three regional operating areas and to expand its
presence in attractive new markets. The Company believes that regional clusters
provide it with significant opportunities to increase revenue and achieve cost
savings by delivering to local and national advertisers efficient access to
multiple markets or highly targeted areas.
Management intends to implement the following operating strategy:
- MAXIMIZE RATES AND OCCUPANCY. Through continued emphasis on customer
sales and service, quality displays and inventory management, the Company seeks
to maximize advertising rates and occupancy levels in each of its markets. The
Company has recruited and trained a strong local sales staff supported by local
managers operating under specific, sales-based compensation targets designed to
obtain the maximum potential from the Company's display inventory.
- INCREASE MARKET PENETRATION. The Company seeks to expand operations
within its existing markets through new construction, with an emphasis on
painted bulletins, which generally command higher rates and longer term
contracts from advertisers than other types of display faces. In addition, the
Company historically has acquired, and intends to continue to acquire,
additional advertising display faces in its existing markets as opportunities
become available.
- PURSUE STRATEGIC ACQUISITIONS. In addition to improved penetration of
its existing markets, the Company also seeks to grow by acquiring additional
display faces in closely proximate new markets. Such new markets allow the
Company to capitalize on the operating efficiencies and cross-market sales
opportunities associated with operating in multiple markets within distinct
regions. The Company intends to develop new regional operating areas in regions
where attractive growth and consolidation opportunities exist.
- CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its ability to
effectively respond to its customers' needs. The Company's continued investment
in equipment and technology provides for greater ongoing benefits in the areas
of sales, production and operations.
- MAINTAIN LOW COST STRUCTURE. Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its Operating Cash Flow
Margin, which it believes to be among the highest in the industry. The Company
believes that its centralized administration provides opportunities for
significant operating leverage for further expansion in existing markets and for
future acquisitions.
- DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other
forms of out-of-home media such as bus shelter or transit advertising in order
to enhance revenues in existing markets or provide access to new markets.
Through implementation of this business strategy, the Company has increased
its outdoor advertising presence from 500 display faces in a single market in
1988 to approximately 31,202 in its markets at October 31, 1996.
ACQUISITIONS
Consistent with its operating strategy, the Company has recently acquired
the assets or capital stock of six outdoor advertising companies. The Company
believes that these acquisitions will significantly strengthen its market
presence in the midwest and southeast regions of the United States, give the
Company a substantial presence in the east coast region and allow the Company to
capitalize on the
44
<PAGE>
operating efficiencies and cross-market sales opportunities associated with
operating in closely proximate markets.
THE POA ACQUISITION. In August 1996, the Company agreed to purchase OAH
pursuant to a merger of a subsidiary of the Company with and into OAH. As a
result of the POA Acquisition, the Company acquired a total of approximately
6,337 advertising display faces consisting of bulletins and posters in five
markets located in the southeast United States, including Orlando, Ocala and
Palm Beach, as well as the East Coast and Gulf Coast areas of Florida, and
Myrtle Beach and Chattanooga.
THE REVERE ACQUISITION. The Company recently acquired a total of
approximately 8,853 advertising display faces located in the east coast of the
United States, including Philadelphia, Washington, D.C., Salisbury and
Wilmington, as well as 1,917 transit display faces located in Baltimore and
1,582 kiosk displays located in malls throughout the United States.
THE MEMPHIS/TUNICA ACQUISITION. In early January 1997, the Company acquired
a total of approximately 2,018 advertising display faces consisting of bulletins
and posters in and around Memphis, Tennessee and Tunica County, Mississippi.
THE MATTHEW ACQUISITION. In mid-January 1997, the Company purchased certain
of the assets of Matthew Outdoor Advertising Acquisition Co., L.P. As a result
of the Matthew Acquisition, the Company acquired 1,035 advertising display faces
consisting of posters and bulletins in three east coast markets.
THE ADDITIONAL ACQUISITIONS. In September 1996, the Company purchased
certain assets of Iowa Outdoor Displays and The Chase Company. As a result of
the Additional Acquisitions, the Company acquired approximately 160 advertising
display faces consisting primarily of posters in and around Des Moines and
approximately 245 advertising display faces consisting primarily of bulletins in
and around Dallas.
THE NAEGELE ACQUISITION. In April 1996, the Company acquired operations in
the Minneapolis/ St. Paul and Jacksonville markets. In a stock purchase
transaction with NOA Holding Company (the "Naegele Acquisition"), the Company
acquired approximately 2,550 poster faces (of which approximately 1,455 are
located in the Minneapolis/St. Paul market and approximately 1,095 are located
in the Jacksonville market) and approximately 840 painted bulletin faces (of
which approximately 440 are located in the Minneapolis/St. Paul market and
approximately 400 are located in the Jacksonville market).
THE OTHER ACQUISITIONS. In April 1996, the Company acquired 4 painted
bulletin faces in the Chicago market from Paramount Outdoor, Inc. in an asset
purchase transaction. In March 1996, through an asset purchase transaction with
Image Media, Inc., the Company acquired 18 painted bulletin and painted wall
faces in the Chicago market. In a transaction with Ad-Sign, Inc. in January
1996, the Company acquired approximately 160 painted bulletin faces in the
Chicago market. In April 1995, the Company acquired approximately 6 painted
bulletin faces in the Chicago market pursuant to a stock purchase transaction
with O&B Outdoor, Inc. The Company has integrated the newly acquired faces from
these acquisitions into its existing Chicago operations.
In March 1995, the Company completed two acquisitions in the Dallas market.
In a stock purchase transaction with Harrington Associates, Inc., the Company
acquired approximately 740 junior (8-sheet) poster faces located in the Dallas
market. In a stock purchase transaction with Best Outdoor, the Company acquired
approximately 387 junior (8-sheet) poster faces in the Dallas market.
45
<PAGE>
MARKETS
Each of the Company's markets generally possess demographic characteristics
that are attractive to national advertisers, allowing the Company to package its
displays in several of its markets in a single contract for advertisers in
national and regional campaigns. Each market also has unique local industries,
businesses, sports franchises and special events that are frequent users of
outdoor advertising. The following sets forth certain information for each of
the Company's markets as of October 31, 1996 after giving effect to the
Acquisitions:
<TABLE>
<CAPTION>
1995 % OF 1995 TOTAL
PRO FORMA PRO FORMA 30-SHEET 8-SHEET DISPLAY
MARKET NET REVENUES NET REVENUES BULLETINS POSTERS POSTERS FACES
- ------------------------- ---------------------- ------------ --------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
MIDWEST:
Chicago................ $ 16,579 10.1% 657 -- 3,671 4,328
Minneapolis/St. Paul... 16,320 10.0 453 1,362 -- 1,815
Indianapolis........... 9,897 6.0 257 1,385 142 1,927
Milwaukee.............. 4,686 2.9 259 -- 334 593
Des Moines............. 3,141 1.9 85 590 9 684
Evansville............. 3,028 1.9 146 694 -- 840
Dallas................. 1,738 1.1 245 -- 1,205 1,450
SOUTHEAST:
Orlando................ 22,253 13.7 849 1,088 -- 1,937
Jacksonville........... 8,528 5.2 367 899 -- 1,266
Palm Beach............. 290 0.2 103 21 -- 124
Ocala.................. 5,011 3.1 858 199 -- 1,057
Memphis/Tunica......... 13,104 8.1 706 1,179 133 2,018
Chattanooga............ 4,582 2.8 359 663 -- 1,022
Myrtle Beach........... 7,931 4.9 733 466 -- 1,199
Atlantic Coast area
(FL)................. 2,784 1.7 569 -- -- 569
Gulf Coast area (FL)... 1,095 0.7 485 -- -- 485
EAST COAST:
Philadelphia........... 13,511 8.3 364 2,117 -- 2,669
Washington, D.C........ 6,289 3.9 87 587 -- 674
Salisbury.............. 3,435 2.1 402 471 -- 873
Wilmington............. 4,576 2.8 163 930 45 1,138
Baltimore.............. 2,295 1.4 -- -- -- 1,917
Mall Media............. 2,636 1.6 -- -- -- 1,582
Northern NJ............ 4,362 2.7 158 5 6 169
Metro New York......... 3,375 2.1 53 384 -- 437
Hudson Valley.......... 1,312 0.8 145 257 27 429
-------- ----- --------- -------- ------- -------
Total................ $162,758 100.0% 8,503 13,297 5,572 31,202(1)
-------- ----- --------- -------- ------- -------
-------- ----- --------- -------- ------- -------
</TABLE>
- ------------------------
(1) Includes 143 transit display faces located in Indianapolis, 188 bus shelters
in Philadelphia, 1,917 transit display faces in Baltimore and 1,582 kiosk
displays in malls throughout the United States.
46
<PAGE>
INVENTORY
The Company operates three standard types of outdoor advertising display
faces and also has transit advertising as follows:
- BULLETINS generally are 14 feet high and 48 feet wide (672 square feet)
and consist of panels on which advertising copy is displayed. The advertising
copy is either hand painted onto the panels at the facilities of the outdoor
advertising company in accordance with design specifications supplied by the
advertiser and attached to the outdoor advertising structure, or is printed with
the computer-generated graphics on a single sheet of vinyl that is wrapped
around the structure. On occasion, to attract more attention, some of the panels
may extend beyond the linear edges of the display face and may include
three-dimensional embellishments. Because of their greater impact and higher
cost, bulletins are usually located on major highways.
- 30-SHEET POSTERS generally are 12 feet high by 25 feet wide (300 square
feet) and are the most common type of billboard. Advertising copy for 30-sheet
posters consists of lithographed or silk-screened paper sheets supplied by the
advertiser that are pasted and applied like wallpaper to the face of the
display, or single sheets of vinyl with computer-generated advertising copy that
are wrapped around the structure. Thirty-sheet posters are concentrated on major
traffic arteries.
- JUNIOR (8-SHEET) POSTERS usually are 6 feet high by 12 feet wide (72
square feet). Displays are prepared and mounted in the same manner as 30-sheet
posters, except that vinyl sheets are not typically used on junior posters. Most
junior posters, because of their smaller size, are concentrated on city streets
and target pedestrian traffic.
- TRANSIT ADVERTISING consists generally of posters and frames displayed on
the sides of public buses operating on city streets.
Billboards generally are mounted on structures owned by the outdoor
advertising company and located on sites that are either owned or leased by it
or on which it has acquired a permanent easement. Billboard structures are
durable, have long useful lives and do not require substantial maintenance. When
disassembled, they typically can be moved and relocated at new sites. The
Company's outdoor advertising structures are made of steel and other durable
materials built to withstand variable climates, including the rigors of the
midwestern climate. The Company expects its structures to last 15 years or more
without significant refurbishment.
LOCAL MARKET OPERATIONS
In each of its principal markets except Palm Beach, the Company maintains a
complete outdoor advertising operation including a sales office, a production,
construction and maintenance facility, a creative department equipped with
advanced technology, a real estate unit and support staff. The Company conducts
its outdoor advertising operations through these local offices, consistent with
senior management's belief that an organization with decentralized sales and
operations is more responsive to local market demand and provides greater
incentives to employees. At the same time, the Company maintains centralized
accounting and financial controls to allow it to closely monitor the operating
and financial performance of each market. Local general managers, who report
directly to the Company's President or a regional manager, are responsible for
the day-to-day operations of their respective markets and are compensated
according to the financial performance of such markets. In general, these local
managers oversee market development, production and local sales. The Company
intends to incorporate the operations acquired in the Acquisitions into this
operational structure with local offices handling the day-to-day operations and
centralized accounting and financial controls.
Although site leases (for land underlying an advertising structure) are
administered from the Company's headquarters in Chicago, each local office is
responsible for locating and ultimately procuring leases for appropriate sites
in its market. Site lease contracts vary in term but typically run from 10 to 20
years with various termination and renewal provisions. Each office maintains a
leasing department, with an extensive database containing information on local
property ownership, lease contract terms, zoning
47
<PAGE>
ordinances and permit requirements. The Company has been very successful in
developing new advertising display face inventory in each of its markets based
on utilizing these databases and developing an experienced staff of lease teams.
Each such team's sole responsibility is the procurement of sites for new
locations in each of the Company's markets.
SALES AND SERVICE
The Company's sales strategy is to maximize revenues from local advertisers.
Accordingly, it maintains a team of sales representatives headed by a sales
manager in each of its markets. The Company devotes considerable time and
resources to recruiting, training and coordinating the activities of its sales
force. A sales representative's compensation is heavily weighted to individual
performance, and the local sales manager's compensation is tied to the
performance of his or her sales team. One sales representative, based in
Chicago, manages sales to national advertisers. In total, as of September 30,
1996, approximately 62 of the Company's employees were significantly involved in
sales and marketing activities.
In addition to the sales staff, the Company has established fully staffed
and equipped creative departments in each of its principal markets except Palm
Beach. Utilizing technologically advanced computer hardware and software, the
staff is able to create original design copy for both local and national
accounts which has allowed the various creative departments to exchange work via
modem or over the Internet with each other or directly with clients or their
agencies. This ability has resulted in many fully staffed advertising agencies
turning to the Company for the creation of their outdoor campaigns. The Company
believes that its creative department's implementation of continuing
technological advances provides a significant competitive advantage in its sales
and service area.
CUSTOMERS
Advertisers usually contract for outdoor displays through advertising
agencies, which are responsible for the artistic design and written content of
the advertising as well as the choice of media and the planning and
implementation of the overall campaign. The Company pays commissions to the
agencies for advertising contracts that are procured by or through those
agencies. Advertising rates are based on a particular display's exposure (or
number of "impressions" delivered) in relation to the demographics of the
particular market and its location within that market. The number of
"impressions" delivered by a display is measured by the number of vehicles
passing the site during a defined period and is weighted to give effect to such
factors as its proximity to other displays, the speed and viewing angle of
approaching traffic, the national average of adults riding in vehicles and
whether the display is illuminated. The number of impressions delivered by a
display is verified by independent auditing companies.
The size and geographic diversity of the Company's markets allow it to
attract national advertisers, often by packaging displays in several of its
markets in a single contract to allow a national advertiser to simplify its
purchasing process and present its message in several markets. National
advertisers generally seek wide exposure in major markets and therefore tend to
make larger purchases. The Company competes for national advertisers primarily
on the basis of price, location of displays, availability and service.
The Company also focuses efforts on local sales, and approximately 78% of
the Company's gross revenues in 1995, after giving effect to the Acquisitions,
were generated from local advertisers. Local advertisers tend to have smaller
advertising budgets and require greater assistance from the Company's production
and creative personnel to design and produce advertising copy. In local sales,
the Company often expends more sales efforts on educating customers regarding
the benefits of outdoor media and helping potential customers develop an
advertising strategy using outdoor advertising. While price and availability are
important competitive factors, service and customer relationships are also
critical components of local sales.
Tobacco revenues have historically accounted for a significant portion of
outdoor advertising revenues. Beginning in 1993, the leading tobacco companies
substantially reduced their expenditures for outdoor advertising due to a
declining population of smokers, societal pressures, consolidation in the
48
<PAGE>
tobacco industry and price competition from generic brands. Since tobacco
advertisers often utilized some of the industry's prime inventory, the decline
in tobacco-related advertising expenditures made this space available for other
advertisers, including those that had not traditionally utilized outdoor
advertising. As a result of this decline in tobacco-related advertising revenues
and the increased use of outdoor advertising by other advertisers, the range of
the Company's advertisers has become quite diverse. The following table
illustrates the diversity of the Company's advertising base giving effect to the
Acquisitions:
1995 PRO FORMA NET REVENUES BY CATEGORY
<TABLE>
<CAPTION>
PERCENTAGE
OF
NET REVENUES
------------
<S> <C>
Travel/Entertainment............................................................ 13.9%
Tobacco......................................................................... 10.8
Retail/Consumer Products........................................................ 10.0
Automotive & Related............................................................ 10.0
Restaurant...................................................................... 8.0
Home Developer/Real Estate...................................................... 6.0
Advertising/Media............................................................... 3.9
Alcohol......................................................................... 3.7
Hotels/Motels................................................................... 3.3
Professional Services........................................................... 3.3
Other........................................................................... 27.1
------------
Total....................................................................... 100.0%
------------
------------
</TABLE>
PRODUCTION
The Company has internal production facilities and staff to perform the full
range of activities required to develop, create and install outdoor advertising
in all of its markets. Production work includes creating the advertising copy
design and layout, painting the design or coordinating its printing and
installing the designs on its displays. In addition, the Company's substantial
new development activity has allowed it to vertically integrate its own sign
fabrication ability so that new signs are fabricated and erected in-house. The
Company usually provides its full range of production services to local
advertisers and to advertisers that are not represented by advertising agencies,
since national advertisers and advertisers represented by advertising agencies
often use preprinted designs that require only installation. However, the
Company's creative and production personnel frequently are involved in
production activities even when advertisers are represented by agencies due to
the development of new designs or adaptation of copy from other media for use on
billboards. The Company's artists also assist in the development of marketing
presentations, demonstrations and strategies to attract new advertisers.
With the increased use of vinyl and pre-printed advertising copy furnished
to the outdoor advertising company by the advertiser or its agency, outdoor
advertising companies are becoming less responsible for labor-intensive
production work since vinyl and pre-printed copy can be installed quickly. The
vinyl sheets are reusable, thereby reducing the Company's production costs, and
are easily transportable. Due to the geographic proximity of the Company's
principal markets and the transportability of vinyl sheets, the Company can
shift materials among markets to promote efficiency. The Company believes that
this trend over time will reduce operating expenses associated with production
activities.
COMPETITION
The Company competes in each of its markets with other outdoor advertisers
as well as other media, including broadcast and cable television, radio, print
media and direct mail marketers. In addition, the Company also competes with a
wide variety of "out-of-home" media, including advertising in shopping centers
and malls, airports, stadiums, movie theaters and supermarkets, as well as on
taxis, trains, buses and subways. Advertisers compare relative costs of
available media and cost-per-thousand impressions,
49
<PAGE>
particularly when delivering a message to customers with distinct demographic
characteristics. In competing with other media, outdoor advertising relies on
its low cost-per-thousand-impressions and its ability to repetitively reach a
broad segment of the population in a specific market or to target a particular
geographic area or population with a particular set of demographic
characteristics within that market.
The outdoor advertising industry is highly fragmented, consisting of several
large outdoor advertising and media companies with operations in multiple
markets as well as smaller and local companies operating a limited number of
structures in single or a few local markets. Although some consolidation has
occurred over the past few years, according to the OAAA, there are approximately
1,000 companies in the outdoor advertising industry operating approximately
396,000 billboard displays. In several of its markets, the Company encounters
direct competition from other major outdoor media companies, including Outdoor
Systems, Inc., Eller Media, Inc. (formerly Patrick Media Group) and 3M National
Advertising Co. (a division of Minnesota Mining and Manufacturing Company), each
of which has a larger national network and greater total resources than the
Company. The Company believes that its emphasis on local advertisers and its
position as a major provider of advertising services enable it to compete
effectively with the other outdoor media operators, as well as other media. The
Company also competes with other outdoor advertising companies for sites on
which to build new structures. See "Risk Factors -- Competition."
GOVERNMENT REGULATION
The outdoor advertising industry is subject to governmental regulation at
the federal, state and local level. Federal law, principally the Highway
Beautification Act of 1965, encourages states, by the threat of withholding
federal appropriations for the construction and improvement of highways within
such states, to implement legislation to restrict billboards located within 660
feet of, or visible from, interstate and primary highways except in commercial
or industrial areas. All of the states have implemented regulations at least as
restrictive as the Highway Beautification Act, including the prohibition on the
construction of new billboards adjacent to federally-aided highways and the
removal at the owner's expense and without any compensation of any illegal signs
on such highways. The Highway Beautification Act, and the various state statutes
implementing it, require the payment of just compensation whenever governmental
authorities require legally erected and maintained billboards to be removed from
federally-aided highways.
The states and local jurisdictions have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify minimum standards for the height,
size and location of billboards. In some cases, the construction of new
billboards or relocation of existing billboards is prohibited. Some
jurisdictions also have restricted the ability to enlarge or upgrade existing
billboards, such as converting from wood to steel or from non-illuminated to
illuminated structures. From time to time governmental authorities order the
removal of billboards by the exercise of eminent domain. Thus far, the Company
has been able to obtain satisfactory compensation for any of its structures
removed at the direction of governmental authorities, although there is no
assurance that it will be able to continue to do so in the future.
In recent years, there have been movements to restrict billboard advertising
of certain products, including tobacco and alcohol. No bills have become law at
the federal level except those requiring health hazard warnings similar to those
on cigarette packages and print advertisements. It is uncertain whether
additional legislation of this type will be enacted on the national level or in
any of the Company's markets.
In August 1996, the U.S. Food and Drug Administration issued final
regulations governing certain marketing practices in the tobacco industry. Among
other things, the regulations prohibit tobacco product billboard advertisements
within 1,000 feet of schools and playgrounds and require that tobacco product
advertisements on billboards be in black and white and contain only text. In
addition, one major tobacco manufacturer recently proposed federal legislation
banning 8-sheet billboard advertising and transit advertising of tobacco
products. A reduction in billboard advertising by the tobacco industry could
cause an immediate reduction in the Company's direct revenue from such
advertisers and would simultaneously
50
<PAGE>
increase the available space on the existing inventory of billboards in the
outdoor advertising industry. See "Business -- Customers" and "Risk Factors --
Tobacco Industry Regulations."
Amortization of billboards has also been adopted in varying forms in certain
jurisdictions. Amortization permits the billboard owner to operate its billboard
as a non-conforming use for a specified period of time until it has recouped its
investment, after which it must remove or otherwise conform its billboard to the
applicable regulations at its own cost without any compensation. Amortization
and other regulations requiring the removal of billboards without compensation
have been subject to vigorous litigation in state and federal courts and cases
have reached differing conclusions as to the constitutionality of these
regulations. To date, regulations in the Company's markets have not materially
adversely affected its operations, except in the Jacksonville market, where the
Company has been subject to regulatory efforts and recently agreed to city
ordinances to remove a number of faces. On March 22, 1995, following litigation
over an ordinance and a municipal charter amendment, Naegele entered into an
agreement with the City of Jacksonville to remove 711 billboard faces over a
twenty year period starting January 1, 1995 and ending December 31, 2014. The
resolution specifies the following removal schedule:
<TABLE>
<CAPTION>
30-SHEET 8-SHEET
CALENDAR YEARS BULLETINS POSTERS POSTERS TOTAL
- --------------------------------------------------------- ------------- ----------- ----------- -----
<S> <C> <C> <C> <C>
1995-1998................................................ 73 242 167 482
1999-2004................................................ 23 87 -- 110
2005-2014................................................ 23 96 -- 119
--- --- --- ---
119 425 167 711
--- --- --- ---
--- --- --- ---
</TABLE>
Under the agreement, Naegele and the City of Jacksonville have agreed on the
removal of 445 pre-selected faces, including 167 (100%) of its 8-sheet faces.
Management of the Company has control over the selection and removal of an
additional 155 faces. The remaining 111 faces to be removed will be selected by
the Company from a pool of faces identified by the City. While the number of
signs being taken down represents a large percentage of Naegele's plant in the
Jacksonville market, the Company believes that Jacksonville has been overbuilt
for a number of years, leading to low occupancy levels and low advertising
rates. The removal of a number of marginally profitable boards is expected to
put upward pressure on rates. Additionally, the removals are staggered over 20
years, with management having substantial input on which signs are removed and
some rights of substitution and rebuilding of outdoor advertising structures in
the Jacksonville market.
On February 1, 1991, Naegele entered into a consent judgment to settle a
complaint brought by the Minnesota Attorney General under Minnesota anti-trust
laws pursuant to which Naegele and its successors are prohibited from purchasing
outdoor advertising displays in the Minneapolis/St. Paul market from other
operators of outdoor advertising displays until February 1, 2001. The consent
judgment also prohibits the Company from enforcing certain covenants not to
compete and from entering into property leases in excess of 15 years. The
consent judgment does not affect the Company's ability to continue to develop
and build new advertising displays in the Minneapolis/St. Paul market.
Additionally, the Company can purchase displays from brokers or other
non-operators.
The outdoor advertising industry is heavily regulated and at various times
and in various markets can be expected to be subject to varying degrees of
regulatory pressure affecting the operation of advertising displays.
Accordingly, although the Company's experience to date is that the regulatory
environment has not adversely impacted the Company's business, other than in the
newly acquired Jacksonville market, no assurance can be given that existing or
future laws or regulations will not materially adversely affect the Company at
some time in the future.
OUTDOOR ADVERTISING PROPERTIES; OFFICE AND PRODUCTION FACILITIES
OUTDOOR ADVERTISING SITES. Giving effect to the Acquisitions, the Company
owns or has permanent easements on approximately 337 parcels of real property
that serve as the sites for its outdoor displays. The Company's remaining
approximately 12,376 advertising display sites are leased or licensed.
51
<PAGE>
The Company's leases are for varying terms ranging from month-to-month or
year-to-year to terms of ten years or longer, and many provide for renewal
options. There is no significant concentration of displays under any one lease
or subject to negotiation with any one landlord. The Company believes that an
important part of its management activity is to manage its lease portfolio and
negotiate suitable lease renewals and extensions.
OFFICE AND PRODUCTION FACILITIES. The Company's principal executive and
administration offices are located in Chicago, Illinois in a 6,956-square foot
space leased by the Company. In addition, after giving effect to the
Acquisitions, the Company has an office and complete production and maintenance
facility in each of Addison, Illinois (40,000 square feet); Orlando (20,500
square feet); Memphis (24,844 square feet); Chattanooga (14,580 square feet);
Ocala (11,700 square feet); Myrtle Beach (14,792 square feet); Milwaukee (18,367
square feet); Indianapolis (23,648 square feet); Des Moines (15,320 square
feet); Minneapolis/ St. Paul (82,547 square feet); Jacksonville (16,000 square
feet); Evansville (16,000 square feet); Philadelphia (32,000 square feet);
Washington, D.C. (15,668 square feet); Salisbury (12,000 square feet);
Wilmington (5,700 square feet); Baltimore (8,000 square feet); Yonkers, NY
(4,900 square feet); and Kingston, NY (3,000 square feet) and a sales, real
estate and administration office in Dallas (2,000 square feet); New York (6,000
square feet); and Orange County, CA (4,000 square feet). The Indianapolis,
Addison, Orlando, Milwaukee, Jacksonville, Myrtle Beach, Chattanooga, Ocala,
Evansville, Philadelphia, Washington, D.C., Salisbury, Wilmington, Yonkers and
Kingston facilities are owned and all other facilities are leased. The Company
considers its facilities to be well maintained and adequate for its current and
reasonably anticipated future needs.
EMPLOYEES
At September 30, 1996, the Company employed approximately 334 people, of
whom approximately 62 were primarily engaged in sales and marketing, 209 were
engaged in painting, bill posting and construction and maintenance of displays
and the balance were employed in financial, administrative and similar
capacities. The Milwaukee market has 16 employees who belong to a union and the
Minneapolis/St. Paul market has 22 employees who belong to unions. The Company
considers its relations with the unions and with its employees to be good.
LITIGATION
The Company, as the successor to POA Acquisition Company, is a defendant in
a case entitled IMPACT COMMUNICATIONS OF CENTRAL FLORIDA, INC., ET AL. vs.
NATIONAL OUTDOOR ADVERTISING, ET AL., filed on February 13, 1995, pending in the
United States District Court, Middle District of Florida. Impact Communications
has alleged that POA, among others, conspired to restrain trade and to
monopolize the market for leases for land on which outdoor advertising
structures can be erected. The case has been set for trial in February 1997. The
plaintiffs have alleged that the acts of the defendants resulted in harm to the
plaintiffs and damages of $4 to 12 million, which could be trebled under the
applicable laws. The Company intends to defend the case vigorously. There can be
no assurance, however, as to the ultimate outcome of this litigation.
52
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The table below sets forth certain information with respect to the directors
and executive officers of the Company. All directors serve terms of one year or
until the election of their respective successors.
<TABLE>
<CAPTION>
YEARS WITH THE
NAME AGE POSITION COMPANY
- ------------------------------ --- ------------------------------------------------------------ -----------------
<S> <C> <C> <C>
Daniel L. Simon*.............. 45 Chief Executive Officer, President and Director 23
Brian T. Clingen.............. 37 Vice President, Chief Financial Officer and Director 8
Paul G. Simon*................ 43 Vice President, Secretary and General Counsel 6
Michael J. Roche.............. 45 Director 2
Michael B. Goldberg........... 49 Director **
Frank K. Bynum, Jr............ 33 Director **
</TABLE>
- ------------------------
* Daniel L. and Paul G. Simon are brothers.
** Became a director in 1996.
Mr. Daniel Simon, a founder and a principal beneficial stockholder of the
Company, has been the President of the Company since 1989 and a director since
its formation. Mr. Simon has 23 years of experience in the outdoor advertising
industry and serves on the executive and legislative committees of the Outdoor
Advertising Association of America. Mr. Simon is a director of Parent.
Mr. Clingen has served as Vice President and Chief Financial Officer of the
Company since December 1987 and as a director since 1990. From 1983 to 1987, Mr.
Clingen worked for Elmore Group ("Elmore"), a diversified property and service
company, and served as Chief Financial Officer of an Elmore subsidiary. Mr.
Clingen is a certified public accountant. Mr. Clingen is a director of Parent.
Mr. Paul Simon has been Vice President and General Counsel of the Company
since 1989 and has served as Secretary of the Company since July 1991. Mr. Simon
was in the private practice of law in Illinois from 1978 to 1989, specializing
in commercial litigation, general corporate matters, real estate and mergers and
acquisitions. Mr. Simon represented the Company as outside counsel from 1981 to
1989.
Mr. Roche has been National Marketing Manager (Licensed Businesses) for
Sears, Roebuck and Co. since 1985. Prior thereto, he was an Assistant Marketing
Manager from 1984 to 1985 and a National Sales Promotion Manager from 1980 to
1984 for Sears, Roebuck and Co. Mr. Roche has been a director of the Company
since November 1993. Mr. Roche is a director of Parent.
Mr. Goldberg has been a director of the Company since April 5, 1996. Mr.
Goldberg has been a Managing Director of Kelso & Company, L.P. since October
1991. Mr. Goldberg served as a Managing Director and jointly managed the merger
and acquisitions department at The First Boston Corporation from 1989 to May
1991. Mr. Goldberg was a partner at the law firm of Skadden, Arps, Slate,
Meagher & Flom from 1980 to 1989. Mr. Goldberg is a director of General Medical
Corporation, Hosiery Corporation of America, Inc., United Refrigerated Services,
Inc. and Parent.
Mr. Bynum has been a director of the Company since July 1996. Mr. Bynum has
been a Vice President of Kelso & Company, L.P. since July 1991, and was an
Associate of Kelso & Company, L.P. from October 1987 to July 1991. He is a
director of Hosiery Corporation of America, Inc., IXL Holdings, Inc., United
Refrigerated Services, Inc. and Parent.
For their services as directors, the members of the Board of Directors who
are not employees of the Company or affiliates of Kelso & Company, L.P. are paid
an aggregate of $10,000 annually. All directors are reimbursed for reasonable
expenses associated with their attendance at meetings of the respective Boards
of Directors.
53
<PAGE>
Executive officers of the Company are elected by the Board of Directors on
an annual basis and serve at the discretion of the Board of Directors.
On December 23, 1992, Kelso & Companies, Inc., the general partner of Kelso
& Company, L.P., and its chief executive officer, without admitting or denying
the findings contained therein, consented to an administrative order in respect
of an inquiry by the SEC relating to the 1990 acquisition of a portfolio company
by an affiliate of Kelso & Companies, Inc. The order found that the tender offer
filing by Kelso & Companies, Inc. in connection with the acquisition did not
comply fully with the SEC's tender offer reporting requirements, and required
Kelso & Companies, Inc. and its chief executive officer to comply with these
requirements in the future.
Pursuant to the Articles of Incorporation of the Company, the Board of
Directors of the Company shall have the same members as the Board of Directors
of Parent. Parent has an agreement with Kelso & Company, L.P. that permits Kelso
& Company, L.P. to nominate two persons for the Board of Directors to be voted
upon by the shareholders. Messrs. Goldberg and Bynum have been retained as
directors of Parent as a result of such agreement. The agreement also provides
that at least one of such nominees, if elected to the Board of Directors, will
also serve on Parent's compensation committee. See "Certain Transactions."
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation paid during 1994, 1995 and 1996 to the Company's Chief Executive
Officer and each other executive officer whose total annual salary and bonus
that year exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- ------------------------------------------------------------------- --------- ---------- ----------- -----------------
<S> <C> <C> <C> <C>
Daniel L. Simon.................................................... 1996 $ 224,379 $ 0 $ 1,000
President and Chief Executive Officer 1995 224,379 0 1,000
1994 249,250 0 500
Brian T. Clingen................................................... 1996 $ 145,128 $ 0 $ 1,000
Chief Financial Officer and Vice President 1995 145,128 0 1,000
1994 145,852 0 500
Paul G. Simon...................................................... 1996 $ 158,176 $ 0 $ 1,000
Vice President, Secretary and General Counsel 1995 158,176 0 1,000
1994 158,968 0 500
</TABLE>
- ------------------------
(1) Represents contributions made by the Company on behalf of the named
executive officers to a 401(k) plan.
Parent currently maintains two life insurance policies covering Daniel L.
Simon, each in the amount of $2.5 million. Parent is the sole beneficiary under
each policy. Pursuant to a buy-sell agreement between Parent and Mr. Simon,
Parent has agreed to use up to $3.5 million of the proceeds from these policies
to purchase a portion of Mr. Simon's shares of Common Stock of Parent from his
estate.
AUDIT COMMITTEE; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of Parent formed an Audit Committee in July 1996
which is responsible for reviewing Parent's accounting controls and recommending
to the Board of Directors the engagement of Parent's outside auditors. The
members of Parent's Audit Committee are Daniel L. Simon, Michael J. Roche and
Frank K. Bynum. The Company has no Audit Committee.
54
<PAGE>
The Board of Directors of Parent formed a Compensation Committee in July
1996 which is responsible for reviewing and approving the amount and type of
consideration to be paid to senior management. The members of Parent's
Compensation Committee are Daniel L. Simon, Brian T. Clingen and Michael B.
Goldberg. Parent has agreed that a KIA V (as defined below) designee will be on
the Compensation Committee so long as there is such a designee on the Board of
Directors. The Company has no Compensation Committee.
55
<PAGE>
CERTAIN TRANSACTIONS
On April 5, 1996, Parent issued to Kelso Investment Associates V, L.P. ("KIA
V") and Kelso Equity Partners V, L.P. ("KEP V") and certain individuals
designated by Kelso & Company, L.P. (the "Kelso Designees") 186,500 shares of
Class B Common Stock and 188,500 shares of Class C Common Stock (prior to a
subsequent 16 for 1 stock split) in exchange for $30,000,000. At such time,
Parent also agreed to pay a one-time fee of $1,250,000 in cash and an annual fee
of $150,000 to Kelso & Company, L.P., an affiliate of KIA V and KEP V, for
consulting and advisory services to Parent. Messrs. Goldberg and Bynum,
directors of the Company, are Managing Director and Vice President,
respectively, of Kelso & Company, L.P., limited partners of the general partner
of KIA V and limited partners of KEP V.
In July 1996, Parent entered into agreements with KIA V, KEP V and certain
individual shareholders relating to certain rights of KIA V, KEP V and such
individual shareholders as holders of Class B Common Stock and Class C Common
Stock of Parent. Pursuant to such agreements, Parent agreed to reclassify the
shares of Class B Common Stock and Class C Common Stock into a total of
6,000,000 shares of Common Stock, of which 2,500,000 were sold in the IPO. See
"Principal Shareholders." Pursuant to such agreements, the annual consulting and
advisory fee of $150,000 payable to Kelso & Company, L.P. was terminated but
Kelso & Company, L.P.'s reimbursement of expenses and indemnification rights in
connection therewith remained in effect. In connection with the IPO, Kelso &
Company, L.P. received a one-time fee of $650,000. In addition, as a result of
the reclassification, KIA V, KEP V and such individual shareholders have the
same rights as holders of Parent's Common Stock. In connection with the
reclassification, KIA V was granted the right to nominate two persons for seats
on the Board of Directors of Parent and consequently of the Company to be voted
upon by the stockholders, with one of such directors, if elected, to be a member
of the Compensation Committee of Parent. The Company's Articles of Incorporation
provide that the members of its Board of Directors shall be identical to those
of Parent's Board of Directors.
As a component of its growth strategy, in July 1995, the Company entered
into a consulting agreement with Urban Development, L.L.C. ("Urban") whereby
Urban shall consult with, and develop new sign locations in the Milwaukee and
Chicago markets for the Company. Urban agreed to provide consulting services to
the Company over a period of 10 years in consideration of $1,400,000 which was
paid on such date. The managing member of Urban is Lawrence J. Simon, a former
officer and director of the Company and the brother of Daniel L. Simon and Paul
G. Simon. Lawrence J. Simon resigned as a director and an executive vice
president of the Company on October 4, 1995.
In April 1996, the Company acquired four painted bulletin faces in Chicago
from Paramount Outdoor, Inc. ("Paramount") in an asset purchase transaction.
Messrs. Quas and Sauber are the owners of Paramount. In exchange for the four
painted bulletin faces, the Company agreed to pay $500,000 in cash at the time
of purchase, $1,400 monthly for the next 24 months and an additional $168,000
payable two years after such purchase date, provided, the gross revenues
received by the Company from the purchased assets equal or exceed $333,600. In
1993, Paramount had purchased the Chicago sites (including the lease rights,
permits and structures) from a joint venture between the Company and HMS, Inc.,
an unaffiliated entity, for $100,000, which the Company believes represented
market price.
All of the transactions described above were approved by the Company's
independent outside director. The Company will not engage in transactions with
its affiliates in the future unless the terms of such transactions are approved
by a majority of its independent outside directors. In addition, the New Credit
Facility and the Indenture impose limitations on the Company's ability to engage
in such transactions. See "Description of Notes--Certain Covenants" and
"Description of Indebtedness and Other Commitments."
56
<PAGE>
PRINCIPAL STOCKHOLDERS
Parent owns 100% of the issued and outstanding capital stock of the Company.
The table below sets forth the number and percentage of outstanding shares of
Parent's Common Stock that will be beneficially owned by (i) each director of
the Company, (ii) each executive officer identified under "Management Executive
- -- Compensation," (iii) all directors and executive officers of the Company as a
group and (iv) each person known by the Company to own beneficially more than 5%
of Parent's Common Stock. The Company believes that each individual or entity
named has sole investment and voting power with respect to shares of Common
Stock indicated as beneficially owned by them, except as otherwise noted.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
-----------------------------
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS
- -------------------------------------------------------------------------------------- -------------- -------------
<S> <C> <C>
Daniel L. Simon....................................................................... 8,584,008(1) 32.4%
321 North Clark Street
Chicago, Illinois 60610
Brian T. Clingen...................................................................... -- (2) --
321 North Clark Street
Chicago, Illinois 60610
Paul G. Simon......................................................................... -- (3) --
321 North Clark Street
Chicago, Illinois 60610
Michael J. Roche...................................................................... 2,000 -- (4)
333 Beverly Road, E5-312A
Hoffman Estates, Illinois 60179
Michael B. Goldberg(5)................................................................ 55,460 -- (4)
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Frank K. Bynum, Jr.(5)................................................................ 30,688 -- (4)
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Kelso Investment Associates V, L.P.(6)(7)............................................. 2,847,871 11.9
Kelso Equity Partners V, L.P.(6)(7)................................................... 151,779 -- (4)
Joseph N. Schuchert(6)(8)............................................................. 2,999,650 12.5
Frank T. Nickell(6)(8)................................................................ 3,134,879 13.1
George E. Matelich(6)(8).............................................................. 3,063,293 12.8
Thomas R. Wall, IV(6)(8).............................................................. 3,080,072 12.8
All directors and executive officers as a group (6 persons)........................... 8,672,156 32.8
</TABLE>
- ------------------------
(1) Daniel L. Simon's beneficial ownership includes 5,096,540 shares that he
owns directly, 88,000 shares held by The Simon Family Limited Partnership of
which he is a general partner, 1,995,000 shares issuable to him upon
exercise of the Management Warrants, 928,860 shares over which he has voting
control pursuant to certain voting trust agreements with Brian T. Clingen
and Paul G. Simon, and 475,608 shares issuable to Brian T. Clingen and Paul
G. Simon upon exercise of the Management Warrants over which Daniel L. Simon
has voting control pursuant to certain voting trust agreements.
57
<PAGE>
(2) Brian T. Clingen owns 802,852 shares directly, 352,078 shares issuable to
him upon exercise of the Management Warrants, and 125,008 shares held by The
Clingen Family Limited Partnership of which he is a general partner, which
represent 5.3% of the Common Stock. The voting rights for such shares have
been granted to Daniel L. Simon pursuant to a voting trust agreement.
(3) Paul G. Simon owns 1,000 shares directly and 123,530 shares issuable to him
upon exercise of the Management Warrants which represent less than 1% of the
Common Stock, the voting rights of which have been granted to Daniel L.
Simon pursuant to a voting trust agreement.
(4) Represents less than 1% of the Common Stock.
(5) Messrs. Goldberg and Bynum may be deemed to share beneficial ownership of
shares of Common Stock owned of record by KIA V by virtue of their status as
limited partners of the general partner of KIA V and as limited partners of
KEP V. Messrs. Goldberg and Bynum disclaim beneficial ownership of such
securities. Mr. Goldberg has been a director of Parent since April 1996 and
Mr. Bynum became a director of Parent following consummation of the IPO.
(6) The business address for such person(s) is c/o Kelso & Company, 320 Park
Avenue, 24th Floor, New York, New York 10022.
(7) KIA V and KEP V due to their common control, could be deemed to beneficially
own each other's shares, but each disclaims such beneficial ownership.
(8) Messrs. Schuchert, Nickell, Matelich and Wall may be deemed to share
beneficial ownership of shares of Common Stock owned of record by KIA V and
KEP V, by virtue of their status as general partners of the general partner
of KIA V and as general partners of KEP V. Messrs. Schuchert, Nickell,
Matelich and Wall share investment and voting power with respect to
securities owned by KIA V and KEP V, but disclaim beneficial ownership of
such securities.
58
<PAGE>
DESCRIPTION OF NOTES
The New Notes offered hereby will be issued under the Indenture between the
Company and United States Trust Company of New York, as Trustee, a copy of which
is filed as an exhibit to the Registration Statement of which this Prospectus
constitutes a part. The following summary, which describes certain provisions of
the Indenture and the Notes, does not purport to be complete and is subject to,
and is qualified in its entirety, by reference to the TIA and all of the
provisions of the Indenture and the Notes, including the definitions therein of
terms not defined in this Prospectus. Certain terms used in this section are
defined below for purposes of this section under "-- Certain Definitions." The
terms of the New Notes are substantially identical in all material respects to
the Old Notes except that the New Notes will not contain terms with respect to
certain transfer restrictions and registration rights relating to the Old Notes.
GENERAL
The Notes will be senior subordinated, unsecured, general obligations of the
Company, limited in aggregate principal amount to $100 million. The Notes will
be subordinate in right of payment to certain other debt obligations of the
Company. The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
The Notes will mature on October 15, 2006. The Notes will bear interest at
the rate per annum stated on the cover page hereof from the date of issuance or
from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semi-annually on April 15 and October 15 of each year,
commencing April 15, 1997, to the persons in whose names such Notes are
registered at the close of business on the April 1 or October 1 immediately
preceding such Interest Payment Date. Interest will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be presented for registration of transfer or exchange, at the
office or agency of the Company maintained for such purpose, which office or
agency shall be maintained in the Borough of Manhattan, The City of New York. At
the option of the Company, payment of interest may be made by check mailed to
the Holders of the Notes at the addresses set forth upon the registry books of
the Company, PROVIDED, that all payments with respect to the Global Note, and
certificated Notes the Holders of which have given wire transfer instructions to
the Company, will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Until otherwise designated
by the Company, the Company's office or agency will be the corporate trust
office of the Trustee presently located at the office of the Trustee in the
Borough of Manhattan, The City of New York.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note.
All Old Notes and New Notes will be treated as a single class of securities
under the Indenture.
SUBORDINATION
The Notes will be general, unsecured obligations of the Company,
subordinated in right of payment to all Senior Debt of the Company. On a PRO
FORMA basis, as of December 31, 1996, after giving effect to the Transactions,
the Offering and the October Offerings and the application of the proceeds
therefrom, the Company would have had outstanding an aggregate of approximately
$136.5 million of Senior Debt.
The Indenture provides that no payment (by set-off or otherwise) may be made
by or on behalf of the Company on account of the principal of, premium, if any,
or interest on the Notes (including any repurchases of Notes), or on account of
the redemption provisions of the Notes, for cash or property (other than Junior
Securities), (i) upon the maturity of any Senior Debt of the Company by lapse of
time, acceleration (unless waived) or otherwise, unless and until all principal
of, premium, if any, and the interest on such Senior Debt are first paid in full
in cash or Cash Equivalents (or such payment is duly
59
<PAGE>
provided for) or otherwise to the extent holders accept satisfaction of amounts
due by settlement in other than cash or Cash Equivalents, or (ii) in the event
of default in the payment of any principal of, premium, if any, or interest on
Senior Debt of the Company when it becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration or otherwise (a "Payment
Default"), unless and until such Payment Default has been cured or waived or
otherwise has ceased to exist.
Upon (i) the happening of an event of default (other than a Payment Default)
that permits the holders of Senior Debt to declare such Senior Debt to be due
and payable and (ii) written notice of such event of default given to the
Company and the Trustee by the agent under the Credit Agreement or the
representative of the holders of an aggregate of at least $10 million principal
amount outstanding of any other Senior Debt (each, a "Senior Debt
Representative") (a "Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment
(by set-off or otherwise) may be made by or on behalf of the Company which is an
obligor under such Senior Debt on account of the principal of, premium, if any,
or interest on the Notes (including any repurchases of any of the Notes), or on
account of the redemption provisions of the Notes, in any such case, other than
payments made with Junior Securities. Notwithstanding the foregoing, unless the
Senior Debt in respect of which such event of default exists has been declared
due and payable in its entirety within 179 days after the Payment Notice is
delivered as set forth above (the "Payment Blockage Period") (and such
declaration has not been rescinded or waived), at the end of the Payment
Blockage Period, the Company shall, unless a Payment Default exists, be required
to pay all sums not paid to the Holders of the Notes during the Payment Blockage
Period due to the foregoing prohibitions and to resume all other payments as and
when due on the Notes. Any number of Payment Notices may be given; PROVIDED,
HOWEVER, that (i) not more than one Payment Notice shall be given within a
period of any 360 consecutive days, and (ii) no default that existed upon the
date of such Payment Notice or the commencement of such Payment Blockage Period
(whether or not such event of default is on the same issue of Senior Debt) shall
be made the basis for the commencement of any other Payment Blockage Period.
Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar
proceeding or upon assignment for the benefit of creditors or any marshalling of
assets or liabilities, (i) the holders of all Senior Debt of the Company will
first be entitled to receive payment in full in cash or Cash Equivalents (or
have such payment duly provided for) before the Holders are entitled to receive
any payment on account of principal of, premium, if any, and interest on the
Notes (other than Junior Securities) and (ii) any payment or distribution of
assets of the Company of any kind or character from any source, whether in cash,
property or securities (other than Junior Securities) to which the Holders or
the Trustee on behalf of the Holders would be entitled (by set-off or
otherwise), except for the subordination provisions contained in the Indenture,
will be paid by the liquidating trustee or agent or other person making such a
payment or distribution directly to the holders of such Senior Debt or their
representative to the extent necessary to make payment in full (or have such
payment duly provided for) on all such Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee at a time when such payment or distribution is
prohibited by the foregoing provisions, such payment or distribution shall be
held in trust for the benefit of the holders of such Senior Debt, and shall be
paid or delivered by the Trustee to the holders of such Senior Debt remaining
unpaid or unprovided for or to their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Debt may have been issued, ratably according to
the aggregate principal amounts remaining unpaid on account of such Senior Debt
held or represented by each, for application to the payment of all such Senior
Debt remaining unpaid, to the extent necessary to pay or to provide for the
payment of all such Senior Debt in full in cash or Cash Equivalents after giving
effect to any concurrent payment or distribution to the holders of such Senior
Debt.
60
<PAGE>
No provision contained in the Indenture or the Notes will affect the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, and interest on the Notes. The subordination
provisions of the Indenture and the Notes will not prevent the occurrence of any
Default or Event of Default under the Indenture or limit the rights of the
Trustee or any Holder to pursue any other rights or remedies with respect to the
Notes.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors or the Company or a
marshalling of assets or liabilities of the Company, holders of the Notes may
receive ratably less than other creditors.
OPTIONAL REDEMPTION
The Company will not have the right to redeem any Notes prior to October 15,
2001 (other than out of the Net Cash Proceeds of a Public Equity Offering or an
Equity Private Placement, as described in the next following paragraph). The
Notes will be redeemable for cash at the option of the Company, in whole or in
part, at any time on or after October 15, 2001, upon not less than 30 days nor
more than 60 days notice to each holder of Notes, at the following redemption
prices (expressed as percentages of the principal amount) if redeemed during the
12-month period commencing October 15 of the years indicated below, in each case
(subject to the right of Holders of record on a Record Date to receive interest
due on an Interest Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest thereon to the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------- -----------
<S> <C>
2001.................................... 104.875%
2002.................................... 103.250%
2003.................................... 101.625%
2004 and thereafter..................... 100.000%
</TABLE>
Until October 15, 1999, upon any Public Equity Offering or Equity Private
Placement, in each case resulting in Net Cash Proceeds of $100 million or more
which are then contributed in full to the Company, up to $35 million aggregate
principal amount of the Notes may be redeemed at the option of the Company
within 120 days of such Public Equity Offering or Equity Private Placement, on
not less than 30 days, but not more than 60 days, notice to each holder of the
Notes to be redeemed, with cash from the Net Cash Proceeds of such Public Equity
Offering or Equity Private Placement, at 110% of principal, (subject to the
right of Holders of record on a Record Date to receive interest due on an
Interest Payment Date that is on or prior to such Redemption Date) together with
accrued and unpaid interest to the date of redemption; PROVIDED, HOWEVER, that
immediately following such redemption not less than $65 million aggregate
principal amount of the Notes are outstanding.
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a PRO RATA basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption to the Holder
of each Note to be redeemed to such Holder's last address as then shown upon the
registry books of the Registrar. Any notice which relates to a Note to be
redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the date of
redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date of redemption, interest will cease to accrue on the Notes or portions
thereof called for redemption, unless the Company defaults in the payment
thereof.
61
<PAGE>
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture provides that in the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an offer by the Company (the "Change of Control Offer"), to require
the Company to repurchase all or any part of such holder's Notes (PROVIDED, that
the principal amount of such Notes must be $1,000 or an integral multiple
thereof) on a date (the "Change of Control Purchase Date") that is no later than
35 Business Days after the occurrence of such Change of Control, at a cash price
(the "Change of Control Purchase Price") equal to 101% of the principal amount
thereof, together with accrued interest to the Change of Control Purchase Date.
The Change of Control Offer shall be made within 10 Business Days following a
Change of Control and shall remain open for 20 Business Days following its
commencement (the "Change of Control Offer Period"). Upon expiration of the
Change of Control Offer Period, the Company promptly shall purchase all Notes
properly tendered in response to the Change of Control Offer.
If the terms of any outstanding Senior Debt prohibit the Company from
repurchasing Notes in accordance with the terms of this covenant, then prior to
the making of the offer, but in any event within 10 Business Days following any
Change of Control, the Company covenants to (i) repay in full such Senior Debt
or offer to repay in full such Senior Debt and repay such Senior Debt of each
holder thereof who has accepted such offer or (ii) obtain the requisite consent
under such Senior Debt to permit the repurchase of Notes in accordance with the
terms of this covenant. The Company shall first comply with the preceding
sentence before it shall be required to repurchase Notes pursuant to this
covenant.
As used herein, a "Change of Control" means (i) any merger or consolidation
of the Company or the Parent with or into any person or any sale, transfer or
other conveyance, whether direct or indirect, of all or substantially all of the
assets of the Company or the Parent, on a consolidated basis, in one transaction
or a series of related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than the Parent in the case of the Company or a Permitted Holder or Holders, is
or becomes the "beneficial owner," directly or indirectly, of more than 50% of
the total voting power in the aggregate normally entitled to vote in the
election of directors, managers, or trustees, as applicable, of the
transferee(s) or surviving entity or entities, (ii) any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than the Parent in the case of the
Company or a Permitted Holder or Holders, is or becomes the "beneficial owner,"
directly or indirectly, of more than 50% of the total voting power in the
aggregate of all classes of Capital Stock of the Company or the Parent, as the
case may be, then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of the Company or the Parent (together with any new
directors whose election by such Board or whose nomination for election by the
shareholders of the Company or the Parent, as the case may be, was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of the Company or the Parent, as the case may
be, then in office.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest) of all Notes so tendered and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Company. The Paying Agent promptly will pay the
Holders of Notes so accepted an amount equal to the Change of Control Purchase
Price (together with accrued and unpaid interest), and the Trustee promptly will
authenticate and deliver to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered. Any Notes not so accepted will
be delivered promptly by the Company to the Holder thereof.
62
<PAGE>
The Company publicly will announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Purchase Date.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company and the Parent, and, thus, the removal
of incumbent management.
The phrase "all or substantially all" of the assets of the Company or the
Parent will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. As a result, there may be a
degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company or the Parent has occurred. In
addition, no assurances can be given that the Company will be able to acquire
Notes tendered upon the occurrence of a Change of Control.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL
STOCK
The Indenture provides that, except as set forth below in this covenant, the
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly, issue, assume, guaranty, incur, become directly or indirectly liable
with respect to (including as a result of an Acquisition), or otherwise become
responsible for, contingently or otherwise (individually and collectively, to
"incur" or, as appropriate, an "incurrence"), any Indebtedness or any
Disqualified Capital Stock (including Acquired Indebtedness). Notwithstanding
the foregoing:
(a) if (i) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a PRO FORMA
basis to, such incurrence of Indebtedness or Disqualified Capital Stock and
(ii) on the date of such incurrence (the "Incurrence Date"), the
Consolidated Leverage Ratio of the Company as of the end of the Reference
Period immediately preceding the Incurrence Date, after giving effect on a
PRO FORMA basis to such incurrence of such Indebtedness or Disqualified
Capital Stock and, to the extent set forth in the definition of Consolidated
Leverage Ratio, the use of proceeds thereof, would not exceed 6.5 to 1 from
the Issue Date to and including the third anniversary of the Issue Date,
6.25 to 1 from the third anniversary of the Issue Date to and including the
fifth anniversary thereof, and 6.0 to 1 thereafter (each a "Debt Incurrence
Ratio"), then the Company may incur such Indebtedness or Disqualified
Capital Stock;
(b) the Company and the Subsidiaries may incur Indebtedness evidenced by
the Notes and represented by the Indenture up to the amounts specified
therein as of the date thereof;
(c) the Company and the Subsidiaries may incur Purchase Money
Indebtedness (including any Indebtedness issued to refinance, replace or
refund such Indebtedness) on or after the Issue Date, PROVIDED, that (i) the
aggregate amount of such Indebtedness incurred on or after the Issue Date
and outstanding at any time pursuant to this paragraph (c) shall not exceed
$10 million, and (ii) in each case, such Indebtedness shall not constitute
more than 100% of the cost (determined in accordance with GAAP) to the
Company or such Subsidiary, as applicable, of the property so purchased or
leased;
(d) the Company and the Subsidiaries, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (a), (b) and (c) of this
covenant or which is outstanding on the Issue Date so long as, in the case
of Refinancing Indebtedness which is not Senior Debt, such Refinancing
Indebtedness is secured only by the assets that secured the Indebtedness so
refinanced;
(e) the Company and the Subsidiaries may incur Permitted Indebtedness;
(f) Indebtedness incurred pursuant to the Credit Agreement up to an
aggregate amount outstanding (including any Indebtedness issued to
refinance, refund or replace such Indebtedness) at any time not to exceed
$300 million minus the amount of any such Indebtedness retired with Net Cash
63
<PAGE>
Proceeds from any Asset Sale and plus any such Indebtedness constituting
Interest Swap and Hedging Obligations;
(g) other Indebtedness of the Company or its Subsidiaries not to exceed
$25 million at any time outstanding, of which only $10 million may be
incurred by the Subsidiaries.
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with the Company or a Subsidiary of
the Company shall be deemed to have been Incurred at the time such Person
becomes such a Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Subsidiary of the Company, as applicable. For
purposes of determining amounts of Indebtedness under this covenant, (i)
Indebtedness resulting from security interests granted with respect to
Indebtedness otherwise included in the determination of Indebtedness, and
guarantees (and security interests with respect thereof) of, or obligations with
respect to letters of credit supporting, Indebtedness otherwise included in the
determination of Indebtedness shall not be included in the determination of
Indebtedness, (ii) any Liens permitted hereunder supporting Indebtedness
otherwise included in the determination of Indebtedness shall not be included in
the determination of Indebtedness and (iii) Indebtedness permitted under this
covenant need not be permitted solely by reference to one provision permitting
such Indebtedness, but may be permitted in part by reference to one such
provision and in part by reference to one or more other provisions of this
covenant. For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness described above, the Company in its sole discretion shall
classify such item of Indebtedness and shall only be required to include the
amount and type of Indebtedness in one of such categories.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, make any Restricted Payment if,
after giving effect to such Restricted Payment on a PRO FORMA basis, (1) a
Default or an Event of Default shall have occurred and be continuing, (2) the
Company is not permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio in paragraph (a) of the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock," or (3) the aggregate amount of all Restricted Payments made by the
Company and its Subsidiaries, including after giving effect to such proposed
Restricted Payment, from and after the Issue Date, would exceed the sum of (a)
Consolidated EBITDA of the Company and its Consolidated Subsidiaries for the
period (taken as one accounting period), commencing on the first day of the
first full fiscal quarter commencing after the Issue Date, to and including the
last day of the fiscal quarter ended immediately prior to the date of each such
calculation (or, in the event Consolidated EBITDA for such period is a deficit,
then minus 100% of such deficit), minus (b) 1.5 times the Consolidated Fixed
Charges over such period, plus (c) the aggregate Net Cash Proceeds received by
the Company from the sale of its Qualified Capital Stock or Indebtedness to the
extent subsequently converted into Qualified Capital Stock (other than (i) to a
Subsidiary of the Company and (ii) to the extent applied in connection with a
Qualified Exchange) or the fair market value (as determined by the Board of
Directors reasonably and in good faith) of securities of the Parent issued in
connection with an acquisition by the Company or any of its Subsidiaries, in
each case after the Issue Date, plus (d) the net reductions in Investments
(other than reductions in Permitted Investments) in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of loans or from
designations of Unrestricted Subsidiaries as Subsidiaries, valued in each case
as provided in the definition of "Investment", not to exceed the amount of
Investments previously made by the Company and its Subsidiaries in such Person,
plus (e) $15 million.
The preceding paragraph, however, will not prohibit (w) payments made in
accordance with the "Use of Proceeds", (x) repurchases of Capital Stock out of
the proceeds of any "key man" life insurance policies on Daniel L. Simon
existing on the Issue Date and described in this Prospectus and additional
repurchases of Capital Stock from employees of the Company or its Subsidiaries
upon the death, disability or
64
<PAGE>
termination of employment in an aggregate amount to all employees not to exceed
$1 million per year or $2 million in the aggregate on and after the Issue Date,
(y) a Qualified Exchange, or (z) the payment of any dividend on Qualified
Capital Stock within 60 days after the date of its declaration if such dividend
could have been made on the date of such declaration in compliance with the
foregoing provisions. The full amount of any Restricted Payment made pursuant to
the foregoing clauses (x) and (z) of the immediately preceding sentence,
however, will be deducted in the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, assume or suffer to exist
any consensual restriction on the ability of any Subsidiary of the Company to
pay dividends or make other distributions to or on behalf of, or to pay any
obligation to or on behalf of, or otherwise to transfer assets or property to or
on behalf of, or make or pay loans or advances to or on behalf of, the Company
or any Subsidiary of the Company, except (a) restrictions imposed by the Notes
or the Indenture, (b) restrictions imposed by applicable law, (c) restrictions
under any Acquired Indebtedness not incurred in violation of the Indenture or
any agreement relating to any property, asset, or business acquired by the
Company or any of its Subsidiaries, which restrictions in each case existed at
the time of acquisition, were not put in place in connection with or in
anticipation of such acquisition and are not applicable to any person, other
than the person acquired, or to any property, asset or business, other than the
property, assets and business so acquired, (d) any such restriction or
requirement imposed by Indebtedness incurred under paragraph (f) of the covenant
"Limitation of Incurrence of Additional Indebtedness and Disqualified Capital
Stock," (e) restrictions with respect solely to a Subsidiary of the Company
imposed pursuant to a binding agreement which has been entered into for the sale
or disposition of all or substantially all of the Equity Interests or of any
assets of such Subsidiary, provided such restrictions apply solely to the Equity
Interests or assets of such Subsidiary, (f) restrictions on transfer contained
in Purchase Money Indebtedness incurred pursuant to paragraph (c) of the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock," provided such restrictions relate only to the transfer of the
property acquired with the proceeds of such Purchase Money Indebtedness, and (g)
in connection with and pursuant to permitted Refinancing Indebtedness,
replacements of restrictions imposed pursuant to clause (a) or (f) of this
paragraph that are not more restrictive than those being replaced and do not
apply to any other person or assets than those that would have been covered by
the restrictions in the Indebtedness so refinanced. Notwithstanding the
foregoing, neither (y) customary provisions restricting subletting or assignment
of any lease entered into in the ordinary course of business, consistent with
industry practice, nor (z) Liens permitted under the terms of the Indenture
shall in and of themselves be considered a restriction on the ability of the
applicable Subsidiary to transfer such agreement or assets, as the case may be.
LIMITATIONS ON LAYERING INDEBTEDNESS
The Indenture provides that the Company will not, directly or indirectly,
incur, or suffer to exist any Indebtedness that is expressly subordinate in
right of payment to any other Indebtedness of the Company unless, by its terms,
such Indebtedness is subordinate in right of payment to, or ranks PARI PASSU
with, the Notes.
LIMITATION ON LIENS SECURING INDEBTEDNESS
The Company will not, and will not permit any Subsidiary to, create, incur,
assume or suffer to exist any Lien of any kind, other than Permitted Liens, upon
any of their respective assets now owned or acquired on or after the date of the
Indenture or upon any income or profits therefrom securing any Indebtedness of
the Company other than Senior Debt of the Company, unless the Company provides,
and causes its Subsidiaries to provide, concurrently or immediately thereafter,
that the Notes are equally and ratably so secured so long as such Lien exists,
PROVIDED that, if such Indebtedness is Subordinated
65
<PAGE>
Indebtedness, the Lien securing such Subordinated Indebtedness shall be
subordinate and junior to the Lien securing the Notes with the same relative
priority as such Subordinated Indebtedness shall have with respect to the Notes.
LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, in one or a series of related transactions, convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of its
property, business or assets, including by merger or consolidation (other than a
merger or consolidation of the Company), and including any sale or other
transfer or issuance of any Equity Interests of any Subsidiary of the Company,
whether by the Company or a Subsidiary of either or through the issuance, sale
or transfer of Equity Interests by a Subsidiary of the Company (an "Asset
Sale"), unless (l)(a) within 210 days after the date of such Asset Sale, the Net
Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the
optional redemption of the Notes in accordance with the terms of the Indenture
or to the repurchase of Notes pursuant to a cash offer (the "Asset Sale Offer")
to repurchase Notes at a purchase price (the "Asset Sale Offer Price") of 100%
of principal amount, plus accrued interest to the date of payment, made within
180 days of such Asset Sale or (b) within 180 days following such Asset Sale
(subject to the right under the October Note indenture to accumulate $15 million
in proceeds), the Asset Sale Offer Amount is (i) invested (or committed to be
invested, and in fact is so invested, within an additional 90 days) in assets
and property other than notes, bonds, obligation and securities (except in
connection with the acquisition of a wholly owned Subsidiary) which in the good
faith reasonable judgment of the Board will immediately constitute or be a part
of a Related Business of the Company or such Subsidiary immediately following
such transaction or (ii) used to permanently reduce Senior Debt (provided that
in the case of a revolver or similar arrangement that makes credit available,
such commitment is also permanently reduced by such amount) or redeem or
purchase the October Notes, (2) at least 75% of the consideration for such Asset
Sale or series of related Asset Sales consists of Cash, Cash Equivalents or
Permitted Investments, (3) no Default or Event of Default shall have occurred
and be continuing at the time of, or would occur after giving effect, on a PRO
FORMA basis, to, such Asset Sale, and (4) the Board of Directors of the Company
determines in good faith that the Company or such Subsidiary, as applicable,
receives fair market value for such Asset Sale.
The Indenture provides that an acquisition of Notes pursuant to an Asset
Sale Offer may be deferred until the accumulated Net Cash Proceeds from Asset
Sales not applied to the uses set forth in (l) in the preceding paragraph (the
"Excess Proceeds") exceeds $15 million and that each Asset Sale Offer shall
remain open for 20 Business Days following its commencement (the "Asset Sale
Offer Period"). Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount plus an amount equal to accrued interest
to the purchase of all Notes properly tendered (on a PRO RATA basis if the Asset
Sale Offer Amount is insufficient to purchase all Notes so tendered) at the
Asset Sale Offer Price (together with accrued interest). To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than
the Asset Sale Offer Amount, the Company may use any remaining Net Cash Proceeds
for general corporate purposes as otherwise permitted by the Indenture and
following each Asset Sale Offer the Excess Proceeds amount shall be reset to
zero. For purposes of (2) in the preceding paragraph, total consideration
received means the total consideration received for such Asset Sales minus the
amount of (a) Senior Debt assumed by a transferee and (b) property that within
30 days of such Asset Sale is converted into Cash or Cash Equivalents.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Subsidiaries may, in the ordinary course of
business, convey, sell, transfer, assign or otherwise dispose of inventory
acquired and held for resale in the ordinary course of business;
(ii) the Company and its Subsidiaries may convey, sell, transfer, assign
or otherwise dispose of assets pursuant to and in accordance with the
limitation on mergers, sales or consolidations provisions in the Indenture;
66
<PAGE>
(iii) the Company and its Subsidiaries may sell or dispose of damaged,
worn out or other obsolete property in the ordinary course of business so
long as such property is no longer necessary for the proper conduct of the
business of the Company or such Subsidiary, as applicable;
(iv) the Subsidiaries may convey, sell, transfer, assign or otherwise
dispose of assets to the Company or any of its wholly owned Subsidiaries;
and
(v) the Company and its Subsidiaries may convey, sell, transfer, assign
or otherwise dispose of assets (in addition to those transactions described
in clauses (i) through (iv) above) with an aggregate fair market value of $5
million in any fiscal year.
All Net Cash Proceeds from an Event of Loss shall be invested, used for
prepayment of Senior Debt, or used to repurchase Notes, all within the period
and as otherwise provided above in clause 1(a) or 1(b) of the first paragraph of
this covenant.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Indenture provides that neither the Company nor any of its Subsidiaries
will be permitted after the Issue Date to enter into or suffer to exist any
contract, agreement, arrangement or transaction (other than guarantees of the
Credit Agreement by the Company's Subsidiaries) with any Affiliate (an
"Affiliate Transaction"), or any series of related Affiliate Transactions, (i)
unless it is determined that the terms of such Affiliate Transaction are fair
and reasonable to the Company, and no less favorable to the Company than could
have been obtained in an arm's length transaction with a non-Affiliate and, (ii)
if involving consideration to either party in excess of $1 million, unless such
Affiliate Transaction(s) is evidenced by an Officers' Certificate addressed and
delivered to the Trustee certifying that such Affiliate Transaction (or
Transactions) has been approved by a majority of the members of the Board of
Directors that are disinterested in such transaction and (iii) if involving
consideration to either party in excess of $10 million, unless in addition the
Company, prior to the consummation thereof, obtains a written favorable opinion
as to the fairness of such transaction to the Company from a financial point of
view from an independent investment banking firm of national reputation.
The foregoing limitation shall not apply to (i) any transaction between the
Company and any of its Subsidiaries or between Subsidiaries, (ii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company and any employment agreement entered into by the
Company or any Subsidiary in the ordinary course of business and (iii) any tax
sharing arrangement between the Company and Parent.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company will not, directly or indirectly,
consolidate with or merge with or into another person or sell, lease, convey or
transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of affiliated Persons, unless (i) either (a) the Company
is the continuing entity or (b) the resulting, surviving or transferee entity is
a corporation organized under the laws of the United States, any state thereof
or the District of Columbia and expressly assumes by supplemental indenture all
of the obligations of the Company in connection with the Notes and the
Indenture; (ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a PRO FORMA basis to such transaction; (iii)
immediately after giving effect to such transaction on a PRO FORMA basis, the
Consolidated Net Worth of the consolidated resulting, surviving or transferee
entity is at least equal to the Consolidated Net Worth of the Company
immediately prior to such transaction; and (iv) immediately after giving effect
to such transaction on a PRO FORMA basis, the consolidated resulting, surviving
or transferee entity would immediately thereafter be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Debt
67
<PAGE>
Incurrence Ratio set forth in paragraph (a) of the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock."
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture with the same
effect as if such successor corporation had been named therein as the Company,
and the Company shall be released from the obligations under the Notes and the
Indenture except with respect to any obligations that arise from, or are related
to, such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, the Company's interest in which constitutes all or
substantially all of the properties and assets of the Company shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture prohibits the Company and its Subsidiaries from being required
to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or from otherwise becoming subject
to regulation under the Investment Company Act.
LIMITATION ON LINES OF BUSINESS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, engage to any substantial extent in
any line or lines of business activity other than that which, in the reasonable
good faith judgment of the Board of Directors of the Company, is a Related
Business.
PAYMENTS FOR CONSENT
Neither the Company nor any of its Subsidiaries or Unrestricted Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of any Notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered to
be paid or agreed to be paid to all holders of the Notes which so consent, waive
or agree to amend in the time frame set forth in solicitation documents relating
to such consent, waiver or agreement.
REPORTS
The Indenture provides that whether or not the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall file with the SEC, and deliver to the Trustee and to each Holder within 15
days after it has filed such with the SEC (if the SEC will accept such filing),
annual, quarterly and other reports required by Section 13 or 15(d) of the
Exchange Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the Company
to pay any installment of interest on the Notes as and when the same becomes due
and payable and the continuance of any such failure for 30 days, (ii) the
failure by the Company to pay all or any part of the principal, or premium, if
any, on the Notes when and as the same becomes due and payable at maturity,
redemption, by acceleration or otherwise, including, without limitation, payment
of the Change of Control Purchase Price or the Asset Sale Offer Price, or
otherwise, (iii) the failure by the Company or any Subsidiary to observe or
perform any other covenant or agreement contained in the Notes or the Indenture
and, subject to certain exceptions, the continuance of such failure for a period
of 30 days after written notice is given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of
68
<PAGE>
the Notes outstanding (PROVIDED, HOWEVER, that the grace period after notice for
an Event of Default arising as a result of the Company's inability to repay
Senior Debt in full, or to obtain requisite consents from holders of Senior Debt
to repurchase Notes, following a Change of Control, or to make a Change of
Control Offer, as described in "-- Repurchase of Notes at the Option of Holders
Upon a Change of Control", shall be five days), (iv) certain events of
bankruptcy, insolvency or reorganization in respect of the Company or any of its
Significant Subsidiaries, (v) a default in the payment of principal on any issue
of Indebtedness of the Company or any of its Subsidiaries at final stated
maturity or any acceleration for any other reason of the stated maturity of any
Indebtedness of the Company or any of its Subsidiaries in each case with an
aggregate principal amount in excess of $10 million and (vi) final unsatisfied
judgments not covered by insurance aggregating in excess of $10 million, at any
one time rendered against the Company or any of its Subsidiaries and either (a)
the commencement by any creditor of any enforcement proceeding upon any such
judgment or order or (b) such judgment or order is not stayed, bonded or
discharged within 60 days. The Indenture provides that if a Default occurs and
is continuing, the Trustee must, within 90 days after the occurrence of such
default, give to the Holders notice of such default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv), above, relating to the Company only) then in
every such case, unless the principal of all of the Notes shall have already
become due and payable, either the Trustee or the Holders of 25% in aggregate
principal amount of the Notes then outstanding, by notice in writing to the
Company (and to the Trustee if given by Holders) (an "Acceleration Notice"), may
declare all principal, determined as set forth below, and accrued interest
thereon to be due and payable immediately; PROVIDED, HOWEVER, that if any Senior
Debt is outstanding pursuant to the Credit Agreement, upon a declaration of such
acceleration, such principal and interest shall be due and payable upon the
earlier of (x) the third Business Day after the sending to the Company and the
Senior Debt Representatives of such written notice, unless such Event of Default
is cured or waived prior to such date and (y) the date of acceleration of any
Senior Debt under the Credit Agreement. If an Event of Default specified in
clause (iv), above, relating to the Company only occurs, all principal and
accrued interest thereon will be immediately due and payable on all outstanding
Notes without any declaration or other act on the part of Trustee or the
Holders. The Holders of a majority in aggregate principal amount of Notes
generally are authorized to rescind such acceleration if all existing Events of
Default, other than the non-payment of the principal of, premium, if any, and
interest on the Notes which have become due solely by such acceleration, have
been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a default
in the payment of principal of or interest on any Note not yet cured or a
default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Note affected.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may, at its option and at any time,
elect to have its obligations discharged with respect to the outstanding Notes
("Legal Defeasance"). Such Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented, and the
Indenture shall cease to be of further effect as to all outstanding Notes,
except as to (i) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due from the trust funds; (ii) the Company's obligations with respect to such
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes, and the maintenance of an office or agency for
payment and money for security payments
69
<PAGE>
held in trust; (iii) the rights, powers, trust, duties, and immunities of the
Trustee, and the Company's obligations in connection therewith; and (iv) the
Legal Defeasance provisions of the Indenture. In addition, the Company may, at
its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, U.S. legal tender, U.S. Government Obligations or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Notes on the stated date for
payment thereof or on the redemption date of such principal or installment of
principal of, premium, if any, or interest on such Notes, and the Holders of
Notes must have a valid, perfected, exclusive security interest in such trust;
(ii) in the case of the Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable to
Trustee confirming that (A) the Company has received from, or there has been
published by the Internal Revenue Service, a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders of such Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to such Trustee confirming that the Holders of such Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (iv) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit or insofar as
Events of Default from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 91st day after the date of deposit; (v) such
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under the Indenture or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound; (vi) the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders of such Notes over any other creditors of the Company or with the intent
of defeating, hindering, delaying or defrauding any other creditors of the
Company or others; and (vii) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that the
conditions precedent provided for in, in the case of the officers' certificate,
(i) through (vi) and, in the case of the opinion of counsel, clauses (i) (with
respect to the validity and perfection of the security interest), (ii), (iii)
and (v) of this paragraph have been complied with.
If the funds deposited with the Trustee to effect Legal Defeasance or
Covenant Defeasance are insufficient to pay the principal or premium, if any,
and interest on the Notes when due, then the obligations of the Company under
the Indenture will be revived and no such defeasance will be deemed to have
occurred.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company and the Trustee to
enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, the
Company and the Trustee are permitted to amend or supplement the Indenture or
any supplemental indenture or modify the rights of the Holders; provided that no
such modification may, without the consent
70
<PAGE>
of each Holder affected thereby: (i) change the Stated Maturity on any Note, or
reduce the principal amount thereof or the rate (or extend the time for payment)
of interest thereon or any premium payable upon the redemption thereof, or
change the place of payment where, or the coin or currency in which, any Note or
any premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
reduce the Change of Control Purchase Price or the Asset Sale Offer Price or
alter the provisions (including the defined terms used therein) regarding the
right of the Company to redeem the Notes in a manner adverse to the Holders, or
(ii) reduce the percentage in principal amount of the outstanding Notes, the
consent of whose Holders is required for any such amendment, supplemental
indenture or waiver provided for in the Indenture, or (iii) modify any of the
waiver provisions, except to increase any required percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the Holder of each outstanding Note affected thereby.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture provides that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of the Company or any
successor entity shall have any personal liability in respect of the obligations
of the Company under the Indenture or the Notes by reason of his or its status
as such stockholder, employee, officer or director, except to the extent such
person is an Issuer.
CERTAIN DEFINITIONS
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of the Company,
including by designation, or is merged or consolidated into or with the Company
or one of its Subsidiaries.
"ACQUISITION" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, PROVIDED, THAT, with respect to ownership interest in the Company
and its Subsidiaries a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"AVERAGE LIFE" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of (a) the
product of the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"BENEFICIAL OWNER" or "BENEFICIAL OWNER", for purposes of the definition of
Change of Control, has the meaning attributed to it in Rules 13d-3 and 13d-5
under the Exchange Act (as in effect on the Issue Date), whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
71
<PAGE>
"CAPITALIZED LEASE OBLIGATION" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person, as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
"CASH EQUIVALENT" means (a)(i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit issued by any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million or (iii)
commercial paper issued by others rated at least A-1 or the equivalent thereof
by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing within one year after
the date of acquisition or (b) shares of money market mutual funds or similar
funds having assets in excess of $500,000,000.
"CONSOLIDATED EBITDA" means, with respect to any Person, for any period, the
Consolidated Net Income of such Person for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication, the sum of (i) consolidated income tax expense,
(ii) consolidated depreciation and amortization expense, PROVIDED, that
consolidated depreciation and amortization of a Subsidiary that is a less than
wholly owned Subsidiary shall only be added to the extent of the Equity Interest
of the Company in such Subsidiary and only to the extent that dividends in
excess of such Person's PRO RATA share of net income are paid, and (iii)
Consolidated Fixed Charges, less the amount of all cash payments made by such
Person or any of its Subsidiaries during such period to the extent such payments
relate to non-cash charges that were added back in determining Consolidated
EBITDA for such period or any prior period.
"CONSOLIDATED FIXED CHARGES" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such Person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of preferred stock (other than
by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed.
"CONSOLIDATED LEVERAGE RATIO" of any Person on any date of determination
(the "Transaction Date") means the ratio, on a PRO FORMA basis after giving
effect to the application of any proceeds of Indebtedness, of (a) Indebtedness
as of the end of the Reference Period to (b) the aggregate amount of
Consolidated EBITDA of such Person attributable to continuing operations and
businesses (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of) for the Reference Period; PROVIDED,
that for purposes of such calculation, (i) Acquisitions which occurred during
the Reference Period or subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the first day of the
Reference Period and (ii) the incurrence of any Indebtedness or issuance of any
Disqualified Capital Stock subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the last day of the
Reference Period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the net income (or loss) of such Person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or
72
<PAGE>
loss) and without duplication): (a) all gains or losses which are either
extraordinary, unusual (as determined in accordance with GAAP) or are
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock or losses in connection with the Transactions), (b) the net
income, if positive, of any Person, other than a wholly owned Consolidated
Subsidiary, in which such Person or any of its Consolidated Subsidiaries has an
interest, except to the extent of the amount of any dividends or distributions
actually paid in cash to such Person or a wholly owned Consolidated Subsidiary
of such Person during such period, but in any case not in excess of such
Person's PRO RATA share of such Person's net income for such period and (c) the
net income, if positive, of any of such Person's Consolidated Subsidiaries to
the extent that the declaration or payment of dividends or similar distributions
is not at the time permitted by operation of the terms of its charter or bylaws
or any other agreement, instrument, judgment, decree, order, or governmental
regulation applicable to such Consolidated Subsidiary.
"CONSOLIDATED NET WORTH" of any Person at any date means the aggregate
consolidated stockholders' equity of such Person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such Person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such Person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such Person or a Consolidated Subsidiary of such Person
subsequent to the Issue Date, and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in Persons that are not Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, for any Person, each Subsidiary of such
Person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such Person in accordance with GAAP.
"CREDIT AGREEMENT" means the consolidated credit agreement dated October 31,
1996, by and among the Company, certain financial institutions and Bankers Trust
Company, as agent, providing for (A) an aggregate $75 million term loan facility
(subject to an amendment subsequent to the date hereof), and (B) an aggregate
$225 million revolving credit facility, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and/ or related documents may be amended,
restated, supplemented, renewed, replaced or otherwise modified from time to
time whether or not with the same agent, trustee, representative lenders or
holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term "Credit Agreement" shall
include agreements in respect of Interest Swap and Hedging Obligations with
lenders party to the Credit Agreement and shall also include any amendment,
amendment and restatement, renewal, extension, restructuring, supplement or
modification to any Credit Agreement and all refundings, refinancings and
replacements of any Credit Agreement, including any agreement (i) extending the
maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii)
adding or deleting borrowers or guarantors thereunder, so long as borrowers and
issuers include one or more of the Company and its Subsidiaries and their
respective successors and assigns, (iii) increasing the amount of Indebtedness
incurred thereunder or available to be borrowed thereunder, PROVIDED, that on
the date such Indebtedness is incurred, it would not be prohibited by clause (f)
of the covenant "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock," or (iv) otherwise altering the terms and conditions
thereof in a manner not expressly prohibited by the terms hereof.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b), with
respect to any Person, an Equity Interest of such Person that, by its terms or
by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such Person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Notes and (b) with respect to any
Subsidiary of such Person (including with respect to any Subsidiary of the
Company), any Equity Interest other than any common equity with no preference,
privileges, or redemption or repayment provisions.
73
<PAGE>
"EQUITY INTEREST" of any Person means any shares, interests, participations
or other equivalents (however designated) in such Person's equity, and shall in
any event include any Capital Stock issued by, or partnership interests in, such
Person. Convertible or exchangeable Indebtedness shall not be deemed to be an
Equity Interest for purposes of clause (b) of the definition of Restricted
Payments to the extent acquired at any time the conversion or exchange feature
is not "in-the-money".
"EQUITY PRIVATE PLACEMENT" means any sale by the Parent of its Capital Stock
(other than Disqualified Capital Stock) not requiring registration under the
Securities Act.
"EVENT OF LOSS" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
"INDEBTEDNESS" of any Person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of such any Person, (i) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, (except
for balances incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors and except for balances
due and actually paid within six months of the date property is delivered or
services are rendered or, if not actually paid within six months, being
contested in good faith), (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) under any Capitalized Lease
Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such Person with respect to any letter of credit; (b) all net
obligations of such Person under Interest Swap and Hedging Obligations; (c) all
liabilities and obligations of others of the kind described in the preceding
clause (a) or (b) that such Person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such Person; (d) any
and all deferrals, renewals, extensions, refinancing and refundings (whether
direct or indirect) of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (a), (b) or (c),
or this clause (d), whether or not between or among the same parties, and (e)
all Disqualified Capital Stock of such Person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified
Capital Stock, such Fair Market Value to be determined in good faith by the
board of directors of the issuer (or managing general partner of the issuer) of
such Disqualified Capital Stock. For purposes hereof, the amount of any
Indebtedness issued with original issue discount shall be the original purchase
price plus accreted interest, PROVIDED, HOWEVER, that such accretion shall not
be deemed an incurrence of Indebtedness.
"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any Person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such Person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for
74
<PAGE>
periodic payments made by such person calculated by applying a fixed or floating
rate of interest on the same notional amount.
"INVESTMENT" by any Person in any other Person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
Person or any agreement obligating a person to make any such acquisition; (b)
the making by such Person of any deposit (in excess of $5 million in any one
transaction) with, or advance, loan or other extension of credit to, such other
Person (including the purchase of property from another person subject to an
understanding or agreement, contingent or otherwise, obligating such Person to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable or deposits
arising in the ordinary course of business); (c) other than guarantees of
Indebtedness of the Company or any Subsidiary to the extent permitted by the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock," the entering into by such Person of any guarantee of, or other
credit support or contingent obligation with respect to, Indebtedness or other
liability of such other Person; (d) the making of any capital contribution by
such Person to such other Person, other than to the Company or a Subsidiary of
the Company; and (e) the designation by the Board of Directors of the Company of
any Person to be an Unrestricted Subsidiary. The Company shall be deemed to make
an Investment in an amount equal to the fair market value of the net assets of
any subsidiary (or, if neither the Company nor any of its Subsidiaries has
theretofore made an Investment in such subsidiary, in an amount equal to the
Investments being made), at the time that such subsidiary is designated an
Unrestricted Subsidiary, and any property transferred to an Unrestricted
Subsidiary from the Company or a Subsidiary shall be deemed an Investment valued
at its fair market value at the time of such transfer.
"ISSUE DATE" means the date of first issuance of the Notes under the
Indenture.
"JUNIOR SECURITY" means any Qualified Capital Stock and any Indebtedness of
the Company that is subordinated in right of payment to Senior Debt at least to
the same extent as the Notes, and has no scheduled installment of principal due,
by redemption, sinking fund payment or otherwise, on or prior to the Stated
Maturity of the Notes.
"LIEN" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"NET CASH PROCEEDS" means the aggregate amount of Cash or Cash Equivalents
received by the Company in the case of a sale of Qualified Capital Stock and by
the Parent in the case of a Public Equity Offering or an Equity Private
Placement and by the Company and its Subsidiaries in respect of an Asset Sale
plus, in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Company (to
the extent not previously included in the calculation of Net Cash Proceeds) upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and expenses (including, without limitation, the fees and
expenses of legal counsel and investment banking fees and expenses) incurred in
connection with such Asset Sale or sale of Qualified Capital Stock or Public
Equity Offering or Equity Private Placement, and, in the case of an Asset Sale
only, less (i) the amount (estimated in good faith by the Company) of income,
franchise, sales and other applicable taxes required to be paid by the Company
or any of its respective Subsidiaries in connection with such Asset Sale, (ii)
payments made to repay Indebtedness or any other obligation outstanding at the
time of such Asset Sale that either (A) is secured by a Lien on the property or
assets sold or (B) is required to be paid as a result of such sale, and (iii)
appropriate amounts to be provided by the Company or any Subsidiary of the
Company as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities,
75
<PAGE>
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as determined
in conformity with GAAP.
"OBLIGATION" means any principal, premium or interest payment, or monetary
penalty, or damages, due by the Company under the terms of the Notes or the
Indenture.
"PERMITTED HOLDER" means Daniel L. Simon, Brian T. Clingen or Kelso &
Company, L.P. or any of their respective affiliates (as such term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934).
"PERMITTED INDEBTEDNESS" means the Indebtedness of the Company to any wholly
owned Subsidiary, and Indebtedness of any wholly owned Subsidiary to any other
wholly owned Subsidiary or to the Company; PROVIDED, that, in the case of
Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Company's obligations pursuant to the Notes
and the date of any event that causes such Subsidiary to no longer be a wholly
owned Subsidiary shall be an Incurrence Date.
"PERMITTED INVESTMENT" means (a) Investments in any of the Notes; (b) Cash
Equivalents; (c) Permitted Indebtedness; (d) Investments in Persons who, after
such Investments, will become Subsidiaries of the Company; (e) other Investments
not to exceed $25 million in aggregate at any time outstanding; and (f)
Investments in any property or assets to be used in a business in which the
Company was engaged on the date of the Indenture.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days, or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property is used by the Company or any of its Subsidiaries) or interfere with
the ordinary conduct of the business of the Company or any of its Subsidiaries;
(f) Liens arising by operation of law in connection with judgments, only to the
extent, for an amount and for a period not resulting in an Event of Default with
respect thereto; (g) pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security legislation; (h) Liens securing the Notes; (i) Liens securing
Indebtedness of a Person existing at the time such Person becomes a Subsidiary
or is merged with or into the Company or a Subsidiary or Liens securing
Indebtedness incurred in connection with an Acquisition, PROVIDED, that such
Liens were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to
any other assets; (j) Liens arising from Purchase Money Indebtedness permitted
to be incurred under clause (c) of the covenant "Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock" provided such Liens
relate to the property which is subject to such Purchase Money Indebtedness; (k)
leases or subleases granted to other persons in the ordinary course of business
not materially interfering with the conduct of the business of the Company or
any of its Subsidiaries or materially detracting from the value of the relative
assets of the Company or any Subsidiary; (l) Liens arising from precautionary
Uniform Commercial Code financing statement filings regarding operating leases
entered into by the Company or any of its Subsidiaries in the ordinary course of
business; and (m) Liens securing Refinancing Indebtedness incurred to refinance
any Indebtedness that was previously so secured in a manner no more adverse to
the Holders of the Notes than the terms of the Liens securing such refinanced
Indebtedness provided that the Indebtedness secured is not increased and the
lien is not extended to any additional assets or property.
76
<PAGE>
"PUBLIC EQUITY OFFERING" means an underwritten offering of Common Stock of
the Parent pursuant to an effective registration statement under the Securities
Act.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness of such person to any
seller or other person incurred to finance the acquisition (including in the
case of a Capitalized Lease Obligation, the lease) of any real or personal
tangible property which, in the reasonable good faith judgment of the Board of
Directors of the Company, is directly related to a Related Business of the
Company and which is incurred substantially concurrently with such acquisition
and is secured only by the assets so financed.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Company that is not
Disqualified Capital Stock.
"QUALIFIED EXCHANGE" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of the Company
issued on or after the Issue Date with the Net Cash Proceeds received by the
Company from the substantially concurrent sale of Qualified Capital Stock or any
exchange of Qualified Capital Stock for any Capital Stock or Indebtedness issued
on or after the Issue Date.
"REFERENCE PERIOD" with regard to any Person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
for which financial statements are available ended immediately preceding any
date upon which any determination is to be made pursuant to the terms of the
Notes or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing,
plus, in each case, premium and fees and expenses; PROVIDED, that (A) such
Refinancing Indebtedness of any Subsidiary of the Company shall only be used to
Refinance outstanding Indebtedness or Disqualified Capital Stock of such
Subsidiary, (B) such Refinancing Indebtedness shall (x) not have an Average Life
shorter than the Indebtedness or Disqualified Capital Stock to be so refinanced
at the time of such Refinancing and (y) in all respects, be no less subordinated
or junior, if applicable, to the rights of Holders of the Notes than was the
Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have a final stated maturity or redemption date,
as applicable, no earlier than the final stated maturity or redemption date, as
applicable, of the Indebtedness or Disqualified Capital Stock to be so
refinanced.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
"RESTRICTED PAYMENT" means, with respect to any Person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such person or any parent of such Person, (b) any payment on account of the
purchase, redemption or other acquisition or retirement for value of Equity
Interests of such Person or parent of such Person, (c) other than with the
proceeds from the substantially concurrent sale of, or in exchange for,
Refinancing Indebtedness any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms of
or any defeasance of, any Subordinated Indebtedness, directly or indirectly, by
such Person or Subsidiary of such Person prior to the scheduled maturity, any
scheduled or required repayment of principal, or scheduled sinking fund payment,
as the case may be, of such Indebtedness and (d) any Investment by such
77
<PAGE>
Person, other than a Permitted Investment; PROVIDED, HOWEVER, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to Capital Stock of an issuer to the extent payable
solely in shares of Qualified Capital Stock of such issuer; or (ii) any
dividend, distribution or other payment to the Company, or to any of its wholly
owned Subsidiaries, by the Company or any of its Subsidiaries.
"SENIOR DEBT" of the Company means Indebtedness (including any monetary
obligation in respect of the Credit Agreement, and interest, whether or not
allowable, accruing on Indebtedness incurred pursuant to the Credit Agreement
after the filing of a petition initiating any proceeding under any bankruptcy,
insolvency or similar law) of the Company arising under the Credit Agreement or
that, by the terms of the instrument creating or evidencing such Indebtedness,
is expressly designated Senior Debt or made senior in right of payment to the
Notes; PROVIDED, that in no event shall Senior Debt include (a) Indebtedness to
any Subsidiary of the Company or any officer, director or employee of the
Company or any Subsidiary of the Company, (b) Indebtedness incurred in violation
of the terms of the Indenture, (c) Indebtedness consisting of trade payables,
(d) Disqualified Capital Stock and (e) Capitalized Lease Obligations.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any Subsidiary
of the Company that, together with its Subsidiaries, (i) for the most recent
fiscal year of the Company, accounted for more than 10% of the consolidated
revenues of the Company and its Subsidiaries or (ii) as of the end of such
fiscal year, was the owner of more than 10% of the consolidated assets of the
Company and its Subsidiaries, all as set forth on the most recently available
consolidated financial statements of the Company for such fiscal year.
"STATED MATURITY," when used with respect to any Note, means October 15,
2006.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company that is
expressly subordinated in right of payment to the Notes in any respect or, for
purposes of the definition of Restricted Payments only, has a stated maturity on
or after the Stated Maturity.
"SUBSIDIARY," with respect to any Person, means (i) a corporation a majority
of whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such Person, by such
Person and one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person, (ii) any other Person (other than a corporation or
partnership) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such Person or a Subsidiary of such Person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Company or of any Subsidiary of the
Company. Unless the context requires otherwise, Subsidiary means each direct and
indirect Subsidiary of the Company.
"UNRESTRICTED SUBSIDIARY" means any subsidiary of the Company that does not
own any Capital Stock of, or own or hold any Lien on any property of, the
Company or any other Subsidiary of the Company and that shall be designated an
Unrestricted Subsidiary by the Board of Directors of the Company; PROVIDED, that
(i) such subsidiary shall not engage, to any substantial extent, in any line or
lines of business activity other than a Related Business and (ii) neither
immediately prior thereto nor after giving PRO FORMA effect to such designation
would there exist a Default or Event of Default. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Subsidiary, PROVIDED,
that (i) no Default or Event of Default is existing or will occur as a
consequence thereof and (ii) immediately after giving effect to such
designation, on a PRO FORMA basis, the Company could incur at least $1.00 of
Indebtedness pursuant to the Debt Incurrence Ratio in paragraph (a) of the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock." Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Equity Interests of
which are owned by the Company or one or more wholly owned Subsidiaries of the
Company.
78
<PAGE>
BOOK-ENTRY, DELIVERY AND FORM
The New Notes will be issued in the form of one Global Note. The Global Note
will be deposited with, or on behalf of, the Depository and registered in the
name of the Depository or its nominee. Except as set forth below, the Global
Note may be transferred, in whole and not in part, only to the Depository or
another nominee of the Depository. Investors may hold their beneficial interests
in the Global Note directly through the Depository if they have an account with
the Depository or indirectly through organizations which have accounts with the
Depository. Notes that are issued as described below under "-- Certificated
Notes" will be issued in definitive form.
The Depository has advised the Company as follows: The Depository is a
limited-purpose trust company and organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depository was created to hold securities of institutions that have accounts
with the Depository ("participants") and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in the accounts of the participants,
thereby eliminating the need for physical movement of securities certificates.
The Depository's participants include securities brokers and dealers (which may
include the Initial Purchasers), banks, trust companies, clearing corporations
and certain other organizations. Access to the Depository's book-entry system is
also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
whether directly or indirectly.
Upon the issuance of the Global Note, the Depository will credit, on its
book-entry and transfer system, the principal amount of the Notes represented by
the Global Note to the accounts of participants. The accounts to be credited
will be designated by the Initial Purchasers of such Notes. Ownership of
beneficial interests in the Global Note will be shown on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depository (with respect to participants' interests) and such participants
(with respect to the owners of beneficial interests in the Global Note other
than participants). The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and laws may impair the ability to transfer or pledge
beneficial interests in the Global Note.
So long as the Depository, or its nominee, is the registered Holder and
owner of the Global Note, the Depository or such nominee, as the case may be,
will be considered the sole legal owner and Holder of the related Notes for all
purposes of such Notes and the Indenture. Except as set forth below, owners of
beneficial interests in the Global Note will not be entitled to have the Notes
represented by the Global Note registered in their names, will not receive or be
entitled to receive physical delivery of certificated Notes in definitive form
and will not be considered to be the owners or holders of any Notes under the
Global Note. Accordingly, each Person owning a beneficial interest in the Global
Note must rely on the procedures of the Depository and, if such Person is not a
participant, on the procedures of the participant through which such person owns
its interests, to exercise any right of a holder of Notes under the Global Note.
The Company understands that under existing industry practice, in the event an
owner of a beneficial interest in the Global Note desires to take any action
that the Depository, as the Holder of the Global Note, is entitled to take, the
Depositary would authorize the participants to take such action, and that the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Payment of principal of and interest on Notes represented by the Global Note
registered in the name of and held by the Depository or its nominee will be made
to the Depository or its nominee, as the case may be, as the registered owner
and Holder of the Global Note.
The Company expects that the Depository or its nominee, upon receipt of any
payment of principal of or interest on the Global Note, will credit
participants' accounts with payment in amounts proportionate to their respective
beneficial interests in the principal amount of the Global Note as shown on the
records of the Depository or its nominee. The Company also expects that payments
by participants to owners of
79
<PAGE>
beneficial interests in the Global Note held through such participants will be
governed by standing instructions and customary practices and will be the
responsibility of such participants. The Company will not have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Global Note
for any Note or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests or for other aspects of the relationship
between the Depository and its participants or the relationship between such
participants and the owners of beneficial interests in the Global Note owning
through such participants.
Unless and until it is exchanged in whole or in part for certificated Notes
in definitive form, the Global Note may not be transferred except as a whole by
the Depository, to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository.
Although the Depository has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Note among participants of the
Depository, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trustee nor the Company will have any responsibility for the performance by the
Depository or its participants or indirect participants of their respective
obligation under the rules and procedures governing their operations.
CERTIFICATED NOTES
The New Notes represented by the Global Note are exchangeable for
certificated Notes in definitive form of like tenor as such Notes in
denominations of U.S. $1,000 and integral multiples thereof if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the Global Note or if at any time the Depository ceases to be a
clearing agency registered under the Exchange Act or (ii) the Company in its
discretion at any time determines not to have any of the Notes represented by
the Global Note. Any New Note that is exchangeable pursuant to the preceding
sentence is exchangeable for certificated Notes issuable in authorized
denominations and registered in such names as the Depository will direct.
Subject to the foregoing, the Global Note is not exchangeable, except for a
Global Note of the same aggregate denomination to be registered in the name of
the Depository or its nominee.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the New Notes represented
by the Global Note (including principal, premium, if any, and interest) be made
by wire transfer of immediately available funds to the accounts specified by the
Global Note holder. With respect to certificated New Notes, the Company will
make all payments of principal, premium, if any, and interest by wire transfer
of immediately available funds to the accounts specified by the Holders thereof
or, if no such account is specified, by mailing a check to each such Holder's
registered address. Secondary trading in long-term notes and debentures of
corporate issuers is generally settled in clearinghouse or next-day funds. In
contrast, the Notes represented by the Global Note are expected to be eligible
to trade in the PORTAL market and to trade in the Depository's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
Notes will, therefore, be required by the Depository to be settled in
immediately available funds.
EXCHANGE OFFER; REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Holders of New Notes are not entitled to any registration rights with
respect to the New Notes. Pursuant to the Registration Rights Agreement, Holders
of Old Notes are entitled to certain registration rights. Under the Registration
Rights Agreement, the Company has agreed, for the benefit of the Holders of the
Old Notes, that it will, at its cost, (i) within 45 days after the Closing Date
file a registration statement under the Securities Act (an "Exchange Offer
Registration Statement") with the SEC with respect to a registered offer to
exchange the New Notes for the Old Notes and (ii) use its best efforts to cause
such Exchange Offer Registration Statement to be declared effective under the
Securities Act within 105 days after the Closing Date. Upon such Exchange Offer
Registration Statement being declared effective, the Company will offer New
Notes in exchange for properly tendered Old Notes. The Company
80
<PAGE>
will keep the Exchange Offer open for not less than 20 business days (or longer
if required by applicable law) after the date notice of such Exchange Offer is
mailed to the holders of Old Notes. For each Old Note surrendered pursuant to
such Exchange Offer, the Holder of such Old Note will receive New Notes having a
principal amount equal to that of the surrendered Old Note. Under existing SEC
interpretations, the New Notes would in general be freely transferable after the
Exchange Offer without further registration under the Securities Act; PROVIDED,
that in the case of broker-dealers, a prospectus meeting the requirements of the
Securities Act must be delivered as required. The Company has agreed for a
period of at least 180 days after consummation of the Exchange Offer to make
available a prospectus meeting the requirements of the Securities Act to any
broker-dealer for use in connection with any resale of any such New Notes so
acquired. A broker-dealer that delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act and will be bound by the provisions of the
Registration Rights Agreement (including, without limitation, certain
indemnification and contribution rights and obligations).
Each Holder of Old Notes who wishes to exchange such Notes for New Notes in
the Exchange Offer will be required to make certain representations including
representations that (i) any New Notes to be received by it will be acquired in
the ordinary course of its business, (ii) it has no arrangement with any person
to participate in the distribution of the New Notes and (iii) it is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company, or if
it is an affiliate of the Company, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
In addition, if the Holder is not a broker-dealer, it will be required to
represent that it is not engaged in, and does not intend to engage in, the
distribution of the New Notes. If the Holder is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities, it
will be required to acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes.
In the event that applicable interpretations of the staff of the SEC do not
permit the Company to effect such an Exchange Offer, or if for any other reason
the Exchange Offer is not consummated within 150 days of the Closing Date, the
Company will, at its own expense, (a) as promptly as practicable, file a shelf
registration statement covering resales of Old Notes (a "Shelf Registration
Statement"), (b) use its best efforts to cause such Shelf Registration Statement
to be declared effective under the Securities Act as promptly as practicable
after the filing of such Registration Statement and (c) use its best efforts to
keep effective such Shelf Registration Statement until the earlier of 36 months
following the Closing Date and such time as all Old Notes have been sold
thereunder, or otherwise cease to be a Transfer Restricted Security (as defined
in the Registration Rights Agreement). The Company will, in the event a Shelf
Registration Statement is required to be filed, provide to each holder of Old
Notes copies of the prospectus which is a part of such Shelf Registration
Statement, notify each such Holder when such Shelf Registration Statement for
Old has become effective and take certain other actions as are required to
permit unrestricted resales of Old Notes. A Holder of Old Notes who sells such
Notes pursuant to the Shelf Registration Statement generally would be required
to be named as a selling security holder in the related prospectus and to
deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement which is
applicable to such a Holder (including certain indemnification and contribution
rights and obligations).
Pursuant to the Registration Rights Agreement, if (a) neither of the
registration statements described above has been filed with the SEC on or prior
to the 45th day after the Closing Date; or (b) neither of such registration
statements is declared effective by the SEC on or prior to the 105th day after
the Closing Date (the "Effectiveness Target Date"); or (c) if an Exchange Offer
Registration Statement is declared effective by the SEC, and on or prior to 45
days following the earlier of (i) the effectiveness thereof or (ii) the
Effectiveness Target Date, the Company has not exchanged New Notes for all Old
Notes validly tendered in accordance with the terms of the Exchange Offer; or
(d) the Shelf Registration has been declared effective by the SEC and such Shelf
Registration ceases to be effective or usable at any time during the
81
<PAGE>
Effectiveness Period, without being succeeded on the same day immediately by a
post-effective amendment to such Shelf Registration that cures such failure and
that is itself immediately declared effective on the same day (each such event
referred to in clauses (a) through (d) above a "Registration Default"), then the
Company will pay liquidated damages ("Liquidated Damages") to each Holder of the
Old Notes, with respect to the first 90-day period immediately following the
occurrence of such Registration Default in an amount equal to $.05 per week per
$1,000 principal amount of the Old Notes held by such Holder. Upon a
Registration Default, liquidated damages will accrue at the rate specified above
until such Registration Default is cured and the amount of liquidated damages
will increase by an additional $.05 per week per $1,000 principal amount of Old
Notes with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of liquidated damages of $.50
per week per $1,000 principal amount of Old Notes (regardless of whether one or
more than one Registration Default is outstanding). All accrued liquidated
damages will be paid by the Company on April 15 and October 15 of each year to
the holders of Notes.
The Summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which has been filed as an Exhibit to the Registration
Statement.
DESCRIPTION OF INDEBTEDNESS AND OTHER COMMITMENTS
The following is a description of the principal agreements which will govern
the Company following the consummation of the Transactions. The following
summaries are qualified in their entirety by reference to the agreement to which
such summary relates. See "Available Information." Defined terms used below and
not defined have the meanings set forth in the respective agreements.
THE OCTOBER NOTES
In October 1996, the Company issued $225 million of 9 3/4% Senior
Subordinated Notes due 2006 with terms and conditions substantially identical to
the Notes.
NEW CREDIT FACILITY
In October 1996, the Company entered into the New Credit Facility, the terms
and conditions of which are as set forth below:
REVOLVING CREDIT FACILITY
COMMITMENT; INTEREST. The Revolving Credit Facility is a revolving line of
credit facility providing for borrowings of up to $12.5 million that may be used
for general corporate purposes including working capital requirements.
Borrowings under the Revolving Credit Facility may be in the form of eurodollar
loans or announced base rate loans as determined by the Company. The Company may
prepay borrowings under the Revolving Credit Facility, and may reborrow (up to
the amount of the commitment then in effect) any amounts that are repaid or
prepaid.
TERMINATION OF COMMITMENT. The initial commitment of $12.5 million
terminates on September 30, 2004, unless extended, or upon the occurrence of a
"change of control" (as defined in the New Credit Facility). On each of these
dates, the Company is required to repay borrowings (together with fees and
interest accrued thereon and any additional amounts owing under the Revolving
Credit Facility) in excess of the commitment as reduced.
SECURITY. The Company's obligations under the Revolving Credit Facility are
secured by first priority liens (subject to certain permitted encumbrances) on
substantially all of the assets of the Company. In addition, the Company has
pledged all the stock of its subsidiaries and Parent has pledged all of the
stock of the Company as security for the Company's obligations.
82
<PAGE>
COVENANTS. The Revolving Credit Facility restricts the Company and its
subsidiaries from, among other things: (i) changes in business; (ii) with
certain exceptions, consolidation, mergers, sales or purchases of assets; (iii)
with certain exceptions, incurring, creating, assuming or suffering to exist any
liens or encumbrances upon property of the Company or assigning any right to
receive income; (iv) with certain exceptions, creating, incurring, assuming or
suffering to exist any indebtedness; (v) making investments or loans in any
other person or entity or acquiring or establishing any subsidiaries except for
investments and subsidiaries permitted under the Revolving Credit Facility; (vi)
selling, assigning or otherwise encumbering or disposing of the capital stock or
other securities of any subsidiary; (vii) making any optional or voluntary
prepayments on indebtedness; (viii) with certain exceptions, redeeming, retiring
or purchasing capital stock of the Company or declaring or paying dividends on
the capital stock of the Company; and (ix) except as to certain transactions
that comply with the terms of the Revolving Credit Facility, entering into
transactions with affiliates. With respect to additional acquisitions, such
additional acquisitions require the consent of the lenders unless such
acquisitions do not exceed $50,000,000 in the aggregate or the Holdings Leverage
Ratio (as defined in the New Credit Facility) is less than 5.50 to 1.0. In
addition, the Revolving Credit Facility also requires the Company to maintain
certain levels of Operating Cash Flow and interest expense coverage, and limits
the Company's capital expenditures to $10 million each fiscal year (in addition
to additional permitted expenditures not in excess of the "basket" amount set
forth therein), which amount is increased annually to 105% of the maximum amount
for the immediately preceding twelve-month period.
CHANGE OF CONTROL. A change of control (as defined in the New Credit
Facility) of the Company constitutes an event of default permitting the lenders
to accelerate indebtedness under and terminate the Revolving Credit Facility.
ACQUISITION CREDIT FACILITY
COMMITMENT; INTEREST. The Acquisition Credit Facility as originally
configured consisted of an acquisition credit line in the amount of $287.5
million pursuant to which $75 million was available under a term loan facility
available on the closing date for the Acquisition Credit Facility in order to
finance, in part, the Acquisitions and $212.5 million which was and continues to
be available under a revolving/term loan facility. The Company drew an amount
equal to approximately $285 million to finance the POA Acquisition and for fees
and expenses in connection therewith. The $212.5 million revolving/term loan
facility may be reborrowed from time to time; the $75 million term loan was
repaid from the proceeds of the October Offerings and may not be reborrowed.
Borrowings under the Acquisition Credit Facility may be in the form of
eurodollar loans or announced base rate loans as determined by the Company. See
"Use of Proceeds."
TERMINATION OF COMMITMENT. Upon the failure of certain events to occur
prior to October 1997, a total of $100 million under the $212.5 million
revolving/term loan may be converted to a term facility which may not be
reborrowed. The $212.5 million revolving/term loan matures on September 30,
2003, or upon the occurrence of a "change of control" (as defined in the New
Credit Facility). The availability under the $212.5 million revolving/term loan
terminates in September, 1999.
SECURITY. The Company's obligations under the Acquisition Credit Facility
are secured by first priority liens (subject to certain permitted encumbrances)
on substantially all of the assets of the Company. In addition, the Company has
pledged all of the stock of its subsidiaries and Parent has pledged all of the
stock of the Company as security for the Company's obligations.
COVENANTS. The Acquisition Credit Facility restricts the Company and its
subsidiaries from, among other things: (i) changes in business; (ii) with
certain exceptions, consolidation, mergers, sales or purchases of assets; (iii)
with certain exceptions, incurring, creating, assuming or suffering to exist any
liens or encumbrances upon property of the Company or assigning any right to
receive income; (iv) with certain exceptions, creating, incurring, assuming or
suffering to exist any indebtedness; (v) making investments or loans in any
other person or entity or acquiring or establishing any subsidiaries except for
investments and subsidiaries permitted under the Acquisition Credit Facility;
(vi) selling, assigning or otherwise encumbering or disposing of the capital
stock or other securities of any subsidiary; (vii) making any optional or
83
<PAGE>
voluntary prepayments on indebtedness; (viii) with certain exceptions,
redeeming, retiring or purchasing capital stock of the Company or declaring or
paying dividends on the capital stock of the Company; and (ix) except as to
certain transactions that comply with the terms of the Acquisition Credit
Facility, entering into transactions with affiliates. With respect to additional
acquisitions, such additional acquisitions require the consent of the lenders
unless such acquisitions do not exceed $50,000,000 in the aggregate or the
Holdings Leverage Ratio (as defined in the New Credit Facility) is less than
5.50 to 1.0. In addition, the Acquisition Credit Facility also requires the
Company to maintain certain levels of Operating Cash Flow and interest expense
coverage, and limits the Company's capital expenditures to $10 million in each
fiscal year (in addition to additional permitted expenditures not in excess of
the "basket" amount set forth therein), which amount is increased to 105% of the
maximum amount for the immediately preceding twelve-month period.
CHANGE OF CONTROL. A "change of control" (as defined in the New Credit
Facility) of the Company constitutes an event of default permitting the lenders
to accelerate indebtedness under and terminate the Acquisition Credit Facility.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF NEW NOTES
The following summary is based on current law and certain proposed
regulations and is for general information only. Forthcoming legislative,
regulatory, judicial or administrative changes or interpretations could affect
the federal income tax consequences to holders of New Notes. The tax treatment
of a holder may vary depending upon whether the holder is a cash-method or
accrual-method taxpayer and upon the holder's particular status. For example,
certain holders, including insurance companies, tax-exempt organizations,
financial institutions, broker-dealers and foreign persons may be subject to
special rules not discussed below.
EXCHANGE OFFER
The exchange of New Notes for Old Notes pursuant to the Exchange Offer will
not be treated as an "exchange" for federal income tax purposes because the New
Notes will not be considered to differ materially in kind or extent from the Old
Notes. Rather, the New Notes received by a holder will be treated as a
continuation of the Old Notes in the hands of such holder. As a result, there
will be no federal income tax consequences to holders exchanging Old Notes for
New Notes pursuant to the Exchange Offer. The holder must continue to include
stated interest in income as if the exchange had not occurred (including
interest on Old Notes that ceased to accrue from the most recent date that
interest has been paid on the Old Notes, or if no interest has been paid, from
December 16, 1996 to the date of issuance of the New Notes). If, however, the
exchange of Old Notes for New Notes were treated as an "exchange" for federal
income tax purposes, such exchange would constitute a recapitalization for
federal income tax purposes. Holders exchanging Old Notes pursuant to such a
recapitalization would not recognize any gain or loss upon the exchange.
STATED INTEREST/ORIGINAL ISSUE DISCOUNT
The Company intends to take the position (which generally will be binding on
holders) that the Old Notes were not issued with original issue discount.
Accordingly, holders of Old Notes and New Notes should include stated interest
(subject to the amortization of any amortizable bond premium, as discussed
below) in gross income in accordance with their methods of accounting for
federal income tax purposes. The Company's position is based on the assumptions
made by the Company that neither an optional redemption nor optional repurchase
of the Old Notes or New Notes will occur and that no Liquidated Damages will be
paid pursuant to the Registration Rights. The Internal Revenue Service may take
a different position, which could affect the timing and character of income by
holders. Holders should consult their tax advisors as to the possible treatment
of Liquidated Damages.
84
<PAGE>
AMORTIZABLE BOND PREMIUM
If a holder's purchase price for an Old Note (excluding amounts paid that
are attributable to accrued interest) was greater than the Old Note's face
amount, such holder will be considered to have purchased the New Note exchanged
for such Old Note with "amortizable bond premium" equal in amount to such
excess. A holder of an Old Note that has elected to amortize such amortizable
bond premium (to reduce the amount of stated interest income on the Old Note)
will continue to amortize such premium on the New Note (to reduce the amount of
stated interest income on the New Note) using the same constant yield method and
term as that determined for the Old Note. A holder of a New Note with
amortizable bond premium that did not elect to amortize such premium on the Old
Note may elect to amortize such premium (to reduce the amount of stated interest
income on the New Note), using a constant yield method, over the remaining term
of the New Note (beginning from the first taxable year of the holder for which
the holder makes such election, as described below) with reference to either the
amount payable on maturity or, if it results in a smaller premium attributable
to the period through an earlier call date, with reference to the amount payable
on such earlier call date. An election to amortize bond premium on the New Note
will apply to the New Note, as well as all taxable debt obligations owned by
such holder at the beginning of the holder's taxable year for which the holder
makes the election and thereafter acquired by the holder and may be revoked only
with the consent of the Internal Revenue Service.
The Internal Revenue Service has published proposed regulations concerning
amortizable bond premium, which if made final in their present form could affect
the accrual of amortizable bond premium by holders of Old Notes and New Notes.
Although such proposed regulations, by their terms, will not be effective until
at least 60 days after they are made final, in their present form, if a holder
of an Old Note or New Note elects to amortize bond premium for the taxable year
containing such effective date, the proposed regulations would apply to all the
holder's debt instruments held on or after the first day of that taxable year.
It cannot be predicted at this time whether the proposed regulations will become
effective or what, if any, modifications will be made to them prior to their
becoming effective. Holders of Old Notes and New Notes should consult their tax
advisors concerning the making of an election to amortize bond premium.
SALE OR OTHER DISPOSITION OF NEW NOTES
A holder of a New Note will have a tax basis in the New Note equal to the
holder's purchase price for the Old Note, increased by the amount of interest,
determined in accordance with the rules concerning amortizable bond premium
described above, and market discount that is included in the holder's gross
income and decreased by payments of such interest and market discount received
(in cash) by the holder.
A holder of a New Note will generally recognize gain or loss on the sale,
exchange, redemption or retirement of the New Note equal to the difference (if
any) between the amount realized from such sale, exchange, redemption or
retirement and the holder's basis in the New Note. Such gain or loss will
generally be long-term capital gain (except to the extent attributable to market
discount) or loss if the New Note has been held more than one year (including
the period that such holder held the Old Note prior to exchange).
BACKUP WITHHOLDING
A noncorporate holder of New Notes that either (a) is (i) a citizen or
resident of the United States, (ii) a partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate, the income of which is subject to United
States federal income taxation regardless of its source, or (iv) a trust if (x)
a court within the United States is able to exercise primary supervision over
the administration of the trust and (y) one or more fiduciaries, which are
United States persons, have the authority to control all substantial decisions
of the trust or (b) is not described in the preceding clause (a), but whose
income from interest (including amortizable bond premium) with respect to the
New Notes or proceeds from the disposition of the New Notes is effectively
connected with such holder's conduct of the United States trade or business, and
that receives interest with respect to the
85
<PAGE>
New Notes or proceeds from the disposition of the New Notes will generally not
be subject to backup withholding on such payments or distributions if it
certifies, under penalty of perjury, that it has furnished a correct Taxpayer
Identification Number ("TIN") and it is not subject to backup withholding either
because it has not been notified by the Internal Revenue Service that it is
subject to backup withholding or because the Internal Revenue Service has
notified it that it is no longer subject to backup withholding. Such
certification may be made on an Internal Revenue Service Form W-9 or
substantially similar form. However, backup withholding will apply to such a
holder if the holder (i) fails to furnish its TIN, (ii) furnishes an incorrect
TIN, (iii) is notified by the Internal Revenue Service that it has failed to
properly report such payments of interest or dividends or (iv) under certain
circumstances, fails to make such certification.
The Company will withhold (at a rate of 31%) all amounts required by law to
be withheld from reportable payments made with respect to the New Notes. Any
amounts withheld from a payment to a holder under the backup withholding rules
will be allowed as a credit against such holder's United States federal income
tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
Holders of the New Notes should consult their tax advisors regarding the
application of backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption, if available.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH HOLDER OF NEW
NOTES SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES OF
HOLDING, EXCHANGING OR SELLING THE NEW NOTES INCLUDING THE APPLICATION AND
EFFECT OF ANY FEDERAL, STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGES IN
APPLICABLE TAX LAWS.
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC set forth in no-action
letters issued to third parties, the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by holders thereof (other than any
holder which is (i) an affiliate of the Company, (ii) a broker-dealer who
acquired Old Notes directly from the Company or (iii) a broker-dealer who
acquired Old Notes as a result of market-making or other trading activities)
without compliance with the registration and prospectus delivery provisions of
the Securities Act provided that such New Notes are acquired in the ordinary
course of such holders' business, and such holders are not engaged in, and do
not intend to engage in, and have no arrangement or understanding with any
person to participate in, a distribution of such New Notes; PROVIDED, that
broker-dealers ("Participating Broker-Dealers") receiving New Notes in the
Exchange Offer will be subject to a prospectus delivery requirement with respect
to resales of such New Notes. To date, the SEC has taken the position that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to transactions involving an exchange of securities such as the
exchange pursuant to the Exchange Offer (other than a resale of an unsold
allotment from the sale of Old Notes to the Initial Purchasers) with the
prospectus contained in the registration statement. Pursuant to the Registration
Rights Agreement, the Company has agreed to permit Participating Broker-Dealers
and other persons, if any, subject to similar prospectus delivery requirements
to use this Prospectus in connection with the resale of such New Notes. The
Company has agreed that, for a period of 180 days after the Exchange Date, it
will make this Prospectus, and any amendment or supplement to this Prospectus,
available to any broker-dealer that requests such documents in the Letter of
Transmittal.
Each holder of Old Notes who wishes to exchange its Old Notes for New Notes
in the Exchange Offer will be required to make certain representations to the
Company as set forth in "The Exchange Offer -- Terms and Conditions of the
Letter of Transmittal." In addition, each Holder who is a broker-dealer and who
receives New Notes for its own account in exchange for Old Notes that were
acquired by it as a result
86
<PAGE>
of market-making activities or other trading activities, will be required to
acknowledge that it will deliver a prospectus in connection with any resale by
it of such New Notes.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealers and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incidental to the Exchange Offer
other than commissions and concession of any brokers or dealers and will
indemnify holders of the Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act, as set forth in the
Registration Rights Agreement.
LEGAL MATTERS
The validity of the New Notes will be passed upon for the Company by Winston
& Strawn, Chicago, Illinois.
EXPERTS
The Consolidated Financial Statements of the Company as of December 31, 1994
and 1995 and for each of the three years in the period ended December 31, 1995
and the Statement of Revenues and Direct Expenses of Ad-Sign for the year ended
December 31, 1995 included in this Prospectus have been so included in reliance
on the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The Consolidated Financial Statements of NOA Holding Company at May 31, 1995
and 1994, and for each of the three years in the period ending May 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
The Financial Statements of POA Acquisition Corporation at December 31, 1995
and 1994, and for each of the three years in the period ended December 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Revere Holding Corp. and
Subsidiaries as of December 31, 1995 and for the year then ended included in
this prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
87
<PAGE>
INDEX TO FINANCIAL STATEMENTS
UNIVERSAL OUTDOOR, INC.
<TABLE>
<S> <C>
Report of Independent Accountants of Price Waterhouse LLP................. F-2
Consolidated Balance Sheets............................................... F-3
Consolidated Statements of Operations..................................... F-4
Consolidated Statements of Cash Flow...................................... F-5
Consolidated Statements of Changes in Common Stockholders' Equity
(Deficit)............................................................... F-6
Notes to Consolidated Financial Statements................................ F-7
NOA HOLDING COMPANY
Report of Independent Auditors of Ernst & Young LLP....................... F-16
Consolidated Balance Sheets............................................... F-17
Consolidated Statements of Operations..................................... F-18
Consolidated Statements of Stockholders' Equity........................... F-19
Consolidated Statements of Cash Flows..................................... F-20
Notes to Consolidated Financial Statements................................ F-21
AD-SIGN
Report of Independent Accountants of Price Waterhouse LLP................. F-27
Statement of Revenues and Direct Expenses................................. F-28
Notes to the Statement of Revenues and Direct Expenses.................... F-29
POA ACQUISITION CORPORATION
Report of Independent Auditors of Ernst & Young LLP....................... F-30
Balance Sheets............................................................ F-31
Statements of Operations.................................................. F-32
Statements of Shareholders' Equity........................................ F-33
Statements of Cash Flows.................................................. F-34
Notes to Financial Statements............................................. F-35
REVERE HOLDING CORP.
Report of Independent Public Accountants of Arthur Andersen LLP........... F-42
Consolidated Balance Sheets............................................... F-43
Consolidated Statements of Operations..................................... F-44
Consolidated Statements of Stockholders' Equity........................... F-45
Consolidated Statements of Cash Flows..................................... F-46
Notes to Consolidated Financial Statements................................ F-47
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Universal Outdoor, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in common stockholders' equity
(deficit) and of cash flows present fairly, in all material respects, the
financial position of Universal Outdoor, Inc. and its subsidiary at December 31,
1994 and 1995, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of Universal's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 23, 1996
F-2
<PAGE>
UNIVERSAL OUTDOOR, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996
------------- ------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash................................................................ $ 11 $ 19 $ 20,258
Accounts receivable, less allowance for doubtful accounts of $106 in
1994 and 1995..................................................... 4,313 5,059 19,016
Other receivables................................................... 185 201 1,129
Accounts receivable -- affiliates................................... -- -- 629
Prepaid land rents.................................................. 822 1,043 3,927
Prepaid insurance and other......................................... 859 1,029 3,558
------------- ------------- --------------
Total current assets............................................ 6,190 7,351 48,517
------------- ------------- --------------
Property and equipment, net........................................... 53,651 55,346 385,782
------------- ------------- --------------
Other assets:
Noncompete agreements, net of accumulated amortization of $4,711,
$4,505, and $281.................................................. 1,615 1,995 1,179
Finance costs, net of accumulated amortization of $511, $1,171, and
$756.............................................................. 3,378 3,196 18,660
Excess of cost over fair value assets acquired, net of accumulated
amortization of $184, $230, and $4,111............................ 746 700 217,831
Other costs associated with acquisitions, net of accumulated
amortization of $569, $686, and $15............................... 584 525 4,259
Deposit............................................................. 26 20 5,073
------------- ------------- --------------
Total other assets.............................................. 6,349 6,436 247,002
------------- ------------- --------------
$ 66,190 $ 69,133 $ 681,301
------------- ------------- --------------
------------- ------------- --------------
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt................................ $ 58 $ 58 $ --
Accounts payable.................................................... 1,469 1,225 3,373
Accounts payable -- affiliates...................................... 722 234 --
Accrued interest.................................................... 998 1,054 5,497
Deferred revenue.................................................... 400 468 329
Accrued expenses.................................................... 482 409 21,174
Other liabilities................................................... -- -- 163
------------- ------------- --------------
Total current liabilities....................................... 4,129 3,448 30,536
------------- ------------- --------------
Long-term debt, less current maturities............................... 73,304 76,079 347,941
Other long-term liabilities........................................... -- -- 140
Deferred income tax liability......................................... -- -- 71,700
------------- ------------- --------------
Common stockholders' equity (deficit):
Common stock, $.01 par value, 1,000,000 shares authorized; 10,000
shares issued and outstanding..................................... -- --
Additional paid in capital.......................................... 22,535 22,535 274,821
Net accumulated deficit............................................. (33,778) (32,929) (43,837)
------------- ------------- --------------
Total common stockholders' equity (deficit)..................... (11,243) (10,394) 230,984
------------- ------------- --------------
Commitment and contingencies (Notes 5 and 9).......................... -- -- --
------------- ------------- --------------
$ 66,190 $ 69,133 $ 681,301
------------- ------------- --------------
------------- ------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
UNIVERSAL OUTDOOR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1993 1994 1995
--------- --------- --------- FOR THE YEAR
ENDED
DECEMBER 31,
------------
1996
------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Gross revenues.................................................... $ 28,710 $ 33,180 $ 38,101 $ 84,939
Less agency commissions........................................... 2,863 3,414 3,953 8,801
--------- --------- --------- ------------
Net revenues................................................ 25,847 29,766 34,148 76,138
--------- --------- --------- ------------
Operating expenses:
Direct advertising expenses..................................... 10,901 11,806 12,864 26,468
General and administrative expenses............................. 3,357 3,873 4,244 10,596
Depreciation and amortization................................... 8,000 7,310 7,402 18,286
--------- --------- --------- ------------
22,258 22,989 24,510 55,350
--------- --------- --------- ------------
Operating income.................................................. 3,589 6,777 9,638 20,788
--------- --------- --------- ------------
Other (income) expense:
Interest expense, including amortization of bond discount of
$162, $61 and $63............................................. 6,610 7,959 8,195 15,515
Interest expense -- amortization of deferred financing costs.... 511 355 432 215
Interest expense -- accretion of dividends on redeemable
preferred stock............................................... 1,844 -- -- --
(Gain) loss on disposal of assets and other expenses............ 351 134 42 --
Other expense................................................... -- -- -- 1,398
--------- --------- --------- ------------
Total other expense......................................... 9,316 8,448 8,669 17,128
--------- --------- --------- ------------
Income (loss) before extraordinary items.......................... (5,727) (1,671) 969 3,660
Extraordinary loss on early extinguishment of debt................ (3,260) -- -- (14,448)
--------- --------- --------- ------------
Net income (loss)................................................. $ (8,987) $ (1,671) $ 969 $ (10,788)
--------- --------- --------- ------------
--------- --------- --------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
UNIVERSAL OUTDOOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------------
1993 1994 1995
---------- --------- --------- FOR THE YEAR
ENDED
DECEMBER 31,
------------
1996
------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................... $ (8,987) $ (1,671) $ 969 $ (10,789)
Depreciation and amortization................................... 8,673 7,726 7,897 18,286
Extraordinary loss.............................................. 3,260 -- -- 6,129
(Gain) loss on sale of property and equipment................... 69 90 --
Accretion of preferred stock dividends.......................... 1,844 -- --
Changes in assets and liabilities:
Accounts receivable and other receivables..................... (728) (1,278) (762) (3,703)
Prepaid land rents, insurance and other....................... (262) (223) (391) (330)
Accounts payable and accrued expenses......................... 741 (156) (317) 2,157
Accounts payable affiliate.................................... -- 722 (488) (71)
Accrued interest.............................................. (253) 140 56 4,266
Deferred revenue.............................................. -- 400 68 --
Other......................................................... (235) -- 6 (19)
---------- --------- --------- ------------
Net cash from operating activities.......................... 4,122 5,750 7,038 15,926
---------- --------- --------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gross capital expenditures...................................... (2,862) (5,671) (5,620) (6,987)
Payments for acquisitions, net of cash acquired................. -- (3,355) (1,925) (489,437)
Proceeds from sale of property and equipment.................... 858 1,003 -- --
Payment for consulting agreement................................ -- -- (1,400) --
Other payments.................................................. (32) (160) (124) --
---------- --------- --------- ------------
Net cash used in investing activities....................... (2,036) (8,183) (9,069) (496,424)
---------- --------- --------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt........................ 64,037 -- -- 325,255
Principal payments of long-term debt............................ (64,505) (272) (262) (66,673)
Deferred financing costs........................................ (3,560) (221) (250) (20,470)
Net borrowings under credit agreements.......................... 3,950 3,040 2,671 10,339
Capital contribution............................................ -- -- -- 252,286
Payment of prepayment fees...................................... (1,272) -- -- --
Payment for redemption of preferred stock....................... -- -- -- --
Payment for cancellation of outstanding warrants................ (750) -- -- --
Dividends paid to parent........................................ -- (120) (120) --
---------- --------- --------- ------------
Net cash from (used in) financing activities.................... (2,100) 2,427 2,039 500,737
---------- --------- --------- ------------
NET INCREASE (DECREASE) IN CASH................................... (14) (6) 8 20,239
CASH, at beginning of period...................................... 31 17 11 19
---------- --------- --------- ------------
CASH, at end of period............................................ $ 17 $ 11 $ 19 $ 20,258
---------- --------- --------- ------------
---------- --------- --------- ------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid during the period................................. $ 7,701 $ 7,765 $ 8,676 $ 10,497
---------- --------- --------- ------------
---------- --------- --------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
UNIVERSAL OUTDOOR, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN
COMMON STOCKHOLDERS' EQUITY (DEFICIT)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADDITIONAL COMMON
PAID IN ACCUMULATED STOCKHOLDERS'
CAPITAL DEFICIT DEFICIT
---------- ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1993............................................. $ 22,135 $ (31,987) $ (9,852)
Reclassification of redeemable common stock reflecting termination of
stockholder agreement which may have required Universal Outdoor II
Holding Company to purchase up to 20% of its outstanding Class A common
stock.................................................................. 400 -- 400
Dividends declared to parent............................................. -- (120) (120)
Net loss................................................................. -- (1,671) (1,671)
---------- ------------ ------------
Balance at December 31, 1994............................................. 22,535 (33,778) (11,243)
Dividends declared to parent............................................. -- (120) (120)
Net income............................................................... -- 969 969
---------- ------------ ------------
Balance at December 31, 1995............................................. 22,535 (32,929) (10,394)
Capital contribution (unaudited)......................................... 252,286 -- 252,286
Dividend declared to parent (unaudited).................................. -- (120) (120)
Net income (unaudited)................................................... -- (10,788) (10,788)
---------- ------------ ------------
Balance at December 31, 1996 (unaudited)................................. $ 274,821 $ (43,837) $ 230,984
---------- ------------ ------------
---------- ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1 -- BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS:
Universal Outdoor, Inc., Universal Outdoor II Holding Company (the Holding
Company), Outdoor Properties, Inc., Midwest Outdoor Management, Inc. and CBT
Development, Inc. were entities under common ownership and control. In
connection with the Refinancing Plan (see below), (i) a wholly-owned subsidiary
of the Holding Company was merged with and into Universal Outdoor, Inc., which
thereupon became a wholly-owned subsidiary of the Holding Company and (ii)
Universal Outdoor, Inc. (Universal) acquired all of the assets, in consideration
for the assumption of all of the liabilities, of each of Outdoor Properties,
Inc., Midwest Outdoor Management, Inc. and CBT Development, Inc. In conjunction
with the Refinancing Plan, 2,649 shares of class A common stock of Universal
were exchanged for an equal number of common shares of the Holding Company, and
1,556 shares of class B common stock of Universal were exchanged for 48,000
shares of Series B voting preferred stock of the Holding Company.
Effective November 18, 1993, Universal executed a Refinancing Plan to extend
the average life of its obligations, thereby enhancing its operating and
financial flexibility. As part of the Refinancing Plan, Universal combined, in a
single operating entity (Universal Outdoor, Inc.) under the Holding Company,
business activities previously conducted by separate affiliated corporations,
repaid certain outstanding indebtedness, issued $65.0 million Senior Notes due
2003 of Universal and replaced its existing bank credit facility. In addition,
the Refinancing Plan provided for the amendment of the terms of the redeemable
preferred stock of the Holding Company to allow the provisions of the indenture
governing the Senior Notes due 2003 to restrict payments by the operating
company to the Holding Company until the $65.0 million Senior Notes due 2003
have been retired.
Pursuant to the Refinancing Plan, Universal entered a new credit facility
which permits borrowings of up to $12,500 on a revolving basis. Additionally,
Universal issued $65.0 million Senior Notes. With the funds obtained, Universal
(i) repaid all outstanding bank borrowings, (ii) retired approximately $25,000
of senior secured notes (including a prepayment penalty of $1,000), (iii)
retired approximately $6,500 of senior subordinated notes, (iv) repaid
approximately $3,400 of other indebtedness and (v) paid related transaction fees
and expenses, including prepayment penalties.
Upon consummation of the Refinancing Plan, Universal recognized an
extraordinary loss totaling $3,300 relating to the write-off of unamortized
deferred financing costs and prepayment fees associated with long term debt
instruments. Furthermore, the redeemable preferred stock ($16,900 at November
18, 1993, the refinancing date) and a $1,200 unsecured term loan became
obligations of and were recorded in the Holding Company with the operations of
Universal and all other assets and liabilities recorded in the operating
subsidiary, Universal. The Holding Company's sole source of funds will be the
operations of its wholly-owned subsidiary, Universal. However the terms of the
$65.0 million Senior Notes due 2003 effectively preclude the operating
subsidiary from distributing cash to satisfy obligations of the Holding Company.
Universal is a leading Midwestern outdoor advertising company. Universal
owns and operates outdoor advertising display faces principally in five
geographic markets: Chicago, Illinois; Milwaukee, Wisconsin; Indianapolis,
Indiana; Des Moines, Iowa; and Evansville, Indiana. Universal sells outdoor
advertising space to national, regional and local advertisers.
Historically, manufacturers of tobacco products, principally cigarettes,
have been major users of outdoor advertising displays, including displays
operated by Universal. In 1993, 1994 and 1995, tobacco industry advertising
accounted for approximately 14.8%, 13.1% and 13.3% of Universal's net revenues,
respectively.
F-7
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
The summary of significant accounting policies is presented to assist the
reader in understanding and evaluating Universal's consolidated financial
statements. These policies are in conformity with generally accepted accounting
principles consistently applied in all material respects.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Universal's revenues are generated from contracts with advertisers generally
covering periods of one to twelve months. Universal recognizes revenues monthly
over the period in which advertisement displays are posted on the advertising
structure. A full month's revenue is recognized in the first month of posting.
Costs incurred for the production of outdoor advertising displays are recognized
in the initial month of the contract or as incurred during the contract period.
Payments received in advance of billings are recorded as deferred revenue.
PREPAID LAND RENTS
Most of Universal's outdoor advertising structures are located on leased
land. Land rents are typically paid in advance for periods ranging from one to
twelve months. Prepaid land rents are expensed ratably over the related rental
term.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets. Expenditures for maintenance and repairs are charged to operations as
incurred; major improvements are capitalized.
INTANGIBLE ASSETS
Non-compete agreements, deferred financing and acquisition costs are
amortized over their estimated economic lives, ranging from three to ten years.
The excess of cost over fair value of assets acquired is amortized on a
straight-line basis over its useful life, principally fifteen years. Universal
reviews the carrying value of intangibles and other long-lived assets for
impairment when events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable. This review is performed by
comparing estimated undiscounted future cash flows from use of the asset to the
recorded value of the asset.
INCOME TAXES
Income tax expense is based on pre-tax income for financial reporting
purposes, adjusted for the effects of permanent differences between such income
and that reported for tax return purposes. Deferred tax assets and liabilities
are recognized for expected future tax consequences of temporary differences
between the carrying amounts and tax bases of the underlying assets and
liabilities (Note 6).
F-8
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
EARNINGS PER SHARE
An earnings per share calculation has not been presented because Universal
is a wholly-owned subsidiary of the Holding Company and accordingly, earnings
per share is not required or meaningful.
RECLASSIFICATIONS
Certain financial information in the prior years have been reclassified to
conform to the current year presentation.
INTERIM FINANCIAL INFORMATION
The interim financial information as of December 31, 1996 has been prepared
from the unaudited financial records of the Company and, in the opinion of
management, reflects all adjustments necessary for a fair presentation of the
financial position and results of operations and of cash flows for the
respective interim periods. All adjustments were of a normal and recurring
nature.
NOTE 3 -- PROPERTY AND EQUIPMENT:
Major classes of property and equipment consist of the following at December
31, 1994 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Outdoor advertising structures.................................................... $ 70,869 $ 76,340
Land and capitalized land lease costs............................................. 2,167 2,232
Vehicles and equipment............................................................ 3,751 4,712
Building and leasehold improvements............................................... 3,019 3,150
Display faces under construction.................................................. 125 1,344
--------- ---------
79,931 87,778
Less accumulated depreciation..................................................... 26,280 32,432
--------- ---------
Net property and equipment........................................................ $ 53,651 $ 55,346
--------- ---------
--------- ---------
</TABLE>
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS:
Long-term debt consists of the following at December 31, 1994 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
11% Senior Notes due 2003, net of discount of $902 and $839 (a)................... $ 64,098 $ 64,161
Credit facility (b)............................................................... 6,990 3,286
Acquisition line (b).............................................................. -- 6,375
Other obligations (c)............................................................. 2,274 2,315
--------- ---------
73,362 76,137
Less current maturities of long-term debt and other obligations................... 58 58
--------- ---------
$ 73,304 $ 76,079
--------- ---------
--------- ---------
</TABLE>
F-9
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
- ------------------------
(a) The $65.0 million Senior Notes due 2003 have interest payable semi-annually
and are subject to redemption at the option of Universal beginning in 1998.
The $65.0 million Senior Notes due 2003 also contain certain restrictive
covenants including, among others, limitations on additional debt incurrence
and restrictions on distributions to stockholders, except for limited
payments permitted under the Indenture.
(b) In July 1995, Universal's credit agreement was amended to increase the
available borrowings, to extend the term of the agreement, and to add an
acquisition line of credit.
Pursuant to the amended revolving credit agreement that extends through May
2001, Universal has borrowing available under a credit facility and an
acquisition line of credit. The credit facility permits borrowings up to
$12,500 until May 1, 2000 when available borrowings under the credit
facility are scheduled to reduce to $10,000. The acquisition line of credit
permits borrowings up to $22,500. Available borrowings under the acquisition
line are scheduled to reduce to $19,500 in 1996, $15,500 in 1997, $10,500 in
1998 and $4,500 in 1999 and $0 in 2000.
The loans under the credit facility and acquisition line bear interest at
the rate per annum equal to the following: (i) Prime rate plus 0.25% when
the aggregate principle amount outstanding under the credit facility and the
acquisition line is $20 million or less, and (ii) Prime rate plus 0.50% when
the aggregate principle amount outstanding is greater than $20 million.
Prior to the amendment, Universal paid interest on this facility at (i) the
Prime rate or (ii) LIBOR plus 225 basis points. The interest rate in effect
during 1995 ranged from 8.5% to 9.25% and was 6% to 8.5% during 1994.
Interest on the credit facility is payable monthly. The credit facility is
collateralized by a first security interest in all assets of Universal.
Borrowings under the credit agreement are subject to certain restrictive
covenants including, among others, a maximum ratio of total indebtedness to
earnings, a minimum ratio of earnings to total interest expense and
restrictions on additional debt incurrence as well as distributions to
stockholders. Commitment fees are 0.25% of the unused portion of the
committed facility and are paid quarterly.
(c) Other obligations include the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
- - Secured term note due November 30, 1999 bearing interest at the prime
rate. Interest on this note is payable monthly. This note is secured by a
building in Addision, Illinois........................................... $ 1,200 $ 1,148
- - Promissory note due December 31, 2001. Interest on this note is
calculated annually and is equal to 14% of the cash flow (as defined) of
Universal's subsidiary................................................... 500 500
- - Promissory note with interest, compounded annually, at 10%, due May 4,
1999. For the first two years subsequent to May 4, 1994, interest is
added to the principal balance. Thereafter, interest is to be paid
monthly in arrears....................................................... 500 500
- - Other obligations........................................................ 74 167
--------- ---------
$ 2,274 $ 2,315
--------- ---------
--------- ---------
</TABLE>
F-10
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
On June 30, 1994, the Holding Company (Universal's parent) issued $50.0
million 14% Senior Secured Discount Notes due 2004 for an aggregate
consideration of approximately $25.4 million. The $50.0 million Senior Secured
Discount Notes due 2004 do not pay any interest prior to July 1, 1999.
Commencing on July 1, 1999, interest on the Notes will accrue and will be
payable in cash semi-annually on each January 1, and July 1 commencing on
January 1, 2000. The Holding Company will be dependant on the cash flow of
Universal and its subsidiary in order to meet its debt service obligations. The
Holding Company believes that it will receive distributions from Universal to
enable it to service the cash interest payments; however, there can be no
assurances that such distributions, if any, will be adequate to satisfy either
the cash interest on, or the payment such debt. Significant contractual and
other restrictions exist on the payment of dividends and the making of loans by
Universal to the Holding Company. Consequently, all or a portion of the $50.0
million Senior Secured Discount Notes due 2004 may require refinancing prior to
the maturity thereof. During the peirod prior to July 1, 2004, the Holding
Company does not expect to have significant short-term cash requirements except
for certain legal, accounting, printing and other similar costs.
Aggregate maturities of long-term debt obligations for each of the five
years subsequent to 1995 are $58, $54, $95, $1,512 and $4,500.
NOTE 5 -- LEASE COMMITMENTS:
Rent expense totaled $4,100, $4,600 and $4,600 in 1993, 1994 and 1995,
respectively. Minimum annual rentals under the terms of noncancellable operating
leases in effect at December 31, 1995 are payable as follows:
<TABLE>
<CAPTION>
OFFICE
YEAR LEASES LAND TOTAL
- ------------------------------------------------------------------------- ----------- --------- ---------
<S> <C> <C> <C>
1996..................................................................... $ 191 $ 3,315 $ 3,506
1997..................................................................... 145 2,995 3,140
1998..................................................................... 63 2,615 2,678
1999..................................................................... 63 2,242 2,305
2000..................................................................... 53 1,925 1,978
Thereafter............................................................... -- 13,083 13,083
----- --------- ---------
$ 515 $ 26,175 $ 26,690
----- --------- ---------
----- --------- ---------
</TABLE>
NOTE 6 -- INCOME TAXES:
Universal and the Holding Company entered into a tax sharing agreement that
became effective upon completion of the Refinancing Plan. Under the tax sharing
agreement, the Holding Company filed a consolidated federal income tax return
with Universal for the taxable year of Universal ended on December 31, 1993 and
will continue to file consolidated returns for each taxable year thereafter for
which the Holding Company and Universal are eligible to file consolidated
federal income tax returns. Under the tax sharing agreement, for each taxable
year of Universal with respect to which Universal is included in a consolidated
federal income tax return with the Holding Company, Universal will pay to the
Holding Company an amount equal to the lesser of (i) the consolidated federal
income tax liability of the consolidated group of which the Holding Company is
the common parent or (ii) the federal income tax liability of Universal,
computed as if Universal had filed a separate federal income tax return.
Accordingly, Universal has included the tax benefits of the Holding Company's
net operating loss carryforwards
F-11
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 6 -- INCOME TAXES: (CONTINUED)
generated prior to consummation of the Refinancing Plan in its deferred tax
computation. Tax benefits from losses generated by the Holding Company
subsequent to the consummation of the Refinancing Plan are not available to
Universal; however, such benefits may be transferred through either an
intercompany transfer or a capital transaction.
Since Universal utilized operating loss carryfowards to completely offset
income in 1995 and incurred a net operating loss in 1994, no provision for
income taxes was required. Deferred tax assets, determined in accordance with
FAS 109, consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Bad debts.......................................................................... $ 42 $ 42
Non-deductible accrued expenses.................................................... 81 53
Depreciation....................................................................... 136 523
Loss carryforwards................................................................. 6,483 5,841
--------- ---------
6,742 6,459
--------- ---------
Valuation reserve.................................................................. (6,742) (6,459)
--------- ---------
Net deferred tax asset............................................................. $ -- $ --
--------- ---------
--------- ---------
</TABLE>
For tax return purposes, the following companies have net operating loss
carryforwards at December 31, 1994 which expire between 2005-2009:
<TABLE>
<S> <C>
PRIOR TO REFINANCING PLAN:
Universal................................................................ $ 5,808
Holding Company.......................................................... 7,172
---------
$ 12,980
---------
---------
SUBSEQUENT TO REFINANCING PLAN:
Universal................................................................ $ 1,622
---------
---------
</TABLE>
Certain restrictions on the Universal's utilization of the net operating
losses will apply if there has been an "ownership change" of either Universal,
the Holding Company, or both within the meaning of section 382 of the Internal
Revenue Code. Upon the Holding Company's completion of its debt offering and
stock purchases, a limitation was imposed on the net operating loss
carryforwards which arose prior to the Refinancing Plan of Universal. The
limitation, as specified in Section 382 of the Internal Revenue Code, is based
on a percentage of the value of the Company at the time of the ownership change.
Furthermore, the Holding Company's use of Universal's net operating losses are
subject to limitations applicable to corporations filing consolidated federal
income tax returns.
NOTE 7 -- SUPPLEMENTAL CASH FLOW INFORMATION:
In March 1995, Universal entered into two stock purchase agreements to
purchase, for a net combined purchase price of $1,400, advertising structures
located in the Dallas market. Approximately $1,200 of the total purchase price
was paid in cash and $200 was paid in the form of promissory notes issued by
Universal or assumption of debt of the acquired company. Additionally, during
1995 Universal acquired signboard crane equipment for $103 under a capital
lease. Accordingly, the Statement of Cash Flows does not reflect the debt
incurred in the acquisition of the stock or the equipment.
F-12
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 7 -- SUPPLEMENTAL CASH FLOW INFORMATION: (CONTINUED)
In May 1994, Universal entered into two asset purchase agreements to
purchase, for a net combined purchase price of $4,300, advertising structures
located in the Chicago and Milwaukee markets. Approximately, $3,300 of the total
purchase price was paid in cash and $1,000 was paid in the form of promissory
notes issued by Universal. Additionally, in October 1994, Universal acquired a
building in Addison, Illinois, for $1,500, $1,200 of which was funded with a
secured term note. Accordingly, the Statement of Cash Flows does not reflect
these notes issued to acquire the advertising structures or building.
NOTE 8 -- FINANCIAL INSTRUMENTS:
Universal values its financial instruments as required by FAS No. 107,
"Disclosures about Fair Values of Financial Instruments." The carrying amounts
of cash and cash equivalents, short term debt and long-term variable rate debt
approximate fair value. The fair value of long-term debt is based on market
prices. The estimated fair values of Universal financial instruments, for which
the carrying amount does not approximate fair value, as of December 31, 1995 is
as follows:
<TABLE>
<CAPTION>
CARRYING
AMOUNT FAIR VALUE
---------- ----------
<S> <C> <C>
Long-term debt.................................................................. $ 76,137 $ 77,112
</TABLE>
NOTE 9 -- CONTINGENCIES:
Universal is subject to various legal claims, suits and complaints in the
normal course of business. Such litigation includes claims by municipalities
that certain outdoor advertising structures must be removed. While the ultimate
outcome of current and future litigation cannot be predicted with certainty,
management believes, based on the advice of the Universal's counsel, the final
outcome of such litigation will not have a material adverse effect on the
Universal's financial position.
CONTINGENCIES--UNAUDITED.
The Company, as the successor to POA Acquisition Company ("POA"), is a
defendant in a case entitled IMPACT COMMUNICATIONS OF CENTRAL FLORIDA, INC., ET.
AL. VS. NATIONAL OUTDOOR ADVERTISING, ET. AL. pending in the United States
District Court, Middle District of Florida. Impact Communications has alleged
that POA, among others, conspired to restrain trade and to monopolize the market
for leases for land on which outdoor advertising structures can be erected. The
case has been set for trial in February 1997. The plaintiffs have alleged that
the acts of the defendants resulted in harm to the plaintiffs and damages of $4
to 12 million, which could be trebled under the applicable laws. The Company
intends to defend the case vigorously. There can be no assurance as to the
ultimate outcome of this litigation although management does not presently
believe it will have a material adverse effect on its results of operations or
financial condition.
NOTE 10 -- RELATED-PARTY TRANSACTIONS:
In June 1994, Universal's parent entity, Universal Outdoor Holding, Inc.,
advanced approximately $1,200 to Universal in the form of a intercompany loan,
which was a portion of the proceeds from the sale by the Holding Company of the
$50.0 million Senior Secured Discount Notes due 2004 (Note 4). Universal does
not pay interest on this loan, and as of December 31, 1995, approximately $234
was outstanding.
F-13
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 10 -- RELATED-PARTY TRANSACTIONS: (CONTINUED)
CAPITAL CONTRIBUTION--UNAUDITED
The Company received capital contributions of $252.3 million during 1996
from the Holding Company.
NOTE 11 -- SUBSEQUENT EVENTS:
In January 1996, the Company entered into an asset purchase agreement with
Ad-Sign, Inc. Under this agreement, Universal purchased approximately 160
display faces in the Chicago market in exchange for $12.5 million. The purchase
price was paid in cash and was financed with borrowings against the Acquisition
Line of Credit.
In February 1996, the Company entered into an agreement to purchase all
outstanding stock of NOA Holding Company for approximately $85 million ("Naegele
Acquisition"). The Company expects fees and expenses associated with the deal to
be $5 million. As a result of the proposed stock purchase, Universal will
acquire signboards in the Minneapolis/St. Paul, Minnesota and Jacksonville,
Florida markets. The Company expects to finance this acquisition with $60
million in bank borrowings and $30 million in cash proceeds from the purchase of
equity of the Holding Company by an investor group. The transaction is expected
to close in April 1996.
FINANCING TRANSACTIONS--UNAUDITED
In April 1996, the Holding Company sold 186,500 shares of Class B common
stock and 188,500 shares of Class C common stock for approximately $30 million.
The proceeds were used to assist in the financing of the Naegele Acquisition.
In July 1996, the Holding Company completed an initial public offering (IPO)
of its stock whereby the Company sold 4,630,000 shares of Common Stock at net
proceeds of $62.4 million. The proceeds were used to pay down on existing debt.
In conjunction with the IPO, the Company effected a 16-for-one stock split. The
accompanying financial statements and related notes thereto have been restated
to reflect the 16-for-one stock split for all periods presented.
In October 1996, the Company completed a public offering of $200 million
9 3/4% Senior Subordinated Notes due 2006 at net proceeds of $193.2 million.
In October 1996, the Holding Company completed a secondary public offering
of its stock whereby the Company sold 5,750,000 shares of Common Stock at net
proceeds of $202.9 million.
In October 1996, the Company completed a tender offer to purchase all of its
outstanding 11% Senior Notes due 2003. Simultaneously, the Holding Company
completed a tender offer to purchase all of its then outstanding 14% Senior
Secured Discount Notes due 2004. These redemptions resulted in an extraordinary
loss of $13.7 million for the Company and $12.5 million for the Holding Company.
The Company financed the new purchase price of certain of the acquisitions
and related refinancing of certain existing bank indebtedness of the Company and
paid the fees and expenses associated with the acquisitions in part through a
total commitment of $300 million under a New Credit Facility. Following the
completion of the October stock and debt offerings, the outstanding amounts
under the New Credit Facility were repaid in full, and the maximum commitment of
the New Credit Facility was reduced to $225 million.
F-14
<PAGE>
UNIVERSAL OUTDOOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 11 -- SUBSEQUENT EVENTS: (CONTINUED)
In December 1996, the Company issued a private offering of $100 million
9 3/4% Series B Subordinated Notes due 2006 at net proceeds of $98.5 million.
ACQUISITIONS--UNAUDITED
In addition to the Naegele Acquisition, the Company has completed the
following acquisitions during 1996 and 1997:
<TABLE>
<CAPTION>
PURCHASE PRICE
--------------------------
ACQUIRED STOCK ASSET
DATE ACQUISITION ACQUISITION
------------------- ----------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
Ad-Sign, Inc........................................................ January, 1996 $ 12.5
Naegele............................................................. March, 1996 $ 85.0
Paramount Outdoor, Inc.............................................. April, 1996 .6
Iowa Outdoor Displays............................................... September, 1996 1.8
The Chase Company................................................... September, 1996 5.8
Outdoor Advertising Holdings, Inc................................... October, 1996 240.0
Revere Holding Corp................................................. December, 1996 123.4
Tanner Peck Outdoor................................................. January, 1997 73.3
Matthew Acquisition Corp............................................ January, 1997 40.0
</TABLE>
All acquisitions have been accounted for under the purchase method of
accounting. With respect to the stock acquisitions, net deferred taxes of
approximately $71.8 million were recorded representing the temporary difference
between the tax basis assumed and recorded book value as of the date of
acquisition. Goodwill of $219.3 million was also recorded as part of the stock
acquisitions. No deferred taxes are required to be recorded for nondeductible
goodwill.
F-15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
NOA Holding Company
We have audited the accompanying consolidated balance sheets of NOA Holding
Company as of May 31, 1994 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended May 31, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of NOA Holding
Company as of May 31, 1994 and 1995 and the consolidated results of its
operations and cash flows for each of the three years in the period ended May
31, 1995 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
July 21, 1995
F-16
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
MAY 31,
-------------------- MARCH 31,
1994 1995 1996
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash......................................................... $ 1,619 $ 1,630 $ 906
Accounts receivable, net of allowance for doubtful accounts
of $346,000 in 1994 and $338,000 in 1995................... 4,384 4,517 3,639
Other receivables............................................ 256 262 126
Inventories.................................................. 267 282 153
Current portion of prepaid leases............................ 1,183 1,098 1,059
Prepaid expenses............................................. 390 274 191
Other assets................................................. 150 35 210
--------- --------- -----------
Total current assets..................................... 8,249 8,098 6,284
--------- --------- -----------
Long-term portion of prepaid leases............................ 312 509 545
Property and equipment, net (Note 3)........................... 23,562 22,357 14,422
Intangibles, net (Note 4)...................................... 17,505 12,374 5,715
--------- --------- -----------
Total assets............................................. $ 49,628 $ 43,338 $ 26,966
--------- --------- -----------
--------- --------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................. $ 605 $ 650 $ 460
Revolving credit............................................. 200 -- --
Accrued interest............................................. 598 191 393
Other accrued expenses....................................... 1,626 1,800 1,705
Deferred revenue............................................. 100 66 136
Current portion of long-term debt............................ 6,000 608 91
--------- --------- -----------
Total current liabilities................................ 9,129 3,315 2,785
--------- --------- -----------
Long-term debt (Note 5)........................................ 29,657 30,324 5,072
Other long-term liabilities.................................... 577 480 521
STOCKHOLDERS' EQUITY (NOTES 8 AND 9)
Preferred stock, par value $.10 per share:
Authorized shares -- 1,000
Issued shares -- 1,000....................................... -- -- --
Class A common stock, par value $.01 per share:
Authorized shares -- 200,000
Issued shares -- 81,693.70 in 1994 and 72,919.94 in 1995..... 1 1 1
Class B common stock, par value $.01 per share:
Authorized shares -- 25,000
Issued shares -- 13,199.82 in 1994 and 6,172.16 in 1995...... -- -- --
Additional paid-in capital..................................... 19,524 18,857 18,857
Retained deficit............................................... (9,260) (9,639) (270)
--------- --------- -----------
Total stockholders' equity............................... 10,265 9,219 18,588
--------- --------- -----------
Total liabilities and stockholders' equity............... $ 49,628 $ 43,338 $ 26,966
--------- --------- -----------
--------- --------- -----------
</TABLE>
See notes to consolidated financial statements.
F-17
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED MAY 31 MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................................................... $ 33,503 $ 33,784 $ 37,054 $ 30,369 $ 28,964
Less agency commissions and discounts...................... 4,394 4,082 4,553 3,730 3,570
--------- --------- --------- --------- ---------
Net revenue................................................ 29,109 29,702 32,501 26,639 25,394
Operating expenses:
Production............................................... 6,876 6,466 6,472 5,416 4,697
Real estate rental....................................... 6,763 7,143 7,556 6,212 6,021
Selling.................................................. 2,364 2,773 2,545 2,108 1,803
General and administrative............................... 4,951 5,294 5,388 4,391 3,509
Depreciation and amortization............................ 6,726 6,816 7,201 6,589 5,073
--------- --------- --------- --------- ---------
27,680 28,492 29,162 24,716 21,103
--------- --------- --------- --------- ---------
Operating profit........................................... 1,429 1,210 3,339 1,923 4,291
Interest................................................... 3,613 3,479 3,062 2,601 1,769
Gain on sale of assets..................................... -- -- -- -- (9,983)
--------- --------- --------- --------- ---------
Net income (loss) before income taxes...................... (2,184) (2,269) 277 (678) 12,505
Income taxes............................................... -- -- -- -- 2,441
--------- --------- --------- --------- ---------
Net income (loss).......................................... (2,184) (2,269) 277 (678) 10,064
Dividends on preferred stock............................... (594) -- -- -- (695)
--------- --------- --------- --------- ---------
Net income (loss) applicable to common shares.............. $ (2,778) $ (2,269) $ 277 $ (678) $ 9,369
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-18
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED CLASS A COMMON CLASS B COMMON
STOCK STOCK STOCK ADDITIONAL
---------------- ----------------- ------------------ PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------- --------- ------ --------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1992............ 1,000 $-- 81,693.70 $1 13,199.82 $-- $19,228 $ (3,612)
Dividends declared............... -- -- -- -- -- -- -- (594)
Net loss......................... -- -- -- -- -- -- -- (2,184)
--
------ ------- --------- --------- ------- ---------- --------
Balance at May 31, 1993............ 1,000 -- 81,693.70 1 13,199.82 -- 19,228 (6,390)
Dividends declared............... -- -- -- -- -- -- -- (305)
Dividends in-kind................ -- -- -- -- -- -- 296 (296)
Net loss......................... -- -- -- -- -- -- -- (2,269)
--
------ ------- --------- --------- ------- ---------- --------
Balance at May 31, 1994............ 1,000 -- 81,693.70 1 13,199.82 -- 19,524 (9,260)
Dividends in-kind................ -- -- -- -- -- -- 961 (656)
Proceeds from issuance of
stock.......................... -- -- -- -- 3,852.63 -- -- --
Stock redemptions relative to the
sale of Pony Panels............ -- -- (7,599.32) -- (9,754.26) -- (1,372) --
Repurchases of stock............. -- -- (1,174.44) -- (1,126.03) -- (270) --
Compensation expense on stock
issuances...................... -- -- -- -- -- -- 14 --
Net income....................... -- -- -- -- -- -- -- 277
--
------ ------- --------- --------- ------- ---------- --------
Balance at May 31, 1995............ 1,000 $-- 72,919.94 $1 6,172.16 $-- $18,857 $ (9,639)
Net income (unaudited)........... -- -- -- -- -- -- -- 9,369
--
------ ------- --------- --------- ------- ---------- --------
Balance at March 31, 1996
(unaudited)...................... 1,000 $-- 72,919.94 $1 6,172.16 $-- $18,857 $ (270)
--
--
------ ------- --------- --------- ------- ---------- --------
------ ------- --------- --------- ------- ---------- --------
</TABLE>
See notes to consolidated financial statements.
F-19
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED MAY 31 MARCH 31,
------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).......................................... $ (2,184) $ (2,269) $ 277 $ (678) $ 9,369
Adjustments to reconcile to net cash provided by operating
activities:
Depreciation and amortization............................ 6,726 6,816 7,201 6,589 5,073
Gain on sale of assets................................... -- -- -- -- (9,983)
Deferred tax provision................................... 550
Barter revenue resulting from purchases of equipment..... (108) -- -- -- --
Stock compensation expense............................... -- -- 14 -- --
Changes in operating assets and liabilities:
Accounts receivable.................................... (444) (57) (320) 118 (7)
Other current and noncurrent assets.................... (36) 628 98 66 (123)
Accounts payable....................................... 191 144 45 (108) --
Accrued expenses, deferred revenue and other........... 5 (477) (59) (231) (344)
--------- --------- --------- --------- ----------
Net cash provided by operating activities.................. 4,150 4,785 7,256 5,756 4,535
--------- --------- --------- --------- ----------
INVESTING ACTIVITIES
Capital expenditures for signs............................. (928) (1,459) (1,636) (1,146) (1,164)
Proceeds from disposal of signs............................ 150 301 51 26 106
Other capital expenditures................................. -- (242) (338) (293) (235)
Proceeds from the sale of assets........................... -- -- 542 542 21,784
--------- --------- --------- --------- ----------
Net cash used in investing activities...................... (778) (1,400) (1,381) (871) 20,491
--------- --------- --------- --------- ----------
FINANCING ACTIVITIES
Net borrowings from bank................................... -- 200 -- -- 1,500
Dividends paid............................................. (594) (296) -- -- --
Increase in preferred stock................................ -- -- -- -- 540
Principal payments of bank debt............................ (3,100) (3,043) (5,157) (4,357) (27,700)
Payments to revise credit agreement........................ -- -- (669) (668) --
Principal payments on notes payable........................ -- -- (38) -- (90)
--------- --------- --------- --------- ----------
Net cash used in financing activities...................... (3,694) (3,139) (5,864) (5,025) (25,750)
--------- --------- --------- --------- ----------
Net cash provided.......................................... (322) 246 11 (140) (724)
Cash at beginning at of period............................. 1,695 1,373 1,619 1,619 1,630
--------- --------- --------- --------- ----------
Cash at end of period...................................... $ 1,373 $ 1,619 $ 1,630 $ 1,479 $ 906
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
</TABLE>
Supplemental schedule of noncash operating and investing activities:
The Company sold the net assets of Pony Panels on August 31, 1994 as
part of a stock redemption.
The book value of the net assets sold totaled approximately $1,900,000.
The Company incurred long-term obligations of $270,000 for stock
redemptions made during the year ended May 31, 1995.
Purchases of equipment resulting from barter agreements totaled $108,000
for the year ended May 31, 1993. There were no such purchases in 1994
and 1995.
See notes to consolidated financial statements.
F-20
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements consolidate the accounts of NOA
Holding Company (formerly McCarty Holding Company, Inc.) and its wholly-owned
subsidiary, Naegele Outdoor Advertising Company. All intercompany transactions
have been eliminated in consolidation.
REVENUE RECOGNITION
Advertising revenue is recognized monthly over the period in which
advertisement displays are posted on the advertising structures. A full month's
revenue is recognized in the first month of posting. The direct costs incurred
to produce the related advertisements are expensed as incurred. Payments
received in advance of billings are recorded as deferred revenue.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Maintenance, repairs and
renewals, which neither materially add to the value of the property, nor
appreciably prolong its life, are charged to expense as incurred.
Depreciation of property and equipment is provided on declining balance and
straight-line methods over useful lives of 3 to 25 years.
INTANGIBLE ASSETS
Intangibles assets are carried and are amortized on the straight-line method
over useful lives of 5 to 40 years. Goodwill represents the cost of acquired
businesses in excess of amounts assigned to tangible and intangible assets at
the date of acquisition.
INVENTORIES
Inventories consist principally of supplies and are stated at lower of cost
or market as determined on a first-in, first-out basis.
INCOME TAXES
Income taxes are computed in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
BARTER TRANSACTIONS
The Company occasionally enters into agreements to trade advertising space
for goods or services. Prior to December 8, 1992, the Company did not record
such arrangements as revenue unless the items bartered for were capital items.
The impact on revenues and expense of barter transactions not recorded in fiscal
1993 was $164,000.
RECLASSIFICATION
Certain amounts previously reported in 1993 and 1994 have been reclassified
to conform to the 1995 presentation.
F-21
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTERIM FINANCIAL INFORMATION
The interim financial information as of March 31, 1996 and 1995 and for the
ten months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
2. ACQUISITIONS
Effective January 19, 1994, the Company purchased Atlantic Outdoor
Advertising, Inc. for $1 million. The acquisition was recorded using the
purchase method of accounting for business combinations.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED
1994 1995 USEFUL LIFE
--------- --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Land............................................................... $ 1,235 $ 1,294 --
Advertising structures............................................. 24,825 25,256 20 years
Buildings.......................................................... 491 491 10-25 years
Machinery and equipment............................................ 1,180 1,201 6 years
Office furniture and equipment..................................... 1,896 1,865 5-10 years
Automobiles and trucks............................................. 1,045 1,124 5 years
Other.............................................................. 384 370 3-10 years
--------- ---------
31,056 31,601
Less accumulated depreciation...................................... 7,494 9,244
--------- ---------
$ 23,562 $ 22,357
--------- ---------
--------- ---------
</TABLE>
4. INTANGIBLES
The intangibles consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED
1994 1995 USEFUL LIFE
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Advertising site leases............................................... $ 22,760 $ 21,762 7 years
Covenant not to compete............................................... 3,118 3,129 5 years
Goodwill.............................................................. 2,159 2,030 40 years
Loan costs............................................................ 2,028 2,697 6 years
Organization costs.................................................... 506 503 5 years
--------- ---------
30,571 30,121
Less accumulated amortization......................................... 13,066 17,747
--------- ---------
$ 17,505 $ 12,374
--------- ---------
--------- ---------
</TABLE>
The advertising site leases and covenant not to compete were recorded as a
result of an acquisition in May 1991. Their cost represents management's best
estimate of the fair value at the date of acquisition.
F-22
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
4. INTANGIBLES (CONTINUED)
The loan costs represent fees paid to obtain a bank term loan and line of credit
in 1991 and to refinance the term loan and line of credit in August 1994. In
connection with the loan refinancing, the Company wrote-off approximately $1
million of unamortized loan costs. The organization costs are management's
estimate of the portion of various fees paid which are allocable to this asset.
5. DEBT
Long-term debt consists of the following at May 31:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Revolving Credit Commitment under the Amended and Restated Credit
Agreement dated August 31, 1994....................................... $ -- $ 30,700
Term loans under the Credit Agreement dated as of May 22, 1991.......... 35,657 --
Revolving Credit Loan under the Credit Agreement dated as of May 22,
1991.................................................................. 200 --
Subordinated note payable, annual installments of $52 through July 1997,
plus quarterly interest payments at prime............................. -- 157
Subordinated notes payable, annual installments of $38 through March
1997, plus quarterly interest payments at prime....................... -- 75
--------- ---------
35,857 30,932
Less current portion.................................................... 6,200 608
--------- ---------
$ 29,657 $ 30,324
--------- ---------
--------- ---------
</TABLE>
The Company amended and restated its bank Credit Agreement on August 31,
1994 and established a Revolving Credit Commitment of up to $38,000,000 and an
Acquisition Loan Commitment of up to $5,000,000. Both commitments decrease
quarterly each fiscal year and terminate on February 28, 2001. The available
Revolving Credit Commitment at May 31, 1995 was $32,800,000. At year end there
were no borrowings against the $5,000,000 Acquisition Loan Commitment. As part
of the Agreement, interest on the first $20,000,000 of debt is payable under an
Interest Rate Protect Plan ("IPP"). The IPP provides for a fixed rate of 6.28%
plus applicable margin (2.5% at May 31, 1995) for a period of three years and
began August 5, 1994. The Amended and Restated Credit Agreement also enables the
Company to borrow the remainder of the debt at a rate equal to either the Loan
Interbank Offered Rate (LIBOR) plus 3.0% or at the Lending Agent's base rate
plus 1.75%. In addition, the Company can realize lower borrowing rates if
certain financial results are achieved. At May 31, 1995, the interest rate in
effect was LIBOR plus 2.5%.
The Company is obligated to pay loan commitment fees to the banks equal to
one-half of 1% of the average daily unused portion of the commitments.
The bank has issued a letter of credit to the Company's insurance carrier
totaling $323,000 at the end of fiscal 1994 and 1995.
All common shares of the Company are pledged as collateral for the Credit
Agreement; accordingly, substantially all of the Company's assets are
effectively pledged as collateral.
The Credit Agreement contains certain restrictive covenants which the
Company must comply with on a continuing basis. The Company is restricted as to
borrowings, dividend payments, acquisitions, stock repurchases, sales of assets
and capital expenditures.
F-23
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
5. DEBT (CONTINUED)
During fiscal 1995, the Company entered into certain stock redemption
agreements to repurchase 1,174.44 shares of Class A Common Stock and 1,126.03
shares of Class B Common Stock. As part of the agreements, the Company issued
subordinated promissory notes totaling approximately $270,000.
Total interest paid on all debt was $3,849,000, $3,528,000 and $3,468,000
for fiscal 1993, 1994 and 1995, respectively.
Aggregate annual maturities of long-term debt during the five-year period
ending May 31, 2000 are (in thousands):
<TABLE>
<CAPTION>
Year ending May 31:
<S> <C>
1996............................................................ $ 608
1997............................................................ 4,365
1998............................................................ 6,227
1999............................................................ 7,600
2000............................................................ 7,600
</TABLE>
6. INCOME TAXES
At May 31, 1995, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $8.0 million. These carryforwards
expire between May 31, 2006 and 2010. During the current fiscal year, the
Company utilized approximately $625,000 of net operating loss carryforwards to
offset current year taxable income.
Components of deferred tax assets and liabilities are (in thousands):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Loss carryforward........................................................ $ 3,403 $ 3,145
Accrued expenses......................................................... 249 207
Loan cost amortization................................................... -- 343
--------- ---------
3,652 3,695
Deferred tax liabilities:
Depreciation............................................................. 857 1,090
Bad debt allowance....................................................... 33 36
--------- ---------
890 1,126
--------- ---------
Net deferred tax assets before valuation allowance......................... 2,762 2,569
Less valuation allowance................................................... 2,762 2,569
--------- ---------
Net deferred tax assets.................................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>
7. EMPLOYEE BENEFIT PLAN
The Company has a voluntary defined contribution 401(k) savings and
retirement plan for the benefit of its nonunion employees who may contribute
from 3% to 10% of their compensation. The Company has no obligation to
contribute to the plan and made no contribution for fiscal 1993, 1994 and 1995.
F-24
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
8. REDEEMABLE PREFERRED STOCK
The preferred stock is redeemable, subject to certain restrictions, by the
Company at a price equal to its value as carried on the financial statements.
The Company also has the right to convert the preferred stock to debt at a rate
of $1,000 principal of debt to $1,000 liquidation value of the preferred stock.
The liquidation value of each of share of preferred stock is $7,699 and $8,660
at May 31, 1994 and 1995, respectively. After May 22, 2001, the preferred
shareholders have the right to control the Board of Directors for the purpose of
selling the Company.
Subject to certain bank restrictions, dividends on the preferred shares are
payable semi-annually at the rate of 8% either in cash or in-kind payments which
increase the liquidation value of the preferred stock. Should operating profits
exceed certain targets, the dividend rate increases to 12%. The minimum targets
for fiscal 1996 are $9,259 for each six month period.
9. COMMON STOCK AND WARRANT
The Class B common stock is entirely owned by key employees and officers.
The ownership vests over a period of five years. In the event of a sale or
liquidation of the Company, the Class A common stock has a 10% return preference
over the Class B common stock.
During fiscal 1995, the Company implemented a stock purchase plan for its
key employees. Under the plan, 4,253 shares of Class B common stock will be
granted to the employees at a purchase price of $.10 per share. The shares will
vest over a five year period. Approximately 3,853 shares had been granted by May
31, 1995.
Additionally, a warrant to purchase 5,000 shares of Class A common stock at
$144.75 per share was outstanding at May 31, 1994 and 1995. The warrant expires
on May 22, 2006 and has no voting rights.
10. SALES OF PONY PANELS
Only July 22, 1994, the Company entered into an agreement with The McCarty
Company ("McCarty") under which McCarty acquired all of the assets of the Pony
Panels division (excluding cash) in exchange for McCarty's assumption of Pony
Panel's liabilities, delivery of 7,599.32 shares of Class A Common Stock and
9,754.26 shares of Class B Common Stock of NOA Holding Company, and cash in the
amount of $542.
11. COMMITMENTS AND CONTINGENCIES
The City of Jacksonville, Florida has enacted a number of ordinances which
would require the removal of outdoor advertising structures which are not
located on federal aid primary and/or interstate highways. Management has
vigorously contested the validity of these ordinances for the last four years.
In March 1995, the Company reached a settlement with the City of Jacksonville
and Capsigns, Inc. and has agreed to remove 711 billboards faces over a period
of 20 years.
The Company is also involved in litigation with various other municipalities
and regulatory agencies as the result of condemnation proceedings and licensing
and permit renewal disputes, which could result in the removal of advertising
structures.
Management believes, based upon the information currently available, that
the settlement with the City of Jacksonville and Capsigns, Inc., along with the
outcomes of the various actions described above, will not have a material
adverse effect on the consolidated financial condition or results of operations
of the Company.
F-25
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
During fiscal 1995, the Company became a party to certain material
litigation. The action alleges that a former billposting employee, while in the
process of posting a billboard, fell to the ground (because the platform on
which he was working gave way) and suffered significant injuries. It is alleged
that these injuries have precluded him from seeking any gainful employment. This
matter involves a significant level issue concerning the exclusive remedy
provision of workers' compensation law in Minnesota. Minnesota law provides that
an employer providing workers' compensation benefits is immune from tort
liability. It is the Company's contention that, because the Company provided
workers' compensation benefits to the former employee, the Company is entitled
to tort immunity.
The Plaintiff disputes the Company's interpretation of the law and argues
that the tort suit can go forward. This matter was argued before a trial judge
on February 28, 1995, who ruled in favor of the Plaintiff. An appeal to the
Minnesota Court of Appeals is currently pending.
The Plaintiff has also made a demand of approximately $4.9 million for lost
wages and pain and suffering. An attempt to amend this complaint and state a
claim for punitive damages has also been made. The Court has not yet acted on
the amendment.
At this time it is not possible to estimate the probable outcome of these
actions and, accordingly, the Company has not established a reserve for the
outcome of this litigation.
The Company leases the facility in Minneapolis from the Company's preferred
stockholder with annual rents of $480,000, exclusive of operating costs, which
commenced May of 1993 and continues through May of 2001.
The Company is required to make the following minimum operating lease
payments for equipment and facilities under noncancelable lease agreements (in
thousands):
<TABLE>
<CAPTION>
Year ending May 31:
<S> <C>
1996............................................................ $ 552
1997............................................................ 552
1998............................................................ 552
1999............................................................ 557
2000............................................................ 557
Thereafter...................................................... 704
---------
$ 3,474
---------
---------
</TABLE>
Rent expense for operating leases for the years ended May 31, 1993, 1994 and
1995 totaled $6,950,000, $6,837,000 and $7,268,000, respectively.
F-26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Universal Outdoor Holdings, Inc.
We have audited the accompanying statement of revenues and direct expenses
of Ad-Sign for the year ended December 31, 1995. This statement is the
responsibility of the company's management. Our responsibility is to express an
opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and direct expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of revenues and direct expenses audited by us
presents fairly, in all material respects, the revenues and direct expenses of
Ad-Sign for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
PRICE WATERHOUSE LLP
June 14, 1996
Chicago, Illinois
F-27
<PAGE>
AD-SIGN
STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Gross revenues...................................................................... $ 2,804
Less agency commissions............................................................. 224
---------
Net revenues...................................................................... 2,580
---------
Direct expenses:
Direct advertising expenses....................................................... 338
General and administrative expenses............................................... 402
Depreciation and amortization..................................................... 454
---------
1,194
---------
Operating income.................................................................... $ 1,386
---------
---------
</TABLE>
See accompanying notes to the statement of revenues and direct expenses.
F-28
<PAGE>
AD-SIGN
NOTES TO THE STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
NOTE 1 -- BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS:
The Statement of Revenues and Direct Expenses for the year ended December
31, 1995 presents revenues from contracts for the 160 advertising display faces
acquired from Ad-Sign, Inc. by Universal Outdoor Holdings, Inc. (Universal) in
the first quarter of 1996. This financial statement excludes operating expenses
which are not directly related to the assets acquired by Universal. Although
Universal only acquired certain assets of Ad-Sign, Inc., this acquisition meets
the criteria for a "business acquired" in accordance with Regulation S-X, Rule
3-05 of the Securities Exchange Act of 1934.
Ad-Sign is an outdoor advertising company which owns and operates outdoor
advertising display faces principally in Chicago, Illinois. Ad-Sign sells
outdoor advertising space to national, regional and local advertisers.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
The preparation of the statement of revenues and direct expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates. The significant accounting policies used in the preparation of these
financial statements are as follows.
REVENUES AND DIRECT EXPENSES
Advertising revenues are generated from contracts with advertisers generally
covering periods of one to twelve months. Ad-Sign recognizes revenues ratably
over the contract term and defers customer prepayment of advertising fees. Costs
incurred for the production of outdoor advertising displays are recognized in
the initial month of the contract or as incurred during the contract period.
PREPAID LAND RENTS
Most of Ad-Sign's outdoor advertising structures are located on leased land.
Land rents are typically paid in advance for periods ranging from one to twelve
months. Prepaid land rents are expenses ratably over the related rental term.
NOTE 3 -- SUBSEQUENT EVENT:
In the first quarter of 1996, Ad-Sign, Inc. entered into an asset purchase
agreement with Universal Outdoor Holdings, Inc. Under this agreement, Universal
purchased 160 advertising display faces in the Chicago market for $12.5 million.
F-29
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
POA Acquisition Corporation
We have audited the accompanying balance sheets of POA Acquisition
Corporation as of December 31, 1995 and 1994, and the related statements of
operations, shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of POA Acquisition Corporation
at December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the 1994 financial
statements have been restated to reflect the correction of an error in the
calculation of the provision for income taxes.
Ernst & Young LLP
Orlando, Florida
April 1, 1996, except for Note 16
as to which the date is
August 27, 1996
F-30
<PAGE>
POA ACQUISITION CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995
------------- SEPTEMBER 30
-------------
1994 1996
------------- -------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash.............................................................. $ 727,690 $ 811,352 $ 3,534,128
Accounts receivable............................................... 4,482,520 5,631,320 6,746,361
Prepaid expenses.................................................. 1,698,539 1,822,964 2,576,998
Prepaid income taxes.............................................. 51,629 43,875 43,875
Deferred income taxes............................................. 2,596,951 3,213,848 3,314,000
------------- ------------- -------------
Total current assets............................................ 9,557,329 11,523,359 16,215,362
Deferred income taxes............................................... 14,269,374 11,835,410 10,040,258
Property, plant and equipment, net.................................. 20,112,931 23,005,058 32,821,811
Other assets........................................................ 46,266,092 41,854,491 38,741,579
------------- ------------- -------------
$ 90,205,726 $ 88,218,318 $ 97,819,010
------------- ------------- -------------
------------- ------------- -------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses............................. $ 3,432,619 $ 2,992,112 $ 4,289,460
Current portion of long-term debt................................. 8,061,214 9,109,419 9,109,419
Notes payable..................................................... -- -- 416,000
------------- ------------- -------------
Total current liabilities....................................... 11,493,833 12,101,531 13,814,879
Long-term debt, less current portion................................ 70,210,555 65,603,203 71,682,647
Shareholder's equity
Common stock, $.01 par value:
Authorized shares -- 2,000,000
Issued and outstanding shares -- 100 in 1995 and 1994........... 1 1 1
Additional paid-in capital........................................ 45,419,909 45,419,909 45,419,909
Accumulated deficit............................................... (36,918,572) (34,906,326) (33,098,426)
------------- ------------- -------------
Total shareholder's equity...................................... 8,501,338 10,513,584 12,321,484
------------- ------------- -------------
$ 90,205,726 $ 88,218,318 $ 97,819,010
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes.
F-31
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------- ----------------------------
1993 1994 1995 1995 1996
------------- ------------- ------------- ------------- -------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Advertising revenues................. $ 37,456,464 $ 41,737,266 $ 45,830,359 $ 33,333,588 $ 38,380,932
Less commissions and discounts....... (3,362,525) (3,865,492) (4,393,319) (3,188,699) (3,520,734)
------------- ------------- ------------- ------------- -------------
34,093,939 37,871,774 41,437,040 30,144,889 34,860,198
------------- ------------- ------------- ------------- -------------
Expenses:
Operating.......................... 10,493,219 11,151,065 11,775,891 8,775,349 10,077,666
Selling, general and
administrative................... 9,413,920 10,283,413 10,698,212 7,551,805 9,307,799
Amortization....................... 4,853,633 5,208,589 5,061,849 3,811,034 3,811,034
Depreciation....................... 2,871,608 2,878,346 2,545,182 1,870,249 2,547,946
------------- ------------- ------------- ------------- -------------
27,632,380 29,521,413 30,081,134 22,008,437 25,744,445
------------- ------------- ------------- ------------- -------------
Income from operations............... 6,461,559 8,350,361 11,355,906 8,136,452 9,115,753
------------- ------------- ------------- ------------- -------------
Other income (expense):
Interest expense................... (5,866,923) (7,012,646) (7,346,241) (5,560,143) (5,548,379)
Loss on sale of a division......... -- (494,824) -- -- --
Gain (loss) on disposal of property
and equipment, net............... (446,151) (329,056) (64,332) (399,572) (346,974)
Interest and other income.......... 167,360 24,412 42,244 31,600 367,500
------------- ------------- ------------- ------------- -------------
(6,145,714) (7,812,114) (7,368,329) (5,928,115) (5,527,853)
------------- ------------- ------------- ------------- -------------
Income before income taxes and
extraordinary item.................. 315,845 538,247 3,987,577 2,208,337 3,587,900
Provision for income taxes:
Current............................ 100,158 37,572 158,264 92,000 150,000
Deferred........................... 478,263 1,256,910 1,817,067 1,002,000 1,630,000
------------- ------------- ------------- ------------- -------------
578,421 1,294,482 1,975,331 1,094,000 1,780,000
------------- ------------- ------------- ------------- -------------
Income (loss) before extraordinary
item................................ (262,576) (756,235) 2,012,246 1,114,337 1,807,900
Extraordinary item:
(Loss) gain on early extinguishment
of debt, net of income tax
expense (benefit) of ($147,350)
and $50,000...................... -- (244,552) -- -- --
------------- ------------- ------------- ------------- -------------
Net income (loss).................... $ (262,576) $ (1,000,787) $ 2,012,246 $ 1,114,337 $ 1,807,900
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
See accompanying notes.
F-32
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PREFERRED PAID-IN ACCUMULATED SHAREHOLDER'S
STOCK STOCK CAPITAL DEFICIT EQUITY
--------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993............... $ 1 $ 12,237 $ 57,644,726 $ (28,262,869) $ 29,394,095
Net loss for 1993...................... -- -- -- (262,576) (262,576)
--------- ----------- -------------- -------------- --------------
Balances at December 31, 1993............ 1 12,237 57,644,726 (28,525,445) 29,131,519
Net loss for 1994 (restated)........... -- -- -- (1,000,787) (1,000,787)
Issuance of preferred stock............ -- 550,000 4,950,000 -- 5,500,000
Redemption of preferred stock.......... -- (562,237) (17,174,817) -- (17,737,054)
Cumulative preferred stock dividends... -- -- -- (7,392,340) (7,392,340)
--------- ----------- -------------- -------------- --------------
Balance at December 31, 1994
(restated).............................. 1 -- 45,419,909 (36,918,572) 8,501,338
Net income for 1995.................... -- -- -- 2,012,246 2,012,246
--------- ----------- -------------- -------------- --------------
Balance at December 31, 1995............. 1 -- 45,419,909 (34,906,326) 10,513,584
Net income for the nine months ended
September 30, 1996 (unaudited).......... -- -- -- 1,807,900 1,807,900
--------- ----------- -------------- -------------- --------------
$ 1 $ -- $ 45,419,909 $ (33,098,426) $ 12,321,484
--------- ----------- -------------- -------------- --------------
--------- ----------- -------------- -------------- --------------
</TABLE>
See accompanying notes.
F-33
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30
-------------------------------------- ------------------------
1993 1995 1995 1996
----------- ----------- ----------- -----------
1994
------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................ $ (262,576) $ (1,000,787) $ 2,012,246 $ 1,114,337 $ 1,807,900
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Amortization................................... 4,853,633 5,208,589 5,061,849 3,811,034 3,811,034
Depreciation................................... 2,871,608 2,878,346 2,545,182 1,870,249 2,547,946
Deferred income taxes.......................... 478,263 1,123,867 1,817,067 1,002,000 1,695,000
Loss on sale of division....................... 1,367,286 494,824 -- -- --
Loss on disposal of property and equipment,
net.......................................... 446,151 329,056 64,332 -- 346,977
Provision for bad debts........................ 122,694 375,190 64,285 -- 176,000
Changes in operating assets and liabilities:
Increase in accounts receivable.............. (677,585) (523,087) (1,213,085) (581,542) (957,596)
Increase in prepaid expenses................. (68,365) (253,802) (124,425) (62,829) (574,486)
Decrease (increase) in prepaid income taxes.. (78,843) (27,786) 7,754 -- --
Decrease (increase) in other assets.......... 862 (2,511,167) (500,248) -- (126,183)
(Increase) decrease in accounts payable and
accrued expenses........................... 867,753 772,507 (440,507) 871,538 1,253,284
----------- ------------ ----------- ----------- -----------
Net cash provided by operating activities........ 9,920,881 6,865,750 9,294,450 8,024,787 9,979,876
INVESTING ACTIVITIES
Proceeds from sale of division................... -- 2,000,000 -- -- --
Proceeds from disposal of property and
equipment....................................... 160,450 101,463 227,854 -- 367,500
Purchases of property, plant and equipment....... (2,586,418) (1,787,528) (5,729,495) (4,687,306) (3,805,706)
Purchaser of other assets........................ -- -- -- (135,250) --
Purchases of intangibles......................... -- -- (150,000) -- (9,898,338)
----------- ------------ ----------- ----------- -----------
Net cash (used in) provided by investing
activities...................................... (2,425,968) 313,935 (5,651,641) (4,822,556) (13,336,544)
FINANCING ACTIVITIES
Proceeds from long-term borrowings............... 133,500 83,023,442 4,500,000 3,000,000 13,147,633
Payments of long-term debt....................... (8,151,871) (70,696,101) (8,059,147) (6,044,831) (7,068,189)
Proceeds from issuance of preferred stock........ -- 5,500,000 -- -- --
Redemption of preferred stock.................... -- (17,737,054) -- -- --
Dividends paid................................... -- (7,392,340) -- -- --
----------- ------------ ----------- ----------- -----------
Net cash (used in) provided by financing
activities...................................... (8,018,371) (7,302,053) (3,559,147) (3,044,831) 6,079,444
----------- ------------ ----------- ----------- -----------
Net increase (decrease) in cash.................. (523,458) (122,368) 83,662 157,400 2,722,776
Cash at beginning of year........................ 1,373,516 850,058 727,690 727,690 811,352
----------- ------------ ----------- ----------- -----------
Cash at end of year.............................. $ 850,058 $ 727,690 $ 811,352 $ 885,090 3,534,128
----------- ------------ ----------- ----------- -----------
----------- ------------ ----------- ----------- -----------
</TABLE>
See accompanying notes.
F-34
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 -- ORGANIZATION
On January 31, 1989, Outdoor Advertising Holdings, Inc. (Holdings)
contributed its shares of POA Acquisition Corporation (Company) common stock,
along with cash, to Peterson Acquisition, Inc. (Acquisition), a wholly-owned
subsidiary of Holdings. Acquisition immediately purchased the Company's
outstanding common shares under the terms of an Agreement and Plan of Merger
dated December 21,1988. Acquisition was subsequently merged into the Company and
its outstanding shares were converted into one hundred shares of the Company's
common stock.
The merger was accounted for as a purchase with a purchase price of
$33,279,550 (including acquisition costs of $4,448,023). Certain individuals,
who were former shareholders of the Company, own shares of Holdings and are
included in the management of Holdings and the Company. The Company allocated
the purchase price among the assets acquired and liabilities assumed, based upon
the respective fair values of the assets and liabilities, with the excess
purchase price recorded as goodwill.
The Company provides outdoor advertising services in the states of Florida,
South Carolina and Tennessee. Approximately 70% of the business is in the State
of Florida.
NOTE 2 -- RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS
In October 1994, the Company sold certain assets, liabilities and the
business of its Orangeburg Division. In determining the gain or loss on the sale
for tax purposes, approximately $2,500,000 of goodwill was incorrectly included
in the calculation. The 1994 financial statements have been restated to reflect
the correction of this error resulting in a decrease in income before
extraordinary item and an increase in net loss of $956,000 from the amounts
previously reported.
NOTE 3 -- ACCOUNTING POLICIES
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation for financial
reporting purposes is computed by the straight-line method over the estimated
useful lives of the various classes of assets as follows:
<TABLE>
<S> <C>
28-30
Buildings....................................................... years
Advertising structures.......................................... 12 years
Equipment....................................................... 2-7 years
</TABLE>
The Company uses the accelerated Cost Recovery System and the Modified
Accelerated Cost Recovery System for income tax reporting purposes.
OTHER ASSETS
Loan costs incurred in connection with obtaining financing have been
deferred and are being amortized over the life of the loans. Goodwill represents
the excess of the cost of acquired businesses over the fair market value at
acquisition of the specifically identified assets.
Intangible assets are being amortized over the following periods:
<TABLE>
<S> <C>
8-10
Advertising structure leases..................................... years
Goodwill......................................................... 40 years
Deferred loan costs.............................................. 1-6 years
</TABLE>
INCOME TAXES
The Company follows the liability method of accounting for income taxes.
Deferred income taxes relate to the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
F-35
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 3 -- ACCOUNTING POLICIES (CONTINUED)
ADVERTISING REVENUE
Advertising revenue is recognized ratably on a monthly basis over the period
in which advertisement displays are posted on the advertising structures.
ADVERTISING STRUCTURE RENTALS
Advertising structure lease rentals are generally paid in advance and
charged to expense over the life of the lease.
INTEREST RATE SWAP AND INTEREST CAP AGREEMENTS
The Company has entered into interest rate swap and interest rate cap
agreements to effectively convert a portion of its variable-rate borrowings into
fixed-rate obligations. The amount to be received or paid related to these
agreements is recognized over the lives of the agreements as an adjustment to
interest expense.
BARTER TRANSACTIONS
The Company enters into agreements to provide outdoor advertising services
in exchange for various goods and services of their customers. Revenue
recognized from these transactions approximated $1,497,000, $830,000 and $0 in
1995, 1994 and 1993, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, accounts payable and
long-term debt at December 31, 1995 approximate fair value.
ACCOUNTING STANDARD
In March 1995, the FASB issued Statement No. 121 ("SFAS No. 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. As of December 31, 1995
there were no indications of impairment that would effect the carrying value of
assets.
INTERIM FINANCIAL INFORMATION
The interim financial information as of September 30, 1996 and 1995 and for
the nine months then ended has been prepared from the unaudited financial
records of the Company and, in the opinion of management, reflects all
adjustments necessary for a fair presentation of the financial position and
results of operations and of cash flows for the respective interim periods. All
adjustments were of a normal and recurring nature.
F-36
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 4 -- ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Trade....................................................................... $ 5,701,472 $ 4,493,568
Employee notes and other.................................................... 463,300 458,119
------------ ------------
6,164,772 4,951,687
Less allowance for uncollectible accounts................................... (533,452) (469,167)
------------ ------------
$ 5,631,320 $ 4,482,520
------------ ------------
------------ ------------
</TABLE>
Included in employee notes and other are notes and accrued interest
aggregating $299,269 in 1995 and $279,473 in 1994 from common shareholders.
NOTE 5 -- PREPAID EXPENSES
Prepaid expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Lease rental payments....................................................... $ 1,261,795 $ 1,065,874
Maintenance supplies........................................................ 94,581 133,268
Other....................................................................... 466,588 499,397
------------ ------------
$ 1,822,964 $ 1,698,539
------------ ------------
------------ ------------
</TABLE>
NOTE 6 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Land.................................................................... $ 2,466,681 $ 2,466,681
Buildings............................................................... 2,074,084 2,011,256
Advertising structures.................................................. 31,857,123 27,446,874
Equipment............................................................... 3,602,942 2,978,167
-------------- --------------
40,000,830 34,902,978
Less accumulated depreciation........................................... (16,995,772) (14,790,047)
-------------- --------------
$ 23,005,058 $ 20,112,931
-------------- --------------
-------------- --------------
</TABLE>
NOTE 7 -- OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Goodwill................................................................ $ 45,239,949 $ 45,239,949
Advertising structure leases, at cost................................... 26,096,863 26,021,863
Non-compete and other, at cost.......................................... 6,495,641 6,420,390
Deferred loan costs..................................................... 3,403,068 2,903,068
-------------- --------------
81,235,521 80,585,270
Less accumulated amortization........................................... (39,381,027) (34,319,178)
-------------- --------------
$ 41,854,494 $ 46,266,092
-------------- --------------
-------------- --------------
</TABLE>
F-37
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 8 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Trade accounts payable...................................................... $ 1,285,008 $ 1,794,814
Accrued compensation and other.............................................. 1,677,573 1,623,766
Accrued interest............................................................ 29,531 14,039
------------ ------------
$ 2,992,112 $ 3,432,619
------------ ------------
------------ ------------
</TABLE>
NOTE 9 -- LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Notes payable to banks................................................... $ 74,500,000 $ 78,000,000
Other long-term debt..................................................... 212,622 271,769
------------- -------------
74,712,622 78,271,769
Less amounts due within one year......................................... (9,109,419) (8,061,214)
------------- -------------
$ 65,603,203 $ 70,210,555
------------- -------------
------------- -------------
</TABLE>
In January 1994, the Company refinanced its notes payable to banks, paid off
the unsecured subordinated notes payable to investment banking firms and
redeemed the 14% Series A senior redeemable cumulative preferred stock with term
notes and revolving credit notes totaling $83,000,000 and $7,000,000,
respectively. Notes payable to banks are term notes and revolving credit notes
are secured by all assets and common stock of the Company. Interest is charged
on borrowings under the term notes and revolving credit notes at the Company's
discretion at either a Eurodollar base rate or an ABR rate determined in
accordance with the terms of the Credit Agreement. Interest on the term notes is
currently charged at a Eurodollar base rate determined at each interest renewal
period. The December 31, 1995 term notes consist of a $54,500,000 borrowing at
8.19% and a $20,000,000 borrowing at 10.94%. On December 29, 1995, the Company
amended its Credit Agreement to allow for an additional $50,000,000 line of
credit available for acquisitions. No borrowings under this amendment have
occurred. Long-term debt maturities over the next five years are approximately
as follows: 1996 -- $9,107,000: 1997 -- $11,051,000: 1998 -- $13,048,000: 1999
- -- $21,505,000: 2000 -- $20,000,000 and $0 thereafter.
The refinancing of the notes payable in 1994 resulted in an extraordinary
loss of $391,902 as a result of writing-off the unamortized portion of deferred
loan costs related to those borrowings.
The Company entered into interest rate swap and interest rate cap agreements
that expire in 1997 with a notional amount of $40,000,000 at December 31, 1995
to reduce the impact of changes in interest rates on its variable rate long-term
debt.
The counterpart to the agreements is a major financial institution. In the
event a counterparty fails to meet the terms of an interest rate swap or
interest rate cap agreement, the Company's exposure is limited to the interest
rate differential. Credit loss from counterparty nonperformance is not
anticipated.
The Company paid approximately $7,331,000, $7,570,000 and $4,301,000 in cash
for interest in 1995, 1994 and 1993, respectively.
F-38
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 10 -- EMPLOYEE BENEFITS PLANS
The Company has a discretionary defined contribution plan which provides
retirement benefits to substantially all employees. The contributions made to
this plan were approximately $100,000 in 1995 and 1994, respectively and
$110,000 in 1993.
NOTE 11 -- INCOME TAXES
At December 31, 1995, the Company had federal and state net operating loss
carryforwards of approximately $43,600,000 for income tax purposes available to
offset future taxable income through 2006 to 2009. The Company was subject to
alternative minimum tax which is imposed at a 20% rate on the corporation's
alternative minimum taxable income in 1995. The alternative minimum tax expense
for 1995 was $132,800 and $100,158 for 1993. The tax paid will be allowed as a
credit carryover against regular tax in future periods. Net operating loss
carryforwards for alternative minimum tax purposes are approximately
$38,900,000. For financial reporting purposes, no valuation allowance has been
recognized to offset the deferred tax assets related to these carryforwards. The
tax benefit of any net operating losses which are not utilized will be
recognized as a current year expense in the year of expiration.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets as of December 31, 1995, are attributable to
the bad debt allowance, depreciation and amortization differences, alternative
minimum tax, and net operating loss carryforwards.
Components of the provision for income taxes for each year are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------------------
1995 1993
------------ 1994 ----------
------------
(RESTATED)
<S> <C> <C> <C>
Current
Federal....................................................... $ 132,754 $ 11,522 $ 100,158
State......................................................... 25,510 26,050 --
------------ ------------ ----------
Total current................................................... $ 158,264 $ 37,572 $ 100,158
------------ ------------ ----------
------------ ------------ ----------
Deferred:
Federal....................................................... $ 1,532,587 $ 1,073,054 $ 432,500
State......................................................... 284,480 183,856 45,763
------------ ------------ ----------
Total deferred.................................................. $ 1,817,067 $ 1,256,910 $ 478,263
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The provision for income taxes included in the statements of operations
differs from the amounts computed by applying the statutory rate to income
before income taxes as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1993
------------ 1994 ----------
------------
(RESTATED)
<S> <C> <C> <C>
Income tax expense at the statutory rate........................ $ 1,355,776 $ 183,004 $ 107,387
Goodwill........................................................ 387,017 942,732 481,136
Meals and entertainment......................................... 17,432 21,214 7,959
State taxes, net of federal benefit............................. 204,593 138,538 30,204
Other........................................................... 10,513 8,994 (48,265)
------------ ------------ ----------
$ 1,975,331 $ 1,294,482 $ 578,421
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
F-39
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 11 -- INCOME TAXES (CONTINUED)
Components of deferred tax assets for each year are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995
------------- 1994
-------------
(RESTATED)
<S> <C> <C>
Current deferred tax assets:
Net operating loss carryforward........................................ $ 3,000,000 $ 2,444,000
Charitable contribution carryforward................................... 2,050 --
Prepaid expenses....................................................... (82,331) (114,184)
Bad debt allowance..................................................... 254,347 176,407
Accrued liabilities.................................................... 39,782 90,728
------------- -------------
Total current deferred tax assets........................................ $ 3,213,848 $ 2,596,951
------------- -------------
------------- -------------
Noncurrent deferred tax assets:
Property and equipment................................................. $ 141,450 $ 87,150
Intangible assets...................................................... (1,961,941) (2,224,357)
Alternative minimum tax credit......................................... 276,112 148,370
Net operating loss carryforward........................................ 13,391,143 16,269,565
State income taxes..................................................... (11,354) (11,354)
------------- -------------
$ 11,835,410 $ 14,269,374
------------- -------------
------------- -------------
</TABLE>
The Company paid income taxes of $149,000, $48,000 and $104,000 in 1995,
1994 and 1993, respectively.
NOTE 12 -- COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases office space under various non-cancelable operating
leases. Minimum lease payments under these leases are approximately as follows:
1996 -- $151,000; 1997 -- $136,000 and $0 thereafter. The Company also leases
land for advertising structures under operating leases which are cancelable or
which have terms of less than one year.
Rent expense charged to operations amounted to approximately $7,461,000 in
1995, $6,947,000 in 1994 and $6,630,000 in 1993.
NOTE 13 -- PREFERRED STOCK
Holdings has issued various classes of preferred stock which provide for,
among other things, cumulative dividends which accrue quarterly whether or not
declared by the board of directors, and a liquidation value which includes
accrued dividends. This liquidation value amounted to approximately $70,711,000
at December 31, 1995 and $66,029,000 at December 31, 1994, of which
approximately $28,110,000 and $23,428,000, respectively, is accrued but unpaid
dividends. At December 31, 1995 Holdings had no assets, other than its
investment in the Company. The Holdings preferred stock does not contain
mandatory redemption features.
NOTE 14 -- ACQUISITIONS
During the year ended December 31, 1995, the Company acquired the assets of
three separate advertising entities. Under the terms of the transactions, the
Company acquired certain fixed assets, customer lists and advertising leases of
these entities for a combined total of $3,710,000. In connection with the
acquisition of the customer lists and advertising leases, intangible assets were
recorded at a total of $150,000. The customer lists and advertising leases were
assigned useful lives of three and ten years, respectively.
F-40
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 15 -- SUBSEQUENT EVENTS
ACQUISITION
On March 29, 1996, the Company purchased the stock of a company that
provides outdoor advertising services for $710,000. The Acquisition has been
accounted for by the purchase method.
COMMITMENT
The Company has entered into an agreement to purchase the capital stock of a
company that provides outdoor advertising services. The purchase price is
$10,000,000 which will be financed with the Company's Term C notes. The Company
anticipates accounting for this Acquisition by the purchase method.
NOTE 16 -- SALE OF THE COMPANY
On October 8, 1996, the Company's parent, Holdings, sold the outstanding
capital stock of Holdings for approximately $240,000,000 in cash.
F-41
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Revere Holding Corp. and Subsidiaries:
We have audited the accompanying consolidated balance sheet of Revere
Holding Corp. (a Maryland corporation) and subsidiaries as of December 31, 1995,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Revere Holding Corp. and
Subsidiaries, as of December 31, 1995, and the results of their operations and
their cash flows for the year then ended, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Baltimore, Maryland,
March 8, 1996
F-42
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 2)........................ $ 1,140,569 $ 511,605
Cash held in escrow (Note 17)............................. 400,000 20,447,420
Accounts receivable -- trade, net of allowance for
doubtful accounts of $316,000 and $445,000,
respectively............................................ 5,349,808 5,336,129
Accounts receivable -- barter, net of allowance for
doubtful accounts of $11,000 and $9,000, respectively
(Note 2)................................................ 207,728 318,577
Accounts receivable -- other.............................. 99,287 105,831
Inventories (Note 2)...................................... 259,522 318,193
Prepaid expenses --
Sign site leases (Note 12).............................. 1,958,745 1,622,871
Other................................................... 689,174 395,757
Deferred income taxes..................................... 687,000 627,000
------------ ---------------
Total current assets.................................. 10,791,833 29,683,383
PROPERTY AND EQUIPMENT, net (Notes 2 and 4)................. 38,899,139 28,046,022
GOODWILL, net of accumulated amortization of $570,000 and
$984,000, respectively (Note 3)........................... 22,668,371 21,809,424
OTHER ASSETS, net (Notes 2 and 5)........................... 16,383,846 13,829,535
------------ ---------------
Total assets.......................................... $ 88,743,189 $ 93,368,364
------------ ---------------
------------ ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade................................. $ 605,780 $ 319,133
Accounts payable -- barter (Note 2)....................... 258,698 371,589
Income taxes payable...................................... 21,000 2,738,000
Accrued interest expense.................................. 31,025 382,026
Deferred revenue.......................................... 611,134 717,095
Accrued bonuses........................................... 547,216 178,058
Accrued health benefits................................... 434,463 330,284
Accrued liabilities (Note 2).............................. 2,701,525 1,750,886
Current portion of long-term debt (Note 6)................ 2,851,765 3,305,379
Current portion of capital lease obligations (Note 12).... 234,016 220,392
------------ ---------------
Total current liabilities............................. 8,296,622 10,312,842
LONG-TERM DEBT, less current portion (Note 6)............... 38,094,955 38,280,668
CAPITAL LEASE OBLIGATIONS, less current portion (Note 12)... 470,637 382,286
DEFERRED TAX LIABILITY (Notes 2 and 7)...................... 5,520,000 5,502,202
------------ ---------------
Total liabilities..................................... 52,382,214 54,477,998
------------ ---------------
MINORITY INTEREST........................................... 140,000 140,000
------------ ---------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.01, 5,000,000 shares authorized;
3,823,458 shares issued and outstanding at December 31,
1995 and September 30, 1996 (unaudited)................. 38,235 38,235
Paid-in capital in excess of par.......................... 38,196,347 38,196,347
Retained earnings (accumulated deficit)................... (1,125,107) 3,053,521
Treasury stock, at cost, -0- shares at December 31, 1995
and 150,751 shares at September 30, 1996 (unaudited)
(Note 11)............................................... -- (1,653,737)
Notes receivable from management stockholders............... (888,500) (884,000)
------------ ---------------
Total stockholders' equity............................ 36,220,975 38,750,366
------------ ---------------
Total liabilities and stockholders' equity............ $ 88,743,189 $ 93,368,364
------------ ---------------
------------ ---------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-43
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE FOR THE NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, ----------------------------
1995 1995 1996
------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
REVENUES:
Gross revenues.................................................... $ 44,075,763 $ 32,703,421 $ 32,529,347
Less: Agency commissions.......................................... (4,714,467) (3,522,060) (3,482,596)
------------- ------------- -------------
Net revenues.................................................. 39,361,296 29,181,361 29,046,751
------------- ------------- -------------
OPERATING EXPENSES:
Operations........................................................ 8,569,222 6,313,353 6,469,145
Real estate....................................................... 8,807,786 6,420,824 7,146,224
Sales............................................................. 4,924,970 3,518,556 3,718,209
General and administrative........................................ 5,611,970 4,240,221 4,117,587
Depreciation and amortization..................................... 6,898,155 5,164,942 5,541,859
------------- ------------- -------------
Total operating expenses...................................... 34,812,103 25,657,896 26,993,024
------------- ------------- -------------
Operating Income.............................................. 4,549,193 3,523,465 2,053,727
------------- ------------- -------------
OTHER INCOME (EXPENSE):
Interest expense (Notes 5,6 and 12)............................... (4,584,699) (3,501,551) (3,391,499)
Gain on sale of assets............................................ -- -- 8,623,905
Other (expenses) income........................................... (333,834) 57,964 (214,151)
------------- ------------- -------------
Total other income (expenses)................................. (4,918,533) (3,443,587) 5,018,255
------------- ------------- -------------
Income (loss) before income taxes............................. (369,340) 79,878 7,071,982
(PROVISION) BENEFIT FOR INCOME TAXES
(Notes 2 and 7)................................................... (578,360) (271,719) (2,893,354)
------------- ------------- -------------
Net income (loss)............................................. $ (947,700) $ (191,841) $ 4,178,628
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-44
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NOTES
RETAINED RECEIVABLE
PAID-IN EARNINGS TREASURY FROM TOTAL
COMMON IN EXCESS (ACCUMULATED STOCK, MANAGEMENT STOCKHOLDERS'
STOCK OF PAR DEFICIT) AT COST STOCKHOLDERS EQUITY
------- ----------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31, 1994........... $38,235 $38,196,347 $ (177,407) $ -- $(888,500) $37,168,675
Net loss.................... -- -- (947,700) -- -- (947,700)
------- ----------- ------------ ----------- ------------- -------------
BALANCE,
December 31, 1995........... 38,235 38,196,347 (1,125,107) -- (888,500) 36,220,975
Payment on note receivable
from management
stockholders
(unaudited)............... -- -- -- -- 4,500 4,500
Treasury stock acquired, at
cost (unaudited).......... -- -- -- (1,653,737) -- (1,653,737)
Net income (unaudited)...... -- -- 4,178,628 -- -- 4,178,628
------- ----------- ------------ ----------- ------------- -------------
BALANCE,
September 30, 1996
(Unaudited)............... $38,235 $38,196,347 $3,053,521 $(1,653,737) $(884,000) $38,750,366
------- ----------- ------------ ----------- ------------- -------------
------- ----------- ------------ ----------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-45
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE MONTHS
ENDED ENDED SEPTEMBER 30,
DECEMBER 31, ----------------------------
1995 1995 1996
------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................................. $ (947,700) $ (191,841) $ 4,178,628
Adjustments to reconcile net loss to net cash provided by
operating activities --
Depreciation and amortization................................... 7,552,486 5,655,691 6,034,913
(Gain) Loss on disposals of property and equipment.............. 418,222 114,319 (8,623,905)
Deferred income tax provision................................... 354,273 103,654 41,665
Changes in assets and liabilities --
Increase in accounts receivable, net.......................... (219,824) (187,242) (103,714)
Decrease (increase) in inventories............................ 32,807 (22,493) (58,671)
(Increase) decrease in prepaid expenses and other............. (204,546) (399,644) 629,291
(Decrease) increase in accounts payable and accrued
expenses.................................................... (1,795,535) (1,747,672) 1,976,230
------------- ------------- -------------
Net cash flows provided by operating activities............. 5,190,183 3,324,772 4,074,437
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment............................... (3,583,772) (1,951,075) (1,588,848)
Proceeds from sale of property and equipment...................... 123,551 45,926 21,514,834
Funds transferred to escrow....................................... -- -- (20,447,420)
Increase in interest receivable................................... (53,330) (58,290) (51,035)
Increase in other assets.......................................... (1,974,930) (1,873,220) (952,589)
Cash paid for acquisitions........................................ (3,080,631) (3,080,631) (2,075,000)
(Increase) decrease in goodwill, net of noncash items............. (39,140) -- 13,042
Cash paid for treasury stock...................................... -- -- (8,237)
------------- ------------- -------------
Net cash flows used in investing activities................. (8,608,252) (6,917,290) (3,595,253)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt....................................... (3,501,044) (2,181,869) (2,435,099)
Payment of liability for Mall Media purchase...................... (4,000,000) (4,000,000) --
Proceeds from long-term debt...................................... 4,166,227 3,000,000 1,326,951
------------- ------------- -------------
Net cash used in financing activities....................... (3,334,817) (3,181,869) (1,108,148)
------------- ------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS........................... (6,752,886) (6,774,387) (628,964)
CASH AND CASH EQUIVALENTS, beginning of period...................... 7,893,455 7,893,455 1,140,569
------------- ------------- -------------
CASH AND CASH EQUIVALENTS, end of period............................ $ 1,140,569 $ 1,119,068 $ 511,605
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-46
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION:
The financial statements of Revere Holding Corp. and Subsidiaries (the
Company) include the accounts of Revere Holding Corp. (Holding) and its
wholly-owned subsidiary, Revere Acquisition Corp. (Acquisition) and
Acquisition's wholly-owned subsidiaries, Revere National Corporation and
subsidiaries (National), Revere Billboard, Inc. (Billboard), Stait Outdoor
Advertising Co. (Stait) and Mall Media Acquisition Corp. (Mall Media). National
provides outdoor advertising services through its network of sign structures in
the Mid-Atlantic region and Texas (see Note 17). Mall Media owns and maintains a
network of kiosks located in shopping malls nationwide and sells advertising
space on the kiosks. Stait provides outdoor advertising services through its
sign structures primarily located in New Jersey and Pennsylvania. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
On December 20, 1994, Acquisition acquired the entities described below,
which were accounted for by the purchase method of accounting. The results of
operations of the acquired companies are included in Holding's statements of
operations for the period in which they were owned by Holding.
On December 20, 1994, Holding was capitalized with $35.0 million in cash
from Merrill Lynch Capital Partners and $375,000 in cash from certain members of
the Board of Directors. The cash was used to capitalize Acquisition, and through
a secured bank credit agreement, Acquisition received funding of an additional
$40.0 million.
Through a series of transactions, Acquisition acquired the assets of
Billboard and Mall Media for $26.5 million and the outstanding stock of National
and Stait for $26.6 million. Additional existing secured debt of National
totaling $20.3 million was repaid by Acquisition, and the remaining funds were
used for financing and acquisition costs.
Additionally, Holding issued and transferred shares of common stock to
certain members of management and the Board of Directors of the Company with a
value of $1,359,582. The consideration for the shares issued was notes
receivable of $888,500 and common stock of National with a value of $471,082.
As provided in the asset purchase agreement, Mall Media purchased certain
assets of the kiosk business, described above, on December 20, 1994. Of the $5.5
million purchase price, $4.0 million was not paid until January 1995. As part of
the purchase price, Holding issued $1.5 million in common stock to the former
owner.
On January 2, 1996, the Company effected a reorganization of its legal
entities. Revere National Corporation of San Antonio, Revere National
Corporation of Victoria, Revere National Corporation of Corpus Christi, Revere
National Corporation of Laredo ("Texas Subs") and Revere National Corporation of
Delmarva ("Delmarva") effected a statutory merger with and into Revere National
Corporation of Philadelphia ("D.C."), with D.C. being the surviving entity.
Further, through a series of transactions, Stait was merged into Revere National
Corporation of Pennsylvania ("PA") effective January 2, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION
Advertising revenues from the sale of advertising space are recognized on a
straight-line basis over the terms of the individual contracts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and short-term highly liquid
investments with a maturity of three months or less.
F-47
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INVENTORIES
Inventories, consisting primarily of sign structure parts, are stated at the
lower of cost (computed on a first-in, first-out basis) or market.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost with the exception of those
assets which have been recorded at estimated fair value in conjunction with the
purchase transactions discussed in Note 3. The cost of sign structures includes
materials and supplies, labor directly involved in construction of the sign
structures and an allocation of direct overhead expenses. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the related assets. The ranges of estimated useful lives are as
follows:
<TABLE>
<CAPTION>
USEFUL LIVES
-------------
<S> <C>
Sign structures and kiosks..................................................... 7-15 years
Buildings...................................................................... 31.5 years
Machinery and equipment........................................................ 5-7 years
Vehicles....................................................................... 5 years
Leasehold improvements......................................................... Lease Term
</TABLE>
Tear down expense or other disposals of sign structures are recorded net of
the estimated realizable value of salvaged materials. The estimated realizable
value of salvaged materials from torn down structures remains recorded as
property and equipment and is depreciated over its remaining useful life. These
materials are used in construction of new structures or refurbishment of
existing structures.
LEASE ACQUISITION COSTS
The direct costs of acquiring and renewing land leases for sites on which
sign structures are erected are capitalized in other assets and amortized using
the straight-line method over five years, which is the estimated average lives
of the leases.
BARTER ARRANGEMENTS
The Company enters into nonmonetary barter transactions with customers
wherein certain goods and services are used by the Company in exchange for
advertising services. Such transactions are recorded in the accompanying
consolidated financial statements at the estimated fair market value of the
goods and services received. Included in revenues and expenses are nonmonetary
transactions of approximately $631,000 and $601,000, respectively, for the year
ended December 31, 1995 and approximately $450,000 and $439,000, and $511,000
and $379,000, respectively, for the nine months ended Setember 30, 1995 and 1996
(unaudited). Included in property and equipment are nonmonetary transactions of
approximately $97,000 for the year ended December 31, 1995, and $18,000 and
$43,000, respectively, for the nine months ended September 30, 1995 and 1996
(unaudited).
The gross amount of barter receivables and barter payables is recorded at
the estimated fair value of services to be received and provided, respectively.
FINANCIAL INSTRUMENTS
The Company values its financial instruments as required by Statement of
Financial Accounting Standards No. 107, "Disclosures About Fair Values of
Financial Instruments." Management believes the
F-48
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable and long-term debt approximate fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues,
expenses, gains and losses during the reporting periods. Actual results could
differ from these estimates.
INCOME TAXES
Provision has been made, using Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes", for deferred Federal and state income
taxes which arise from differences between the basis of certain assets and
liabilities, for income tax and financial statement reporting purposes, and
differences between reporting methods for income tax and financial statement
reporting purposes. The differences relate principally to property, deferred
costs and accruals. The Company and its subsidiaries file consolidated Federal
income tax returns.
RECLASSIFICATIONS.
Certain financial information in the prior years have been reclassified to
conform to the current year presentation.
ACCOUNTING STANDARD
In March 1995, the FASB issued Statement No. 121 (SFAS 121), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," which requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. As of September 30, 1996 (unaudited),
management believes there were no indications of impairment that would effect
the carrying values of assets.
NON-CASH TRANSACTIONS
In addition to the previously described barter transactions, the Company
entered into the following non-cash transactions for the year ended December 31,
1995, and the nine months ended September 30, 1995 and 1996:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE MONTHS
ENDED ENDED SEPTEMBER 30,
DECEMBER 31, -----------------------
1995 1995 1996
------------ --------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Property and equipment under capital leases........... $ 336,277 $ 19,600 $ 273,063
------------ --------- ------------
------------ --------- ------------
Treasury stock purchased in exchange for note
payable............................................. $ -- $ -- $ 1,645,500
------------ --------- ------------
------------ --------- ------------
</TABLE>
F-49
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INTERIM FINANCIAL INFORMATION
The interim financial information as of September 30, 1996 and for the nine
months ended September 30, 1995 and 1996 has been prepared from the unaudited
financial records of the Company and, in the opinion of management, reflects all
adjustments necessary for a fair presentation of the financial position and
results of operations and of cash flows for the respective interim periods. All
adjustments were of a normal and recurring nature.
3. GOODWILL:
The Company utilized the purchase method of accounting for the acquisitions
of the common stock of National and Stait and the purchase of the assets of
Billboard and Mall Media. The total purchase price of $73.5 million was
originally allocated approximately $37.7 million to property and equipment, $4.6
million to an acquired deferred tax liability and $18.3 million to other net
assets and liabilities, resulting in goodwill of approximately $22.1 million.
During 1995, the Company adjusted the purchase price allocation to reflect an
income tax liability of approximately $310,000 which existed at the acquisition
date, resulting in an increase to goodwill for the same amount. Goodwill is
being amortized over a period of 40 years.
During 1995, the Company executed several acquisitions which had an
aggregate purchase price of approximately $2.8 million. These acquisitions were
accounted for in accordance with the purchase method, whereby the purchase price
is allocated to assets acquired and liabilities assumed based upon estimated
fair value. As a result of these acquisitions, the Company recorded additional
goodwill of approximately $654,000. In addition, goodwill in the amount of
$140,000 has been recorded at December 31, 1995, relating to another acquisition
of the Company in 1995.
4. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following as of December 31, 1995
and September 30, 1996:
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- --------------
(UNAUDITED)
<S> <C> <C>
Sign structures and kiosks.................................. $ 32,770,314 $ 24,205,343
Land and buildings.......................................... 6,311,519 4,694,414
Machinery and equipment..................................... 1,638,450 1,846,847
Vehicles.................................................... 740,388 195,419
Leasehold improvements...................................... 196,519 224,865
-------------- --------------
41,657,190 31,166,888
Less -- Accumulated depreciation and amortization........... (2,758,051) (3,120,866)
-------------- --------------
Property and equipment, net................................. $ 38,899,139 $ 28,046,022
-------------- --------------
-------------- --------------
</TABLE>
Depreciation expense for the year ended December 31, 1995, and the nine
months ended September 30, 1995 and 1996 (unaudited) was $2,782,706, and
$2,111,160 and $2,222,964, respectively.
F-50
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. OTHER ASSETS:
Other assets consisted of the following as of December 31, 1995 and
September 30, 1996:
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Intangible lease assets..................................... $ 9,352,833 $ 7,183,851
Financing and acquisition costs............................. 6,627,239 6,655,367
Lease acquisition costs..................................... 3,952,191 3,789,525
MTC contract for advertising privileges..................... -- 1,935,000
Covenants not to compete.................................... 570,000 350,000
Deposits.................................................... 82,450 76,025
Other....................................................... 151,092 108,697
-------------- ---------------
20,735,805 20,098,465
Less -- Accumulated amortization............................ (4,351,959) (6,268,930)
-------------- ---------------
Other assets, net........................................... $ 16,383,846 $ 13,829,535
-------------- ---------------
-------------- ---------------
</TABLE>
Amortization for the year ended December 31, 1995, and the nine months ended
September 30, 1995 and 1996 (unaudited) was $4,769,780, and $3,544,531 and
$3,811,949, respectively, including amortization of deferred financing costs of
$654,331, and $490,749 and $493,054, which was classified as interest expense.
Intangible lease assets represent site leases with rents below market rates
which were purchased with the acquisition of Billboard. The intangible lease
assets have been recorded at the present value of the excess of the fair market
rents of the lease over the actual rents. This amount is being amortized over
the life of the leases.
Financing and acquisition costs consisting of bank, legal and other
professional fees and other costs of approximately $6.0 million were incurred
and capitalized in connection with the acquisitions described in Note 1 and the
related financing described in Note 6. These costs are being amortized over the
period of the related debt agreements.
Covenants not to compete were entered into with the former owners of the
assets of certain purchase transactions at the time of the respective purchase
and are being amortized over terms ranging from five to ten years.
6. LONG-TERM DEBT:
In connection with the acquisitions described in Note 1, Acquisition and
Holding entered into a Credit Agreement consisting of a Revolving Credit Loan, a
Term A Loan and a Term B Loan.
The Revolving Credit Loan consists of a reducing revolving credit facility
with a principal amount not to exceed $17 million. As of December 31, 1995 and
September 30, 1996 (unaudited), outstanding borrowings against the facility were
$3,500,000 and $5,000,000, respectively. The commitment under the revolving
credit facility will decrease by $1.0 million annually on December 31, 1995
through 1998. The remaining available $13.0 million will expire on June 30,
2001.
The Term A Loan in the amount of $24.5 million is scheduled to be amortized
annually in three equal installments in June, September and December of each
year. The annual amortization amounts are $2,750,000 in 1996, $3,570,000 in 1997
and 1998; and $4,500,000, $6,125,000 and $3,735,000 in 1999, 2000 and 2001,
respectively.
F-51
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT: (CONTINUED)
The Term B Loan in the amount of $13.0 million is scheduled to be paid in a
single installment on June 30, 2002.
In addition to the debt repayments discussed above, the Company is required
to make prepayments of 50% of Excess Cash Flow as defined in the Credit
Agreement. No such prepayments were required for the periods ending December 31,
1995 and September 30, 1996 (unaudited).
Interest on borrowings under this agreement are at varying rates based, at
the Company's option, on the federal funds rate, the bank's prime rate, a three
month average certificate of deposit rate or the London Interbank Offering Rate
(LIBOR), plus a fixed percent and are adjusted based upon the ratio of total
debt to operating cash flow. Additionally, commitment fees of 1/2% on available
but undrawn revolving credit funds are payable quarterly in advance. The
weighted average interest rates for the year ended December 31, 1995 and for the
nine months ended September 30, 1995 and 1996 (unaudited) were 8.3%, and 8.8%
and 8.4%, respectively. Interest expense relating to the Credit Agreement for
the year ended December 31, 1995, and for the nine months ended September 30,
1995 and 1996 (unaudited), were approximately $3,852,000 and $2,951,555 and
$2,782,050, respectively.
Under the covenants of the Credit Agreement, the Company is required to
maintain certain financial ratios, including an interest coverage ratio, a
leverage ratio and a fixed charges ratio. Substantially all of the Companies'
assets have been pledged as security under the Credit Agreement.
Long-term debt at September 30, 1996 (unaudited), includes a subordinated
promissory note in the amount of $1,645,500 to a former stockholder and employee
of the Company as a result of the repurchase by the Company of all of his shares
of outstanding common stock (see Note 11). The note matures on March 27, 1999,
and interest is payable annually at the lowest rate of interest applicable to
borrowings under the Credit Agreement.
A summary of long-term debt as of December 31, 1995 and September 30, 1996
(unaudited), is as follows:
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Credit Agreement Term A Note................................ $ 24,250,000 $ 21,916,666
Credit Agreement Term B Note................................ 13,000,000 13,000,000
Revolving Credit Note....................................... 3,500,000 5,000,000
Other notes payable with varying maturity dates............. 196,720 1,669,381
-------------- ---------------
Total long-term debt...................................... 40,946,720 41,586,047
Less -- Current portion of long-term debt................... (2,851,765) (3,305,379)
-------------- ---------------
Long-term debt less current portion....................... $ 38,094,955 $ 38,280,668
-------------- ---------------
-------------- ---------------
</TABLE>
F-52
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT: (CONTINUED)
Future maturities of long-term debt as of December 31, 1995 and September
30, 1996, are as follows:
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
1996........................................................ $ 2,851,765 $ 3,305,379
1997........................................................ 3,632,255 3,573,693
1998........................................................ 3,602,700 3,574,080
1999........................................................ 4,500,000 6,150,007
2000........................................................ 6,125,000 6,127,427
2001 and thereafter......................................... 20,235,000 18,855,461
-------------- ---------------
Total..................................................... $ 40,946,720 $ 41,586,047
-------------- ---------------
-------------- ---------------
</TABLE>
Interest payments for the year ended December 31, 1995 and for the nine
months ended September 30, 1995 and 1996 (unaudited), were approximately
$3,901,000, and $2,911,780 and $2,387,456, respectively.
7. INCOME TAXES:
The (provision) benefit for income taxes for the year ended December 31,
1995, and the nine months ended September 30, 1995 and 1996 (unaudited),
consists of the following:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE MONTHS ENDED
ENDED SEPTEMBER 30,
DECEMBER 31, --------------------------
1995 1995 1996
------------ ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current
Federal.......................................... $ (72,187) $ (54,140) $ (2,087,942)
State............................................ (151,900) (113,925) (763,747)
------------ ----------- -------------
(224,087) (168,065) (2,851,689)
------------ ----------- -------------
Deferred
Federal.......................................... (267,373) (38,479) (34,541)
State............................................ (86,900) (65,175) (7,124)
------------ ----------- -------------
(354,273) (103,654) (41,665)
------------ ----------- -------------
Total.......................................... $ (578,360) $ (271,719) $ (2,893,354)
------------ ----------- -------------
------------ ----------- -------------
</TABLE>
Income tax payments made for the year ended December 31, 1995, and for the
nine months ended September 30, 1995 and 1996 (unaudited), were $584,674 and
$237,650 and $50,100, respectively.
F-53
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES: (CONTINUED)
The following is a reconciliation of the statutory federal income tax
benefit to the recorded effective tax (provision) benefit for year ended
December 31, 1995, and the nine months ended September 30, 1995 and 1996
(unaudited):
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE MONTHS ENDED
ENDED SEPTEMBER 30,
DECEMBER 31, --------------------------
1995 1995 1996
------------ ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Statutory federal taxes, at 34% of pretax.......... $ 125,576 $ 94,182 $ (2,404,474)
State provision.................................... (238,800) (179,100) (504,073)
Non-deductible depreciation and amortization....... (549,748) (412,311) (203,097)
Other.............................................. 84,612 225,510 218,290
------------ ----------- -------------
Effective tax benefit (provision)................ $ (578,360) $ (271,719) $ (2,893,354)
------------ ----------- -------------
------------ ----------- -------------
</TABLE>
The Company has incurred net operating losses which are available as
carryforwards to offset future taxable income. At December 31, 1995 and
September 30, 1996 (unaudited) net operating losses for income tax reporting
purposes are approximately $5.2 million and $3.9 million, respectively, and
expire between 2008 and 2010. For losses incurred prior to December 20, 1994,
utilization is limited to taxable gains recognized through 1998 on the sale of
assets which had "built-in gains" in 1994. A full valuation allowance on all
losses has been reflected in the accompanying balance sheet due to uncertainties
relating to the utilization of these net operating losses.
Total deferred tax assets and liabilities and the sources of the differences
between financial accounting and tax bases of the Company's assets and
liabilities which give rise to the deferred tax assets and liabilities are as
follows as of December 31, 1995 and September 30, 1996 (unaudited):
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward........................... $ 2,128,403 $ 1,612,389
Accrued liabilities....................................... 560,942 560,483
Accrued environmental remediation......................... 147,814 68,141
Bad debt reserves......................................... 134,517 187,101
Valuation allowance....................................... (2,128,403) (1,612,389)
-------------- ---------------
843,273 815,725
-------------- ---------------
Deferred tax liabilities:
Property and equipment.................................... 5,487,547 5,501,664
Prepaid expenses.......................................... 8,464 8,464
Officer bonuses........................................... -- --
Other..................................................... 180,262 180,799
-------------- ---------------
5,676,273 5,690,927
-------------- ---------------
Net deferred tax liability.............................. $ 4,833,000 $ 4,875,202
-------------- ---------------
-------------- ---------------
</TABLE>
F-54
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. MANAGEMENT STOCK OPTION PLAN:
On December 20, 1994, Holding instituted a Management Stock Option Plan
("the Stock Option Plan") under which nonqualified incentive and performance
stock options were granted to certain consultants, directors and employees of
the Company. Each option entitles the grantee to purchase one share of common
stock at a certain price per share, based on the estimated fair value of the
shares at the date of grant. The maximum authorized number of shares of common
stock which may be issued under the Stock Option Plan is 360,000. All options
expire ten years after the date of grant or at the time the grantee ceases to be
a full-time employee, director or consultant.
Options are only exercisable when vested. Incentive options vest 20% every
year. Performance options vest over a five year period based on the Company
achieving certain defined levels of earnings performance or upon approval of the
Board of Directors.
The following options were outstanding and exercisable:
<TABLE>
<CAPTION>
OPTION
PRICE/SHARE INCENTIVE PERFORMANCE TOTAL
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Total outstanding at December 31, 1994........................... $ 10.00 170,660 170,660 341,320
Granted in 1995.................................................. $ 10.00 6,840 6,840 13,680
--------- ----------- ---------
Total outstanding at December 31, 1995........................... 177,500 177,500 355,000
--------- ----------- ---------
--------- ----------- ---------
Exercisable at December 31, 1995................................. 35,500 35,500 71,000
--------- ----------- ---------
--------- ----------- ---------
Granted, January 1, 1996 to September 30, 1996 (unaudited)....... $ 12.50 25,000 25,000 50,000
--------- ----------- ---------
Exercised, March 27, 1996 (unaudited)............................ $ 10.00 (7,700) (7,700) (15,400)
--------- ----------- ---------
Expired, January 1, 1996 to September 30, 1996 (unaudited)....... $ 10.00 (32,266) (32,266) (64,532)
--------- ----------- ---------
Total outstanding at September 30, 1996 (unaudited).............. 162,534 162,534 325,068
--------- ----------- ---------
--------- ----------- ---------
Exercisable at September 30, 1996 (unaudited).................... 32,507 32,507 65,014
--------- ----------- ---------
--------- ----------- ---------
</TABLE>
9. PROFIT SHARING PLAN:
The Revere National Corporation 401(k) profit sharing plan and trust (the
Plan) covers eligible employees of the Company. Contributions made to the Plan
include an employee elected salary deduction amount and Company matching
contributions. The Company's 401(k) expense for the periods ended December 31,
1995 and September 30, 1995 and 1996 (unaudited), was $133,176, and $100,201 and
$113,984, respectively.
10. NOTES RECEIVABLE:
Notes receivable from management stockholders represent notes due in
connection with the issuance of Holding stock as discussed in Note 1. The notes
bear interest at the same rate as the Term A Note discussed in Note 6 and are
due on December 20, 2004.
11. TREASURY STOCK (UNAUDITED):
In connection with the termination of two employees, one of which was an
officer and director of the Company, the Company purchased 150,751 shares of its
common stock at a cost of $1,653,737 during the
F-55
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. TREASURY STOCK (UNAUDITED): (CONTINUED)
nine months ended September 30, 1996 (unaudited). These transactions were
completed primarily in exchange for a note payable, as described in Note 6.
12. COMMITMENTS:
The Company leases office space and equipment under the terms of operating
leases agreements. Lease expense of approximately $236,300, $167,600 and
$230,900 was recorded for the periods ended December 31, 1995, and September 30,
1995 and 1996 (unaudited), respectively.
Future minimum lease payments under capital and operating leases and the
present value of the net minimum lease payments as of December 31, 1995 and
September 30, 1996 (unaudited), are as follows:
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
AS OF DECEMBER 31, 1995 1996
----------------------- ----------------------
CAPITAL OPERATING CAPITAL OPERATING
YEAR ENDING DECEMBER 31, LEASES LEASES LEASES LEASES
- ------------------------------------------------------------- ----------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
1996......................................................... $ 288,394 $ 227,776 $ 52,221 $ 71,177
1997......................................................... 235,066 222,770 269,064 246,528
1998......................................................... 186,610 219,778 227,160 210,930
1999......................................................... 98,724 128,224 111,323 124,575
2000......................................................... 9,274 88,164 21,484 86,164
2001 and thereafter.......................................... -- -- -- 18,420
----------- ---------- ---------- ----------
Minimum lease payments....................................... $ 818,068 $ 886,712 $ 681,252 $ 757,794
---------- ----------
---------- ----------
Less -- Amount representing interest and executory costs..... (113,415) (78,574)
----------- ----------
Present value of minimum lease payments...................... $ 704,653 $ 602,678
----------- ----------
----------- ----------
</TABLE>
Additionally, substantially all of the Company's sign structures are located
on land which is leased from unrelated parties for periods ranging from one to
ten years. Generally, these sign site lease agreements permit the Company to
cancel an agreement upon 30 days written notice.
13. MINORITY INTEREST:
In August 1995, Mall Media entered into a 15 year operating agreement with
Vision Digital Communications, LLC ("VDC"), a California limited liability
corporation in which Mall Media holds an 80% investment, to conduct an
interactive kiosk business. Pursuant to this agreement, the initial capital
contributions of two of the minority investors of VDC were $140,000, which
reflected the estimated fair value of assets and properties these two members
contributed to VDC. This amount has been reflected in the consolidated financial
statements as Minority Interest at December 31, 1995. In accordance with the
operating agreement, 100% of the loss during 1995 was allocated to Mall Media.
14. LITIGATION:
The Company is involved in various legal and administrative actions evolving
from its conduct of routine operations. These actions include resolutions of
disputes with land owners, regulatory compliance issues and personal property
tax assessment issues, the outcome of which cannot currently be determined.
Management does not believe that the outcome of these actions will have a
material adverse effect on the Company.
F-56
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. UNAUDITED PRO FORMA SUMMARY RESULTS OF OPERATIONS:
The unaudited pro forma summary consolidated results of operations for the
year ended December 31, 1995 and the nine months ended September 30, 1996
(unaudited), assuming the acquisitions executed during 1995 and 1996 (as
described in Notes 3 and 16) and the sale of the Company's operations in Texas
(as described in Note 17) had been consummated on January 1, 1995, are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE
ENDED MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(UNAUDITED)
<S> <C> <C>
Net revenues.................................................... $ 34,688 $ 25,400
------------ -------------
------------ -------------
Net loss........................................................ $ (287) $ (1,395)
------------ -------------
------------ -------------
</TABLE>
16. SUBSEQUENT EVENTS:
On February 2, 1996, the Company acquired certain assets of Mass Transit
Communications ("MTC") and Mass Transit Communications -- Wallscapes ("MTC-W")
for $2,075,000. This purchase, which is effective February 1, 1996, allows the
Company to exclusively sell and service advertising space in and on municipal
transit systems of the cities of Baltimore and Annapolis, Maryland.
In March 1996, the Board of Directors approved a restructuring of the
Company's operations at Mall Media. The ultimate impact of the restructuring has
not yet been determined; however, management does not believe the restructuring
will have a material impact on the Company's financial position or results of
operations in 1996.
17. EVENTS SUBSEQUENT TO THE DATE OF THE AUDITORS' REPORT (UNAUDITED):
On July 1, 1996, the Company sold substantially all of its assets associated
with the Company's operations in San Antonio, Texas, through a third-party
intermediary with the intention of completing a like-kind exchange of assets by
December 28, 1996. Associated with this sale was the establishment of an escrow
account whereby the proceeds of the sale ($11,000,000) were deposited and can
only be withdrawn for the purchase of like-kind property or to pay down existing
senior debt. If the purchase of like-kind property is successfully completed
within 180 days of the sale, the Company may defer the gain, for income tax
purposes, on the property sold. The gain is estimated to be approximately
$5,000,000.
On August 30, 1996, the Company sold substantially all of its assets
associated with operations in Corpus Christi and Laredo, Texas, in a like-kind
exchange transaction, similar to that discussed above, with the intentions of
completing a like-kind exchange of property by February 28, 1997. The proceeds
from the sale also were deposited with a third-party intermediary totaling
$9,300,000. The gain, for income tax purposes, if the purchase of like-kind
property is not successfully completed within 180 days of the sale, is estimated
to be approximately $4,000,000.
F-57
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE NEW NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information.......................... 2
Prospectus Summary............................. 3
Risk Factors................................... 13
The Transactions............................... 17
Use of Proceeds................................ 19
The Exchange Offer............................. 19
Capitalization................................. 26
Pro Forma Financial Information................ 27
Selected Consolidated Financial and Operating
Data......................................... 34
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 36
Business....................................... 43
Management..................................... 53
Certain Transactions........................... 56
Principal Stockholders......................... 57
Description of Notes........................... 59
Description of Indebtedness and Other
Commitments.................................. 82
Certain United States Federal Income Tax
Consequences................................. 84
Plan of Distribution........................... 86
Legal Matters.................................. 87
Experts........................................ 87
Index to Financial Statements.................. F-1
</TABLE>
[LOGO]
UNIVERSAL OUTDOOR, INC.
OFFER TO EXCHANGE ITS
9 3/4% SERIES B SENIOR
SUBORDINATED
EXCHANGE NOTES
DUE 2006
FOR ANY AND ALL OF ITS
OUTSTANDING 9 3/4% SERIES B
SENIOR SUBORDINATED NOTES
DUE 2006
---------------------
PROSPECTUS
---------------------
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
offering described in this Registration Statement. All amounts shown are
estimates, except the SEC registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $ 30,304
Printing and Engraving Expenses.................................. 50,000
Legal Fees and Expenses.......................................... 75,000
Accounting Fees and Expenses..................................... 50,000
Blue Sky Fees and Expenses....................................... 5,000
Exchange Agent Fees and Expenses................................. 15,000
Miscellaneous.................................................... 25,000
---------
$ 250,304
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Certain provisions of the Illinois Business Corporation Act of 1983, as
amended, provide that Universal Outdoor, Inc. ("the Registrant") may, and in
some circumstances must, indemnify the directors and officers of the Registrant
and of each subsidiary company against liabilities and expenses incurred by such
person by reason of the fact that such person was serving in such capacity,
subject to certain limitations and conditions set forth in the statute.
The By-laws of the Registrant generally provide that the Registrant shall
indemnify its officers and directors if such person acted in good faith and in a
manner reasonably believed to be in, or not opposed to, the best interests of
the Registrant, and, with respect to any criminal action or proceeding, if such
person had no reasonable cause to believe his or her conduct was unlawful.
Indemnification shall be provided only upon a determination that such
indemnification is proper in the circumstances because the person has met the
applicable standard of conduct. Such determination shall be made by the
Registrant as authorized by Section 8.75(d) of the Illinois Business Corporation
Act of 1983, as amended, or any successor provisions. Expenses may be advanced
to the indemnified party upon receipt of an undertaking by, or on behalf of,
such person to repay such amounts if it is ultimately determined that he or she
is not entitled to be indemnified by the Registrant.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On December 16, 1996, the Registrant issued and sold to Bear, Stearns & Co.,
Inc. and BT Securities Corporation (the "Series B Initial Purchasers") $100
million principal amount of 9 3/4% Series B Senior Subordinated Notes due 2006
(sold with a 3% discount to the Series B Initial Purchasers). This sale to the
Series B Initial Purchasers was exempt from registration as an exempt private
placement under Section 4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ --------------------------------------------------------------------------
<C> <S>
2.1 Plan and Agreement of Merger, dated November 18, 1993, between the Company
and Universal Outdoor II, Inc. (filed as Exhibit 2 to the Company's
Registration Statement on Form S-1 (Commission File No. 33-72710) and
incorporated herein by reference)
2.2* Agreement and Plan of Merger between the Company, Universal Acquisition
Corp. and Outdoor Advertising Holdings, Inc. dated August 27, 1996
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ --------------------------------------------------------------------------
<C> <S>
2.3* Option and Asset Purchase Agreement between the Company and the
Memphis/Tunica Sellers dated September 12, 1996
2.4 Asset Purchase Agreement by and among Mountain Media, Inc., d/b/a Iowa
Outdoor Displays, Robert H. Lambert and the Company dated September 12,
1996
2.5* Asset Purchase Agreement between the Company and The Chase Company dated
September 11, 1996
2.6 Stock Purchase Agreement, dated as of November 22, 1996, among Revere, the
Company and the Stockholders of Revere
2.7 Asset Purchase Agreement, dated as of December 10, 1996, by and among
Matthew, Matthew Acquisition Corp. and the Company
3.1 Third Amended and Restated Articles of Incorporation (filed as Exhibit 3.1
to the Company's Registration Statement on Form S-1 (Commission File No.
333-12427) and incorporated herein by reference)
3.2 Second Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Commission File No. 333-12427) and
incorporated herein by reference)
4.1 Indenture, dated as of December 16, 1996, between the Company and United
States Trust Company of New York, as Trustee
4.2 Purchase Agreement, dated as of December 11, 1996, among the Company and
the Initial Purchasers relating to the Old Notes
4.3 Form of New Notes
4.4 Registration Rights Agreement, dated as of December 16, 1996, by and among
the Company and the Initial Purchasers
5.1 Opinion of Winston & Strawn
10.1 Consolidated Credit Agreement dated October 31, 1996, among the Company,
certain financial institutions, Bankers Trust Company, as Agent and
LaSalle National Bank, as Co-Agent
10.2 Agreement Regarding Tax Liabilities and Payments dated as of November 18,
1993 by and between Parent and the Company (filed as Exhibit 10(f) to
the Company's Form S-1 Registration Statement (File No. 33-72710) and
incorporated herein by reference)
10.3 Indenture, dated as of October 16, 1996 between the Company and United
States Trust Company of New York as Trustee
12.1 Computation of Ratios
21.1 Subsidiaries of the Company
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Arthur Andersen LLP
23.5 Consent of Winston & Strawn (contained in Exhibit 5.1)
24.1 Power of Attorney (included on Signature Page)
25.1 Statement of eligibility of Trustee on Form T-1
99.1 Letter of Transmittal
99.2 Notice of Guaranteed Delivery
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ --------------------------------------------------------------------------
<C> <S>
99.3 Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
99.4 Letter from Registered Holders to Clients
</TABLE>
- ------------------------
* Filed with Parent's Registration Statement on Form S-1, dated October 9,
1996 (Commission File No. 333-12457) and incorporated herein by reference
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
this registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that:
Insofar as indemnification of liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ --------------------------------------------------------------------------
<C> <S>
2.1 Plan and Agreement of Merger, dated November 18, 1993, between the Company
and Universal Outdoor II, Inc. (filed as Exhibit 2 to the Company's
Registration Statement on Form S-1 (Commission File No. 33-72710) and
incorporated herein by reference)
2.2* Agreement and Plan of Merger between the Company, Universal Acquisition
Corp. and Outdoor Advertising Holdings, Inc. dated August 27, 1996
2.3* Option and Asset Purchase Agreement between the Company and the
Memphis/Tunica Sellers dated September 12, 1996
2.4 Asset Purchase Agreement by and among Mountain Media, Inc., d/b/a Iowa
Outdoor Displays, Robert H. Lambert and the Company dated September 12,
1996
2.5* Asset Purchase Agreement between the Company and The Chase Company dated
September 11, 1996
2.6 Stock Purchase Agreement, dated as of November 22, 1996, among Revere, the
Company and the Stockholders of Revere
2.7 Asset Purchase Agreement, dated as of December 10, 1996, by and among
Matthew, Matthew Acquisition Corp. and the Company
3.1 Third Amended and Restated Articles of Incorporation (filed as Exhibit 3.1
to the Company's Registration Statement on Form S-1 (Commission File No.
333-12427) and incorporated herein by reference)
3.2 Second Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Commission File No. 333-12427) and
incorporated herein by reference)
4.1 Indenture, dated as of December 16, 1996, between the Company and United
States Trust Company of New York, as Trustee
4.2 Purchase Agreement, dated as of December 11, 1996, among the Company and
the Initial Purchasers relating to the Old Notes
4.3 Form of New Notes
4.4 Registration Rights Agreement, dated as of December 16, 1996, by and among
the Company and the Initial Purchasers
5.1 Opinion of Winston & Strawn
10.1 Consolidated Credit Agreement dated October 31, 1996, among the Company,
certain financial institutions, Bankers Trust Company, as Agent and
LaSalle National Bank, as Co-Agent
10.2 Agreement Regarding Tax Liabilities and Payments dated as of November 18,
1993 by and between Parent and the Company (filed as Exhibit 10(f) to
the Company's Form S-1 Registration Statement (File No. 33-72710) and
incorporated herein by reference)
10.3 Indenture, dated as of October 16, 1996 between the Company and United
States Trust Company of New York as Trustee
12.1 Computation of Ratios
21.1 Subsidiaries of the Company
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Arthur Andersen LLP
23.5 Consent of Winston & Strawn (contained in Exhibit 5.1)
24.1 Power of Attorney (included on Signature Page)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ --------------------------------------------------------------------------
<C> <S>
25.1 Statement of eligibility of Trustee on Form T-1
99.1 Letter of Transmittal
99.2 Notice of Guaranteed Delivery
99.3 Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
99.4 Letter from Registered Holders to Clients
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into this 12th day of September, 1996,
by and among MOUNTAIN MEDIA, INC., A Pennsylvania corporation doing business
as Iowa Outdoor Displays ("IOD") and ROBERT H. LAMBERT, ("Lambert") (IOD and
Lambert are collectively referred to as "Seller") and UNIVERSAL OUTDOOR, INC.
an Illinois corporation, ("Buyer").
W I T N E S S E T H :
In consideration of the respective representations, warranties and
covenants contained in this Agreement and other good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged,
Buyer and Seller agree as follows:
1. Transfer of Assets.
1.1. Buyer agrees that at the Closing it shall acquire all of the
business and assets of Seller, whether disclosed or undisclosed,
wherever located, which are used in the outdoor advertising
business in the market described in Exhibit 1.1, ("Market"),
including, but not limited to, those assets listed on Exhibits or
Schedules attached to this Agreement ("Assets"), and Seller agrees
to transfer, assign, convey and deliver to Buyer all of the Assets,
in exchange solely for the consideration specified under the
provisions of Section 1.4 herein ("Purchase Price"), plus the
assumption of certain obligations of Seller as specified.
1.2 The consideration payable by Buyer, as specified in
Section 1.1, includes any applicable sales taxes or other taxes
imposed upon the transfer of the Assets to Buyer.
1.3 The Assets shall include, but shall not be limited to, the
following, all of which are located in the Market:
1.3.1 All interest in and to real property as described
on Exhibit 1.3.1 including all leasehold interests of
Seller in and to real property, and all easements and
licenses, including prepaid ground rents.
1.3.2 All sign structures, whether owned or leased, and
any fixtures and leasehold
1
<PAGE>
interests in sign structures, and all lights, electrical
hook ups, catwalks and other appurtenant equipment in the
Market which are described in Exhibit 1.3.2.
1.3.3 All rights and entitlement of Seller in and to
advertising contracts which are listed in Exhibit 1.3.3.
1.3.4 All other contract rights and entitlements related to
the business of Seller, whether oral or written in excess
of $5,000, including those set forth in 1.3.4.
1.3.5 All rights and obligations of Seller in and to sign
constructions. All such rights and a list of any
contractors are listed in Exhibit 1.3.5. For purposes of
this subsection "sign constructions" shall mean any
locations as to which Seller has a perfected or partial
right or expectancy to construct signs.
1.3.6 All governmental permits, licenses, approvals or
authorizations necessary for Seller to conduct its outdoor
business within the Market. Seller shall cooperate with
Buyer in the assignment and transfer to Buyer of all such
governmental permits, licenses, approvals or authorizations,
including state and local sign permits. All such sign
permits and all other material permits, licenses,
approvals or authorizations are listed in Exhibit 1.3.1
and 1.3.6.
1.3.7 All other assets and property of Seller used in the
Market in Seller's outdoor advertising business, such as
motor vehicles, office equipment and machinery, sign
panels, lighting fixtures, furniture, inventories of raw
materials, supplies, customer lists, business records, and
work in progress. A list of all other material assets is
set out in Exhibit 1.3.7.
1.3.8 All deposits from customers held by Seller arising
from transactions in the Market. A list of all deposits
from customers is set forth in Exhibit 1.3.8.
1.3.9 All telephone numbers and listings used by Seller in
the Market. Seller will not change said telephone numbers.
A list of all
2
<PAGE>
telephone numbers and listings is attached as Exhibit 1.3.9.
1.3.10 [Intentionally Deleted]
1.3.11 Data regarding lessors, advertisers and other business
data in machine-readable form.
1.3.12 All accounts receivables and prepaid expenses of IOD
attached as Exhibit 1.3.12.
1.4 Buyer shall pay to Seller a Purchase Price for the Assets of:
(a) One Million Seven Hundred Twenty-Five Thousand Dollars
($1,725,000) in cash or by wire transfer at Closing at Seller's
direction as shown on Exhibit 1.4(a) and (b) Seventy-Five Thousand
Dollars ($75,000) payable into escrow pursuant to the terms of the
Escrow Agreement attached Exhibit 1.4(b). The Purchase Price set
forth herein is subject to the following adjustments:
1.4.1 [Intentionally Deleted]
1.4.2 Minus the amounts which will credit Buyer for the
following:
1.4.2.1 $1000 for the Construction of one face on
Route 48, Shenandoah.
1.4.2.2 Any advertising services delivered after
Closing for which Seller has already received
payment as reflected on Exhibit 1.3.8.
1.4.3 Other than as provided for in Section 1.4.2, all items
of income and expense listed below relating to the Assets
will be prorated as of the Closing Date, with Seller liable
to the extent such items relate to any time period up to and
including the Closing Date, and Buyer liable to the extent
such items relate to periods on or subsequent to the
Closing Date: (a) personal property, real estate,
occupancy and water taxes, if any, on or with respect to
the Assets: (b) rents, taxes and other items payable by
Seller under any contract to be assigned to or assumed by
Buyer: (c) the amount of sewer rents and charges for
water, telephone, electricity and other utilities and
fuel; and (d) [Intentionally Deleted] (e) all
3
<PAGE>
fuel; and (d) [Intentionally Deleted] (e) 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) - (d) above which are normally prorated in
connection with similar transactions;
The net aggregate amount of the prorations described
in (a) - (d) shall be added to or subtracted from the
base amount payable by Buyer to Seller on the Closing
Date. If current payments with respect to items to be
prorated pursuant to this Section 1.4.3 are not
ascertainable on or before the Closing Date, such payments
shall be prorated on the basis of the most recently
ascertainable bill therefor and shall be reprorated between
Seller and Buyer when the current bills with respect to
such items have been issued and a cash settlement shall
be made within thirty (30) days thereafter.
The prorated items known to the parties at Closing
are as listed on Exhibit 1.4.3.
1.5 The Purchase Price will be paid by Buyer plus or minus the
amount, if any, by which the Purchase Price is adjusted pursuant
to subsection 1.4 of this Agreement.
1.6 The parties hereto agree that the allocated Asset values
attached hereto, designated Exhibit 1.6, fairly and accurately
represent the respective values of the Asset categories of Seller
purchased by Buyer pursuant to the Asset Agreement.
1.7 At the Closing, Seller shall execute the Non-Competition,
Non-Solicitation and Non-Disclosure Agreement substantially in the
form set forth in Exhibit 1.7(a).
If Seller violates this Section 1.7 and the Non-Competition,
Non-Solicitation and Non-Disclosure Agreement referenced herein, and
Buyer obtains a final judgment or arbitration award or a settlement
is reached with Seller for damages as a result of this violation,
Buyer may offset the amount of this judgment, arbitration award or
settlement against any amounts owed by Buyer. "Final" shall mean
any judgment for which no appeal has been filed during the thirty
(30) days following the
4
<PAGE>
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 shall have the right to use the name
Iowa Outdoor Displays and all other trade names used by Seller
in the Market. Buyer shall also have the right for one year
from the Closing Date to endorse the name Iowa Outdoor Displays
to all checks which, pursuant to the terms of this Agreement,
are the property of Buyer.
2. Representations and Warranties of Seller. Seller represents and
warrants to Buyer as an inducement to Buyer to purchase the Assets
of Buyer pursuant to the terms of this Agreement as follows:
2.1 IOD is a Pennsylvania corporation, duly organized, validly
existing and in good standing under the laws of that state,
and has the corporate power to own its property and carry on
its business as now being conducted, and to execute and deliver
the Asset Purchase Agreement and any other agreements to be
entered into by Seller in connection with the Asset Purchase
Agreement.
2.2 Seller is properly qualified as a foreign corporation to do
business in the jurisdictions listed in the attachment hereto
designated as Exhibit 2.2. These are the only jurisdictions where
Seller is required to be qualified as a foreign corporation in order
to conduct business in the Market.
2.3 To the best of Seller's knowledge, except as set forth on
Exhibit 2.3, there are no violations of applicable laws or
regulations, including, but not limited to, zoning regulations and
building permits or other permits related to sign structures have
occurred that would have a material adverse effect on the future
operation of any Asset.
2.4 Attached as Exhibit 2.4 are unaudited balance sheets and
comparative operating statements of Seller's business in the Market
as of July 31, 1996 (the "Financial Statements"). These Financial
Statements are in accordance with the books and records of Seller
and fairly and accurately present its financial position as of that
date in accordance with generally accepted accounting principles.
2.5 Since the date of the Financial Statements, except as disclosed
in Exhibit 2.5 attached hereto, to the best of Seller's knowledge
there have been no material adverse
5
<PAGE>
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
material respects including specifically the following:
2.6.1 The information about contracts attached as
Exhibit 1.3.3 and Exhibit 1.3.4 to this Agreement is
true and correct as of the date set forth in said Exhibit.
Except as set forth in Exhibit 2.6.1, said contracts (1) are
in full force and effect (2) have not been breached by Seller
or to the best of Seller's knowledge, any of the parties
thereto; and (3) all payments required under said contracts
have been made except those not yet due and payable provided
the current portion of which is included as a Current
Liabilities. Seller has no "percentage rental" leases.
2.6.2 All sign leases to which Seller is a Lessee are in full
force and effect.
2.6.3 [Intentionally Deleted]
2.6.4 Exhibit 2.6.4 lists agreements, whether oral or written
requiring payments or performance by IOD after Closing other
than Lease payments and the following agreements:
(a) Each material contract, agreement or commitment for
the sale or lease of Seller's Assets, products or services,
excluding advertising contracts and contracts to provide
advertising allowances or promotional services which are
listed in Exhibit 1.3.4.
(b) Each contract with any dealer, distributor, broker, agent
or sales representative.
(c) Employment contracts, including union contracts, executed
by any officer, director, employee or consultant of Seller.
2.7 There are no unfair labor practice charges pending, or to
the best of Seller's knowledge, threatened against Seller.
Seller has not engaged in any unfair labor practices, and there
is no strike, dispute, request for representation or work
stoppage pending or threatened against Seller by or with
respect to any such employees.
2.8 The execution, delivery and performance of this
6
<PAGE>
Agreement by Seller, including, without limitation, all
conveyances, transfers, assignments and deliveries
contemplated herein, have been duly and effectively
authorized and approved by IOD's board of directors and
shareholders and all other persons, businesses, banks and
governmental bodies or courts whose approval is required . This
Agreement and each and every instrument executed and delivered
hereunder by Seller shall constitute a valid and binding
obligation of Seller enforceable according to their terms.
2.9 The performance of this Agreement by Seller will not
conflict with or violate the provisions of any material
agreement or instrument binding upon Seller
2.10 Except as set forth in Exhibit 2.10, there is no suit,
action, arbitration or legal, administrative or other proceeding
or governmental investigation pending or, after due inquiry, to
the best of Seller's knowledge, threatened against or affecting
the business, Assets or financial conditions of Seller within the
Market which would have any material adverse effect on Seller's
performance of this Agreement and the transactions contemplated
herein. Seller is not in default with respect to any order, writ,
injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality.
2.11 Except as set forth on Exhibit 2.11, at Closing Seller will
convey good and merchantable title to all Assets and Seller's
title to all property included in the Assets required to be
disclosed in the Exhibits to this Agreement is not encumbered in
any manner other than for liens for taxes not yet due.
2.12 All Assets are useable in the ordinary course of business in
accordance with industry standards except those listed in
Exhibit 2.12. Seller has no knowledge of any defects in the
condition of any of the said Assets, ordinary wear and tear
excepted.
2.13 Seller represents and warrants to Buyer that as of the date
of this Agreement the following environmental representations
and warranties are true:
2.13.1 Seller has not caused or permitted its operations
on any real estate owned or leased by Seller to
generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer, produce or process
hazardous substances or other dangerous or toxic
substances or solid wastes, except in
7
<PAGE>
caused or to the best of Seller's knowledge permitted
and has no knowledge of the release of any hazardous
substances that have gone onto or offsite of any real
estate owned or leased by Seller (other than the
disposal of paints, pastes and similar chemicals
through approved channels) and Seller has no knowledge
that any person or entity has in the past utilized any
real estate owned or leased by Seller in a manner
which has created any hazardous substance on or off
any real estate owned or leased by Seller. There are no
pending and, to the best of Seller's knowledge, no
threatened claims, suits, administrative proceedings,
or other actions by a Court or governmental entity
with regard to hazardous substances on any real estate
owned or leased by Seller except as set forth in
Exhibit 2.13.1.
2.13.2 Seller agrees to indemnify and hold
harmless Buyer, its successors, and assigns against and in
respect of any and all damages, claims, losses, liabilities and
expenses, including, without limitation, reasonable legal,
accounting, consulting, engineering and other expenses, which
may be imposed upon or incurred by Buyer, its successors or
assigns, or asserted against the Buyer, their successors or
assigns by any other party or parties (including, without
limitation, a governmental entity), arising out of or in
connection with any environmental condition, resulting from
activity of Seller prior to Closing. The indemnification
obligations of Seller in this Section 2.13.2 shall survive and
extend to the fifth anniversary of Closing subject to the limits
stated in Section 10.5.
2.14 As of the date of this Agreement, Seller knows of no
individual, partnership, corporation or other entity in the
Market who makes it a practice to destroy billboards as part of
a campaign or concerted effort to damage billboard companies.
2.15 Except current liabilities incurred or paid in the ordinary
course of business and obligations under contracts entered into
or performed in the ordinary course of business Seller has not
since the date of the Financial Statements attached as
Exhibit 2.4:
8
<PAGE>
2.15.1 incurred or become subject to any obligations or
liabilities (absolute or contingent) which have a material
adverse effect on the Assets;
2.15.2 mortgaged, pledged or subjected to any lien, charge or
encumbrance any of its assets covered by this Agreement
(other than liens for taxes not yet due);
2.15.3 entered into any transaction other than in the ordinary
course of business in any way affecting the Assets, except
for this Agreement and the transactions contemplated
hereunder;
2.15.4 increased, without the knowledge of Buyer, the general
rate of compensation payable to any of its employees or made
or accrued for any new employee benefit plans for employees.
A list of employees who work on a full time basis and all
compensation and bonus arrangements for these employees is
set forth in Exhibit 2.15.4;
2.15.5 made, accrued or become liable in any way for any bonus,
profit sharing, pension, incentive compensation or other
similar payments to any employee; or
2.15.6 suffered any other event or condition of any character
which has materially adversely affected Seller's business.
2.16 The accounts receivable of Seller reflected in the Financial
Statements attached hereto as Exhibit 2.4 and the accounts
receivable of Seller resulting from its business operations through
the Closing Date have been or, to the best of Seller's knowledge,
will be collected in the ordinary course of business, considering
the offset for the reserve for doubtful accounts on the same basis
as used by Seller in the past. Seller shall continue through the
Closing Date its normal and customary collection efforts with regard
to such accounts receivable and shall not make any operational
changes in anticipation of this transaction. Said accounts
receivable arose out of bona fide transactions in the ordinary
course of business and are not subject to any right of offset or
counterclaim except for any barter or lease trade out arrangements
disclosed in Section 2.21.
2.17 Except as set forth in Exhibit 2.17, Seller does not sponsor
or participate in any (i) life, health, accident
9
<PAGE>
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.
2.18 Pursuant to the terms of this Agreement, is delivering to
Buyer all Assets used in the Market by Seller to operate its
business except Seller's Automobile.
2.19 Seller has paid all federal and municipal taxes, including
real and personal property, sales and use taxes it is required to
pay.
2.20 Seller has not sublet any property except as disclosed in
Exhibit 2.20.
2.21 Seller has not engaged in any "bartering" or "lease trade
outs" of accounts receivable or advertising space except as set forth
in Exhibit 2.21.
2.22 The supplies owned by Seller being purchased by Buyer, which
are current assets, are useable by Buyer, both as to quality and
quantity, in the ordinary course of business in accordance with
industry standards.
2.23 [Intentionally Deleted]
2.24 [Intentionally Deleted]
2.25 Seller has all permits and licenses needed to operate the
Assets being purchased by Buyer and no one has challenged the
validity of those permits and licenses except as set forth in
Exhibit 2.25.
2.26 No Major Advertiser of Seller has advised Seller that it will
not renew or it is going to breach or terminate its advertising
contracts when it is assigned to Buyer. The term "Major Advertiser"
as used herein shall mean any advertiser whose annual payments are
Five Thousand Dollars ($5,000.00) in the aggregate or more. No group
of advertisers whose annual payments exceed Forty Thousand Dollars
($40,000) have advised Seller they will not renew or are going to
breach or terminate their advertising contracts when they are
assigned to Buyer.
2.27 Seller has not received notice of any tax audits against
Seller.
10
<PAGE>
2.28 Seller shall be responsible for providing any notice of
layoff or plant closing required in connection with the transaction
contemplated herein pursuant to the Federal Worker Adjustment and
Retraining Notification Act of 1988, any successor federal law, and
any applicable state or local plant closing notification statute,
and Seller shall bear any liability or obligation that may rise or
accrue as the result of improper or untimely notice or that may
arise from any person claiming wrongful termination or change of
employment as a result of any action or omissions of Seller with
respect to the transactions set forth in this Agreement.
2.29 All dues owed by Seller to any outdoor advertising
association have been paid.
2.30 There are no agreements or undertakings pursuant to which any
third party has or may have the right to acquire from Seller any of
the stock or (except in the ordinary course of business) Assets of
Seller.
2.31 To the best of Seller's knowledge, except as set forth on
Exhibit 2.31, after Closing Buyer will have the exclusive right to
use the Seller's name and all other trade names used by Seller in
the outdoor advertising business in the outdoor advertising market
area where Seller currently transacts business.
2.32 To the best of Seller's knowledge, in the five years prior to
Closing, no employee of Seller, lessor, business invitee, or other
person has suffered personal injury or property damage as a result
of any action involving the business or Assets of Seller within the
Market such that a claim has been or may be raised against Seller
directly or indirectly or under the workman's compensation laws of
any state except as set forth in Exhibit 2.32.
2.33 Seller shall have delivered to Buyer under this Agreement
sign structures containing, in the aggregate, at least 155
advertising faces.
2.34 Except as disclosed on Exhibit 2.34, following Closing,
neither Seller nor any affiliates, officers, directors or
shareholders of IOD nor any person related to or affiliated with
Lambert will have any direct, indirect or beneficial ownership of
any real or personal property which is in any way involved with or
related to the operation of the Assets and property of Seller used
in the Market in Seller's outdoor advertising business being
purchased by Buyer.
3. Representatives and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
11
<PAGE>
3.1 Buyer has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of
Illinois, with full power and authority to own its properties and
carry on its business as now being conducted and to execute and
deliver this Asset Purchase Agreement and any other Agreements to be
entered into by Buyer in connection with this Asset Purchase
Agreement.
3.2 The performance of this Agreement by Buyer will not conflict
with or violate the provisions of any material agreement or
instrument binding upon Buyer; and the execution, delivery and
performance of this Agreement shall have been duly and effectively
authorized by Buyer prior to Closing. This Agreement and each and
every instrument executed and delivered by Buyer shall constitute a
valid and binding obligation of Buyer.
3.3 There is no suit, action, arbitration or legal,
administrative or other proceeding or governmental investigation
pending or, to the best of Buyer's knowledge, threatened against or
affecting the business, assets or financial conditions of Buyer
which would have any material adverse effect on Buyer's performance
of this Agreement and the transactions contemplated. Buyer is not in
default with respect to any order, writ, injunction or decree of any
federal, state, local or foreign court, department, agency or
instrumentality.
3.4 Buyer shall use its best efforts to perform and fulfill all
conditions and obligations on its part to be performed and fulfilled
under this Agreement, to the end that the transactions contemplated
by this Agreement shall be fully carried out.
4. Assumptions of Obligations.
4.1 Buyer does not assume any obligations or liabilities of
Seller of any kind or nature, except as to those post-closing
matters specified below.
4.1.1 Post-closing liabilities under leases affecting the
Assets or within the Market; and which have not been paid,
performed or discharged by Seller.
4.1.2 Post-closing obligations to deliver advertising services
pursuant to advertising contracts purchased pursuant to this
Agreement in the Market.
12
<PAGE>
4.2 Anything to the contrary notwithstanding, it is expressly
understood that Buyer shall not assume any of the following
obligations or liabilities of Seller:
4.2.1 Any city, state or federal tax liabilities for any
kind of tax for any period prior to and including the
Closing Date. Real and personal property taxes shall be
prorated as of the Closing Date, based upon bills
received, when received.
4.2.2 Any income tax liability arising from the sale of
Assets to Buyer or conveyance of Assets to Buyer or any
liquidation and dissolution of Seller.
4.2.3 Any obligation, commitment or liability of or claim
against Seller which constitutes or arises from a breach
by Seller of any representation, warranty or covenant.
4.2.4 Any obligation, commitment or liability of or claim
against Seller which may arise from Seller's operation of
the Assets prior to the Closing Date.
4.2.5 Any obligation, commitment or liability of or claim
against Seller which may arise from the rendering of
professional, legal, accounting, appraisal, engineering
or other similar services to Seller in connection with
the transactions.
4.2.6 Any liability of Seller under profit-sharing or
similar employee benefit plans or any other employee
benefit collective bargaining agreement, employment
agreement or salary or bonus arrangement.
4.3 Seller herewith agrees that it shall pay promptly when due,
or contest, any and all liabilities of Seller arising in the Market
not assumed by Buyer at Closing or discharged by Seller prior to
Closing, if Seller's failure to pay would have a material adverse
effect on Buyer, provided that Seller may contest the assertion of
any such liability to the extent reasonably prudent and Buyer shall
cooperate fully in any such contest. If Seller elects to contest
any such liability and fails to succeed in such contest after any
appeals, then Seller shall promptly pay such liability. Seller shall
give Buyer written notice before Seller begins contesting any such
liability unless Seller does not have adequate time,
13
<PAGE>
in which event, Seller shall give Buyer said written notice within
five (5) business days after Seller begins contesting any such
liability.
In the event that Seller is contesting any liability not assumed
by Buyer under the terms of the Asset Agreement, Seller shall make it
clear to the third party that Seller and not Buyer is the entity
disputing the matter.
4.4 Installments of special assessments levied against real estate
included in the Assets shall be the obligation of Seller if due on or
before the Closing Date and the obligation of Buyer if due after the
Closing Date.
4.5 Prior to the Closing and for six months thereafter, Seller shall
cooperate with Buyer to obtain all consents, approvals, and
certificates and licenses and permits, and other documents required
or appropriate in connection with the performance by it of this
Agreement and the consummation of the transactions contemplated
hereby or otherwise required in order to prevent the breach of any
representation and warranty set forth herein; provided, however,
that no contact will be made by the Seller with any third party to
obtain any Consent except in accordance with arrangements
previously agreed to by Buyer.
4.6 Excluding workmen's compensation, Seller shall be responsible
for all claims associated with health, illness or injury insofar as
they relate to events or conditions existing on or before the Closing
Date and relating to employees or their dependents (or others) to
the extent that event or condition has been reported on or before
the Closing Date to Seller or to a medical professional or as to
which medical treatment has been obtained on or before the Closing
Date; provided, however, that Buyer's health plans will (to the
extent they would cover medical expenses for a condition arising
after the Closing Date) cover medical expenses for continuing
employees incurred after the Closing Date to the extent said
medical expenses result from a medical condition existing on or
before the Closing Date that have not been so reported or the subject
of such treatment.
Seller shall be responsible for all workmen's compensation
claims associated with health, illness or injury insofar as they
relate to events occurring on or before the Closing Date.
14
<PAGE>
4.7 Seller shall offer continuation coverage under its applicable
group health plans to all employees of Seller and their covered
dependents who incur a "qualifying event" (within the meaning of
section 4980(B) of the Code and section 603 of ERISA) as a result
of or in connection with the transactions contemplated by this
Agreement. Such coverage shall comply with the continuation coverage
requirements (including any applicable notice provisions) of
section 4980(B) of the Code and Part 6 of Title I of ERISA and any
applicable state law continuation coverage requirements.
5. Conduct of Business Pending Closing. Seller represents,
warrants and agrees that from the date of this Agreement until the
Closing as to the Markets and Assets:
5.1 The business of Seller will be conducted in the usual
and ordinary course, the character of the business will not
change, no different business will be undertaken within the
Market, and Seller will, in accordance with its past practices,
preserve for Buyer the relationship with suppliers, customers
and others having business relations with Seller, including
those employees of Seller which Buyer intends to hire after
Closing.
5.2 Except in the ordinary course of business, Seller will not
enter into any contract, agreement, commitment or understanding
with respect to employing any agents, wholesalers, dealers,
brokers or consultants in the development and sale of their
services which requires an expenditure of more than $5,000
without the prior written authorization of Buyer.
5.3 As to the Market or Assets in the Market, Seller will not:
(i) mortgage, pledge or subject to any lien, charge or
encumbrance any of its Assets in the Market;
(ii) sell or transfer any of its Assets in the Market, except
in the ordinary course of business, or any permits, licenses,
approvals, or authorization or except in the ordinary course
of business, cancel any debts or claims;
(iii) knowingly enter into any transaction outside the
ordinary course of business.
(iv) make, accrue or become liable in any way for any bonus
(other than those which Seller shall pay in full), profit-
sharing, pension, incentive compensation or other similar
payments to any employee in the Market
15
<PAGE>
inconsistent with prior practices or other than as shown on a
Schedule or Exhibit to this Agreement;
(v) make or permit any amendment or early termination of
any contract, except in the ordinary course of business;
(vi) through negotiations or otherwise, make any commitment
affecting the Market or incur any liability affecting the Market
to labor organizations without the prior written approval of
Buyer;
(vii) make any material alteration to the normal and customary
pricing in the Market or terms and conditions of sale extended
to Seller's customers; or
(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.
5.5 Prior to this Agreement, Seller has made available to Buyer and
its representatives certain information and records relating to the
business and affairs of Seller as requested by Buyer. During the
normal business hours throughout the period from this date to the
Closing Date, Seller will give to Buyer and its accountants, counsel,
appraisers and other representatives full access to all properties,
contracts, commitments, books and records or Seller pertaining to
the Market. Buyer will keep such information confidential and not
disclose or use such information except for purposes of this
Agreement until Closing.
5.6 Prior to the Closing, Buyer shall not have the risk of loss with
respect to the Assets to be conveyed pursuant to this Agreement. In
the event, between the date of this Agreement and the Closing Date,
any parcel of improved real property or personal property being
purchased, or leased as a part of this transaction, including but
not limited to, the office furniture and equipment, fixtures,
leasehold improvements, equipment, vehicles or other personal
property is materially damaged or destroyed by fire or other casualty
or in the event that the sign structures to be purchased are
materially damaged or destroyed by fire or other casualty, and if as
16
<PAGE>
a result the Assets are materially diminished in value, Buyer may
elect to terminate this Agreement, and all obligations of the parties
shall cease and neither party shall have any further rights against the
other. Seller shall have the right within thirty (30) days to remedy or
repair such damage or destruction and (subject to the terms and
conditions of this Agreement) thereupon require Buyer to close. Seller
shall immediately notify the Buyer in writing of the occurrence of any
fire or other casualty. Buyer shall notify Seller in writing within two
days of Buyer's receipt of Seller's notice whether Buyer elects to
consummate this transaction.
6. Conditions to Obligations of Buyer to Consummate the Transaction. The
obligations of Buyer to be performed at the Closing shall be subject to the
satisfaction or the waiver in writing by Buyer on or prior to the Closing
Date of the following conditions:
6.1 Buyer shall have received an opinion from counsel for Seller in
the form attached as Exhibit 6.1 which shall be reasonably satisfactory
to Buyer, dated the Closing Date, to the effect that;
6.1.1 IOD is a corporation duly organized, existing and in good
standing under the laws of the State of Pennsylvania and has the
corporate power to carry on its business as now being conducted in
the Market, and is not required to qualify to do business in any
state where the nature of its business or assets require
qualification.
6.1.2 Such counsel does not know of any pending or threatened
lawsuits against Seller other than those described in Exhibit 2.10
or elsewhere in this Agreement.
6.1.3 The execution, delivery and performance of this Agreement by
Seller has been duly authorized and approved by its Board of
Directors and this Agreement and each instrument executed and
delivered herewith by Seller has been duly executed by and
constitute valid and binding obligations of Seller on the Closing
Date enforceable according to their terms except to the extent
enforceability is limited by applicable bankruptcy and insolvency
laws and by general principles of equity. Counsel may take exception
to the enforceability of the noncompetition and nonsolicitation
provisions of the instruments and other generally accepted
exceptions.
17
<PAGE>
6.1.4 This Agreement and each instrument have been duly executed
and delivered by Seller.
6.1.5 [Intentionally Deleted]
6.1.6 [Intentionally Deleted]
6.1.7 When the Bill of Sale or other conveyance instruments shall
have been delivered to Buyer by Seller, such delivery will transfer
to Buyer good title to the Assets, and the Assets to the best of
counsel's knowledge will be free and clear of all liens,
encumbrances, claims, charges and assessments whatsoever, other than
any incurred by Buyer.
6.2 Buyer shall not have discovered and given notice to Seller prior
to closing of any material error, misstatement or omission in the
representations and warranties made by Seller which alone or in the
aggregate are materially adverse to Seller or to Buyer if the
transaction is completed, unless Seller has covered the same to Buyer's
reasonable satisfaction. The representations and warranties and
Exhibits or Schedules of Seller contained in this Agreement shall be
true on and as of the Closing Date with the same effect as though such
representations and warranties have been made on and as of such date,
except for any variations resulting from actions contemplated or
permitted by this Agreement, which variations shall not be materially
adverse, and each and all of the covenants to be performed by Seller on
or before the Closing Date pursuant to the terms shall have been duly
performed in all material respects. Seller shall deliver to Buyer a
certiifcate to that effect, dated the Closing Date, certifying to all
the foregoing, and executed by an authorized officer of Seller.
6.3 All contracts, leases and options, permits and rights employed by
Seller in the conduct of its business in the Market, to the extent
assignable by Seller, shall be assigned to Buyer at Closing, and Seller
will use reasonable business efforts to obtain and provide to Buyer at
Closing any third parties' consents required for such assignments.
6.4 If required by law, Seller shall have
18
<PAGE>
complied with all requirements imposed by such agencies of the
U.S. Government as may be necessary for the valid and legal
consummation of the transactions contemplated by this Agreement.
6.5 No court or governmental agency shall have issued an order,
binding on Buyer, enjoining the closing of the transactions
contemplated herein, and no proceeding shall be pending or threatened
that could result in such order.
6.6 [Intentionally Deleted]
6.7 Seller shall have delivered a certificate that there has been no
material adverse change in the exhibits prepared for this Agreement
between the date of the exhibit and the Closing Date.
6.8 There shall be no existing or threatened suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the best
of Seller's knowledge, threatened against or affecting the business,
assets or financial conditions of Seller within the Market which would
have any material adverse effect on Seller's performance of this
Agreement and the transactions contemplated, including that listed in
Exhibit 2.10 or elsewhere in this Agreement.
6.9 Seller shall deliver a certified copy of the Board of Directors
resolution approving this transaction and the execution of this
Agreement.
6.10 Seller shall deliver an Incumbency Certificate to Buyer as to
Seller.
6.11 Seller shall deliver to Buyer copies of all books, records and
documents relating to the Assets at the Closing. Seller shall retain
its minute books and Corporate records.
6.12 Seller shall have terminated or reassigned all of Seller's
employees in the Market.
7. Conditions to Obligations of Seller to Consummate the Transaction. The
obligations of Seller to be performed at the Closing shall be subject to
the satisfaction or the waiver in writing by Seller on or prior to the
Closing Date of the following conditions:
7.1 Seller shall have received an opinion of Buyer's counsel in the
form attached as Exhibit 7.1 and which shall be reasonably satisfactory
to Seller, dated the
19
<PAGE>
Closing Date, to the effect that:
7.1.1 Buyer is a corporation duly organized, existing and in good
standing under the laws of the State of Illinois and has the
corporate power to carry on its business as now being conducted.
7.1.2 The execution, delivery and performance of this Agreement by
Buyer has been duly authorized and approved; and this Agreement and
each instrument executed and delivered by Buyer have been duly
executed by and constitute valid and binding obligations of Buyer
enforceable according to their terms subject, however, to any state
or federal laws for debtor relief or general principles of equitable
relief.
7.2 Seller shall not have discovered any material error, misstatement
or omission in the representations and warranties made by Buyer which
alone or in the aggregate to Buyer or Seller if this transaction is
completed unless Buyer has covered the same to Seller's reasonable
satisfaction. The representations and warranties of Buyer contained in
this Agreement shall be true on and as of the Closing Date with the
same effect as though such representations and warranties had been
made on and as of such date, except for any variations therein
resulting from actions permitted by this Agreement, which variations
shall not be materially adverse to Buyer and each and all the
covenants to be performed by Buyer on or before the Closing Date shall
have been duly performed in all material respects. Buyer shall
deliver to Seller a certificate to that effect, dated the Closing
Date, and executed by an authorized officer of Buyer.
7.3 If required by law, Buyer shall have complied with all
requirements imposed by such agencies of the U.S. Government as may be
necessary for the valid and legal consummation of the transactions
contemplated hereby.
7.4 No court of competent jurisdiction or governmental agency shall
have issued an order, binding on Seller, enjoining the closing of the
transactions contemplated herein, and no proceeding shall be pending or
threatened
20
<PAGE>
that could result in such order.
7.5 There shall be no existing or threatened suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the
best of Buyer's knowledge, threatened against or affecting the
business, assets or financial conditions of Buyer within the Market
which would have any material adverse effect on Buyer's performance
of this Agreement and the transactions contemplated, including that
listed in Exhibit 2.10 or elsewhere in this Agreement.
7.6 Buyer shall deliver an Incumbency Certificate to Seller as to
Buyer.
8. Closing.
8.1 The transactions required under this Agreement to be
consummated at the Closing shall take place at such date ("Closing
Date"), and time as Seller and Buyer may agree, as close as possible
to the execution of this agreement, but in no event later than
September 30, 1996.
8.2 In addition to, and without limiting any other provision of
this Agreement, Seller agrees to do, perform and deliver at the date
of Closing the following:
8.2.1 The opinion of counsel of Seller as specified in
Section 6.1;
8.2.2 Execution by Seller of the requisite instruments of
conveyance, including, but not limited to, a Bill of Sale
and assignments;
8.2.3 Appropriate instruments of transfer to Buyer all
parcels of real estate or leaseholds covered by this
Agreement.
8.2.4 Evidence satisfactory to Buyer showing compliance
with provisions of any applicable requirement of the U.S.
Government or any state or local government.
8.2.5 Such other instruments as counsel for Buyer may
reasonably request.
8.2.6 A certificate that there has been no material adverse
change in the Exhibits prepared for this Agreement,
between the date of the Exhibit and the Closing Date.
21
<PAGE>
8.3 In addition to, and without limiting any other provisions of
this Agreement, Buyer agrees to do, perform and deliver at the Closing
the following:
8.3.1 The opinion of Buyer's counsel as specified in
Section 7.01;
8.3.2 The amount specified in Section 1.4 in the form of an
interbank transfer of immediately available funds;
8.3.3 Deposit of the amount specified in Section 1.4 in
escrow pursuant to the Escrow Agreement.
8.3.4 Evidence satisfactory to Seller showing compliance
with provisions of any applicable requirement of the U.S.
Government or any state or local government.
8.3.5 Such other instruments as counsel for Seller may
reasonably request.
9. Post-Closing Covenants.
9.1 Buyer and Seller agree to retain and permit each other access
to relevant pre-closing accounting records and corporate books of
Seller regarding the Assets for a period of six (6) years following
the Closing Date for any proper purpose. "Proper purpose" means the
preparation and review of any federal, state or local tax filing or
governmental report, filing, or application and defending or
enforcing rights against third parties or defending or enforcing
rights under this Agreement.
9.2 Seller and Buyer agree to cooperate in the preparation of any
governmental reports and to furnish reasonably requested information
needed for the preparation of governmental reports.
9.3 Consents. To the extent that the assignment of any contract,
license, lease or other agreement to be assigned to Buyer herein
shall require the consent of any person other than Seller, this
Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof. Of any such
consent is not obtained before the Closing Date, Seller agrees to
cooperate with Buyer thereafter in any reasonable arrangement (such
as subcontracting, sublicensing or subleasing) designed to provide
for Buyer
22
<PAGE>
the benefits under the applicable contract, license, lease or other
agreement, as the case may be including without limitation,
enforcement, at the cost to and for the benefit of Buyer, of any all
rights of Seller against the other parties thereto arising out of
the breach or cancellation thereof by such other parties or
otherwise.
9.4 Waiver of Bulk Transfer Laws. The Buyer and Seller each hereby
agrees to waive compliance by the other with the provisions of the
bulk transfer law of any jurisdiction.
10. Indemnity.
10.1 Seller agrees to indemnify Buyer against all claims, losses,
expenses, obligations, damages and liabilities (including, without
limitation, costs and expenses of litigation and reasonable
attorneys' fees) occurring or arising from the following: (1) any
breach of any representation or warranty or failure to do and
perform any covenant or agreement of Seller contained in this
Agreement; (2) any obligation, debt or liability of Seller of any
claim based upon any other occurrence arising from the operation of
the Assets anywhere, or from the operation of Seller's entire
business anywhere, prior to the Closing, the obligation for which is
not expressly assumed or agreed to be assumed by Buyer; or (3) any
claim of any finder or broker engaged by Seller or owed compensation
by Seller as a result of the transactions contemplated in this
Agreement.
10.2 Buyer hereby agrees to indemnify Seller against all claims,
losses, expenses, obligations, damages and liabilities (including,
without limitation, costs and expenses of litigation and reasonable
attorneys' fees) occurring or arising from the following: (1) any
breach of any representation or warranty or failure to do and
perform any covenant or agreement of Buyer contained in this
Agreement: (2) any obligation, debt or liability of Seller or any
claim based upon any other occurrence arising from the operation of
the Assets anywhere, or from the operation of Buyer's entire
business anywhere after the Closing, the obligation for which is not
expressly assumed or agreed to be assumed by Seller: or (3) any
claim of any finder or broker engaged by Buyer or owed compensation
by Buyer as a result of this transaction.
10.3 Within a reasonable time after receipt of notification of a
claim, the indemnified party shall notify the indemnifying party of
any claim or demand which the indemnified party has determined has
given rise
23
<PAGE>
to a right of indemnification. Such notice shall specify the
agreement, representation or warranty with respect to which the
claim is made, the facts giving rise to the claim, the alleged basis
for the claim, and the amount (to the extent then determinable) of
liability for which indemnity is asserted. Failure to give the
foregoing notice shall not be deemed a waiver of any claim or a bar
to the assertion of such claim unless and to the extent an
indemnifying party is able to establish damage or prejudice arising
from the delay, in which case such failure shall be a waiver and bar
only to the extent of such damage or prejudice. In the event any
action, suit or proceeding is brought against the indemnified party
with respect to which it may make a claim for indemnification, the
indemnifying party shall assume the defense of such action, suit or
proceeding and shall hire attorneys and other professionals
reasonably acceptable to the indemnified party. The defense shall
include all settlement negotiations and arbitration, trial, appeal
or other proceedings which indemnifying party's counsel shall deem
appropriate, all of which shall be at the discretion of and
conducted by the indemnifying party. The indemnified party shall
have the right to be represented by advisory counsel and
accountants, at its expense, and shall be kept informed of such
action, suit or proceeding at reasonable times at all stages thereof,
whether or not so represented. The parties agree to make available
to each other, their counsel and accountants all information and
documents reasonably available to them which relate to such
proceedings or litigation, and the parties further agree to render
to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such
action, suit or proceeding. Each party shall promptly notify the
other party of any audit or examination of its books and records
undertaken by federal or state tax authorities and the results of
any such audit or examination, if such audit or examination is
reasonably expected to impact the other party.
10.4 In the event that any party does not provide indemnification as
required by the terms of this Article 10, and an indemnified party
shall pay or suffer a loss due to an indemnified liability, the
party or parties failing to provide indemnification shall pay all
expenses suffered by the indemnified party including reasonable
legal expenses of compelling the indemnifying party or parties to
provide indemnification to so provide.
If any party brings a legal action to compel an indemnification
and loses, the losing party or parties shall pay all reasonable
costs of litigation and the
24
<PAGE>
legal expenses of the defendant in that action.
10.5 Limits on Indemnification. No claim for indemnification or damages
shall be made by Buyer hereunder unless the aggregate cumulative
amount of claims of Buyer (or any person or entity claiming through
Buyer) exceeds $7.500 and then only to the extent such claims exceeds
such amount. Notwithstanding anything in this Agreement to the
contrary, Seller shall not be liable to Buyer or any person claiming
through Buyer for an aggregate cumulative amount in excess of $250,000.
10.6 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof shall be settled by final and
binding arbitration in accordance with the then prevailing rules of
the American Arbitration Association, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. The
arbitration proceedings shall be held in Des Moines, Iowa, before a
single arbitrator.
11. Finders. Except with respect to Johnsen, Fretty & Co., which shall be
paid solely by Seller, Seller and Buyer each represent and warrant to the
other that they have not dealt with any finder or broker, they have not had
communications with any individual acting in such capacity with regard to
these transactions, and they are not in any way obligated to compensate any
such person.
12. Miscellaneous.
12.1 This Agreement may be amended or modified by, and only
by, a written document executed by all of the parties.
12.2 The titles of the sections of this Agreement are for
convenience of reference only and are not to be considered in
construing this Agreement.
12.3 This Agreement and any documents specifically referred to
constitute the entire understanding between the parties with respect
to the subject matter, superseding all negotiations, prior discussions
and preliminary agreements. This Agreement may be executed in any
number of counterparts.
12.4 The representations and warranties by the parties shall
survive the Closing for a period of two (2) years, all covenants and
agreements shall also survive the
25
<PAGE>
Closing for a period of two (2) years unless they expire by
their terms on or before Closing. Except as set forth in Section 2.13,
no claim for indemnification shall be allowed after such two year
period.
12.5 It is expressly understood and agreed that Buyer and
Seller or their respective officers or agents have not made any
warranty or agreement, express or implied, except as are
expressly provided, as to the tax consequences of this
transaction or the tax consequences of any transaction pursuant
to or arising out of this Agreement.
12.6 Other than to a subsidiary or affiliate of Buyer, this
Agreement may not be assigned without the prior written consent of the
other party. This Agreement will be binding upon and inure to the
benefit of the parties, their successors or permitted assigns, and the
parties agree for themselves, their successors or permitted assigns,
to execute any instrument and to perform any acts which may be
necessary or proper to carry out the purposes of this Agreement.
12.7 The Exhibits to this agreement shall be as of the date of
this Agreement unless otherwise stated, but Seller shall provide Buyer
with the certification provided for in Section 6.7.
12.8 All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if delivered in person or by electronic facsimile with receipt
acknowledged and copies sent by mail as provided below to the
respective persons named below or if mailed by Express, certified or
registered mail, postage prepaid, return receipt requested:
If to Seller:
Robert H. Lambert
Iowa Outdoor Displays, Inc.
P.O. Box 66
105 W. Montgomery
Creston, IA 50801
(Phone: 515-782-4176)
(Fax: 515-782-4177)
26
<PAGE>
With a copy to:
David A. Swerdloff, Esq.
Day, Berry & Howard
One Canterbury Green
Stamford, CT 06901
(Phone: 203-977-7301)
(Fax: 203-977-7334)
If to Buyer:
Brian T. Clingen
Paul G. Simon
Universal Outdoor, Inc.
321 North Clark Street, Suite 1010
Chicago, Illinois 60610
12.9 After the execution of this Agreement, Buyer may issue
such press releases and prepare and file documents containing such
information regarding this Agreement and the transactions contemplated
as Buyer deems appropriate.
12.10 This Agreement may be executed in one or more
counterparts, each of which need not contain the signatures of all
parties, and all of such counterparts taken together shall constitute
one Agreement. Signatures on facsimile copies of this
Agreement are acceptable.
IN WITNESS WHEREOF, all of the parties hereto have
executed and delivered this Agreement as of the day and year first
above written.
BUYER:
UNIVERSAL OUTDOOR, INC
By: /s/ Brian T. Clingen
---------------------------------
Its: Vice President
---------------------------------
SELLER:
MOUNTAIN MEDIA INC., d/b/a
IOWA OUTDOOR DISPLAYS
By: /s/ Robert H. Lambert
---------------------------------
Its President
---------------------------------
/s/ R.H. Lambert
---------------------------------
Robert H. Lambert
27
<PAGE>
Exhibit 2.6
STOCK PURCHASE AGREEMENT
dated as of November 22, 1996
by and among
Revere Holding Corp.;
Merrill Lynch Capital Appreciation Partnership
No. B-XXVII, L.P.;
ML Offshore LBO Partnership No. B-XXVII;
ML IBK Positions, Inc.;
MLCP Associates L.P. No. IV;
Merrill Lynch KECALP L.P. 1994;
The Other Stockholders
Listed on
the Signature Pages Hereto;
and
Universal Outdoor, Inc.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Certain Definitions
-------------------
Section 1 Definitions 1
ARTICLE II
Sale of Securities; Closing
---------------------------
Section 1 Purchase and Sale 7
Section 2 Time and Place of Closing 7
ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
Section 1 Incorporation; Authorization; etc. 8
Section 2 Capitalization; Structure 9
Section 3 Financial Statements 10
Section 4 Undisclosed Liabilities 11
Section 5 Absence of Certain Changes 11
Section 6 Properties 12
Section 7 Litigation; Orders 13
Section 8 Compliance with Laws; Permits 13
Section 9 Material Contracts 14
Section 10 Taxes.. 15
Section 11 ERISA........ 16
Section 12 Environmental Matters 18
Section 13 Transactions with Affiliates 20
Section 14 Brokers, Finders, etc. 20
Section 15 Patents, Trademarks and Copyrights 21
Section 16 Insurance 21
Section 17 Labor Agreements 21
-i-
<PAGE>
ARTICLE IV
Representations and Warranties of the Sellers
---------------------------------------------
Section 1 Authority and Related Matters . . . . . . . . . . . . . . . 22
Section 2 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . 24
ARTICLE V
Represenatatios and Warranties of Buyer
---------------------------------------
Section 1 Incorporation; Authorization; etc. 25
Section 2 Brokers, Finders, etc. 26
Section 3 Approvals, Other Authorizations,
Consents, Reports, etc. 26
Section 4 Acquisition of Securities for Investment. 26
Section 5 Litigation 26
Section 6 Financial Capability 27
ARTICLE VI
Covenants of the Company, Sellers and Buyer
-------------------------------------------
Section 1 Investigation of Business; Access to
Properties and Records 27
Section 2 Efforts; Obtaining Consents 28
Section 3 Further Assurances 29
Section 4 Conduct of Business 30
Section 5 Public Announcements 32
Section 6 Non-Solicitation of Employees 33
Section 7 Stockholders Agreement 33
Section 8 Management Notes 33
Section 9 Company Option Plan 33
Section 10 Repayment of Indebtedness 34
Section 11 Directors' and Officers'
Indemnification 34
Section 12 No Shop 35
Section 13 Schedule Delivery 35
Section 14 Working Capital 35
ARTICLE VII
Conditions of Buyer's Obligation to Close
-----------------------------------------
-ii-
<PAGE>
Section 1 Representations and Warranties;
Covenants 36
Section 2 Filings; Consents; Waiting Periods 37
Section 3 No Injunction 37
Section 4 Resignations of Directors 37
Section 5 Share Certificates 37
Section 6 Evidence of Indebtedness 37
Section 7 Working Capital 37
Section 8 Officer's Certificate 37
Section 9 Company Affidavit 38
ARTICLE VIII
Conditions to Sellers' Obligation to Close
------------------------------------------
Section 1 Representations and Warranties;
Covenants 38
Section 2 Filings; Consents; Waiting Periods 38
Section 3 No Injunction 38
Section 4 Purchase Price 39
ARTICLE IX
Termination
-----------
Section 1 Termination . . . . . . . . . . . . . . . . . . . 39
Section 2 Procedure and Effect of Termination . . . . . . . 39
ARTICLE X
Miscellaneous
-------------
Section 1 Survival Periods . . . . . . . . . . . . . . . . . 40
Section 2 Counterparts . . . . . . . . . . . . . . . . . . . 40
Section 3 Governing Law . . . . . . . . . . . . . . . . . . 40
Section 4 Entire Agreement . . . . . . . . . . . . . . . . . 40
Section 5 Expenses . . . . . . . . . . . . . . . . . . . . . 41
Section 6 Notices . . . . . . . . . . . . . . . . . . . . . 41
Section 7 Successors and Assigns . . . . . . . . . . . . . . 42
Section 8 Amendments and Waivers . . . . . . . . . . . . . . 43
Section 9 No Implied Representation . . . . . . . . . . . . 43
Section 10 Construction of Certain Provisions . . . . . . . . 43
Section 11 Headings; Definitions . . . . . . . . . . . . . . 44
Section 12 Interpretation . . . . . . . . . . . . . . . . . . 44
Section 13 Reasonable Consent Required. . . . . . . . . . . . 44
-iii-
<PAGE>
SCHEDULES
Schedule 2.1 Stock and Option Ownership of Revere Holding Corp.
Schedule 3.1 Conflicts; Company Filings
Schedule 3.2 Subsidiaries
Schedule 3.3 Financial Statements
Schedule 3.4 Liabilities
Schedule 3.5 Conduct of Business
Schedule 3.6 Encumbrances
Schedule 3.7 Litigation
Schedule 3.8 Permits
Schedule 3.9 Material Contracts
Schedule 3.10 Tax Matters
Schedule 3.11 Employee Matters
Schedule 3.12 Environmental Matters
Schedule 3.13 Transactions with Affiliates
Schedule 4.1 Seller Filings
Schedule 5.1 Conflicts
Schedule 5.3 Buyer Filings
Schedule 6.4(b) Conduct of Business
Schedule 7.2 Buyer's Filings; Consents
Schedule 8.2 Sellers' Filings; Consents
-iv-
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
November 22, 1996, is by and among Revere Holding Corp., a Delaware
corporation (the "COMPANY"); Merrill Lynch Capital Appreciation Partnership
No. B-XXVII, L.P., ML Offshore LBO Partnership No. B-XXVII, ML IBK Positions,
Inc., MLCP Associates L.P. No. IV, Merrill Lynch KECALP L.P. 1994
(collectively, the "ML INVESTORS"); Dale Lang, Robert Olney, James Gibson,
Ronald Jensen, Robert McLachlin, Daniel Schulte, Harrison McCawley, Charles
Marino, James Lloyd, Gary White, Raul Guzman, Harry Adams, Jr., Dennis
Weller, Todd Schwartzrock, Patrick Sherry, Michael Quade and Sandy Petersen
(collectively, the "MANAGEMENT INVESTORS" and, together with the ML
Investors, "SELLERS"); and Universal Outdoor, Inc., an Illinois corporation
("BUYER").
WHEREAS, Sellers, collectively, own all of the outstanding
Securities (as defined herein) of the Company and all of the outstanding
options to purchase Securities of the Company; and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire
to sell to Buyer, 100% of the outstanding Securities upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1 DEFINITIONS. As used in this Agreement the following terms
shall have the following respective meanings:
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with such first Person. A Person shall be deemed to
control another Person if such first Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
"AFFILIATED GROUP" shall have the meaning set forth in Section
3.10(a) hereof.
"AGREEMENT" shall have the meaning set forth in the Preamble hereof.
<PAGE>
"BALANCE SHEET" shall have the meaning set forth in Section 3.3
hereof.
"BUSINESS CONDITION" shall mean, with respect to any Person, the
business, properties, assets, results of operations or condition (financial
or otherwise) of such Person.
"BUYER" shall have the meaning set forth in the Preamble hereof.
"CLAIMS" shall have the meaning set forth in Section 3.12 hereof.
"CERCLA" shall have the meaning set forth in Section 3.12 hereof.
"CLOSING" shall mean the consummation of the transactions
contemplated by Section 2.1 of this Agreement.
"CLOSING DATE" shall mean the later of (i) the third business day
after expiration or termination of all waiting periods prescribed under the
HSR Act, and (ii) the date on which the conditions set forth in Articles VII
and VIII shall be satisfied or duly waived; or if Sellers and Buyer mutually
agree on a different date, the date upon which they have mutually agreed.
"CODE" shall have the meaning set forth in Section 3.10(a) hereof.
"COMMON STOCK" shall mean the Common Stock, par value $.01 per
share, of the Company.
"COMPANY" shall have the meaning set forth in the Preamble hereof.
"COMPANY PROPERTY" shall have the meaning set forth in Section 3.12
hereof.
"CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of
December 20, 1994, by and among the Company, Revere Acquisition Corp., the
several lenders from time to time party thereto and Canadian Imperial Bank of
Commerce, New York Agency, as Agent, as amended.
"DECEMBER 31 FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 3.3 hereof.
"ENCUMBRANCES" shall have the meaning set forth in
-2-
<PAGE>
Section 3.12 hereof.
"ENVIRONMENTAL CLAIMS" shall have the meaning set forth in Section
3.12 hereof.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 3.12
hereof.
"ERISA" shall have the meaning set forth in Section 3.11(a) hereof.
"ERISA AFFILIATE" shall have the meaning set forth in Section
3.11(a) hereof.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
3.3 hereof.
"GAAP" shall have the meaning set forth in Section 3.3 hereof.
"GOVERNMENT CONSENTS" shall have the meaning set forth in Section
6.2(a) hereof.
"GOVERNMENT FILINGS" shall have the meaning set forth in Section
6.2(a) hereof.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section
3.12 hereof.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"INDEBTEDNESS" shall mean (i) all indebtedness of such Person for
borrowed money, (ii) the face amount of all letters of credit issued for the
account of the Company or its Subsidiaries and, without duplication, all
drafts thereunder, (iii) all net obligations of the Company or its
Subsidiaries under interest rate swap agreements, any interest rate cap
agreement, any interest rate collar agreement or other similar agreement or
arrangement designed to protect the Company or its Subsidiaries against
fluctuations in interest rates, and (iv) any guarantee by the Company or its
Subsidiaries of any Indebtedness, leases, dividends or other material payment
obligations of any other Person (other than the Company and its Subsidiaries).
"LIABILITIES" shall have the meaning set forth in
-3-
<PAGE>
Section 3.4 hereof.
"MAJORITY SELLERS" shall mean Sellers holding in excess of 50% of
the outstanding Securities.
"MANAGEMENT INVESTORS" shall have the meaning set forth in the
Preamble hereof.
"MANAGEMENT NOTE" shall mean each Non-Recourse Secured Promissory
Note, dated December 20, 1994, executed by a Management Investor indicated on
Schedule 2.1 in favor of the Company, as amended.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the Business Condition of the Company and its Subsidiaries considered as one
enterprise or a material impairment or delay of the Stock Purchase.
"MATERIAL LEASES" shall have the meaning set forth in Section 3.9(a)
hereof.
"MERRILL LYNCH" shall have the meaning set forth in Section 3.14
hereof.
"ML INVESTORS" shall have the meaning set forth in the Preamble
hereof.
"MLCP" shall mean Merrill Lynch Capital Partners, Inc., a Delaware
corporation.
"MULTIEMPLOYER PENSION PLAN" shall have the meaning set forth in
Section 3.11(a) hereof.
"NATIONAL" shall have the meaning set forth in Section 3.10(a)
hereof.
"NON-VOTING COMMON STOCK" shall mean the Non-Voting Common Stock,
par value $.01 per share, of the Company.
"OBLIGATIONS" shall have the meaning given in the Credit Agreement.
"OPTION" shall mean any outstanding option to purchase shares of
Common Stock granted under the Option Plan.
"OPTION PLAN" shall mean the Management Stock Option Plan of the
Company, dated December 20, 1994, as amended.
"PBGC" shall have the meaning set forth in Section
-4-
<PAGE>
3.11(a) hereof.
"PERMITS" shall have the meaning set forth in Section 3.8 hereof.
"PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
or other form of business or legal entity.
"PLANS" shall have the meaning set forth in Section 3.11(a) hereof.
"REAL PROPERTIES" shall have the meaning set forth in Section 3.6
hereof.
"RELEASE" shall have the meaning set forth in Section 3.12 hereof.
"REVOLVING CREDIT COMMITMENTS" shall have the meaning given in the
Credit Agreement.
"SECURITIES" shall mean the outstanding shares of Common Stock and
the Non-voting Common Stock, collectively.
"SELLERS" shall have the meaning set forth in the Preamble hereof.
"SEPTEMBER 30 FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 3.3 hereof.
"SHARE PURCHASE PRICE" shall mean the amount obtained by dividing
(i) $130,000,000 (x) minus the sum of (A) the amount of principal (including
prepayment penalties, if any) outstanding immediately prior to the Closing
under the Credit Agreement, under the note to Dana Hogan dated March 27, 1996
in the original principal amount of $1,645,500, and under any additional
indebtedness for money borrowed outstanding as of the Closing incurred by the
Company and its Subsidiaries after the date hereof, (B) Accrued Interest (as
calculated in accordance with GAAP) outstanding as of the Closing in excess
of $331,000, (C) the amount of capitalized leases as of the Closing
calculated in accordance with GAAP, (D) bonus payments payable to the Chief
Executive Officer and the Chief Financial Officer of the Company in
connection with the consummation of the transactions contemplated hereby
pursuant to Section 4(b) of each of their employment agreements listed on
Schedule 3.11
-5-
<PAGE>
and the cash severance obligations payable to the Chief Executive Officer of
the Company pursuant to Section 7(b) of his employment agreement listed on
Schedule 3.11, in each case, that remain payable following the Closing, (E)
$4,000,000, (F) any unpaid cash amounts required as of the Closing to be paid
for the remainder of the term under the Revere Consulting Group Consulting
Agreement listed on Schedule 3.11 and (G) the fees of Merrill Lynch and
Wachtell, Lipton, Rosen & Katz payable in connection with the consummation of
the transactions contemplated hereby that remain payable following the
Closing, and (y) plus the sum of (1) the Company's and its Subsidiaries' cash
and cash equivalents (including such amounts held in escrow and bonds posted
relating to potential tax liabilities) as of the Closing and (2) any amounts
to be set-off pursuant to Section 6.8, by (ii) the total number of Securities
issued and outstanding as of the Closing (as set forth on the Updated
Capitalization Schedule after giving effect to any theretofore properly
exercised Options).
"STOCK PLEDGE AGREEMENT" shall mean each Stock Pledge Agreement,
dated December 20, 1994, by and between the Company and a Management Investor
who has executed a Management Note, as amended.
"STOCK PURCHASE" shall mean the acquisition by Buyer of all of the
outstanding Securities, and the payments contemplated by Section 6.9(a) in
respect of Options, as of the Closing Date, as contemplated by this Agreement.
"STOCKHOLDERS' AGREEMENT" shall mean the Stockholders' Agreement,
dated as of December 20, 1994, by and among the Company, the management
investors listed in Schedule 1 thereto and the stockholders listed in
Schedule 2 thereto, as amended.
"SUBSIDIARY" shall mean each subsidiary of the Company listed on
Schedule 3.2 hereto.
"TAX RETURN" shall have the meaning set forth in Section 3.10(c)
hereof.
"TAXES" shall have the meaning set forth in Section 3.10(b) hereof.
"TRANSACTION TAXES" shall have the meaning set forth in Section 10.5
hereof.
"UPDATED CAPITALIZATION SCHEDULE" shall have the
-6-
<PAGE>
meaning set forth in Section 6.13 hereof.
"WARN ACT" shall have the meaning set forth in Section 3.17(b)
hereof.
"WELFARE BENEFIT PLANS" shall have the meaning set forth in Section
3.11(a) hereof.
"WITHHOLDING TAX" shall have the meaning set forth in Section 6.9(b)
hereof.
"WORKING CAPITAL" shall have the meaning set forth in Section 6.14.
"WORKING CAPITAL SCHEDULE" shall have the meaning set forth in
Section 6.14.
ARTICLE II
SALE OF SECURITIES; CLOSING
Section 1 PURCHASE AND SALE. (a) On the basis of the
representations, warranties, covenants and agreements and subject to the
satisfaction or waiver of the conditions set forth herein, at the Closing the
Sellers shall sell, assign and transfer, and the Buyer shall purchase from
the Sellers, all of the Securities. In payment for the Securities,
simultaneously with the delivery by Sellers of certificates representing such
Securities, with appropriate stock powers attached, properly signed, Buyer
will pay to each Seller the Share Purchase Price per share of Common Stock
and per share of Non-voting Common Stock (as set forth on Schedule 2.1 hereto
and giving effect to the exercise of any Options after the date hereof and
prior to the Closing) held by each such Seller as of the Closing (net of any
amounts to be set-off pursuant to Section 6.8 hereof), in addition to making
the payment to the Sellers contemplated by Section 6.9(a) hereof. All
payments shall be made on the Closing Date by wire transfer of immediately
available funds to the accounts to be designated by each Seller in writing to
Buyer at least one day prior to the Closing Date. If the Closing does not
occur, all payments shall be repaid, all certificates shall be returned to
the Person possessing such certificates prior to the Closing, and the
transactions shall be deemed not to have occurred.
-7-
<PAGE>
Section 2 TIME AND PLACE OF CLOSING. The Closing shall take place
on the Closing Date at 10:00 A.M., New York City time, at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company hereby
represents and warrants to Buyer as follows:
Section 1 INCORPORATION; AUTHORIZATION; ETC. (a) Each of the
Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its Subsidiaries has all requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted, and is in
good standing and is duly qualified to transact business in each jurisdiction
in which the nature of property owned or leased by it or the conduct of its
business requires it to be so qualified, except where the failure to have
such power or authority, to be in good standing or to be duly qualified to
transact business, would not, individually or in the aggregate, have a
Material Adverse Effect. The copies of the certificate of incorporation and
by-laws (in each case, together with all amendments thereto) of the Company
and each of its Subsidiaries which have been previously delivered or made
available to Buyer are true, correct and complete.
(b) The Company has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement, the performance of the Company's obligations
hereunder and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of the Company and
no other corporate proceedings or actions on the part of the Company, its
Board of Directors or stockholders are necessary therefor. The execution,
delivery and performance
-8-
<PAGE>
of this Agreement and the consummation of the transactions contemplated
hereby will not (i) violate any provision of the certificate of incorporation
or by-laws of the Company or any of its Subsidiaries, (ii) except as
disclosed in Schedule 3.1 hereto, and except as provided in the Credit
Agreement, violate or conflict with any provision of, or be an event that is
(or with the passage of time will result in) a violation or conflict of, or
result in the termination or acceleration of or entitle any party to
terminate or accelerate (whether after the giving of notice or lapse of time
or both) any obligation under, or constitute a default (with or without
notice or lapse of time, or both), or result in (or with notice or the
passage of time would result in) the imposition of any lien upon or the
creation of a security interest in any of the Company's or any of its
Subsidiaries' assets or properties pursuant to, any mortgage, lien, lease,
agreement, instrument, order, arbitration award, judgment or decree to which
the Company or any of its Subsidiaries is a party or by which any of them or
their assets are bound, or (iii) except as described in Section 3.1(c) hereof
or as listed on Schedule 3.1 hereto, violate or conflict with any law, order,
judgment, injunction, decree, ordinance, regulation or ruling of any
governmental authority to which the Company or any of its Subsidiaries is
subject, except for those that, in the case of clauses (ii) and (iii) would
not, individually or in the aggregate, have a Material Adverse Effect. This
Agreement has been duly executed and delivered by the Company, and, assuming
the due execution hereof by Buyer, this Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except for (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws relating
to or affecting the rights of creditors generally and (ii) the effect of
equitable principles of general application.
(c) No registrations, filings, applications, notices, consents,
approvals, orders, qualifications, authorizations or waivers are required to
be made, filed, given or obtained by the Company or any of its Subsidiaries
(or, by reason of facts pertaining to the Company or its Subsidiaries, on the
part of Buyer) with, to or from any Persons (including governmental
authorities) in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby, except for (i)
those set forth on Schedule 3.1, (ii) filings under the HSR
-9-
<PAGE>
Act, (iii) those that become applicable solely as a result of the specific
regulatory status of Buyer or its Affiliates, or (iv) those that the failure
to make, file, give or obtain would not, individually or in the aggregate,
have a Material Adverse Effect.
Section 2 CAPITALIZATION; STRUCTURE. (a) The authorized capital
stock of the Company consists of (i) 5,000,000 shares of Common Stock of
which (v) 3,500,000 shares are issued and outstanding as of the date hereof,
(w) 150,000 shares are held in the Company's treasury, (x) 360,000 shares
have been reserved for issuance upon exercise of Options, (y) 331,964 shares
are subject to Options outstanding as of the date hereof and (z) 172,707.29
shares are issuable upon conversion of shares of Non-voting Common Stock; and
(ii) 173,459 shares of Non-voting Common Stock, of which (a) 172,707.29
shares are issued and outstanding as of the date hereof and (b) 750.86 shares
are held in the Company's treasury. All of the outstanding shares of Common
Stock and Non-voting Common Stock are validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive rights.
Schedule 3.2 contains a true and complete list of all entities in which more
than 50% of the voting stock or other voting equity interests are owned,
directly or indirectly, by the Company. Except as otherwise set forth on
Schedule 3.2 hereto, all of the outstanding shares of capital stock or other
equity interests of each of the Company's Subsidiaries have been validly
issued and are fully paid and nonassessable and have not been issued in
violation of any preemptive rights and are owned by the Company and/or one or
more of its Subsidiaries free and clear of all mortgages, pledges, liens,
claims, charges, security interests, options, hypothecations, easements,
restrictions (on transfer, voting or otherwise) or conditional sale or other
like restriction agreements, or other encumbrances ("ENCUMBRANCES"). Except
as set forth in this Section 3.2 and as set forth on Schedule 3.2 hereto,
there are no outstanding options, warrants, calls, commitments, securities,
agreements or other rights of any kind to acquire, or any securities which
upon conversion, exchange or exercise would require or give any Person the
right to require the issuance, sale or transfer of, or obligations to issue,
sell or transfer, shares of capital stock of any class of, or other debt
obligations of or equity interests in, the Company or of any of its
Subsidiaries which have been issued, granted or entered into by the Company
or any of its Subsidiaries. Except for the Subsidiaries or as set forth on
Schedule 3.2 hereto, none of the Company or any Subsidiary owns any capital
stock or eq-
-10-
<PAGE>
uity interest in any other entity.
(b) Schedule 2.1 sets forth the amount of each class of capital stock
of the Company held by each Seller and, with respect to the Options, the
exercise price and number of shares of capital stock of the Company issuable
upon exercise thereof. None of the Options listed on Schedule 2.1 have
expired as of the date hereof.
Section 3 FINANCIAL STATEMENTS. Set forth on Schedule 3.3 are true
and complete copies of (i) the audited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 1995, and the related
consolidated statements of operations, shareholders' equity and cash flows
for the year ended December 31, 1995 (including the notes thereto) (the
"DECEMBER 31 FINANCIAL STATEMENTS"), together with the Report of Independent
Accountants thereon; and (ii) the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of September 30, 1996 (the "BALANCE SHEET")
and the unaudited consolidated statement of operations of the Company and its
Subsidiaries for the nine months ended September 30, 1996 (collectively, with
the Balance Sheet, the "SEPTEMBER 30 FINANCIAL STATEMENTS" and together with
the December 31 Financial Statements, the "FINANCIAL STATEMENTS"). The
Financial Statements are in accordance, in all material respects, with the
books and records of the Company and its Subsidiaries as of the dates and for
the periods indicated, have been prepared, in all material respects, in
conformity with the practices consistently applied by the Company and its
Subsidiaries in the immediately preceding fiscal periods and present fairly
the consolidated financial position, cash flows and results of operations of
the Company and its Subsidiaries, for the periods or as of the dates set
forth therein, in each case in conformity with United States generally
accepted accounting principles consistently applied ("GAAP"), subject, in the
case of the unaudited financial statements, to normal year-end audit
adjustments, the effect of which, in the aggregate, will not be material.
Section 4 UNDISCLOSED LIABILITIES. Except as set forth on Schedule
3.4, neither the Company nor any of its Subsidiaries has any outstanding
claims, liabilities or indebtedness (whether accrued, absolute, contingent or
otherwise, and whether due or to become due) ("LIABILITIES"), except (i)
Liabilities disclosed in the September 30 Financial Statements; (ii) amounts
of indebtedness outstanding under
-11-
<PAGE>
the Credit Agreement; (iii) Liabilities incurred after September 30, 1996 in
the ordinary course of business; and (iv) Liabilities that, individually or
in the aggregate, would not have a Material Adverse Effect.
Section 5 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
September 30 Financial Statements or on Schedule 3.5, since December 31,
1995: (a) the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course of business and there has been no
material adverse change in the Business Condition of the Company and its
Subsidiaries considered as one enterprise except for (i) any change resulting
from general economic, financial or market conditions and (ii) any change
resulting from conditions or circumstances generally affecting the businesses
in which the Company and/or its Subsidiaries operate, (b) there has been no
physical damage, destruction or loss that would, after taking into account
any insurance recoveries payable in respect thereof, have a Material Adverse
Effect, and (c) neither the Company nor any of its Subsidiaries has taken any
action of the type described in paragraphs (i), (iii), (iv), (vi), (vii),
(ix), (x), (xi), (xii), (xiii), (xv) or (xvi) of Section 6.4(b) or agreed,
committed or resolved to take any such actions.
Section 6 PROPERTIES. With the exception of properties disposed of
in the ordinary course consistent with past practice since the date of the
Balance Sheet, except as set forth on Schedule 3.6, the Company or one of its
Subsidiaries has good and marketable title to, or holds by valid and existing
lease or license, free and clear of all Encumbrances, each piece of real and
personal property capitalized on or included in the Balance Sheet and each
piece of real and personal property acquired by the Company or any of its
Subsidiaries since the date of the Balance Sheet that would, had it been
acquired prior to such date, be capitalized on or included in the Balance
Sheet, except in any of the foregoing cases for such imperfections of title
or Encumbrances as (i) are reflected or reserved against in the Balance
Sheet, (ii) arise out of taxes or general or special assessments not in
default and payable without penalty or interest or the validity of which are
being contested in good faith by appropriate proceedings, or (iii) would not,
individually or in the aggregate, have a Material Adverse Effect. The
Company and the Subsidiaries own or otherwise have the right to use all
property (real, personal or intangible) now used in the operation of their
business or the use of which is required for the operation of their business
as operated at the date of this Agreement,
-12-
<PAGE>
except for such property, the failure of which to own or have the right to
use would not, individually or in the aggregate, have a Material Adverse
Effect. The properties subject to Material Leases and the material owned
real properties of the Company and its Subsidiaries are collectively referred
to herein as the "REAL PROPERTIES." None of the Company or any Subsidiary
has received any written notice advising it of any material general or
special assessment relating to any of the Real Properties. There are no
material structural defects in any of the buildings, structures or other
improvements constituting part of the Real Properties nor any material
defects in any system supporting such building, structure or improvement,
which in any such case would have a Material Adverse Effect. Except as
disclosed in Schedule 3.6, to the knowledge of the Company, no condemnation
or eminent domain proceeding against any Real Property is pending or
threatened. Except as set forth in Schedule 3.6, to the knowledge of the
Company, no other party to any Material Lease has stated in writing that it
intends to terminate its relationship thereunder.
Section 7 LITIGATION; ORDERS. Except as set forth on Schedule 3.7,
there are no lawsuits, actions, administrative, arbitration or other
proceedings or governmental investigations pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries, or to
the knowledge of the Company, the Sellers, that would, individually or in the
aggregate, have a Material Adverse Effect or which, as of the date hereof,
seeks to restrain or prohibit or otherwise challenge the consummation,
legality or validity of the transactions contemplated hereby. Except as set
forth on Schedule 3.7, there are no judgments or outstanding orders,
injunctions, decrees, stipulations or awards (whether rendered by a court or
administrative agency, or by arbitration) against the Company or any of its
Subsidiaries or any of their respective properties, assets or businesses, or
to the knowledge of the Company, the Sellers, that would, individually or in
the aggregate, have a Material Adverse Effect.
Section 8 COMPLIANCE WITH LAWS; PERMITS. Each of the Company and its
Subsidiaries is in compliance with, and, to the knowledge of the Company, is
not under governmental investigation with respect to and has not been
threatened in writing to be charged with or given notice in writing that
-13-
<PAGE>
the continued operation of any assets does or will violate, applicable laws,
rulings, injunctions, ordinances, regulations, orders, judgments and decrees
of any federal, state or local governmental authority, except for such
failures to comply or violations that would not, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth on Schedule
3.8, (i) the Company and its Subsidiaries hold, own and possess all
governmental, regulatory and other filings, licenses, permits, approvals,
registrations, consents, franchises and concessions (collectively, "PERMITS")
as are necessary for the ownership or occupancy of the property and assets
and conduct of the business of the Company and its Subsidiaries as currently
conducted, except for such Permits which the failure to hold, own and possess
would not, individually or in the aggregate, have a Material Adverse Effect;
(ii) the Permits are valid, in full force and effect, except for any failures
to be valid or in full force and effect which would not, individually or in
the aggregate, have a Material Adverse Effect; (iii) there are no proceedings
pending or, to the knowledge of the Company, complaints or petitions by
others, or threatened proceedings, challenging or revoking such Permits, that
would, individually or in the aggregate, have a Material Adverse Effect; and
(iv) the Company and its Subsidiaries are in compliance with their respective
obligations under such Permits, except for such non-compliance which,
individually or in the aggregate, would not have a Material Adverse Effect.
Section 9 MATERIAL CONTRACTS. (a) Except as set forth on Schedule
3.9 hereto, none of the Company or any of its Subsidiaries is a party to any
oral or written contract, commitment or agreement (i) that, other than with
respect to Material Leases, obligates the Company or any Subsidiary to pay or
entitles the Company or any Subsidiary to receive an amount, from and after
the date hereof, of $250,000 or more annually; (ii) restricting the Company's
or any Subsidiary's ability to conduct the outdoor or mall advertising
business generally in any geographic location (including applicable
non-competes or similar agreements); (iii) that provides for the lease,
sublease, license or other similar rights of possession or occupancy of real
property (as tenant, occupier or possessor) used primarily for billboard
sites, pursuant to which the current net annual rent payable by the Company
or any Subsidiary currently exceeds $50,000 (the "MATERIAL LEASES"); or (iv)
evidences indebtedness of the Company or any Subsidiary for money borrowed
(whether incurred, assumed, guaranteed or secured by any asset) and, with
respect to all such contracts, commitments and agreements, except as set
forth on Schedule 3.9 hereto, neither
-14-
<PAGE>
the Company nor any of its Subsidiaries, nor, to the knowledge of the Company,
any other party to any such contract, commitments and agreements is, in breach
thereof or default thereunder and there does not exist under any provision
thereof, to the knowledge of the Company, any event that, with the giving of
notice or the lapse of time or both, would constitute such a breach or default,
except for such breaches, defaults and events as to which requisite waivers or
consents have been obtained or which would not, individually or in the
aggregate, have a Material Adverse Effect. Complete and correct copies of each
contract, commitment and agreement set forth on Schedule 3.9 have been furnished
or made available to Buyer, and, to the knowledge of the Company, all of such
contracts, commitments and agreements are valid, binding and in full force and
effect except for such failures to be so valid, binding and in full force and
effect which, individually or in the aggregate, would not a Material Adverse
Effect.
(b) Pursuant to the terms of the Credit Agreement and the Revolving
Credit Commitments or other applicable governing documents, the Obligations and
any other Indebtedness of the Company and its Subsidiaries thereunder may be
pre-paid by Buyer on the Closing Date pursuant to Section 6.10, subject to the
notice requirements contemplated thereby.
Section 10 TAXES. (a) The Company and the Subsidiaries have duly
filed with the appropriate taxing authorities all Tax Returns required to be
filed by or with respect to the Company, the Subsidiaries or any member of an
affiliated group of corporations within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended (the "CODE"), filing consolidated
returns which include, or have included, the Company and its Subsidiaries (an
"AFFILIATED GROUP") other than those Tax Returns which the failure to file would
not have a Material Adverse Effect. Such Tax Returns are true, correct and
complete in all material respects. Except as set forth on Schedule 3.10, the
Company and the Subsidiaries (i) have paid in full and on time, or have made
adequate provision on the Balance Sheet for, all Taxes of the Company, the
Subsidiaries or any member of an Affiliated Group shown to be due on such Tax
Returns, (ii) have made adequate provision on the Balance Sheet for unpaid Taxes
as required by GAAP, and (iii) have not given or requested with respect to the
Company, its Subsidiaries or any member of an Affiliated Group any waivers of
statutes of
-15-
<PAGE>
limitations in connection with any Taxes or Tax Returns. There are no
material liens for Taxes upon the assets of the Company or of the
Subsidiaries except for statutory liens for current taxes not yet due and
liens which, individually or in the aggregate, would not have a Material
Adverse Effect. Except as set forth on Schedule 3.10, neither the Company
nor any of the Subsidiaries has any unpaid deficiency or assessment from any
taxing authority with respect to Taxes or Tax Returns of the Company or any
of the Subsidiaries or any member of an Affiliated Group. Neither the
Company nor the Subsidiaries (i) except for the agreements, plan and
arrangements listed on Schedule 3.11, has made payments, is obligated to make
any payments, or is a party to any agreement that under certain circumstances
could obligate them to make any payments that will not be deductible under
Code Section 280G, (ii) (A) has been a member of any Affiliated Group other
than the Affiliated Group of which Company is the common parent corporation
and the Affiliated Group of which Revere National Corporation ("NATIONAL")
was the common parent corporation; or (B) is subject to liability for Taxes
of any other person (other than Taxes of the Company or the Subsidiaries),
including, without limitation, liability arising from the application of
Treasury Regulation Section 1.1502-6 (or any similar provision of Tax law),
(iii) is a party to any Tax allocation or sharing agreement, (iv) has filed a
consent under Code Section 341(f) concerning collapsible corporations, or
(v) except as set forth in Schedule 3.10, has any deferred intercompany
income or gains or excess loss accounts within the meaning of Treasury
Regulation Section 1.1502 ET SEQ. (or any similar provisions of state law).
Since the acquisition by an indirect subsidiary of the Company of National,
neither the Company, nor any of the Subsidiaries has undergone or will
undergo an "ownership change" within the meaning of Code Section 382(g)(1)
(excluding any ownership change which occurs as a result of the acquisition
of all of the capital stock of the Company by Buyer under this Agreement).
Except as set forth on Schedule 3.10, neither the Company nor any of its
Subsidiaries has engaged in any transaction that was intended to qualify
under Code Section 1031(a). Except as set forth on Schedule 3.10 (which
shall set forth the nature of the proceeding, the type of return, a detailed
explanation of each adverse adjustment or deficiency proposed, asserted or
assessed and the amount thereof, and the taxable year in question), no
adverse adjustment or deficiency for any Taxes has been proposed, asserted or
assessed against the Company or any of its Subsidiaries (or any member of the
Affiliated Group for which the Company or its Subsidiaries could be liable).
-16-
<PAGE>
(b) For the purposes of this Agreement, "TAXES" shall mean all taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross income, sales, use, franchise, profits,
service, gross receipts, capital, ad valorem, value added, transfer, inventory,
capital stock, license, social security, unemployment, severance, stamp,
recording, occupation, withholding, payroll, employment, excise, or property
taxes and estimated taxes, water, rent and sewer service charge custom duties,
fees, assessments or charges of any kind whatsoever together with interest and
any penalties, fines, additions to tax or additional amounts with respect
thereto required to be paid prior to the Closing Date with respect to all
taxable periods or portions of taxable periods ending on or before the Closing
Date.
(c) For purposes of this Agreement, "TAX RETURN" shall mean any
return, declaration, report, estimate, schedule, information return or other
document (including any related or supporting information) with respect to
Taxes.
Section 11 ERISA. (a) Neither the Company nor any of its
Subsidiaries nor any trade or business, whether or not incorporated (an "ERISA
AFFILIATE") that together with the Company would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA maintains or contributes to any
"employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) covering
employees or former employees of the Company or its Subsidiaries ("PLANS"),
except for the Plans listed on Schedule 3.11. Neither the Company nor any of
the Subsidiaries has any formal plan or commitment to create any additional Plan
or modify or change any existing Plan that would affect any current or former
employee of the Company or any of its Subsidiaries. Except as set forth on
Schedule 3.11, to the knowledge of the Company and the Sellers: (i) with
respect to each Plan that is neither a "multiemployer plan," as such term is
defined in Section 3(37) of ERISA (a "MULTIEMPLOYER PENSION PLAN") nor an
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA) (a
"WELFARE BENEFIT PLAN") that is identified as a multiemployer plan on Schedule
3.11, (A) such Plans are in material compliance with all applicable laws,
including the applicable provisions of ERISA and the Code, (B) neither the
Company nor any of its Subsidiaries nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty
-17-
<PAGE>
Corporation ("PBGC") nor any other liability under Title IV of ERISA with
respect to such Plans other than premiums due to the PBGC (which premiums
have been paid when due) and (C) such Plans are qualified under Section
401(a) of the Code; and (ii) with respect to any Multiemployer Pension Plan:
(A) neither the Company, any of its Subsidiaries nor any ERISA Affiliate has
made or suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in Sections 4203 and 4205 of ERISA, (B) no
event has occurred that presents a material risk of a partial withdrawal, (C)
neither the Company, any of its Subsidiaries nor any ERISA Affiliate has any
contingent liability under Section 4204 of ERISA, and no circumstances exist
that present a material risk that any such plan will go into reorganization,
and (D) the aggregate withdrawal liability of the Company, its Subsidiaries
and the ERISA Affiliates, computed as if a complete withdrawal by the
Company, its Subsidiaries and the ERISA Affiliates had occurred under each
such Plan on the date hereof, would not have a Material Adverse Effect. No
Plan that is not a Multiemployer Pension Plan is subject to Title IV of ERISA
and neither the Company, any of its Subsidiaries nor any ERISA Affiliate has
maintained such a Plan during the past six years. Schedule 3.11 also lists
each Welfare Benefit Plan maintained by the Company or its Subsidiaries
covering employees of the Company or its Subsidiaries, and as to such
employee welfare benefit plans that are not identified as multiemployer plans
on Schedule 3.11, either the Company or one of the Subsidiaries has filed all
reports required to be filed by it with the Internal Revenue Service or with
the Department of Labor or the PBGC under applicable provisions of ERISA and
the Code. With respect to each of the Plans that is neither a Multiemployer
Pension Plan nor a Welfare Benefit Plan identified on Schedule 3.11 as a
multiemployer plan, the Company has heretofore delivered to Buyer true and
complete copies of each of the following documents: (i) a copy of the Plan
(including all amendments thereto); (ii) a copy of the most recent annual
report, if required under ERISA; (iii) a copy of the most recent Summary Plan
Description; and (iv) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan that is intended to be
qualified under Section 401 of the Code.
(b) Neither the Company nor any of its Subsidiaries has any liability
for life, health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA.
-18-
<PAGE>
(c) Schedule 3.11 lists each: (i) agreement with any director,
executive officer or other key employee of the Company or any of its
Subsidiaries (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the business
of the nature of any of the transactions contemplated by this Agreement, (B)
providing any remaining term of employment in excess of one year or (C)
providing severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee and (ii)
agreement, plan or arrangement under which any person may receive payments from
the Company or any of its Subsidiaries that may be subject to the tax imposed by
Section 4999 of the Code or included in the determination of such person's
"parachute payment" under Section 280G of the Code.
(d) Except as set forth on Schedule 3.11, there are no pending,
anticipated or, to the knowledge of the Sellers, and the Company, threatened
claims by or on behalf of any Plan, by any employee or beneficiary covered under
any such Plan, or otherwise involving any such Plan (other than routine claims
for benefits).
Section 12 ENVIRONMENTAL MATTERS. Except as disclosed in Schedule
3.12 and except as would not have a Material Adverse Effect, (a) there have been
no Releases of Hazardous Materials at any time on any Company Property, or, to
the knowledge of the Company, any property adjoining or adjacent to any Company
Property, (b) the Company and each of its Subsidiaries are in compliance in all
respects with all Environmental Laws and the requirements of any permits issued
under such Environmental Laws with respect to any Company Property, (c) there
are no pending or, to the knowledge of the Company, threatened Environmental
Claims against the Company or any of its Subsidiaries or any Company Property,
(d) there are not any underground storage tanks located on any Company Property,
except in material compliance with Environmental Laws, (e) neither the Company
nor any of its Subsidiaries has caused or permitted its operations to be used to
generate, manufacture, transport, treat, store, handle, dispose or process
Hazardous Materials or other dangerous or toxic substances, or solid wastes
except in compliance with Environmental Laws, and (f) neither the Company nor
any Subsidiary has received any written notice or request for information from
any governmental authority or other Person alleging that it is a
-19-
<PAGE>
potentially responsible party at any Superfund site or analogous site subject
to listing, investigation or remediation under another Environmental Law.
The Company has made available to Buyer any significant environmental study,
audit, or test relating to significant Company Properties prepared, to the
knowledge of the Chief Executive Officer and the Chief Financial Officer of
the Company, by the Company since December 22, 1994. The Company and its
Subsidiaries have complied (i) with their obligations under the Remediation
Agreement, dated December 22, 1994, between Revere National Corporation of
Pennsylvania and the New Jersey Department of Environmental Protection, as
amended by the Amendment to Remediation Agreement, dated April 13, 1995, and
(ii) with the requirements of the New Jersey Industrial Site Recovery Act
with respect to the matters set forth in the third paragraph of Item (a) on
Schedule 3.12, except as would not, individually or in the aggregate, have a
Material Adverse Effect.
For purposes of this Agreement, the following terms shall have the
following meanings: (A) "COMPANY PROPERTY" means any real property and
improvements owned, operated or leased by the Company or any of its
Subsidiaries; (B) "HAZARDOUS MATERIALS" means (i) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
that contain dielectric fluid containing levels of polychlorinated biphenyls,
and radon gas and (ii) any chemicals, materials or substances defined as
"solid wastes," "hazardous wastes," "hazardous substances," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," or words of similar import, under any
applicable Environmental Law; (C) "ENVIRONMENTAL LAW" means any federal,
state or local statute, law, rule, regulation, ordinance or code or judicial
or administrative order or consent decree, relating to the environment,
health, safety or Hazardous Materials, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601 ET SEQ. ("CERCLA"); the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 ET SEQ.;
the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251
ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ.;
the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water
Act, 42 U.S.C. Section 3808 ET SEQ.; Occupational Safety and Health Act, 29
U.S.C. Section 651; (D) "ENVIRONMENTAL CLAIMS" means any and all
administrative, regulatory or judicial actions, suits, claims, liens,
-20-
<PAGE>
written notices of noncompliance or violation, notice letters pursuant to
Section 104(e) of CERCLA or similar state laws, or proceedings relating to
any Environmental Law (for purposes of this subclause (D), "CLAIMS") or any
permit issued under any such Environmental Law, including, without
limitation, (i) any and all Claims by governmental or regulatory authorities
for enforcement, cleanup, removal, response or remedial actions or damages
pursuant to any applicable Environmental Law and (ii) any and all Claims by
any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health,
safety or the environment; and (E) "RELEASE" means disposing, discharging,
injecting, spilling, leaking, leaching, dumping, emitting, escaping,
emptying, seeping, placing and the like, into or upon any land or water or
air, or otherwise entering into the environment.
Section 13 TRANSACTIONS WITH AFFILIATES. Except with respect to
those agreements and arrangements listed in Schedule 3.13 or Schedule 3.11,
transactions between the Company and its Subsidiaries, and pursuant to
at-will employment arrangements, neither the Company nor any of its
Subsidiaries is a party to any material transaction or series of material
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Company or its Subsidiaries or with any Seller.
Section 14 BROKERS, FINDERS, ETC. Except for the services of
Merrill Lynch & Co. ("MERRILL LYNCH"), the Company has not employed, and is
not subject to any valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this
Agreement or the sale process undergone by the Company and its financial
advisors leading to this transaction who might be entitled to a fee or
commission in connection with such transactions. The Company is solely
responsible for any payment, fee or commission that may be due to Merrill
Lynch in connection with such transactions.
Section 15 PATENTS, TRADEMARKS AND COPYRIGHTS. The Company and the
Subsidiaries possess all patents, patent licenses, trade names, trademarks,
service marks, brand marks, brand names, copyrights, know-how, formulas and
other proprietary and trade rights necessary for the conduct of their respective
businesses as now conducted, except for
-21-
<PAGE>
those the absence of which would not, individually or in the aggregate,
result in a Material Adverse Effect. The use by the Company or any
Subsidiary of such rights in the conduct of its respective business as now
conducted does not violate the rights of any third party, except for such
violations as would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 16 INSURANCE. There is no claim pending for an amount in
excess of $100,000 nor has there been a claim made for an amount in excess of
$100,000 since January 1, 1995 under any policy of insurance or fidelity bond of
any kind or nature covering the Company or any Subsidiary as to which coverage
has been questioned, denied or disputed (in the case of pending claims), or
denied (in the case of past claims not currently pending), by the underwriters
of such policies or bonds or, in the case of pending claims, in respect of which
such underwriters have reserved their rights, and all such policies are in full
force and effect, except as would not have a Material Adverse Effect. The
Company and the Subsidiaries have complied with the terms and conditions of all
such policies and bonds, and such policies will remain in effect immediately
following Closing, in either case, except as would not have a Material Adverse
Effect.
Section 17 LABOR AGREEMENTS. (a) Except to the extent set forth in
Schedule 3.11, (i) there is no labor strike, material dispute, slowdown,
stoppage or lockout actually pending, or, to the knowledge of the Company,
threatened against or affecting the business of the Company or any of its
Subsidiaries and, since January 1, 1995, there has not been any such action;
(ii) to the knowledge of the Company, no union claims to represent the employees
of the Company or any of its Subsidiaries; (iii) none of the employees of the
Company or any of its Subsidiaries is represented by any labor organization and
the Company has no knowledge of any union organizing activities among the
employees of the Company or any of its Subsidiaries currently in progress or
occurring; (iv) there is no grievance arising out of any collective bargaining
agreement or other labor grievance procedure which, if adversely determined,
would have a Material Adverse Effect; and (v) to the knowledge of the Company,
neither the Company nor any of its Subsidiaries has received written notice of
the intent of any federal, state or local governmental agency responsible for
the enforcement of labor or employment laws or regulations to conduct an
investigation with respect to or relating to the Company or any of its
Subsidiaries.
-22-
<PAGE>
(b) Since January 1, 1995, neither the Company nor any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the Worker
Adjustment and Restraining Notification Act (the "WARN ACT")) affecting any site
of employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of its Subsidiaries; or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of the Company or any of its Subsidiaries; nor has the Company or any
of its Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law or regulation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SELLERS
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, each Seller severally (as to
himself, herself or itself and not as to any other Seller) represents and
warrants, as of the date hereof and as of the Closing Date, to Buyer as follows:
Section 1 AUTHORITY AND RELATED MATTERS. (a) Such Seller has all
requisite power to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
With respect to any Seller that is a corporation or a partnership, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including without limitation the Stock
Purchase, by such Seller have been duly and validly authorized by the Board
of Directors or other governing body of such Seller and no other corporate
or similar proceedings on the part of such Seller, and, as the case may be,
its Board of Directors or other governing body or its stockholders or
partners are necessary therefor. This Agreement has been duly executed and
delivered by such Seller, and, assuming the due execution hereof by each of
the Company, Buyer and the other Sellers, this Agreement constitutes the
legal, valid and binding obligation of such Seller, enforceable against such
Seller in accordance with its terms, except for (i) the
-23-
<PAGE>
effect of any applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws relating to or affecting the rights of creditors generally
and (ii) the effect of equitable principles of general application. With
respect to any Seller that is a corporation or a partnership, such Seller, to
the extent applicable, is duly organized, validly existing and in good
standing under the laws of its state of organization.
(b) Such Seller is the record and beneficial owner of the aggregate
number of shares of Common Stock or Non-voting Common Stock, as the case may be,
listed opposite its respective name on Schedule 2.1 hereto. In addition, if
such Seller is designated on Schedule 2.1 hereto as holding Options, such Seller
will, at the Closing, also be the record and beneficial owner of that number of
shares of Common Stock equal to that number of Options listed opposite such
Seller's name on such Schedule, other than with respect to any Options such
Seller does not exercise and which are terminated pursuant to Section 6.9
hereof. Except for this Agreement and the transactions contemplated hereby, and
except as disclosed on Schedules 3.2 and 2.1, there are no agreements,
arrangements, warrants, options, puts, calls, rights or other commitments or
understandings of any character to which such Seller is a party or by which any
of his, her or its respective assets is bound and relating to the issuance,
sale, purchase, redemption, conversion, exchange, registration, voting or
transfer of any shares of Common Stock, Non-voting Common Stock or other capital
stock of the Company or other securities convertible into capital stock of the
Company. Upon consummation of the Stock Purchase at the Closing, as
contemplated by this Agreement, good title to the Securities to be sold by such
Seller will be delivered to Buyer, free and clear of any Encumbrances.
(c) Except as described in Section 4.1(d) hereof, neither the
execution and delivery by such Seller of this Agreement nor the consummation by
such Seller of the transactions contemplated hereby will violate, conflict with,
result in (or with the passage of time would result in) a breach of the terms,
conditions or provisions of, or constitute a default (with or without notice or
lapse of time, or both), an event of default or an event creating rights of
acceleration, amendment, termination or cancellation or a loss of rights under,
or result in (or with the passage of time or notice would result in) the
creation or imposition of any Encumbrance upon any of such Seller's Securities
or any of the assets or properties of such Seller under any certificate of
incorporation, by-laws, trust
-24-
<PAGE>
agreement, partnership agreement, the Stockholders Agreement or certificate
of partnership or other constitutive documents of such Seller, any note,
instrument, agreement, mortgage, lease, license, franchise, Permit or
judgment, order, award or decree to which such Seller is a party (other than
the Management Notes and Stock Pledge Agreements) or by which such Seller or
any Securities of such Seller are bound, or any statute, other law or
regulatory provision affecting such Seller or any Securities of such Seller.
(d) No registrations, filings, applications, notices, consents,
approvals, orders, qualifications, authorizations or waivers are required to
be made, filed, given or obtained by such Seller (or, by reason of facts
pertaining to such Seller, on the part of Buyer) with, to or from any Persons
(including governmental authorities) in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) those set forth on Schedule 4.1, (ii)
filings under the HSR Act, (iii) those that become applicable solely as a
result of the specific regulatory status of Buyer or its Affiliates, or (iv)
those that the failure to make, file, give or obtain would not, individually
or in the aggregate, impair or delay the consummation of the Stock Purchase
by such Seller.
Section 2 BROKERS, FINDERS, ETC. Except as set forth in Section
3.14, such Seller has not employed, and is not subject to any valid claim of,
any broker, finder, consultant or other intermediary in connection with the
transactions contemplated by this Agreement or the sale process undergone by
such Seller and its financial advisors leading to this transaction who might be
entitled to a fee or commission in connection with such transactions. The
Company is solely responsible for any payment, fee or commission that may be due
to Merrill Lynch in connection with the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to the Company and each of the Sellers to enter into
this Agreement and to consummate the transactions contemplated hereby, Buyer
hereby represents
-25-
<PAGE>
and warrants to Sellers as follows:
Section 1 INCORPORATION; AUTHORIZATION; ETC. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois. Buyer has all requisite corporate power to
execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement, the performance of Buyer's obligations hereunder
and the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Buyer and no other
corporate proceedings or actions on the part of Buyer, its Board of Directors
or stockholders are necessary therefor. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not (i) violate any provision of the certificate of
incorporation or by-laws or similar organizational instrument of Buyer, (ii)
except as disclosed in Schedule 5.1 hereto, violate any provision of, or be
an event that is (or with the passage of time will result in) a violation of,
or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or lapse of time or both) any obligation under, or
result in the imposition of any lien upon or the creation of a security
interest in any of Buyer's assets or properties pursuant to, any mortgage,
lien, lease, agreement, instrument, order, arbitration award, judgment or
decree to which Buyer is a party or by which any of its assets are bound, or
(iii) violate or conflict with any other law, order, judgment or ruling of
any governmental authority to which Buyer is subject, that, in the case of
clauses (ii) and (iii), would, individually or in the aggregate, have a
material adverse effect on the Business Condition of Buyer, or would impair
or delay consummation of the Stock Purchase. This Agreement has been duly
executed and delivered by Buyer, and, assuming the due execution hereof by
the Company and each of the Sellers, this Agreement constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except for (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws relating
to or affecting the rights of creditors generally and (ii) the effect of
equitable principles of general application.
Section 2 BROKERS, FINDERS, ETC. Buyer has not employed, and is not
subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
who
-26-
<PAGE>
might be entitled to a fee or commission from any Seller or the Company in
connection with such transactions.
Section 3 APPROVALS, OTHER AUTHORIZATIONS, CONSENTS, REPORTS, ETC.
No registrations, filings, applications, notices, consents, approvals,
orders, qualifications or waivers are required to be made, filed, given or
obtained by Buyer (or, by reason of facts pertaining to the Buyer, on the
part of the Company or any Seller) with, to or from any Persons (including
governmental authorities) in connection with the consummation of the Stock
Purchase, except for (i) those set forth on Schedule 5.3, (ii) filings under
the HSR Act, or (iii) those that the failure to make, file, give or obtain
would not, individually or in the aggregate, either have a material adverse
effect on the Business Condition of Buyer or impair or delay consummation of
the Stock Purchase by Buyer.
Section 4 ACQUISITION OF SECURITIES FOR INVESTMENT. Buyer has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of its purchase of the Securities. Buyer
confirms that the Company and the Sellers have made available to Buyer the
opportunity to ask questions of the officers and management employees of the
Company and to acquire additional information about the business and
financial condition of the Company and its Subsidiaries. Buyer is acquiring
the Securities for investment and not with a view toward or for sale in
connection with any distribution thereof, or with any present intention of
distributing or selling the Securities. Buyer agrees that the Securities may
not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act of 1933,
as amended, except pursuant to an exemption from such registration available
under such Act.
Section 5 LITIGATION. There are no pending or, to the knowledge of
Buyer, threatened actions, suits or proceedings, either at law or in equity,
which would have a material adverse impact on Buyer's Business Condition or
otherwise impair or delay consummation of the Stock Purchase.
Section 6 FINANCIAL CAPABILITY. Buyer will have on the Closing
Date and immediately prior to the Closing, funds sufficient to consummate the
transactions contemplated hereby.
-27-
<PAGE>
ARTICLE VI
COVENANTS OF THE COMPANY, SELLERS AND BUYER
Section 1 INVESTIGATION OF BUSINESS; ACCESS TO PROPERTIES AND
RECORDS. (a) After the date hereof, the Company and its Subsidiaries shall
afford to representatives of Buyer reasonable access to their respective
offices, properties, officers, employees, accountants, auditors and other
representatives, books and records during normal business hours in order that
Buyer may continue to have the opportunity to investigate the affairs of the
Company and its Subsidiaries, including access to the properties, plants and
facilities of the Company and its Subsidiaries to conduct environmental
studies to the extent reasonably requested by Buyer; PROVIDED, HOWEVER, that
such investigation shall not unreasonably disrupt the personnel and
operations of the Company or any of its Subsidiaries. If, at or prior to the
Closing, any party hereto discovers any fact or circumstance that would
constitute a breach of any representation, warranty, covenant or agreement
contained in this Agreement or any circumstance or condition that upon
Closing would constitute such a breach, the parties hereto covenant that they
will promptly so inform the other parties hereto in writing.
(b) Any information provided to Buyer or its representatives
pursuant to this Agreement shall be held by Buyer and its representatives in
accordance with, and shall be subject to the terms of, the Confidentiality
Agreement dated September 16, 1996 by and between the Company and Universal
Outdoor Holdings, Inc., which is hereby incorporated in this Agreement as
though fully set forth herein. Following the Closing each Seller shall hold
in confidence all knowledge and information of a secret or confidential
nature with respect to the business of the Company and the Subsidiaries and
shall not disclose or publish the same without the consent of the Buyer,
except to the extent that such information shall have become public knowledge
other than by breach of the Agreement by such Seller or except as otherwise
required by law.
(c) Buyer agrees to (i) hold all of the books and records of the
Company and its Subsidiaries existing on the Closing Date and not to destroy
or dispose of any thereof for a period of six (6) years from the Closing Date
or such longer time as may be required by law, and thereafter, if it
-28-
<PAGE>
desires to destroy or dispose of such books and records, to offer first in
writing at least 60 days prior to such destruction or disposition to
surrender them to MLCP (or MLCP's successors or assigns) and (ii) following
the Closing Date to afford MLCP (or MLCP's successors or assigns), its
accountants and counsel, during normal business hours, full access to such
books, records and other data and to the employees of Buyer and the Company
and any of its Subsidiaries to the extent that such access may be reasonably
required for any legitimate purpose at no cost to MLCP (other than for
reasonable out-of-pocket expenses); PROVIDED, HOWEVER, that nothing herein
shall limit any of MLCP's or any Seller's rights of discovery.
(d) The Company agrees to provide such financial and other relevant
information as Buyer may reasonably request with respect to the Company and
its Subsidiaries in connection with, among other things, capital market
transactions and any disclosure obligations of the Buyer or its Affiliates
under federal securities and other applicable law and that, upon reasonable
advance written notice to the Company, such financial and other relevant
information may be disclosed by Buyer and its Affiliates to the extent
reasonably appropriate, including in connection with capital market
transactions, filings required pursuant to federal securities and other
applicable law.
Section 2 EFFORTS; OBTAINING CONSENTS. (a) Subject to the terms
and conditions herein provided, the Company, each of the Sellers and Buyer
each agrees to use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement and to cooperate with the other
in connection with the foregoing, including using its reasonable best efforts
(i) to obtain all necessary waivers, consents and approvals from other
parties to material loan agreements, leases and other contracts, (ii) to
obtain all consents, approvals and authorizations that are required to be
obtained under any applicable law or regulation (the "GOVERNMENT CONSENTS"),
(iii) to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties hereto to consummate the
transactions contemplated hereby, (iv) to effect all necessary registrations
and filings as promptly as practical including, but not limited to, filings
under the HSR Act and
-29-
<PAGE>
submissions of information requested by governmental authorities (the
"GOVERNMENT FILINGS"), and (v) to fulfill all conditions to this Agreement. The
Company, each of the Sellers and Buyer further covenant and agree, with respect
to a threatened or pending preliminary or permanent injunction or other order,
decree or ruling or statute, rule, regulation or executive order that would
adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby, to use their respective reasonable best
efforts to prevent the entry, enactment or promulgation thereof, as the case may
be.
(b) The Company and the Sellers, on the one hand, and Buyer, on the
other hand, shall promptly inform the other of any material communication from
the United States Federal Trade Commission, the Department of Justice or any
other domestic or foreign government or governmental or multinational authority
regarding any of the transactions contemplated hereby. If any such party or any
Affiliate thereof receives a request for additional information or documentary
material from any such government or authority with respect to the transactions
contemplated hereby, then such party will endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after consultation with
the other parties, an appropriate response in compliance with such request.
Buyer will advise the Company and Sellers promptly in respect of any
understandings, undertakings or agreements (oral or written) which Buyer
proposes to make or enter into with the Federal Trade Commission, the Department
of Justice or any other domestic or foreign government or governmental or
multinational authority in connection with the transactions contemplated hereby.
(c) All filing fees required in connection with the application for or
prosecution of the Government Consents and the Government Filings shall be borne
by the Buyer. All other fees, expenses and disbursements (including the costs
of preparation of any such filings) incurred in connection with the Government
Consents and the Government Filings shall be borne by the Buyer if incurred by
or on behalf of the Buyer and by the Company if incurred by or on behalf of the
Company or the Sellers.
Section 3 FURTHER ASSURANCES. The Company, Sellers and Buyer agree
that, from time to time, whether before, at or after the Closing Date, each of
them will execute and deliver such further instruments of conveyance and
transfer and take such other action as may be necessary
-30-
<PAGE>
to carry out the purposes and intents of this Agreement.
Section 4 CONDUCT OF BUSINESS. (a) Subject to Section 6.4(b) hereof,
the Company shall, and shall cause each of its Subsidiaries to, operate and
carry on its business only in the ordinary course consistent with past practice,
except as otherwise contemplated by this Agreement or consented to in writing by
Buyer. In furtherance and not in limitation of the foregoing, the Company
shall, and shall cause each of its Subsidiaries to, use reasonable efforts
consistent with good business practice to (i) keep and maintain its respective
assets and properties in normal operating condition and repair, and (ii)
maintain the business organization of the Company and the Subsidiaries intact
and preserve the goodwill of the suppliers, contractors, licensors, employees,
customers, distributors and others having business relations with them.
(b) Except as contemplated by this Agreement or as set forth in
Schedule 6.4(b), the Company shall not, and shall not cause or allow any
Subsidiary to, without the prior approval in writing of Buyer:
(i) amend its certificate of incorporation or by-laws;
(ii) issue or agree to issue (by the issuance or granting of options,
warrants or rights to purchase Common Stock or Non-voting Common Stock or
other capital stock of the Company or otherwise) any shares of Common Stock
or Non-voting Common Stock or other capital stock of the Company, any
securities exchangeable for or convertible into Common Stock or Non-voting
Common Stock or other capital stock of the Company, or any other
securities, other than pursuant to the exercise of outstanding Options,
PROVIDED that each Seller who holds Options agrees that no Options may be
exercised in the 5 business days immediately preceding and including the
Closing Date;
(iii) split, combine or reclassify any shares of the Common Stock
or Non-voting Common Stock or other capital stock of the Company or
declare, set aside or pay any dividends or make any other distributions
(whether in cash, stock or other property) in respect of the Common Stock
or the Non-voting Common Stock or other capital stock of the Company;
-31-
<PAGE>
(iv) redeem, purchase or otherwise acquire for any consideration
(other than pursuant to the terms of the Stockholders' Agreement) (A) any
outstanding shares of its capital stock or securities carrying the right to
acquire, or which are convertible into or exchangeable or exercisable for,
with or without additional consideration, such stock, (B) any other
securities of the Company or any Subsidiary, or (C) any interest in any of
the foregoing;
(v) (A) incur any indebtedness for borrowed money which exceeds
$1,000,000 in the aggregate, except (1) Revolving Credit Loans (as such
term is defined in the Credit Agreement) consistent with past practice or
(2) pursuant to the terms of the Stockholders' Agreement or otherwise in
the ordinary course of business, or (B) amend, supplement or otherwise
modify any of the terms of the Credit Agreement, or any other instrument or
agreement evidencing indebtedness for borrowed money in excess of
$1,000,000 of the Company or its Subsidiaries;
(vi) make any acquisition or disposition (or series of related
acquisitions or dispositions) of stock or assets of any entity in excess of
$250,000;
(vii) merge or consolidate with any corporation or other entity,
or adopt a plan of complete or partial liquidation, dissolution,
bankruptcy, restructuring, recapitalization or other reorganization;
(viii) transfer, sell or dispose of any material assets other than
in the ordinary course of business;
(ix) make any investment in any entity that is not a Subsidiary,
except as required by non-waivable provisions of applicable law or pursuant
to any existing agreements set forth on Schedule 6.4(b);
(x) relinquish any material right or privilege of the Company or its
Subsidiaries without either adequate consideration or a reasonable business
purpose;
(xi) enter into, amend or supplement any employment, severance,
termination or other similar agreement or employee benefit plan, including
any of the Plans, or make any changes in the compensation, severance or
termination payable or to become payable to any of its
-32-
<PAGE>
officers, directors, employees, agents or consultants (other than planned
annual increases in the rates of compensation to employees who are not
officers or directors of the Company in the ordinary course of business);
(xii) mortgage, pledge, or otherwise voluntarily encumber any
material part of its assets, tangible or intangible, other than pursuant to
the Credit Agreement;
(xiii) make any material and adverse changes in its customary
method of operations, including marketing and pricing policies and
maintenance of business premises, fixtures, furniture and equipment and its
accounting policies;
(xiv) modify, amend or cancel any of its existing material leases
or enter into any material contracts, agreements, leases or understanding,
other than in the ordinary course of business;
(xv) enter into, amend or supplement any collective bargaining
agreement, except as required by law, in which case such entrance,
amendment or supplement shall be subject to the reasonable approval of
Buyer;
(xvi) pay, discharge or otherwise satisfy any material claim,
liability or obligation (including to the Sellers) except in the ordinary
course of business and consistent with past practice;
(xvii) make any Tax election or settle or compromise any income tax
liability, in the case of any of the foregoing, material to the business,
financial condition or results of operations of the Company or its
Subsidiaries, without the reasonable consent of Buyer, which will not be
unreasonably withheld;
(xviii) enter into any transaction, arrangement or agreement with
any Seller or any Affiliate of the Sellers, other than those entered into
in the ordinary course of business and on arms-length terms; or
(xix) agree, commit or resolve to do or authorize any of the
foregoing.
-33-
<PAGE>
Section 5 PUBLIC ANNOUNCEMENTS. No press release or announcement
concerning the transactions contemplated hereby shall be issued by the Company,
Buyer or any Seller without the prior consent of Buyer and the Company, except
as such release or announcement may be required by law, rule or regulation, in
which case the party required to issue the release or announcement shall allow
Buyer and the Company reasonable time to comment on such release or announcement
in advance of its issuance.
Section 6 NON-SOLICITATION OF EMPLOYEES. If this Agreement is
terminated, Buyer will not, and if the Closing occurs, the Sellers will not, for
a period of three years thereafter, without the prior written approval of the
Company, solicit any person who is an employee of the Company or any of its
Subsidiaries, at the date hereof or at any time hereafter that precedes such
termination or Closing (as the case may be), to terminate his or her employment
with the Company or any of its Subsidiaries. Buyer and each of the Sellers
agree that any remedy at law for any breach by it of this Section 6.6 would be
inadequate, and the Company would be entitled to injunctive relief in such a
case. If it is ever held that the restriction placed on Buyer or the Sellers by
this Section 6.6 is too onerous and is not necessary for the protection of the
Company, Buyer and each of the Sellers agree that any court of competent
jurisdiction may impose lesser restrictions which such court may consider to be
necessary or appropriate to properly protect the Company.
Section 7 STOCKHOLDERS AGREEMENT. In connection with the
transactions contemplated by this Agreement, the Company and the Sellers agree
that the Tag-Along Rights (as such term is defined in the Stockholders'
Agreement) and the rights of first refusal set forth in Section 2.3 of the
Stockholders' Agreement shall not apply to the consummation of the Stock
Purchase, and that, effective as of, and contingent upon, the consummation of
the Stock Purchase, the Stockholders' Agreement is hereby amended to provide
that it shall terminate as of the Closing.
Section 8 MANAGEMENT NOTES. A true and complete list of each
Management Investor that has executed a Management Note in favor of the Company,
and the principal amount outstanding under such Management Note as of the date
of this Agreement, are set forth in Schedule 2.1 under the column "Management
Notes Outstanding". Buyer, the Company and each such Management Investor agree
that at the Closing
-34-
<PAGE>
the following will occur simultaneously: (i) each Management
Note shall be cancelled, the indebtedness represented thereby shall be fully
discharged, and the related Stock Pledge Agreement shall be terminated, and (ii)
Buyer shall be entitled to set-off the amount of principal outstanding under,
and the amount of accrued and unpaid interest on, each such Management Note as
of the Closing Date against the purchase price for each such Management
Investor's Securities.
Section 9 COMPANY OPTION PLAN. (a) The number of shares of Common
Stock subject to outstanding Options held by each Seller as of the date hereof
is set forth in Schedule 2.1 under the column "Number of Shares Subject to
Options Owned." Buyer, the Company and each Seller that holds Options as of
the date hereof agree that (A) such Seller will not exercise any Options in the
5 business days immediately preceding and including the Closing Date, and (B) at
the Closing the following will occur simultaneously: (i) subject to the payment
of the amounts required pursuant to Section 6.9(b), Buyer shall pay to each
Seller the Share Purchase Price for each share of Common Stock subject to the
Options held by such Seller (to the extent not theretofore exercised, terminated
or cancelled), less the aggregate exercise price of such Options (to the extent
not theretofore exercised, terminated or cancelled) held by such Seller, and
(ii) the Option Plan and each Option and the related agreement pursuant to such
Option Plan held by such Seller shall be terminated.
(b) Buyer, the Company and each Seller that holds Options as of the
date hereof agree that (i) after the close of business on the day prior to the
date that is expected to be the Closing Date, the Company shall deliver to each
such Seller a notice setting forth the aggregate amount of any Federal, state or
local taxes required to be withheld from such Seller with respect to the
transactions contemplated by Section 6.9(a) at the Closing (the "WITHHOLDING
TAX"); (ii) each such Seller whose Options are terminated at the Closing
pursuant to Section 6.9(a) shall, at the Closing, deliver to the Company a
check, made payable to the order of the Company, in the amount of the
Withholding Tax (unless the Company and such Seller agree to offset such amounts
against amounts due hereunder); and (iii) as to each such Seller the Company
shall, and Buyer shall cause the Company to, pay the appropriate portion of the
Withholding Tax to the respective Federal, state or local tax authorities within
the period
-35-
<PAGE>
prescribed by law.
Section 10 REPAYMENT OF INDEBTEDNESS. On the Closing Date,
simultaneously with the Closing, Buyer shall cause all outstanding Obligations
to be paid in full, and the Company shall terminate the Revolving Credit
Commitments.
Section 11 DIRECTORS' AND OFFICERS' INDEMNIFICATION. The provisions
of the certificate of incorporation and by-laws of the Company and of each
Subsidiary concerning elimination of liability and indemnification of directors
and officers shall not be amended in any manner that would adversely affect the
rights thereunder of any person that is as of the date hereof an officer or
director of the Company or of any such Subsidiary. At the Closing, Buyer shall
assume and become liable for, jointly and severally with the Company and each
Subsidiary, any liability and all obligations of the Company and each Subsidiary
under such provisions.
Section 12 NO SHOP. Each Seller and the Company and its Subsidiaries
(and each of their respective directors, officers, employees, advisors,
representatives, agents or Affiliates) shall not, directly or indirectly,
encourage, engage in, solicit or initiate any discussions or negotiations with,
or provide any information to (except, that in the event Buyer shall be
obligated by law to publicly disclose (and does so disclose) that this Agreement
exists, the Sellers and the Company and its Subsidiaries may provide information
to other Persons for the sole purposes of advising them of the existence of this
Agreement), or negotiate or enter into any agreement or agreement in principle
with, any other Person with respect to a sale of the Company or any Subsidiary,
their assets (except as permitted by Section 6.4) or capital stock or any
similar transaction.
Section 13 SCHEDULE DELIVERY. The Company will prepare and deliver
to Buyer five days prior to the Closing Date a schedule showing a reasonable
estimate of the outstanding principal of and interest which will have accrued as
of the Closing Date with respect to the Obligations and the Management Notes,
and the other adjustments to the Share Purchase Price and such schedule shall be
updated as of the Closing Date and such update shall be true and correct as of
the Closing Date. Five days prior to the Closing Date, the Sellers shall
deliver to Buyer an updated Schedule 2.1 (the "UPDATED CAPITALIZATION
SCHEDULE"), revised to the extent
-36-
<PAGE>
necessary to confirm the information contained therein as of such date,
including reflecting any exercise of Options that has taken place, and such
schedules shall be true and correct in all respects as of such date and as of
the Closing Date. Sellers shall notify Buyer of the Closing Date ten days
prior to the Closing Date.
Section 14 WORKING CAPITAL. At the Closing Date, the Company and its
Subsidiaries will use its reasonable efforts to have Working Capital (as defined
below) of at least $3,700,000. The Company will prepare and deliver to Buyer
five days prior to the Closing Date a schedule estimating Working Capital as of
such date (the "WORKING CAPITAL SCHEDULE"). Buyer shall have the opportunity to
participate in the preparation of such schedule and to comment on and review
such schedule. The parties hereto shall use their best efforts to resolve any
disputes with respect to the Working Capital Schedule prior to the Closing Date.
"WORKING CAPITAL" shall mean the difference between (i) consolidated current
assets carried under the headings Accounts Receivable, Prepaid Leases and Other
Current Assets (and, if the Company elects to exclude such amount from the
calculation of Share Purchase Price, such amount of cash as the Company so
elects) on the Company's financial statements prepared in accordance with GAAP
and (ii) consolidated current liabilities carried under the headings Accounts
Payable and Other Current Liabilities on the Company's financial statements
prepared in accordance with GAAP. The Working Capital Schedule shall be
prepared in accordance with GAAP consistently applied based upon the books and
records of the Company.
ARTICLE VII
CONDITIONS OF BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to consummate the Stock Purchase shall be subject
to the satisfaction or waiver, on or prior to the Closing Date, of all of the
following conditions:
Section 1 REPRESENTATIONS AND WARRANTIES; COVENANTS. (a) The
representations and warranties of the Company contained herein shall be true in
all respects as of and at the time of the Closing, except (i) for changes
per-
-37-
<PAGE>
mitted or contemplated by this Agreement, (ii) to the extent that any
representation or warranty is made herein as of a specified date, in which
case such representation or warranty shall be true in all respects as of such
specified date and (iii) for the failure of such representations and
warranties to be true, when read without giving effect to any materiality
qualifiers contained therein, which would not, in the aggregate, have a
Material Adverse Effect; the Company shall have performed in all material
respects all obligations and complied in all material respects with all
covenants and other agreements required of it by this Agreement to be
performed or complied with by it at or prior to the Closing; and there shall
have been delivered to Buyer a certificate to such effect, dated the Closing
Date and signed by a senior executive officer of the Company.
(b) The representations and warranties of the Sellers contained herein
shall be true in all material respects as of and at the time of the Closing,
except for changes permitted or contemplated by this Agreement and except to the
extent that any representation or warranty is made herein as of a specified
date, in which case such representation or warranty shall be true in all
material respects as of such specified date; and each of the Sellers shall have
performed in all material respects all obligations and complied in all material
respects with all covenants and other agreements required of them by this
Agreement to be performed or complied with by them at or prior to the Closing.
Section 2 FILINGS; CONSENTS; WAITING PERIODS. All registrations,
filings, applications, notices, consents, approvals, orders, qualifications and
waivers listed in Schedule 7.2 hereto shall have been filed, made or obtained,
and all waiting periods applicable under the HSR Act shall have expired or been
terminated.
Section 3 NO INJUNCTION. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the Stock Purchase.
Section 4 RESIGNATIONS OF DIRECTORS. Prior to the Closing Date,
Buyer shall notify the Company of those directors of the Company and the
Subsidiaries from whom it will require resignations. The Company shall have
furnished Buyer with such signed resignations, effective as of the Closing.
-38-
<PAGE>
Section 5 SHARE CERTIFICATES. The Sellers shall have delivered to
Buyer certificates representing all of the Securities in accordance with Section
2.1 hereof.
Section 6 EVIDENCE OF INDEBTEDNESS. (a) The Company shall have
delivered to Buyer evidence that the Management Notes have been cancelled and
each of the related Stock Pledge Agreements has been terminated, in each case,
in accordance with Section 6.8.
(b) Buyer shall have received evidence satisfactory to it, that all
liens on the Company's and the Subsidiaries' assets and pledges of the Company's
and the Subsidiaries' stock held by the several lenders pursuant to the Credit
Agreement, will be released upon payment of the Obligations.
Section 7 WORKING CAPITAL. As of the Closing Date, the Company shall
have Working Capital of at least $3,700,000 and Buyer shall have received a
certificate of the chief financial officer of the Company to the effect of the
foregoing.
Section 8 OFFICER'S CERTIFICATE. The Company shall have delivered to
Buyer a certificate signed by the chief financial officer of the Company dated
the Closing Date to the effect that the information contained in the updated
schedules delivered pursuant to Section 6.13 is true, complete and correct in
all respects.
Section 9 COMPANY AFFIDAVIT. The Company shall have delivered an
affidavit to the Buyer, dated as of the Closing Date, that is satisfactory to
the Buyer and which satisfies the requirements of Code Section 1445(b)(3) and
Treasury Regulation Section 1.1445-2(c)(3)(i).
ARTICLE VIII
CONDITIONS TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to consummate the Stock Purchase is subject to
the satisfaction or waiver, on or prior to the Closing Date, of all of the
following conditions:
Section 1 REPRESENTATIONS AND WARRANTIES; COV-
-39-
<PAGE>
ENANTS. The representations and warranties of Buyer contained herein shall
be true in all material respects as of and at the time of the Closing, except
for changes permitted or contemplated by this Agreement and except to the
extent that any representation or warranty is made herein as of a specified
date, in which case such representation or warranty shall be true in all
material respects as of such specified date; Buyer shall have performed in
all material respects all obligations and complied in all material respects
with all covenants and other agreements required of it by this Agreement to
be performed or complied with by it at or prior to the Closing; and there
shall have been delivered to the Company a certificate to such effect, dated
the Closing Date and signed by a senior executive officer of Buyer.
Section 2 FILINGS; CONSENTS; WAITING PERIODS. All registrations,
filings, applications, notices, consents, approvals, orders, qualifications and
waivers listed in Schedule 8.2 hereto shall have been filed, made or obtained,
and all applicable waiting periods under the HSR Act shall have expired or been
terminated.
Section 3 NO INJUNCTION. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the Stock Purchase.
Section 4 PURCHASE PRICE. The Sellers shall have received the
purchase price for the Securities in accordance with Section 2.1 hereof, and
each Seller that holds Options as of the Closing Date shall have received the
payments contemplated by Section 6.9 hereof.
ARTICLE IX
TERMINATION
Section 1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing by:
(i) The mutual consent of the Company, the Majority Sellers and
Buyer;
(ii) Buyer in the event that any condition set
-40-
<PAGE>
forth in Article VII hereof shall not be satisfied and shall not be
reasonably capable of being remedied by January 31, 1997;
(a) The Company or the Majority Sellers in the event that any
condition set forth in Article VIII hereof shall not be satisfied and shall not
be reasonably capable of being remedied by January 31, 1997; or
(b) Either the Majority Sellers or Buyer if the Closing has not
occurred by the close of business on January 31, 1997; provided, however, that
no party may terminate this Agreement pursuant to clause (b) or (c) above, or
pursuant to this clause (d), if the failure of the applicable condition in
Article VII or VIII (as the case may be) to be satisfied or the failure of the
Closing to occur on or before the date required in this Section 9.1(d) results
from the willful and material breach by the Sellers or the Company in the case
of a termination by the Company or the Majority Sellers, or by the Buyer in the
case of a termination of the Buyer, of any covenant in this Agreement.
Section 2 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement by a party hereto pursuant to Section 9.1, written
notice thereof shall forthwith be given by the terminating party to the other
parties hereto, and this Agreement shall thereupon terminate and become void and
have no effect, and the transactions contemplated hereby shall be abandoned
without further action by the parties hereto, except that the provisions of
Sections 6.1(b), 6.6 and 10.5 shall survive the termination of this Agreement;
PROVIDED, HOWEVER, that such termination shall not relieve any party hereto of
any liability for any breach of this Agreement (other than nonwillful breaches
of representations, warranties and covenants, as to which no party shall be
liable hereunder).
ARTICLE X
MISCELLANEOUS
Section 1 SURVIVAL PERIODS. All representations and warranties set
forth in Articles III, IV (other than Section 4.1(b)) and V hereof and (except
as provided by the following sentence) covenants of the parties contained in
-41-
<PAGE>
this Agreement or in any Schedule hereto, or any certificate, document or other
instrument delivered in connection herewith shall terminate and cease to be of
further force and effect as of the Closing. Only those covenants that
contemplate actions to be taken or obligations in effect after the Closing shall
survive in accordance with their terms and to the extent so contemplated. The
representations and warranties set forth in Section 4.1(b) hereof shall survive
indefinitely.
Section 2 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective against the parties that have executed and delivered
the Agreement when one or more counterparts have been signed by all of the
parties and delivered to Buyer and the Majority Sellers.
Section 3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to the choice of law principles thereof.
Section 4 ENTIRE AGREEMENT. This Agreement and the Schedules hereto
contain the entire agreement between the parties with respect to the subject
matter hereof and there are no agreements, understandings, representations or
warranties between the parties other than those set forth or referred to herein.
Except for Section 6.11, which is intended to benefit, and to be enforceable by,
the Persons referred to therein whether or not parties hereto, this Agreement is
not intended to confer upon any person not a party hereto (or their successors
and assigns permitted by Section 10.7) any rights or remedies hereunder.
Section 5 EXPENSES. Except as otherwise set forth in this Agreement
(and except for all transfer, personal property, sales, stock transfer, gains
and stamp taxes incurred in connection with this Agreement and the transactions
contemplated hereby ("TRANSACTION TAXES"), which, if the Closing occurs, shall
be borne by the Company at or following the Closing), all legal and other costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether the Stock Purchase is or is not consummated. The Company
shall be responsible for filing all applicable tax returns and other
documentation with respect to all Transaction Taxes.
-42-
<PAGE>
Section 6 NOTICES. All notices hereunder shall be sufficiently given
for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to the Management Investors shall
be addressed to each Management Investor at the address set forth below under
such Management Investor's signature, or at such other address and to the
attention of such other Person as such Management Investor may designate by
written notice to the ML Investors and Buyer. Notices to the ML Investors (and
the Company prior to the Closing) shall be addressed to:
Merrill Lynch Capital Partners, Inc.
c/o Stonington Partners, Inc.
767 Fifth Avenue, 48th Floor
New York, NY 10153
Attn.: Alexis P. Michas
Telecopy No: (212) 339-8585
and
Revere Holding Corp.
217 East Redwood Street
Suite 1450
Baltimore, Maryland 21202
Attn.: Harrison McCawley
Telecopy No: (410) 685-6488
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn.: Mitchell S. Presser, Esq.
Telecopy No: (212) 403-2000
or at such other address and to the attention of such other Person as any ML
Investor may designate by written notice to Buyer and the Management Investors.
Notices to Buyer shall be addressed to:
Universal Outdoor Holdings, Inc.
321 North Clark Street
Suite 1010
-43-
<PAGE>
Chicago, Illinois, 60610
Attention: Paul G. Simon, Esq.
Telecopy: (312) 664-8371
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Attention: James Connors, Esq.
Telecopy: (212) 223-2379
With copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Lou R. Kling, Esq.
Telecopy: (212) 735-2000
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attenton: Leland E. Hutchinson, Esq.
Telcopy: (312) 558-5700
or at such other address and to the attention of such other Person as Buyer may
designate by written notice to Sellers and the Company.
Section 7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that neither the Company nor any
Seller shall assign its rights or delegate its obligations under this Agreement
without the express prior written consent of Buyer, and PROVIDED FURTHER that
Buyer shall not assign its rights or delegate its obligations under this
Agreement without the express prior written consent of the Majority Sellers.
Section 8 AMENDMENTS AND WAIVERS. This Agreement, and the terms and
provisions hereof, may not be modified, waived or amended except by an
instrument or instruments in writing signed by the party against whom
enforcement of any such modification or amendment is sought (or, in the case of
a waiver, by the intended beneficiary of the waived term or provision);
provided, however, that the Sellers hereby agree that an amendment, waiver or
modification may be enforced against all Sellers if the
-44-
<PAGE>
Majority Sellers have signed such amendment, waiver or modification and such
amendment, waiver or modification affects all Sellers in the same manner.
The waiver by any party hereto of a breach of any term or provision of this
Agreement shall not be construed as a waiver of any subsequent breach.
Section 9 NO IMPLIED REPRESENTATION. Notwithstanding anything
contained in Article III, IV or V or any other provision of this Agreement, it
is the explicit intent of each party hereto that the Company and the Sellers are
making no representation or warranty whatsoever, express or implied, beyond
those expressly given in this Agreement, including but not limited to any
implied warranty or representation as to condition, merchantability or
suitability as to any of the properties or assets of the business of the Company
and its Subsidiaries. It is understood that any estimates or other predictions
contained or referred to in the Schedules hereto or in the materials that have
been provided to Buyer are not and shall not be deemed to be representations or
warranties of Sellers.
Section 10 CONSTRUCTION OF CERTAIN PROVISIONS. It is understood and
agreed that the specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any specific item in
the Schedules is not intended to imply that such amounts or higher or lower
amounts, or the items so included or other items, are or are not material, and
no party shall use the fact of the setting of such amounts or the fact of the
inclusion of any such item in the Schedules in any dispute or controversy
between the parties as to whether any obligation, item or matter not described
herein or included in a Schedule is or is not material for purposes of this
Agreement. All covenants and agreements made by the Sellers hereunder are made
severally and not jointly and no Seller is responsible for the compliance or
noncompliance by any other Seller with any covenant or agreement continued
herein.
Section 11 HEADINGS; DEFINITIONS. The section and article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to
-45-
<PAGE>
both the singular and plural forms of such terms.
Section 12 INTERPRETATION. For the purposes of this Agreement, (a)
"to the knowledge of the Company" shall mean the knowledge of the Company's
executive officers, and (b) "including" shall mean "including, without
limitation," unless otherwise specified.
Section 13 REASONABLE CONSENT REQUIRED. Where any provision of this
Agreement requires a party to obtain the consent, approval or other acquiescence
of any other party, such consent, approval or other acquiescence shall not be
unreasonably withheld or delayed by such other party.
-46-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the day first above written.
REVERE HOLDING CORP.
By: /s/ Robert McLachlin
-----------------------------------
Name: Robert McLachlin
Title: President
UNIVERSAL OUTDOOR, INC.
By: /s/ Brian T. Clingen
-----------------------------------
Name: Brian T. Clingen
Title: Chief Financial Officer
MERRILL LYNCH CAPITAL APPRECIATION
PARTNERSHIP NO. B-XXVII, L.P.
By: /s/ Nathan C. Thorne
-----------------------------------
Name: Nathan C. Thorne
Title: Vice President
ML IBK POSITIONS, INC.
By: /s/ Nathan C. Thorne
-----------------------------------
Name: Nathan C. Thorne
Title: Vice President
MLCP ASSOCIATES L.P. NO. IV
By: /s/ Nathan C. Thorne
-----------------------------------
Name: Nathan C. Thorne
Title: Vice President
MERRILL LYNCH KECALP L.P. 1994
-47-
<PAGE>
By: /s/ Nathan C. Thorne
-----------------------------------
Name: Nathan C. Thorne
Title: Attorney-in-Fact
ML OFFSHORE LBO PARTNERSHIP
NO. B-XXVII
By: /s/ Nathan C. Thorne
-----------------------------------
Name: Nathan C. Thorne
Title: Vice President
DALE LANG
/s/ Dale Lang
---------------------------------------
Address: c/o Dale Lang Communications
230 Park Avenue
New York, New York 10169
ROBERT OLNEY
/s/ Robert Olney
---------------------------------------
Address: P.O. Box 223
Montchanin, Delaware 19710
JAMES GIBSON
/s/ James Gibson
---------------------------------------
Address:
RONALD JENSEN
/s/ Ronald Jensen
---------------------------------------
Address: 1197 Kenilworth Dr.
Woodbury, MN 55125
-48-
<PAGE>
ROBERT MCLACHLIN
/s/ Robert McLachlin
---------------------------------------
Address: 7 Maybrook Court
Glen Arm, Maryland 21057
DANIEL SCHULTE
/s/ Daniel Schulte
---------------------------------------
Address: 77 S. Woods Ln.
Doylestown, PA 18901
HARRISON MCCAWLEY
/s/ Harrison McCawley
---------------------------------------
Address: 22 Atwood Court
Silver Spring, MD 20906
CHARLES MARINO
/s/ Charles Marino
---------------------------------------
Address: 9654 Golden Road Path
Columbia, MD 21046
JAMES LLOYD
/s/ James Lloyd
---------------------------------------
Address: 3306 Hermitage Rd.
Wilmington, DE 19810
GARY WHITE
/s/ Gary White
---------------------------------------
Address: 806 Lari Dawn
San Antonio, TX 78258
-49-
<PAGE>
RAUL GUZMAN
/s/ Raul Guzman
---------------------------------------
Address: 1102 Rosari St.
Laredo, TX 78040-6208
HARRY ADAMS, JR.
/s/ Harry Adams, Jr.
---------------------------------------
Address: 12 Luaw
Rockport, Texas 78382
DENNIS WELLER
/s/ Dennis Weller
---------------------------------------
Address: 6625 Concord Lane
Salisbury, MD 21801
TODD SCHWARTZROCK
/s/ Todd Schwartzrock
---------------------------------------
Address: 9604 Hadleigh Court
Laurel, MD 20723
PATRICK SHERRY
/s/ Patrick Sherry
---------------------------------------
Address: 4 Baker Ave.
Westport, CT 06880
MICHAEL QUADE
/s/ Michael Quade
---------------------------------------
Address: 1542 Falstone Lane
Crofton, MD 21114
-50-
<PAGE>
SANDY PETERSEN
/s/ Sandy Petersen
---------------------------------------
Address: 10830 Factory Rd.
Glen Arm, MD 21057
-51-
<PAGE>
Schedule 3.2
Subsidiaries of Revere Holding Corp.
PERCENT
OWNERSHIP
---------
OWNED BY REVERE HOLDING CORP.
Revere Acquisition Corp. 100%
OWNED BY REVERE ACQUISITION CORP.
Revere National Corporation 100%
Revere Billboard, Inc. 100%
Mall Media Acquisition Corp. 100%
OWNED BY REVERE ACQUISITION CORP.
Revere National Corporation of Philadelphia 88%
Revere National Corporation of Wilminton 100%
OWNED BY REVERE NATIONAL CORPORATION OF PHILADELPHIA
Revere National Corporation of Pennsylvania 100%
OWNED BY MALL MEDIA ACQUISITION CORP.
Vision Digital Communications, LLC 80%
OWNED BY REVERE NATIONAL CORPORATION OF PENNSYLVANIA
Revere National Corporation of Philadelphia 12%
The shares of Revere's Subsidiaries have been pledged to CIBC pursuant to the
Credit Agreement, dated as of December 20, 1994, by and among Revere Holding
Corp., Revere Acquisition Corp., the several lenders from time to time party
thereto and Canadian Imperial Bank of Commerce, New York Agency, As Agent, as
amended.
Stockholders Agreement, dated as of December 20, 1994, by and among Revere
Holding Corp., the management investors listed in Schedule 1 thereto and the
ML investors listed in Schedule 2 thereto, as amended
Stock Pledge Agreements, each dated December 20, 1994, by and between Revere
Holding Corp. and each of: Dale Lang, Robert McLachlin, Daniel Schulte,
Harrison McCawley, Charles Marino, James Lloyd, Gary White, Harry Adams, Jr.,
Dennis Weller and Todd Schwartzrock.
<PAGE>
________________________________________________________________________________
ASSET PURCHASE AGREEMENT
BY AND AMONG
MATTHEW OUTDOOR ADVERTISING ACQUISITION CO., L.P.
MATTHEW ACQUISITION CORPORATION
AND
UNIVERSAL OUTDOOR, INC.
DATED AS OF DECEMBER 10, 1996
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF CERTAIN LIABILITIES. . . . . . . . . 1
Section 1.1 Payment of Deposit. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Application of Deposit. . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Consideration . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.6 Deliveries by the Seller. . . . . . . . . . . . . . . . . . . 6
Section 1.7 Deliveries by the Parent and the Buyer and Release of the
Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.8 Lease Payment Related Adjustments to Cash Purchase Price. . . 8
Section 1.9 AR Amount and Adjustments to Purchase Price . . . . . . . . . 9
Section 1.10 Use of Name . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1.11 Use of Corporate Headquarters . . . . . . . . . . . . . . . . 11
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER . . . . . . . 12
Section 2.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 Interests in Other Entities; Formation. . . . . . . . . . . . 13
Section 2.4 Consents and Approvals; No Violations . . . . . . . . . . . . 13
Section 2.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . 14
Section 2.6 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . 15
Section 2.7 Absence of Adverse and Other Changes. . . . . . . . . . . . . 15
Section 2.8 Title, Ownership and Related Matters. . . . . . . . . . . . . 17
Section 2.9 Properties and Assets Necessary for Conduct of Business . . . 18
Section 2.10 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.11 Displays. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.12 Intangible Property . . . . . . . . . . . . . . . . . . . . . 19
Section 2.13 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.14 Compliance with Applicable Law; Permits . . . . . . . . . . . 20
Section 2.15 Certain Contracts and Arrangements. . . . . . . . . . . . . . 20
i
<PAGE>
Section 2.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.17 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . 22
Section 2.18 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . 26
Section 2.20 Certain Fees. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.21 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . 27
Section 2.22 Labor Agreements. . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND THE BUYER . . . . . . . . . . . . . 29
Section 3.1 Organization and Authority of the Parent and the Buyer. . . . 29
Section 3.2 Consents and Approvals; No Violations . . . . . . . . . . . . 30
Section 3.3 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.4 Certain Fees. . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
COVENANTS. . . . . . . . . . . . . . . . 31
Section 4.1 Conduct of the Business; Capital Expenditures . . . . . . . . 31
Section 4.2 Access to Information; Confidentiality. . . . . . . . . . . . 31
Section 4.3 Regulatory Compliance . . . . . . . . . . . . . . . . . . . . 33
Section 4.4 Consents; Assignments . . . . . . . . . . . . . . . . . . . . 34
Section 4.5 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . 35
Section 4.6 Non-competition . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.7 Press Releases. . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.8 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.9 Environmental Studies; Title. . . . . . . . . . . . . . . . . 37
Section 4.10 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . 37
Section 4.11 No Solicitation of Transactions . . . . . . . . . . . . . . . 38
Section 4.12 Liabilities, Obligations and Debts of the Seller. . . . . . . 38
Section 4.13 Obligations of the Buyer. . . . . . . . . . . . . . . . . . . 38
Section 4.14 Letter of Credit. . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE V
CERTAIN TAX MATTERS . . . . . . . . . . . . . 39
ii
<PAGE>
Section 5.1 Tax Certificates. . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.2 Allocation of Consideration . . . . . . . . . . . . . . . . . 39
Section 5.3 Seller's Responsibility . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES . . . . . . . . 40
Section 6.1 Conditions to Each Party's Obligation . . . . . . . . . . . . 40
Section 6.2 Conditions to Obligations of the Seller . . . . . . . . . . . 41
Section 6.3 Conditions to Obligations of the Parent and the Buyer . . . . 42
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER. . . . . . . . . . . 43
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.2 Procedure and Effect of Termination . . . . . . . . . . . . . 43
Section 7.3 Amendment, Modification and Waiver. . . . . . . . . . . . . . 44
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . . . . . 44
Section 8.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.2 Seller's Agreement to Indemnify . . . . . . . . . . . . . . . 45
Section 8.3 Notice and Opportunity to Defend. . . . . . . . . . . . . . . 45
ARTICLE IX
DEFINITIONS . . . . . . . . . . . . . . . 47
ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . . . . 57
Section 10.1 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 57
Section 10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.3 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.4 Binding Effect; Assignment. . . . . . . . . . . . . . . . . . 59
Section 10.5 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . 60
Section 10.6 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . 60
iii
<PAGE>
Section 10.7 Jurisdiction and Consent to Service . . . . . . . . . . . . . 60
Section 10.8 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.10 Specific Performance. . . . . . . . . . . . . . . . . . . . . 61
Section 10.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.12 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
EXHIBIT A - Form of Bill of Sale
EXHIBIT B - Form of Undertaking
EXHIBIT C - Form of Lease Assignment
EXHIBIT D - Form of Waiver
EXHIBIT E - Form of Consulting Agreement
iv
<PAGE>
DISCLOSURE SCHEDULE
SECTION
Section 1.3(a)(i) - Displays
Section 1.3(a)(iii) - Sign Location Leases
Section 1.3(a)(vi) - Unbuilt Signs
Section 1.3(c) - Excluded Assets
Section 2.3(a) - Interests in Other Entities
Section 2.4 - Exception to Consents and Approvals; No Violations
Provision
Section 2.5 - Financial Statements
Section 2.6 - Undisclosed Liabilities
Section 2.7 - Exception to Absence of Adverse and Other Changes
Provision
Section 2.8 - Title; Ownership and Related Matters
Section 2.10 - Leases
Section 2.12 - Intangible Property
Section 2.13 - Litigation
Section 2.15 - Certain Contracts and Arrangements
Section 2.16 - Insurance
Section 2.17 - Employee Benefit Plans
Section 2.18 - Taxes
Section 2.19 - Environmental Matters
Section 2.21 - Affiliate Transactions
Section 2.22 - Labor Agreements
Section 5.1 - Tax Certificates
Section 9 - Counties
BUYER DISCLOSURE SCHEDULE
SECTION
Section 3.2 - Exception to Consents and Approvals; No Violations
Provision
Section 5.2 - Allocation of Consideration
v
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of December 10, 1996, by and among
Matthew Outdoor Advertising Acquisition Co., L.P. (the "Seller"), a Delaware
limited partnership, Matthew Acquisition Corporation (the "Buyer"), a Delaware
corporation, and Universal Outdoor, Inc. (the "Parent"), an Illinois
corporation.
WHEREAS, pursuant to the terms and conditions of this Agreement, the
Seller desires to sell to the Buyer, and Buyer desires to purchase from the
Seller, the Assets of the Seller.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF CERTAIN LIABILITIES
Section 1 PAYMENT OF DEPOSIT. Concurrently with the execution and
delivery of this Agreement, the Buyer has paid a deposit to the Seller in the
amount of $250,000 (the "Deposit"). The Deposit shall be deposited by the
Seller into a segregated, interest-bearing account at the Merchants Bank of
Bangor, PA.
Section 2 APPLICATION OF DEPOSIT. In the event that the transactions
contemplated by this Agreement are consummated, at the Closing Date the Deposit
and the interest earned thereon through the Closing Date shall be applied to the
Cash Purchase Price payable by the Buyer at the Closing. In the event that this
Agreement is terminated pursuant to Article VII and the transactions
contemplated hereby are not consummated for any reason other than the failure of
the Seller to satisfy the conditions to Closing set forth in Article VI of this
Agreement, the Seller shall have the right to retain the Deposit and the
interest earned thereon. In the event that this Agree-
1
<PAGE>
ment is terminated pursuant to Article VII and the transactions contemplated
hereby are not consummated by reason of the failure of the Seller to satisfy
the conditions to Closing set forth in Article VI of this Agreement, the
Seller shall have the right to retain the Deposit and the interest earned
thereon. In the event that this Agreement is terminated pursuant to Article
VII and the transactions contemplated hereby are not consummated by reason of
the failure of the Seller to satisfy the conditions to Closing set forth in
Article VI of this Agreement, the Deposit and the interest earned thereon
shall be returned to the Buyer.
Section 3 PURCHASE AND SALE.
(a) Subject to the terms and conditions of this Agreement, at
the Closing, the Seller will sell, convey, assign, transfer and deliver or cause
to be sold, conveyed, assigned, transferred and delivered to the Buyer, and the
Buyer will purchase, acquire and accept from the Seller, all of the Seller's
rights, title and interests in and to the Assets, free and clear of all Liens,
other than Permitted Liens, including, without limitation, the following:
(i) all personal property owned and used in the
operation of the existing bulletin, junior poster, thirty-sheet
painted walls or any other outdoor advertising displays (the
"Displays") as such Displays are more fully described by location in
Section 1.3(a)(i) of the Disclosure Schedule, including all sign
structures and any fixtures and leasehold interests in sign
structures, and all lights, electrical hook ups, catwalks and other
appurtenant equipment related thereto;
(ii) all of the real property owned in fee (the "Owned
Real Property") and
2
<PAGE>
any rights in and to all facilities, easements, rights-of-way, licenses,
permits and other appurtenances thereunto belonging and all buildings,
facilities, structures, fixtures, leasehold and other improvements located
thereon;
(iii) all of the rights and incidents of ownership in
and to all leases, including Sign Location Leases for the locations
listed on Section 1.3(a)(iii) of the Disclosure Schedule, and all
leases and subleases for real property and any rights in and to all
easements, rights-of-way, licenses, permits and other appurtenances
thereon belonging and all buildings, facilities, structures, fixtures
and leasehold improvements located thereon and any prepaid ground
rents thereunder;
(iv) all rights and entitlement in and to the
advertising contracts (the "Advertising Contracts");
(v) all necessary and requisite consents, permits,
licenses, franchises, approvals or authorizations (including any
vegetation removal permits) of any governmental or regulatory agency
or authority (collectively, the "Permits");
(vi) any complete or partially complete Displays and
any Sign Location Leases, Advertising Contracts or Permits, as well as
any perfected or partial right, title, interest, or expectancy in any
location within the existing counties of operation of the Business on
the Closing Date where the Seller has planned, contemplated or worked
upon the possibility of outdoor advertising at any time prior
3
<PAGE>
to the date of this Agreement but which have not yet been constructed
(including those described in Section 1.3(a)(vi) of the Disclosure
Schedule);
(vii) all raw materials, work-in process, finished
goods, supplies and other inventories and fixtures and the leasehold
improvements, plant and equipment located on any of the Real
Properties;
(viii) all rights in, to and under all other
contracts, licenses, leases, commitments, purchase orders, entitlement
and other agreements, whether oral or written, except as specifically
excluded under an express statement herein or in any Section of the
Disclosure Schedule;
(ix) all customer lists of whatever nature;
(x) all trademarks, trade names, service marks,
service names, logos, assumed names, copyrights, patents,
registrations and applications for the foregoing, trade secrets and
confidential business information (including ideas, research and
development, know-how, technical data, designs, drawings and
specifications) and all licenses thereof, and all other intellectual
property rights (together, the "Intangible Property"), but excluding
the Intangible Property listed on Section 1.3(c) of the Disclosure
Schedule and thereby deemed an Excluded Asset;
(xi) to the extent related to the Business, the
Assets or the Assumed Liabilities: (a) all of the books and records of
the
4
<PAGE>
Seller including, but not limited to, all files, computer generated or
stored data, advertising and customer information, correspondence,
memoranda, telephone numbers and listings, personnel and payroll records
and the like; and (b) all books and records in connection with or to any
extent relating to Taxes (including without limitation accounting and tax
records and information pertaining to events occurring prior to or after
the Closing Date) (collectively, the "Books and Records");
(xii) all accounts and other receivables and prepaid
expenses existing as of the Closing;
(xiii) all other files, indices, market research
studies, surveys, reports, analyses and similar information;
(xiv) all other assets and property, including sign
panels, computer hardware and software, machinery, equipment,
furniture, office equipment, communications equipment, vehicles,
storage tanks, spare and replacement parts, fuel and other tangible
property, to the extent used in the Business;
(xv) all deposits from customers held ("Customer
Deposits");
(xvi) all right, title and interest to (including all
permits, licenses, leases, contracts, arrangements and understandings
with respect thereto) any cellular communications towers or similar
structures or any cellular communications equipment located on any
Display;
5
<PAGE>
(xvii) all rights under any non-compete agreements;
(xviii) all rights, claims, credits, causes of action,
condemnation proceedings or rights of set-off against third parties
and any compensation from condemnation proceedings (whether in cash,
permits or otherwise);
(xix) the goodwill in or arising from the Assets or
the Business; and
(xx) all other assets which would be reflected on a
balance sheet of the Business as of the Closing Date prepared in
accordance with GAAP.
(b) Such sale, assignment, transfer and delivery of the Assets
will be effected by delivery by the Seller to the Buyer of (i) the Bill of Sale,
(ii) the Lease Assignments, (iii) the Deeds, and (iv) the Other Instruments.
(c) Notwithstanding anything to the contrary contained in
paragraphs (a) or (b) of this Section 1.3, the following assets shall be
considered Excluded Assets: (i) the consideration delivered by the Buyer
pursuant to this Agreement and the Seller's rights under this Agreement and (ii)
the assets listed on Section 1.3(c) of the Disclosure Schedule.
(d) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement shall not, unless and until, and to the extent
the Buyer notifies the Seller otherwise, constitute an agreement to assign any
right, title or interest in, to or under any contract, license, lease,
commitment, sales order, purchase order or other agreement or any claim or right
to
6
<PAGE>
any benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof, or in any way adversely affect the rights of the Buyer or the Seller
thereunder, and such consent is not obtained.
Section 4 CONSIDERATION. Subject to the terms and conditions of this
Agreement, the consideration for the Assets to be acquired shall be (i) the sum
of (A) $40,000,000 in cash (the "Cash Purchase Price") and (B) 70% of the AR
Amount (the "AR Closing Payment"), as adjusted pursuant to Section 1.8(b)
hereof, (the "Closing Payment"), as further adjusted pursuant to Section 1.9(c)
hereof (the Closing Payment as so finally adjusted, the "Purchase Price") and
(ii) assumption of liabilities consummated pursuant to the Undertaking.
Section 5 CLOSING. The Closing hereunder (the "Closing") shall take
place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York, at 10:00 a.m. on January 6, 1997 or, as soon
thereafter as practicable following the date on which each of the conditions to
Closing set forth in Article VI hereof have been satisfied or waived. The date
of the Closing is referred to herein as the Closing Date.
Section 6 DELIVERIES BY THE SELLER. At the Closing, the Seller will
deliver or cause to be delivered to the Buyer the following:
(a) the Deeds;
(b) the Lease Assignments;
(c) a duly executed Bill of Sale;
(d) a duly executed Undertaking;
7
<PAGE>
(e) the Other Instruments, if any;
(f) the Books and Records;
(g) a duly executed Consulting Agreement;
(h) the certificate of the Seller signed by James P. McAndrew,
president of the General Partner of the Seller referred to in Section 6.3
hereof;
(i) a certificate of the General Partner of the Seller
certifying that appropriate approvals have been obtained from the Partners of
the Seller to authorize the execution and delivery of this Agreement and the
Related Agreements and the transactions contemplated hereby;
(j) an opinion of counsel to the Seller, dated as of the Closing
Date, in form and substance reasonably satisfactory to the Buyer;
(k) the Final Proration Schedule;
(l) the Estimated AR Schedule; and
(m) all other documents, instruments and writings required to be
delivered by the Seller at or prior to the Closing pursuant to this Agreement or
otherwise required in connection herewith. All such documents, instruments and
writings to be delivered by the Seller at the Closing shall be in form and
substance reasonably satisfactory to the Buyer.
Section 7 DELIVERIES BY THE PARENT AND THE BUYER AND RELEASE OF THE
DEPOSIT.
(a) At the Closing, the Buyer will deliver or cause to be
delivered to the Seller the following:
8
<PAGE>
(i) the Closing Payment, minus the sum of (x) the
Deposit and (y) the interest earned on the Deposit through the Closing
Date, delivered by wire transfer of immediately available funds to
such bank account as shall be specified by the Seller prior to the
Closing;
(ii) a duly executed Undertaking;
(iii) the Other Instruments, if any;
(iv) a duly executed Consulting Agreement;
(v) the certificate of the Parent and the Buyer signed
by an officer of the Parent and the Buyer referred to in Section 6.2
hereof;
(vi) an opinion of counsel to the Buyer dated as of
the Closing Date, in form and substance reasonably satisfactory to the
Seller;
(vii) certificates of the Secretaries of Parent and
Buyer as to the authorization of the execution and delivery of this
Agreement and the Related Agreements and the transactions contemplated
hereby; and
(viii) all other documents, instruments and writings
required to be delivered by the Parent or the Buyer at or prior to the
Closing pursuant to this Agreement or otherwise required in connection
herewith. All such documents, instruments and writings to be de-
9
<PAGE>
livered by Parent or Buyer shall be in form and substance reasonably
satisfactory to Seller.
(b) At the Closing, the Deposit and the interest earned thereon
through the Closing Date will be released to the Seller in accordance with the
provisions of Section 1.2 hereof.
Section 8 LEASE PAYMENT RELATED ADJUSTMENTS TO CASH PURCHASE PRICE.
(a) Five days prior to the Closing Date, the Seller shall
prepare and deliver to the Buyer a schedule (the "Proration Schedule") showing
the (i) pre-paid lease expenses plus $22,500, (ii) pre-paid property Taxes,
(iii) deposits in respect of Leases, and (iv) pre-payment of fees on new Permits
which are due on January 1, 1997, in each case, of the Seller as of the Closing
Date (together, the "Prepaid Expenses") and the (x) liability for accrued
percentage lease payments, (y) the Notes and Mortgages referred to in clause (c)
of the definition of Assumed Liabilities set forth in Article IX hereof and (z)
the loans payable set forth as item (i)(b) (except for subsections (i), (iv),
(vi), (viii), (x), (xi), (xiv) and (xv)) of Section 2.15 of the Disclosure
Schedule) and other accrued liabilities of the Seller as of the Closing Date
that have not been noted as Assumed Liabilities in the Disclosure Schedule
hereto and that are reasonably agreed to by the parties hereto prior to the
Closing (together, the "Accruals"). The Buyer shall have an opportunity to
participate in the preparation of the Proration Schedule and to comment on and
review such schedule. The parties hereto shall use their best efforts to
resolve any disputes with respect to the Proration Schedule prior to the Closing
Date. On the Closing Date, the Seller shall prepare and deliver to the Buyer an
updated Proration Schedule (the "Final Proration Schedule") revised to the
extent necessary such that the information set forth therein shall be true,
complete and
10
<PAGE>
accurate in all respects as of the Closing Date. The Proration Schedule and the
Final Proration Schedule shall be prepared in all material respects in
accordance with GAAP consistent with the Balance Sheet and based upon the books
and records of the Seller.
(b) For purposes of calculating the Closing Payment, the Cash
Purchase Price shall be (i) increased to the extent the Prepaid Expenses exceed
the Accruals, in each case as set forth on the Final Proration Schedule or (ii)
decreased to the extent the Accruals exceed the Prepaid Expenses, in each case
as set forth on the Final Proration Schedule.
Section 9 AR AMOUNT AND ADJUSTMENTS TO PURCHASE PRICE.
(a) Five days prior to the Closing Date, the Seller shall
prepare and deliver to the Buyer a schedule showing an estimate of the book
value of the accounts receivables and of the reserve for doubtful accounts of
the Seller as of the Closing Date (the "AR Schedule"). The parties hereto shall
use their best efforts to resolve any disputes with respect to the AR Schedule
prior to the Closing Date. On the Closing Date, the Seller shall prepare and
deliver to the Buyer an updated AR Schedule (the net amount of such accounts
receivables net of such reserves reflected on such schedule being herein
referred to as the "AR Amount", and the schedule being herein referred to as the
"Estimated AR Schedule"), on the basis of the most current information available
such that the information set forth therein shall be true, complete and accurate
in all respects as of the date of such information which shall in no event be
more than two business days prior to the Closing Date. Within seven days after
the Closing, Seller shall deliver to Buyer a final AR Schedule showing all
accounts receivables of the Seller as of the Closing Date (the "Final AR
Schedule")and such schedule shall be true, complete and
11
<PAGE>
correct in all respects. The AR Schedule, the Estimated AR Schedule and the
Final AR Schedule shall be prepared in all material respects in accordance with
GAAP consistent with the Balance Sheet and based upon the books and records of
the Seller. The Buyer shall have an opportunity to participate in the
preparation of the AR Schedule, the Estimated AR Schedule and the Final AR
Schedule and to comment on and review such schedules.
(b) Within 75 days following the Closing Date, the Buyer shall
prepare and deliver to the Seller a schedule setting forth in reasonable detail
the accounts receivables identified on the Final AR Schedule which have been
paid to the Buyer within the period from the Closing Date through and until 60
days following the Closing Date (the amounts so paid to the Buyer being herein
referred to as the "AR Collections"). The Buyer shall deliver, at the same time
it delivers the schedule of AR Collections, an assignment to Seller of all
accounts receivable identified on the Final AR Schedule which are not reflected
as having been collected in the schedule of AR Collections. The Seller shall
have 5 Business days following the delivery of such schedule during which to
notify the Buyer of any dispute of any item contained in the schedule, and the
parties hereto shall use their best efforts to resolve any disputes with respect
to the AR Collections following the delivery by the Buyer to the Seller of a
notice of a dispute. The AR Collections, as modified by the Buyer and Seller,
shall be the Final AR Collections.
(c) To the extent that the aggregate amount of the Final AR
Collections exceeds the AR Closing Payment, the Buyer shall pay the difference
to the Seller as soon as practicable after the determination thereof by wire
transfer of immediately available funds to an account designated by the Seller.
To the extent that the AR Closing Payment exceeds the Final AR Collections, the
Seller shall pay the difference to the Buyer as soon as
12
<PAGE>
practicable after the determination thereof by wire transfer of immediately
available funds to an account designated by the Buyer.
(d) The Parent's and the Buyer's rights to indemnification
pursuant to Article VIII hereof shall not be deemed to limit, supersede or
otherwise affect the Buyer's rights to a payment pursuant to this Section 1.9.
Section 10 USE OF NAME. Seller hereby grants to Buyer and Parent a
non-exclusive royalty-free license to use the names and marks set forth on
Section 1.11 of the Disclosure Schedule (collectively, the "Licensed Marks") in
connection with the operation of the Business following the Closing Date, each
for an initial term (the "Initial Term") of six months following the Closing
Date in a manner consistent with the use of such Licensed Marks by the Seller in
connection with the Business prior to the Closing Date, such grant of rights to
Buyer and Parent being subject to Buyer's and Parent's obligation not to use the
Licensed Marks in any manner which would materially degrade the quality or value
of such Licensed Marks. Following the Initial Term, such license shall continue
thereafter, on the same terms and conditions as provided above, until such time
as Seller shall have notified Buyer and Parent of its intent to terminate the
license; PROVIDED, HOWEVER, that such notification shall be in writing and shall
be given at least sixty days prior to the intended date of termination.
Section 11 USE OF CORPORATE HEADQUARTERS. As additional
consideration for the Purchase Price, Seller hereby grants to Buyer and Parent
the use and access, to the extent reasonably required by Buyer and Parent in the
operation of the Business following the Closing Date, of Seller's corporate
headquarters located at 420 A South First Street, Bangor, Pennsylvania for a
period of 60 days following the Closing Date.
13
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer and the Parent on the
date hereof and as of the Closing Date as follows:
Section 1 ORGANIZATION. The Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate the
properties owned, leased and operated by it and to carry on the operations of
the Business as now being conducted by it. The Seller is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary. The Seller has previously made
available to the Buyer complete and correct copies of its partnership agreement
(the "Partnership Agreement") and certificate of limited partnership; PROVIDED,
HOWEVER, THAT, certain provisions of the Partnership Agreement relating to
economic matters applicable to the Partners have been redacted.
Section 2 AUTHORIZATION. The Seller has the power and authority to
execute and deliver this Agreement and the Related Agreements and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action on the part of the Seller, and no other
proceedings on the part of the Seller are necessary to authorize the execution,
delivery and performance of this Agreement and the Related Agreements or the
consummation of the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by
14
<PAGE>
the Seller and constitutes, and when executed and delivered, each of the Related
Agreements to be executed and delivered by the Seller pursuant hereto will
constitute, a valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms.
Section 3 INTERESTS IN OTHER ENTITIES; FORMATION.
(a) Except as set forth in Section 2.3(a) of the Disclosure
Schedule, the Seller, directly or indirectly, (i) has no interest in the
outstanding stock of any corporation or in any partnership, joint venture,
limited liability company or other entity or (ii) is not party to nor is it
bound by any agreement, understanding, contract or commitment relating to an
interest in any such entity or the Seller's investment therein or which would
require the Seller to make any investment therein. Except for the Assets and
the Excluded Assets, the Seller holds no other assets used in connection with
the Business.
(b) (i) The Seller was formed on December 29, 1995, (the
"Formation Date"). Pursuant to an Asset Purchase Agreement, between Matthew
Outdoor Advertising Inc. ("MOA"), Pocono and the Seller, dated December 29,
1995, the Seller acquired (the "Purchase") all of the assets and liabilities of
MOA (the "Purchase Agreement"). The Seller has heretofore delivered to the
Buyer and the Parent accurate and complete copies of the Purchase Agreement.
(ii) The execution and delivery of the Purchase Agreement
and the consummation of the transactions contemplated thereby (including,
without limitation, the Purchase) were duly and validly authorized by all
necessary action on the part of the Seller. Pursuant to the Purchase Agreement,
the Seller received all of the assets and liabilities of MOA primarily related
to the
15
<PAGE>
Business. The Purchase Agreement was duly and validly executed on behalf of the
Seller and constituted the valid and binding agreement of the Seller,
enforceable against the Seller in accordance with its terms.
(c) Prior to the Purchase, the Seller had conducted no business
and incurred no liabilities, other than in connection with its formation and all
such liabilities have been paid or discharged.
Section 4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
applicable requirements of the HSR Act, and as set forth in Section 2.4 of the
Disclosure Schedule, neither the execution and delivery of this Agreement or the
Related Agreements nor the consummation by the Seller of the transactions
contemplated hereby and thereby will (a) conflict with or result in any breach
of any provision of the Partnership Agreement or certificate of limited
partnership of the Seller; (b) require any filing with, or the obtaining of any
permit, license, action, waiver, authorization, consent, filing, registration or
approval of, any governmental or regulatory authority, PROVIDED, HOWEVER, THAT,
no representation in this clause (b) is made by reason of facts pertaining
specifically to the Parent or the Buyer; (c) result in a breach of, or
constitute a default (whether by notice or lapse of time or by both) under, or
violate or conflict with or give rise to any right of amendment, termination,
cancellation or acceleration, or to a loss of any benefit to which the Seller is
entitled, or require any consent to assign, under any of the terms, conditions
or provisions of, any note, mortgage, other evidence of indebtedness, guarantee,
license, agreement, lease or other contract, instrument or obligation to which
the Seller is party or to which the Seller or any of the Assets are bound (or
result in the imposition of any Lien upon any of the Assets); or (d) violate or
conflict with any order, injunction, decree, statute, rule or regulation
applicable to the Seller or to the Assets.
16
<PAGE>
Section 5 FINANCIAL STATEMENTS. Section 2.5 of the Disclosure
Schedule contains true and accurate copies (collectively, the "Financial
Statements") of (i) audited balance sheets (including notes thereto) for the
years ended December 31, 1995, December 31, 1994 and December 31, 1993 and
related statements of earnings for the periods then ended for the Seller or its
predecessors, MOA and Pocono Outdoor Advertising Company Inc. (n/k/a "PA
Outdoor, Inc.") ("Pocono," and together with MOA, its "Predecessors"), and (ii)
an unaudited balance sheet and statement of earnings as of September 30, 1996 of
the Seller (the "Balance Sheet"). The Financial Statements have been prepared
in accordance with GAAP, consistently applied (other than for statements of cash
flows and footnotes otherwise required by GAAP) and have been prepared on a
basis consistent with the financial and other books and records of the Seller.
The Financial Statements fairly present the financial position and the results
of operations of such entities as of the respective dates and periods thereof,
subject in the case of interim financial statements to normal year-end
adjustments. The Financial Statements have not been adjusted to reflect the
Pocono Sale, which occurred after the date of issuance of the Financial
Statements.
Section 6 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
and obligations (a) incurred since September 30, 1996 in the ordinary course of
business and consistent with past practice, (b) disclosed in Section 2.6 of the
Disclosure Schedule or specifically identified as an undisclosed liability or
obligation on any other Section of the Disclosure Schedule, or (c) provided for
in the Balance Sheet, the Seller has no liabilities or obligations of any kind
whatsoever (whether direct, indirect, accrued or contingent) and there is no
existing condition or situation which could reasonably be expected to result in
any such liabilities or obligations.
17
<PAGE>
Section 7 ABSENCE OF ADVERSE AND OTHER CHANGES. Except as set forth
in Section 2.7 of the Disclosure Schedule or as otherwise contemplated by this
Agreement, since September 30, 1996, (a) there has not been any event or
occurrence which has resulted in or could reasonably be expected to result in,
an adverse change in the Business or in the business, assets, results of
operations, prospects or condition (financial or otherwise) of the Seller, taken
as a whole, (b) the Business and all other business operations of the Seller
have been conducted in the ordinary course consistent with past practices, and
(c) there has not been (i) any increase in the compensation of or other benefits
payable to any of the officers or employees of the Seller, except such increases
as are granted in the ordinary course of business in accordance with its
customary practices (which shall include normal periodic performance reviews and
related compensation and benefit increases), (ii) any incurrence, assumption or
guarantee by the Seller in connection with the Business of any indebtedness for
borrowed money; (iii) any creation or other incurrence of any Lien (other than a
Permitted Lien) on any Asset; (iv) any transaction or commitment made, or any
contract or agreement entered into, by the Seller in connection with the
Business (including with respect to the acquisition or disposition of any
assets) or any relinquishment by the Seller in connection with the Business of
any contract or other right, in either case, other than in the ordinary course
of the Seller's business and for fair consideration; (v) any change in any
method of accounting or accounting practice by the Seller; (vi) any (A)
employment, deferred compensation, severance, retirement or other similar
agreement entered into with any employee of the Seller (or any amendment to any
such existing agreement), (B) grant of any severance or termination pay to any
such employee or (C) any loan or advance to such employee; (vii) any change in
the methods of operation of the Business other than in the ordinary course of
the Seller's business consistent with past practice; (viii)
18
<PAGE>
any loss or damage to the properties of the Business or the Assets other than
losses or damages which can be reasonably repaired or replaced; (ix) any capital
expenditure (or series of related capital expenditures) in excess of $10,000
individually or $100,000 in the aggregate by the Seller in connection with the
Business; (x) any acceleration, termination, modification, or cancellation of
any contract, agreement, lease, license or understanding by the Seller in
connection with the Business, outside of the ordinary course of the Seller's
business consistent with past practice; (xi) any capital investment in, or any
loan to, any other Person by the Seller in connection with the Business; (xii)
any delay or postponement of the payment of any accounts payable or other
liabilities or obligations by the Seller in connection with the Business other
than in the ordinary course of the Seller's business consistent with past
practice, but in no event to or in connection with an Affiliate of the Seller;
(xiii) any cancellation, waiver or release of any right or claim by the Seller
in connection with the Business, other than in the ordinary course consistent
with past practice; (xiv) any grant or any license or sublicense of any rights
under or with respect to any Intangible Property; (xv) any transaction with,
payment to or repurchase of any interest in (or any amounts in respect of
interests in), any partner or Affiliate of the Seller (other than one involving
Excluded Assets); (xvi) any settlement or payment of any amount to any other
Person with respect to any liability or obligation, outside the ordinary course
of the Seller's business; (xvii) any dividend, distribution or allocation to any
Partner of the Seller in respect of such Partner's interest in the Seller (other
than one involving Excluded Assets); or (xviii) any agreement or any commitment
to take any of the actions described in this Section 2.7.
19
<PAGE>
Section 8 TITLE, OWNERSHIP AND RELATED MATTERS.
(a) Section 2.8(a) of the Disclosure Schedule sets forth a list
and briefly describes (and specifies the owner of) all Real Property owned (and
any options to purchase) by the Seller in connection with the Business, and any
title insurance policies and surveys with respect thereto, and any Liens
thereon.
(b) Except as set forth in Section 2.8(b) of the Disclosure
Schedule, as of the Closing, the Seller will have, and will deliver to the
Buyer, good and marketable title to all Assets other than the leased Real
Property, and in the case of any leased Real Property, has, and will deliver a
valid fee simple or leasehold interest in, all of the leased Real Property, in
each case free and clear of all Liens, except for Permitted Liens.
(c) There are no material defects in the physical condition of
buildings, structures, and other improvements included within the Real Property
(the "Improvements") that would interfere with the use or occupancy of the
Improvements in the ordinary conduct of the Business. The Improvements have
access to all utility services that are necessary for and currently used in the
conduct of the Business. Except as set forth in Section 2.10 of the Disclosure
Schedule, there are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or parties the right of use
of occupancy of any portion of any Real Property and Seller has not granted any
outstanding options or rights of first refusal to purchase any Real Property or
interest therein owned by the Seller. Except as set forth on Section 2.8(c) of
the Disclosure Schedule, no condemnation or eminent domain proceeding, or sale
or disposition in lieu thereof, against any of the Real Properties is pending
or, to the knowledge of Sell-
20
<PAGE>
er, threatened or any other matter affecting adversely the current use,
occupancy or value thereof. Except as set forth in Section 2.8(c) of the
Disclosure Schedule, the Seller has not received any written notice of any
violation of any law, regulation or ordinance relating to (i) the physical
condition of the Improvements or (ii) the current use of the Real Property.
Each parcel of Real Property abuts on or has vehicular access (without violating
the rights of third parties) to a public road. Notwithstanding anything to the
contrary, all references in this Section 2.8 to leased office space are made to
the knowledge of Seller.
Section 9 PROPERTIES AND ASSETS NECESSARY FOR CONDUCT OF BUSINESS.
The Assets to be transferred to the Buyer pursuant to this Agreement are all the
properties and assets (i) owned by the Seller (except for Excluded Assets), and
(ii) necessary to permit the Business to be conducted as currently conducted.
Section 10 LEASES. Section 2.10 of the Disclosure Schedule sets
forth a true, complete and correct list, as of the date hereof, of all Leases
(including the Sign Location Leases), the name of the lessor or sublessor, the
primary lease term and any Liens thereon. True and complete copies of the
Leases and all written riders, addenda, amendments and any other agreements in
the Seller's possession relating thereto have been made available to the Buyer.
Except as set forth in Section 2.10 of the Disclosure Schedule, the Seller has a
valid leasehold interest in such Lease free and clear of all Liens, other than
Permitted Liens. Except as set forth in Section 2.10 of the Disclosure
Schedule, no consent is required of any landlord or other third party to any
Lease to consummate the transactions contemplated hereby and upon consummation
of the transactions contemplated hereby, each Lease will continue to entitle the
Buyer to the use and possession of the real property specified in such Leases
and for the purposes for which such real
21
<PAGE>
property is now being used by the Seller. The Seller is not in default beyond
any applicable notice or grace period and has not received written notice of
default still outstanding on the date hereof under any such Lease, and to the
Seller's knowledge, there exists no uncured default thereunder by any third
party. With respect to any Leases whereon there exists a Display, unless
otherwise set forth in Section 2.10 of the Disclosure Schedule, said Display is
owned by the Seller and is conveyed in accordance with this Agreement. Except
as set forth on Section 2.10 of the Disclosure Schedule and except as would not
individually or in the aggregate have a Material Adverse Effect, the Seller is
not aware of any dispute, oral modification or forebearance program regarding
any Lease and has not received any notice of any lessor's intention to terminate
any Lease (either at present or in the future) prior to the expiration of its
term.
Section 11 DISPLAYS. Except as set forth in Section 2.11 of the
Disclosure Schedule, the Displays and all related equipment are in good working
order and repair, and, except for Displays with respect to which variances have
been granted, 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
commercially reasonable industry practices. There are a total of approximately
1,000 advertising faces being purchased by the Buyer.
Section 12 INTANGIBLE PROPERTY. Section 2.12 of the Disclosure
Schedule hereto contains a complete and correct list of the Intangible Property
used by the Seller in connection with the Business, and each license or other
agreement relating thereto. Each of the Intangible Properties is owned or
licensed by the Seller and is owned or licensed free and clear of all Liens.
There has been no claim asserted in writing, which is still
22
<PAGE>
pending, or otherwise threatened, that any of the foregoing is invalid or
conflicts with the asserted rights of others, or, to the knowledge of the
Seller, otherwise challenging the Seller's ownership or use thereof. The
Seller's rights in and to the Intangible Property other than the Intangible
Property listed on Section 1.3(c) of the Disclosure Schedule used in and
material to the conduct of the Business as currently conducted, to the extent
protectible under applicable law, have not been invalidated or committed to the
public domain by any action of the Seller. The Seller possesses all Intangible
Property necessary for the conduct of the Business as currently conducted. To
the knowledge of the Seller, the use by the Seller of such rights does not
violate any proprietary right of any third party.
Section 13 LITIGATION. Except as set forth in Section 2.13 of the
Disclosure Schedule, there is no claim, action or proceeding pending or, to the
knowledge of the Seller, threatened against the Seller or any of its operations
by or before any court, governmental or regulatory authority.
Section 14 COMPLIANCE WITH APPLICABLE LAW; PERMITS.
(a) Except as disclosed in Section 2.8(a) of the Disclosure
Schedule, the Seller is not in violation of, nor has been threatened to be
charged with or given notice of any violation of, or to the Seller's knowledge,
is under investigation with respect to, any applicable laws, ordinances, rules
and regulations of any federal, state, local or foreign governmental authority.
(b) Except as set forth in Section 2.8(c) of the Disclosure
Schedule, the Seller has obtained all necessary Permits (including, without
limitation, vegetation removal permits) and other federal, state and local
authorizations necessary to allow the continued presence
23
<PAGE>
of the Displays where located; all applicable fees for such Permits have been
paid; all such Permits are valid and in effect and are fully transferable; and
neither the execution nor the consummation of this Agreement and the
transactions contemplated hereby will terminate any Permit.
Section 15 CERTAIN CONTRACTS AND ARRANGEMENTS. Section 2.15 of the
Disclosure Schedule sets forth as of the date hereof and, other than with
respect to clauses (i), (ii), (iii), and (iv) hereof, as of the Closing Date,
the following agreements to which the Seller is a party or in connection with
the Business, (i) any agreements relating to indebtedness for borrowed money
(whether incurred, assumed, guaranteed or secured by any asset), (ii) all
Advertising Contracts, (iii) any agreement (or group of related agreements) for
the lease of personal property to or from any Person providing for lease
payments in excess of $10,000 per annum, (iv) any agreement (or group of related
agreements) for the purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of more than one
year, result in a material loss to the Seller, or involve consideration in
excess of $25,000, (v) any agreement concerning a partnership or joint venture
other than those which will not bind the Parent or the Buyer or any of the
Assets or the Business following the Closing Date, (vi) any agreement concerning
confidentiality other than those which will not bind the Parent or the Buyer or
any of the Assets or the Business following the Closing Date, (vii) any (A)
profit sharing, partnership interest option, partnership interest purchase or
partnership interest appreciation right, other than those which will not bind
the Parent or the Buyer or any of the Assets or the Business or for which any of
them will have any liability, obligation or responsibility following the Closing
Date, or (B) deferred compensation, severance, or other material plan or
arrangement
24
<PAGE>
for the benefit of the current or former employees of the Seller, (viii) any
collective bargaining agreement, (ix) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis providing
annual compensation in excess of $1,000 or providing severance benefits, (x) any
agreement under which it has advanced or loaned any amount to any of the
employees or Affiliates of the Seller, (xi) any agreement providing for
indemnification of or by the Seller, (xii) any non-compete agreement applicable
to the Seller, (xiii) any agreement by the Seller providing products or services
to any Person for consideration other than cash or receiving consideration from
any Person in products or services in lieu of cash, and (xiv) any other
agreement (or group of related agreements) the performance of which involves
consideration in excess of $10,000 (such contracts and agreements, together with
the Leases, the Sign Location Lease and the Insurance Policies, the "Material
Agreements"). The Seller has delivered to the Buyer a correct and complete copy
of each written Material Agreement and a written summary setting forth the terms
and conditions of each oral Material Agreement. Except as set forth in Section
2.10 (as to the Leases) or in Section 2.15 of the Disclosure Schedule, all
Material Agreements that are Assumed Liabilities are valid, binding and
enforceable in accordance with their terms and will continue to be so on
identical terms immediately following the consummation of the transactions
contemplated by this Agreement and the Related Agreements, and neither the
Seller nor, to the knowledge of the Seller, any other party thereto, is in
default under any of such agreements, nor, to the knowledge of the Seller, has
any event or circumstance occurred that, with notice or lapse of time or both,
would constitute any event of default by the Seller or any other party thereto.
None of the Parent, the Buyer, the Assets or the Business will have any
liability under the CIBC Credit Agreement. Section 2.15 of the Disclosure
Schedule will be updated as of the Closing Date with respect to clauses (i),
(ii), (iii) and (iv) of the first
25
<PAGE>
sentence hereof, and each agreement included thereon shall be deemed a Material
Agreement as of the Closing Date for purposes hereof.
Section 16 INSURANCE. Section 2.16 of the Disclosure Schedule sets
forth a complete and accurate list of all policies and fidelity bonds (including
their respective expiration dates) of fire, liability, product liability,
worker's compensation, and other forms of insurance presently in effect with
respect to the Business and its operations (the "Insurance Policies"). There is
no claim pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds or in respect of which such underwriters have reserved their rights. All
premiums payable under all such policies and bonds have been timely paid and the
Seller has otherwise complied fully with the terms and conditions of all such
policies and bonds. Such policies of insurance and bonds (or other policies and
bonds providing substantially similar insurance coverage) have been in effect
since January 1, 1996 and remain in full force and effect. Such policies and
bonds are of the type and in amounts customarily carried by Persons conducting
businesses similar to the Business.
Section 17 EMPLOYEE BENEFIT PLANS.
(a) Section 2.17(a) of the Disclosure Schedule contains a true
and complete list of each bonus, deferred compensation, incentive compensation,
partnership interest purchase, partnership interest option, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, each employment, termination or severance
contract and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
26
<PAGE>
contributed to by the Seller or any ERISA Affiliate for the benefit of any
employee or terminated employee of the Seller or any ERISA Affiliate, whether
formal or informal and whether legally binding or not (the "Plans"). Neither
the Seller nor any ERISA Affiliate has any formal plan or commitment, whether
legally binding or not, to create any additional Plan or modify or change any
existing Plan that would affect any employee or terminated employee of the
Seller or any ERISA Affiliate.
(b) With respect to each Plan, the Seller has heretofore
delivered to the Buyer true and complete copies of each of the following
documents to the extent applicable: (i) a copy thereof (including all
amendments thereto); (ii) a copy of the most recent annual report, if required
under ERISA; (iii) a copy of the most recent actuarial report, if required under
ERISA; (iv) a copy of the most recent report prepared with respect thereto in
accordance with Statement of Financial Accounting Standards No. 87, Employer's
Accounting for Pensions; (v) a copy of the most recent Summary Plan Description;
(vi) if the Plan is funded through a trust or any third party funding vehicle, a
copy of the trust or other funding agreement (including all amendments thereto);
and (vii) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan that is intended to be qualified under
section 401 of the Code.
(c) To the knowledge of the Seller, other than the terminations
contemplated hereby, there has been no termination or partial termination,
withdrawal or partial withdrawal with respect to any of the Plans that the
Seller maintains or contributes to or has maintained or contributed to. Neither
the Seller nor any ERISA Affiliate has incurred any material liability under
Title IV of ERISA with respect to any of the Plans, other than liability for
premiums due the Pension Benefit Guaranty Corporation, which payments have been
made or will be
27
<PAGE>
made when due. With respect to each Plan that is a multiemployer plan, (i)
other than the terminations contemplated hereby, neither the Seller nor any
ERISA Affiliate has made or suffered a complete or partial withdrawal, as such
terms are respectively defined in sections 4203 and 4205 of ERISA, (ii) neither
the Seller nor any ERISA Affiliate has any contingent liability under section
4204 of ERISA, and (iii) the aggregate withdrawal liability of the Seller and
the ERISA Affiliates, computed as if a complete withdrawal by the Seller and the
ERISA Affiliates had occurred under each such Plan on the date hereof, would not
be material. To the extent operated or administered by Seller, each of the
Plans has been operated and administered in all material respects in accordance
with applicable laws, including but not limited to ERISA and the Code.
(d) Except as set forth in Section 2.17(d) of the Disclosure
Schedule, no amounts payable under the Plans will fail to be deductible for
federal income tax purposes by virtue of section 280G of the Code. Except as
set forth in Section 2.17(d) of the Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with a second event, (i) entitle any current or former employee or
officer of the Seller to severance pay, unemployment compensation or any other
payment or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer. There are no pending,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
Section 18 TAXES.
(a) The Seller and each Controlled Affiliate (i) have each
timely filed or will timely file with
28
<PAGE>
the appropriate Tax Authority all Tax Returns required to be filed by each such
person on or prior to the Closing Date (including extensions of time to file),
and all such Tax Returns are true, correct and complete in all material
respects, (ii) have each timely paid in full (or adequately provided for on the
Balance Sheet) all Taxes that are due or claimed to be due from such person by
any Tax Authority with respect to periods (or any portion thereof) ending on or
before the Closing Date, and (iii) are not required to file any state Tax
Returns other than as set forth in Section 2.18 of the Disclosure Schedule.
(b) No Tax in an amount in excess of $10,000 is required to be
withheld by the Buyer from the Purchase Price as a result of the transfers
contemplated by this Agreement or the Related Agreements. The Buyer will not be
liable for any Tax of any of the Seller or its Partners as a result of the
transactions contemplated hereby.
(c) No deficiency for any Taxes has been proposed, asserted or
assessed against the Seller or any Controlled Affiliate which has not been
resolved and paid in full; neither the Seller nor any Controlled Affiliate has
received any notice of deficiency or assessment from any Tax Authority with
respect to liability for Taxes of a Partner of the Seller relating to income of
the Seller or relating to a liability of the Seller which has not been resolved
and paid in full; no Partner of the Seller, officer, or employee responsible for
Tax matters of the Seller, or any Controlled Affiliate expects any Tax Authority
to propose, assert, or assess any additional Taxes for any period for which Tax
Returns have been filed; neither the Seller, any Controlled Affiliate nor any
Partner of the Seller has signed or filed any written requests, agreements,
consents or waivers to extend any statutory period of limitations with respect
to Taxes of the Seller or any Controlled Affiliates.
29
<PAGE>
(d) No audit or other proceeding by any Tax Authority is
presently pending with respect to any Taxes or Tax Return of the Seller or any
Controlled Affiliate. There are no liens, security interests or other
encumbrances for Taxes upon any of the assets of the Seller or any Controlled
Affiliate other than liens, security interests or other encumbrances for Taxes
not yet due or payable. From the date of its formation, the Seller has at all
times been classified as a partnership for all Tax purposes; the Seller has
filed all forms and taken all actions necessary to maintain such status (and to
so qualify and maintain such status in Delaware and any other state where such
qualification is necessary). Neither the Seller nor any Partner of the Seller
has taken or will have taken or permitted any action, or omitted to take any
action, which action or omission could result in the loss of the Seller's
classification as a partnership for any period on or before the Closing Date.
The Seller and any Controlled Affiliates have complied (and until the Closing
will comply) in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code
or similar provisions under any foreign laws) and have, within the time and in
the manner prescribed by law, withheld from employee wages and paid over to the
proper governmental authorities all amounts required to be so withheld and paid
over under all applicable law.
(e) Neither the Seller nor any Controlled Affiliate is a party
to, is bound by, nor has any obligation under any Tax sharing, allocation,
indemnity, or similar contract or arrangement, or is liable for the Taxes of any
other person. No power of attorney has been granted by the Seller or any
Controlled Affiliate with respect to any matter relating to Taxes which is
currently in force. No assumed liability or indebtedness of the Seller to be
assumed by Buyer is an obligation to make a
30
<PAGE>
payment that would not be deductible under Section 280G of the Code.
Section 19 ENVIRONMENTAL MATTERS. Except as set forth in Section 2.19
of the Disclosure Schedule: (a) (i) the Seller is in substantial compliance
with all Environmental Permits, and with all applicable Environmental Laws and
no notice, notification, demand, request for information, citation, summons,
complaint or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review (collectively, "Environmental
Notices") is pending, or to the Seller's knowledge, threatened by any
governmental entity or other Person with respect to any (A) alleged violation by
the Seller of any Environmental Law or liability thereunder or (B) alleged
failure by the Seller to have any Environmental Permit; (ii) the Seller has not
received any written request for information, nor has the Seller been notified
in writing or, to the actual knowledge of the Seller, orally, that it is a
potentially responsible party, under the federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, the New Jersey
Spill Compensation and Control Act, as amended, or any other similar federal or
state law with respect to any on-site or off-site location; (iii) there have
been no discharges, emissions or releases of Hazardous Substances which are or
were reportable under Environmental Laws by the Seller; and (iv) the Seller has
no liability (and has not handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property in any manner that
could form the basis for any present or future action, suit, proceeding,
investigation, charge, complaint, claim or demand against the Seller, which
could reasonably be expected to result in any liability) for any damage to any
site, location, or body of water, for any illness or personal injury to any
employee or other individual, or for any reason under any
31
<PAGE>
Environmental Law and (v) the execution of this Agreement will not trigger any
obligations on the part of either party pursuant to the New Jersey Industrial
Site Recovery Act.
(b) There has been no environmental investigation, study, audit,
test, review or other analysis (including all Phase I environmental assessments)
conducted of which the Seller has knowledge and possession in relation to any
Real Property which has not been delivered to the Buyer prior to the date
hereof. Except as set forth in Section 2.19 of the Disclosure Schedule, the
Seller is not subject to any judgment, decree or order relating to compliance
with, or the cleanup of regulated substances under, any applicable Environmental
Law.
Section 20 CERTAIN FEES. Except in connection with the retention of
CVF Investors ("CVF") (whose fees shall be the sole responsibility of the
Seller), the Seller has not (i) employed any financial advisor or finder, or
(ii) incurred any liability for any financial advisory or finders' fees, in each
case, in connection with this Agreement or the Related Agreements or the
transactions contemplated hereby or thereby.
Section 21 AFFILIATE TRANSACTIONS. Section 2.21 of the Disclosure
Schedule sets forth all contracts, agreements and arrangements relating to the
Business or reflected in the Financial Statements in effect on or after January
1, 1996 between the Seller or its Predecessors, on the one hand, and any
Affiliates, associates, Partners or Affiliates or associates of Partners of the
Seller ("Affiliate Transactions"). All such contracts, agreements and
arrangements have been entered into on an arm's length basis and are
commercially reasonable. Except as set forth in Section 2.21 of the Disclosure
Schedule, neither any Partner of the Seller nor any Affiliates or associates of
the Seller or any such Part-
32
<PAGE>
ner has 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
Displays or any other Real Property to be conveyed pursuant to the terms of this
Agreement. Except as set forth in Section 2.21 of the Disclosure Schedule,
since September 30, 1996, no payment, compensation, loan, advance or
distribution has been made to any Affiliates, associates, Partners or Affiliates
or associates of Partners of the Seller, by the Seller on account of or in
connection with the Business except for compensation paid to employees of the
Seller in the ordinary course of business consistent with past practices.
Section 22 LABOR AGREEMENTS.
(a) Except as set forth in Section 2.22 of the Disclosure
Schedule, (i) the Seller is not a party to or bound by any labor or collective
bargaining agreement and there are no labor or collective bargaining agreements
which pertain to employees of the Seller; (ii) there are no pending or, to the
Seller's knowledge, threatened strikes, work stoppages, slowdowns, lockouts,
unfair labor practice charges or complaints, grievances or arbitrations arising
out of a collective bargaining agreement, or other labor disputes against the
Business and during the past three years there has not been any such action or
proceeding; (iii) there are no pending or, to the Seller's knowledge, threatened
complaints, charges or claims against the Seller with any public or governmental
authority, arbitrator or court based upon the employment or termination of
employment by the Seller of any individual; (iv) the Seller is in compliance
with all laws, regulations and orders relating to the employment of labor,
including all such laws, regulations and orders relating to terms and conditions
of employment, wages, hours, collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and payment
of withholding and/or social
33
<PAGE>
security taxes and any similar tax and the Seller is not and has not been for
the past two (2) years engaged in any unfair labor practice as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation;
(v) except as previously provided to the Buyer, the Seller has no written
personnel policies applicable to employees; and (vi) no union organization
campaign is presently in progress or has occurred in the past three (3) years
and no representation question exists with respect to the employees of the
Seller.
(b) Since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), the Seller has not effectuated (i) a "plant
closing" (as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or facility of
the Seller; (ii) a "mass layoff" (as defined in the WARN Act) affecting any site
of employment or facility of the Seller; nor has the Seller been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state, local or foreign law or
regulation. Except as set forth in Section 2.22 of the Disclosure Schedule,
none of the Seller's employees has suffered an "employment loss" (as defined in
the WARN Act) during the 90 day period prior to the date of this Agreement and
prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND THE BUYER
The Parent and the Buyer jointly and severally represent and warrant
to the Seller on the date hereof and as of the Closing Date as follows:
34
<PAGE>
Section 1 ORGANIZATION AND AUTHORITY OF THE PARENT AND THE BUYER.
(a) Each of the Parent and the Buyer are a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each of the Parent and the Buyer has heretofore
delivered to the Seller complete and correct copies of its respective
certificate of incorporation and by-laws as currently in effect.
(b) Each of the Parent and the Buyer has the corporate and other
power and authority to execute and deliver this Agreement and the Related
Agreements and consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Directors of each of the Parent and the
Buyer and no other corporate or other proceedings on the part of either of the
Parent or the Buyer are necessary to authorize the execution, delivery and
performance of this Agreement and the Related Agreements or the consummation of
the transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by each of the Parent and the Buyer and constitutes, and
when executed and delivered each of the Related Agreements to be executed and
delivered by each of the Parent and the Buyer pursuant hereto will constitute, a
valid and binding obligation of each of the Parent and the Buyer, enforceable
against each of the Parent and the Buyer in accordance with its terms.
Section 2 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
applicable requirements of the HSR Act and as set forth in Section 3.2 of the
Buyer Disclosure Schedule, neither the execution and delivery of this Agreement
or the Related Agreements nor the consummation by the Parent or the Buyer of the
transactions contem-
35
<PAGE>
plated hereby and thereby will (a) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws of the Parent or the
Buyer; (b) require on the part of the Parent or the Buyer any material filing
with, or the obtaining of any material permit, license, action, waiver,
authorization, consent, filing, registration or approval of, any governmental or
regulatory authority; (c) result in a material breach of, or constitute a
material default under, or violate or conflict with or give rise to any material
right of amendment, termination, cancellation or acceleration, or to a loss of
any benefit to which the Parent or the Buyer is entitled, under any of the
terms, conditions or provisions of any note, mortgage, other evidence of
indebtedness, guarantee, license, agreement, lease or other contract, instrument
or obligation to which the Parent or the Buyer is a party or by which the Parent
or the Buyer or any of the assets of the Parent or the Buyer may be bound or (d)
violate or conflict with any order, injunction, decree, statute, rule or
regulation applicable to the Parent or the Buyer, excluding from the foregoing
clauses (b), (c) and (d) such requirements, defaults, rights or violations which
(X) become applicable as a result of any acts or omissions by, or any facts
specifically relating to, the Seller, or (Y) would not have a material adverse
effect on the ability of the Parent or the Buyer to consummate the transactions
contemplated hereby.
Section 3 LITIGATION. There is no claim, action or proceeding pending
or, to the knowledge of the Parent or the Buyer, threatened against either of
the Parent or the Buyer which challenges the validity of this Agreement or the
Related Agreements, or the resolution of which would have an adverse effect on
the ability of the Parent or of the Buyer to consummate the transactions
contemplated hereby and thereby, by or before any court, governmental or
regulatory authority.
36
<PAGE>
Section 4 CERTAIN FEES. Neither the Parent nor the Buyer has
employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
Related Agreements or the transactions contemplated hereby and thereby.
ARTICLE IV
COVENANTS
Section 1 CONDUCT OF THE BUSINESS; CAPITAL EXPENDITURES. The Seller
agrees that, during the period from the date of this Agreement to the Closing,
it shall operate the Business in the ordinary course consistent with past
practice and will use its best efforts consistent with past practice to keep its
business and properties substantially intact, including its present operations,
physical facilities, working conditions and business relationships. Without
limiting the generality of the foregoing, the Seller shall not take any action
of the type contemplated by Section 2.7 of this Agreement.
Section 2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date of this Agreement and the Closing, the
Seller shall during normal business hours and upon reasonable notice (i) give to
the Parent and the Buyer and their respective authorized representatives access
to all books and records, offices and other facilities and properties of the
Business and the Seller relating to the Business or the Assets; (ii) permit the
Parent and the Buyer to make such inspections thereof as the Parent and the
Buyer may reasonably request; (iii) cause the officers of the Seller to furnish
each of the Parent and the Buyer with such financial and operating data and
other information with respect to the
37
<PAGE>
business and properties of the Business as the Parent and the Buyer may from
time to time request; and (iv) otherwise provide the Parent and the Buyer and
their respective representatives full and complete access to the books and
records, employees and properties of the Seller relating to the Business or the
Assets so as to provide the Buyer and the Parent with the ability to prepare for
the integration of the Business with the Parent's business following the
Closing. Following the Closing Date, the Seller shall, during normal business
hours and upon reasonable notice, give to the Parent and the Buyer and their
authorized representatives access to the books and records listed on Section
1.3(a)(xi) of the Disclosure Schedule and not previously delivered to Buyer to
the extent reasonably requested.
(b) Subject to the provisions of the following sentence, all
confidential information concerning the Business furnished or provided by the
Seller, to either of the Parent or the Buyer or their respective representatives
(whether furnished before or after the date of this Agreement) shall be kept
confidential by the Seller, and, until the Closing, by the Buyer or the Parent.
The Seller agrees to provide such financial and other information as the Buyer
or the Parent may reasonably request with respect to the Seller or the Business
in connection with, among other things, capital market transactions, any
disclosure obligations of the Buyer or the Parent or their Affiliates under
federal securities and other applicable law and such other matters as the Buyer
may reasonably request, and that such financial and other information may be
disclosed by the Buyer, the Parent and their Affiliates to the extent reasonably
appropriate including in connection with capital market transactions, filings
required pursuant to federal securities and other applicable law and such other
matters as the Buyer may reasonably request.
38
<PAGE>
(c) The Seller agrees to keep proprietary information regarding
the Business, the Assets, the Buyer and the Parent confidential and following
the Closing will keep proprietary information regarding the Business, the
Assets, the Buyer and the Parent confidential and agrees that it will only use
such information in connection with the transactions contemplated by this
Agreement and not disclose any of such information, except to the extent
disclosure is required by law, regulation or judicial order by any governmental
authority.
(d) The Seller agrees that so long as any books and records
relating to the Business remain in existence and available and have not
otherwise been delivered to the Buyer, the Buyer and the Parent shall have the
right to inspect and to make copies of the same at any time during normal
business hours for any proper purpose, and that, to the extent any such books
and records have not otherwise been delivered to the Buyer, the Seller will not
destroy or dispose of any books or records relating to the Business existing as
of the Closing Date without first offering to provide such books or records to
the Buyer. The Buyer and the Parent shall, during normal business hours and
upon reasonable notice, give the Seller and its authorized representatives
reasonable access to the Books and Records pertaining to matters occurring prior
to the Closing Date, and for a period of seven years will not destroy or dispose
of such Books and Records without first offering to provide the same to Seller.
(e) The Seller shall deliver or make available to the Buyer any
documents which the Buyer shall request in order that the Buyer may obtain title
insurance on surveys for each of the Real Properties.
39
<PAGE>
Section 3 REGULATORY COMPLIANCE.
(a) Immediately following the date hereof, the parties hereto
shall make all necessary filings, including, without limitation, those required
under the HSR Act, in connection with the New Jersey Permit applicable United
States or foreign antitrust laws and applicable state laws, in order to
facilitate prompt consummation of the transactions contemplated hereby and by
the Related Agreements. In addition, each of the Seller and the Buyer will use
its reasonable best efforts (including, without limitation, payment of any
required fees), and will cooperate fully with the other to (i) comply as
promptly as practicable with all governmental requirements applicable to the
transactions contemplated by this Agreement and the Related Agreements and (ii)
obtain promptly all approvals, permits, orders or other consents of any
applicable governmental authorities necessary for the consummation of the
transactions contemplated by this Agreement and the Related Agreements. Each of
the parties hereto will furnish to the other party such necessary information
and reasonable assistance as such other party may reasonably request in
connection with the foregoing. All fees and expenses payable in connection with
the HSR filing, New Jersey Permit and the transfer of the Permits shall be paid
by the Buyer.
(b) The Seller and the Buyer will coordinate and cooperate fully
with the other in exchanging such information and providing such assistance as
the other may reasonably request in connection with the foregoing and in seeking
early termination of any applicable waiting periods under the HSR Act or in
connection with other regulatory approvals and consents. The Seller and the
Buyer agree to respond promptly to and comply fully with any request for
additional information or documents under the HSR Act. The Seller and the Buyer
will each provide the other party with copies of all correspondence, filings or
communications (or memoranda
40
<PAGE>
setting forth the substance thereof) between the Seller or the Buyer or any of
their representatives, on the one hand, and any governmental agency or authority
or members of their respective staffs, on the other hand, with respect to this
Agreement and the transactions contemplated hereby.
Section 4 CONSENTS; ASSIGNMENTS. The Seller and the Buyer will use
their respective reasonable best efforts to obtain any consent, approval or
amendment required to novate and/or assign all agreements, leases, licenses and
other rights of any nature whatsoever relating to the Assets; PROVIDED, HOWEVER,
THAT, except for filing and other administrative charges, the Buyer shall not be
obligated to pay any consideration therefor to the third party from whom such
consents, approvals and amendments are requested. In the event and to the
extent that the Buyer and the Seller are unable to obtain any such required
consent, approval or amendment, or if any attempted assignment would be
ineffective or would adversely affect the rights of the Seller with respect to
any Asset so that the Buyer would not in fact receive all the rights with
respect to such Asset, the Seller and the Buyer will cooperate (to the extent
permitted by law or the terms of any applicable agreement) in a mutually
agreeable arrangement under which the Buyer would, to the extent possible,
obtain the benefits and assume the obligations with respect to such Asset, in
accordance with this Agreement, including sub-contracting, sub-licensing, or
sub-leasing to the Buyer, or under which the Seller would enforce for the
benefit of the Buyer, with the Buyer assuming the Seller's obligations, any and
all rights of the Seller against a third party thereto. The Seller shall,
without further consideration therefor, pay and remit to the Buyer promptly all
monies, rights and other considerations received in respect of the Buyer's
performance of such obligations and the Buyer shall remit to the Seller (or pay
directly) all amounts due under such contracts to such third parties. If and
when any
41
<PAGE>
such consent shall be obtained or such agreement, lease, license or other right
shall otherwise become assignable or able to be novated, the Seller shall
promptly assign and novate all its rights and obligations thereunder to the
Buyer without payment of further consideration and the Buyer shall, without the
payment of any further consideration therefor, assume such rights and
obligations and the Seller shall be relieved of any and all liability hereunder.
Section 5 REASONABLE BEST EFFORTS. Upon the terms and subject to the
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take or cause to be taken all action, to do or cause
to be done, and to assist and cooperate with the other party hereto in doing,
all things necessary, proper or advisable under applicable laws and regulations,
to consummate and make effective, in the most expeditious manner practicable,
the transactions contemplated by this Agreement and the Related Agreements.
Section 6 NON-COMPETITION.
(a) The Seller agrees that for a period of five full years from
the Closing Date, neither it nor any of its officers or Affiliates (other than
CIBC and CVF), nor James P. McAndrew or any member of his immediate family or
any of his or their Affiliates (other than CIBC or CVF) shall, without the prior
written consent of the Parent: (i) engage, either directly or indirectly, as a
principal or for its own account or solely or jointly with others, or as
shareholders, members, partners or the like (other than through the ownership of
not more than 5% of the outstanding voting securities of any publicly-traded
entity), in any business that competes with the Business as it exists on the
Closing Date in any of those counties listed in Section 9 of the Disclosure
Schedule where the Business is conducted on the Closing Date; or (ii)
affirmatively solicit, other than through a
42
<PAGE>
general solicitation, the employment of any employee of the Business as of the
Closing Date. McAndrew may, with the prior consent of Parent, be employed by,
consult with or provide services to any entity, that is a competitor of the
Business, with respect to any business conducted in any territory other than the
counties listed on Section 9 of the Disclosure Schedule; PROVIDED, that such
consent shall be given by Parent if reasonable provisions can be made to prevent
the disclosure of Confidential Information (as defined in the Consulting
Agreement) and to otherwise protect the Business and the Assets.
(b) If any provisions contained in this Section 4.6 shall for
any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section 4.6, but this Section 4.6 shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein. It is the
intention of the parties that if any of the restrictions or covenants contained
herein is held to cover a geographic area or to be for a length of time which is
not permitted by applicable law, or in any way construed to be too broad or to
any extent invalid, such provision shall not be construed to be null, void and
of no effect, but to the extent such provision would be valid or enforceable
under applicable law, a court of competent jurisdiction shall construe and
interpret or reform this Section 4.6 to provide for a covenant having the
maximum enforceable geographic area, time period and other provisions (not
greater than those contained herein) as shall be valid and enforceable under
such applicable law. The Seller acknowledges that the Buyer would be
irreparably harmed by any breach of this Section 4.6 and that there would be no
adequate remedy at law or in damages to compensate the Buyer for any such
breach. The Seller agrees that the Buyer shall be entitled to injunctive relief
requiring specific performance by the Seller of
43
<PAGE>
this Section 4.6, and the Seller consents to the entry of an order thereof.
Section 7 PRESS RELEASES. Prior to Closing, neither the Seller nor
the Buyer shall make any press release or public announcement in connection with
the transactions contemplated hereby without the prior written consent of the
other or, if required by law, without prior consultation with the other,
PROVIDED, THAT, the Buyer and the Parent may disclose such information to
analysts and other market professionals, in any capital market transaction and
as otherwise provided in Section 4.2(b) hereof.
Section 8 EMPLOYEES. Buyer shall inform the Seller in writing at
least five days prior to the Closing of which employees of the Seller the Buyer
intends to offer employment (the "Retained Employees"). As of the Closing, (a)
Seller shall terminate the employment of all Retained Employees and shall
terminate all consulting and employment agreements and pay out any severance
benefits and (b) the Buyer shall offer employment, effective the day after the
Closing Date, to the Retained Employees. The Buyer will not adopt or assume, at
and as of the Closing, any of the Plans maintained nor any trust, insurance
contract, annuity contract, or other funding arrangement established with
respect thereto. The Buyer will not ensure that the Plans treat employment with
the Business prior to the Closing Date the same as employment with the Buyer for
purposes of eligibility, vesting, and benefit accrual.
Section 9 ENVIRONMENTAL STUDIES; TITLE. The Seller shall allow the
Buyer (and any Person designated by the Buyer) access to the Real Properties to
the extent necessary to conduct Phase I, Phase II and any other environmental
studies and surveys and title reports, as the Buyer may request ("Environmental
Studies").
44
<PAGE>
Section 10 SUPPLEMENTAL DISCLOSURE. The Seller will promptly inform
the Buyer in writing of any fact or circumstance known to the Seller that would
constitute a breach of any representations or warranties contained in Article II
or would cause any of the conditions to either party's obligations to consummate
the transactions contemplated under this Agreement not to be fulfilled.
Section 11 NO SOLICITATION OF TRANSACTIONS. The Seller shall not,
and shall cause each of its Partners and their respective officers, employees,
advisors, representatives, agents or Affiliates not to, directly or indirectly,
encourage, engage in, solicit or initiate any discussions or negotiations with,
or provide any information to, or negotiate or enter into any agreement or
agreement in principle with, any other person, entity or group, with respect to
a sale of the Business, assets or partnership interests in connection therewith
or any similar transaction. The Seller shall, and shall cause its Partners and
their respective officers, employees, advisors, representatives, agents and
Affiliates to, notify the Buyer of any action taken by any person in connection
with the foregoing sentence and shall provide the Buyer with any information,
written or oral, obtained by such party in connection therewith.
Section 12 LIABILITIES, OBLIGATIONS AND DEBTS OF THE SELLER. The
Seller agrees to pay all liabilities, obligations and debts of the Seller (other
than the Assumed Liabilities) as they become due.
Section 13 OBLIGATIONS OF THE BUYER. The Parent and the Buyer shall
be jointly and severally responsible to perform all of the Buyer's obligations,
covenants and agreements under this Agreement, other than with respect to the
Assumed Liabilities and the Undertaking which will be the sole responsibility of
the Buyer.
45
<PAGE>
Section LETTER OF CREDIT. The Buyer and the Parent will use their
reasonable best efforts to have the letter of credit issued in connection with
the existing sign at the New Jersey side entrance of the Lincoln Tunnel released
at the Closing Date.
ARTICLE V
CERTAIN TAX MATTERS
Section 5.1 TAX CERTIFICATES. On or before Closing, the Seller shall
provide the Buyer with copies of the certificates (and similar Tax documentation
or correspondence) from the appropriate Tax Authorities set forth on Section 5.1
of the Disclosure Schedule (or any similar certificates or documentation the
Buyer reasonably requests at least ten days prior to the Closing) stating that
no Taxes of the kind for which the Buyer could have liability to withhold or pay
Taxes with respect to the transfer of the Assets are due to any state or other
Tax Authority; PROVIDED, HOWEVER, THAT, any failure to provide such certificates
to the Buyer which is not the fault of the Seller or any of its Partners shall
not relieve the Buyer of its obligations to enter into and complete the Closing.
If the Seller fails to provide such certificates, the Buyer shall withhold such
amount as necessary from the Purchase Price based upon the Buyer's reasonable
estimate of the amount of such potential liability, or as determined by the
appropriate Tax Authority, to cover such Taxes until such time as certificates
are provided.
Section 5.2 ALLOCATION OF CONSIDERATION. No later than 15 days after
the date hereof, the Seller shall make available to the Buyer, or provide the
Buyer with access to, all information necessary to the preparation of Section
5.2 of the Buyer Disclosure Schedule described hereafter. In accordance with
and subject to
46
<PAGE>
the provisions of Section 1.9 hereof, the Buyer and the Seller shall cooperate
in good faith in the preparation of Section 5.2 of the Buyer Disclosure Schedule
which shall allocate the Consideration (which will constitute an amount paid to
acquire the Assets for federal, state or local income tax purposes) among the
assets and to the non-compete provisions provided for in Section 4.6 hereof in
accordance with the fair market value of such assets and provisions.
Notwithstanding the foregoing, $50,000 (or such higher amount reasonably
determined by the Seller) of the Consideration shall be allocated to the non-
compete provisions provided for in Section 4.6 hereof. No later than four
months following the Closing Date, the Buyer shall deliver Schedule 5.2 to the
Seller. The Buyer and the Seller shall each report the transactions
contemplated under this Agreement for all federal, state and local income tax
and all other purposes (including, without limitation, for purposes of Section
1060 of the Code) as set forth on Schedule 5.2. The Buyer and the Seller shall
each use their best efforts to cause the Partners of the Seller to timely file a
Form 8594 (and any similar forms required under state or local Tax law) in
accordance with the requirements of Section 1060 of the Code (or state or local
Tax law, as the case may be) and this Section 5.2. An agreement on or before
the Closing Date as to an allocation of the Consideration shall not be a
condition to the Buyer's or the Seller's respective obligations to close
hereunder.
Section 5.3 SELLER'S RESPONSIBILITY. The Seller shall be responsible
for all sales, use, transfer, transfer gains, recording, ad valorem, stamp, and
any similar Tax, fee or duty arising out of and in connection with or
attributable to the transactions effected pursuant to this Agreement.
47
<PAGE>
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
Section 1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of each party to consummate the transactions contemplated herein is
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Any waiting periods applicable to the transactions
contemplated by this Agreement under applicable United States and foreign
antitrust or trade regulation laws and regulations, including, without
limitation, under the HSR Act, shall have expired or been terminated and all
governmental authorizations or approvals required in connection with the
transactions contemplated by this Agreement shall have been obtained or given.
(b) No statute, rule or regulation shall have been enacted,
entered, promulgated or enforced by any court or governmental authority and
there shall not be in effect any judgement, order, injunction or decree of any
court of competent jurisdiction which prohibits or restricts the consummation of
the transactions contemplated hereby.
(c) No proceeding by any Person which is reasonably likely to
have any of the effects contemplated in clause (b) of this Section 6.1 shall be
pending.
(d) James P. McAndrew shall have caused Slate Belt Development
to convey to the Buyer and Buyer shall have purchased on the Closing Date the
two parcels of real property (the "Slate Belt Properties") set forth in item 1
on Section 2.21 of the Disclosure Schedule by limited warranty deeds (or the
statutory equivalent thereof with covenants against grantor's acts only), in
48
<PAGE>
recordable form, for aggregate consideration of $100,000; it being understood
that the consummation of such transfer shall be subject to satisfactory
environmental studies in the judgement of the Buyer.
Section 2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations
of the Seller to consummate the transactions contemplated herein are further
subject to the satisfaction (or waiver) at or prior to the Closing of the
following conditions:
(a) The representations and warranties of the Parent and the
Buyer contained in Article III of this Agreement shall be true and correct in
all respects at the date hereof and as of the Closing Date, as if made at and as
of such time, except for representations and warranties which are as of a
specific date which shall be true and correct in all respects as of such date.
(b) Each of the Parent and the Buyer shall have performed in all
material respects its respective obligations under this Agreement required to be
performed by it at or prior to the Closing pursuant to the terms hereof; and the
Seller shall have received a certificate from the Parent and the Buyer signed by
an authorized officer of each of the Parent and the Buyer to the effect of this
paragraph and of paragraph (a) of this Section 6.2.
(c) The parties shall have executed an agreement in respect of
the acquisition of the lease with the Township of Weehawkin, New Jersey for 2
(two) Displays located in the immediate vicinity of the Lincoln Tunnel.
49
<PAGE>
Section 3 CONDITIONS TO OBLIGATIONS OF THE PARENT AND THE BUYER. The
obligations of the Parent and the Buyer to consummate the transactions
contemplated hereby are further subject to the satisfaction (or waiver) at or
prior to the Closing of the following conditions:
(a) The representations and warranties of the Seller contained
in this Agreement shall be true and correct in all respects at the date hereof
and as of the Closing Date, as if made at and as of such time, except for
representations and warranties which are as of a specific date which shall be
true and correct in all respects as of such date and except for such
inaccuracies in such representations and warranties and failures of such
representations and warranties to be true and correct in all respects which
would not in the aggregate have a material adverse effect on the business,
assets, results of operations, prospects or condition (financial or otherwise)
of the Business taken as a whole (a "Material Adverse Effect"). For purposes of
this Section 6.3(a), (i) an adverse change (including any regulation of content
of advertising) will not be deemed to be a Material Adverse Effect unless it
relates to the loss of or impairs the current use of either (A) 3% or more of
the number of signs, (B) signs generating 3% or more of the revenues of the
Business during 1995 or the nine months ended September 30, 1996, or (C) 3% or
more of the revenues of the Business during 1995 or the nine months ended
September 30, 1996, and (ii) regulations limiting the content of advertising
shall not be deemed to constitute a Material Adverse Effect to the extent they
directly restrict or prohibit the advertising of tobacco products or alcoholic
beverages.
(b) The Seller shall have performed in all material respects
each of its obligations under this Agreement required to be performed by it at
or prior to the Closing pursuant to the terms hereof; and the Buyer
50
<PAGE>
shall have received a certificate from the Seller signed by James P. McAndrew,
president of the General Partner of the Seller to the effect of this paragraph
and of paragraph (a) of this Section 6.3.
(c) The Environmental Studies are satisfactory to the Buyer and
the Parent; PROVIDED, HOWEVER, that in the event the Environmental Studies are
not satisfactory to the Buyer and the Parent, the Seller may elect to exclude
any property which is the subject of any environmental liabilities or any
potential liabilities identified to Seller as unsatisfactory to the Buyer and
the Parent from the Assets to be conveyed hereunder and such action by Seller
shall constitute the satisfaction of this condition to Closing.
(d) The Seller shall have provided evidence satisfactory to the
Buyer that any Liens, other than Permitted Liens, on the Assets, including
without limitation any Liens on the Assets in connection with the CIBC Credit
Agreement, shall have been released as of the time of the Closing.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by mutual written consent of the parties
hereto;
(b) by either the Buyer or the Seller, if the Closing shall not
have occurred prior to January 31, 1997; or
51
<PAGE>
(c) by either the Buyer or the Seller if consummation of the
transactions contemplated hereby would violate any nonappealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction;
PROVIDED, THAT, no party may terminate this Agreement pursuant to clauses (b) or
(c) above, if such party is, at the time of any such attempted termination, in
breach of any term hereof.
Section 2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 7.1 hereof, written notice thereof shall
forthwith be given by the party so terminating to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action. If this Agreement is terminated pursuant to
Section 7.1 hereof, (i) the Deposit and interest earned thereon shall be
distributed in accordance with the provisions of Section 1.2 hereof, and (ii)
there shall be no liability or obligation hereunder on the part of the Seller,
the Buyer or the Parent or any of their respective directors, officers,
employees, Affiliates, controlling persons, agents or representatives, unless
the Seller, the Buyer or Parent, as the case may be, has (x) willfully failed to
have performed its obligations hereunder or (y) knowingly made a
misrepresentation of any matter set forth herein.
Section 3 AMENDMENT, MODIFICATION AND WAIVER. This Agreement may be
amended, modified or supplemented at any time only by written agreement of the
Seller and the Buyer. Any failure of the Seller on the one hand, or the Buyer
or the Parent, on the other hand, to comply with any term or provision of this
Agreement may be waived, with respect to the Buyer or the Parent, by the Seller
and, with respect to the Seller, by the Buyer, by
52
<PAGE>
an instrument in writing signed by or on behalf of the appropriate party, but
such waiver or failure to insist upon strict compliance with such term or
provision shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure to comply.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 1 SURVIVAL. The parties hereto agree that (i) the covenants
and agreements contained in this Agreement and the representations and
warranties contained in Sections 2.2 and 2.8 (b) shall survive without
limitation, (ii) the representations and warranties contained in Sections 2.17,
2.18, 2.19, 2.20 and 2.21 shall survive until 90 days after the expiration of
all applicable statutes of limitation with respect to the subject matter
thereof, PROVIDED, HOWEVER, THAT, in the event that CIBC, CVF and James P.
McAndrew each provide to the Buyer on the Closing Date an executed waiver in the
form attached hereto as Exhibit D, then the representations and warranties
contained in Section 2.21 shall survive until the first anniversary following
the Closing Date, and (iii) the representations and warranties contained in
Article II (other than Sections 2.2, 2.8(b), 2.17, 2.18, 2.19, 2.20 and, except
as provided in clause (ii) hereof, Section 2.21) shall survive until the first
anniversary following the Closing Date.
Section 2 SELLER'S AGREEMENT TO INDEMNIFY.
(a) Subject to the terms and conditions set forth herein, from
and after the Closing, the Seller shall indemnify and hold harmless the Parent,
the Buyer and the Indemnitees from and against all Damages.
53
<PAGE>
(b) The Seller's obligation to indemnify the Indemnitees for
Damages pursuant to Section 8.2(a) hereof is subject to the following
limitations: (i) no indemnification shall be made by the Seller for Damages
arising solely from clause (i) of the definition of Damages set forth in Article
IX hereof unless the aggregate amount of such Damages exceeds $400,000 and then
to the full extent of all such Damages in excess of $400,000; and (ii) in no
event shall the Seller's obligation to indemnify the Indemnitees exceed the
Purchase Price.
Section 3 NOTICE AND OPPORTUNITY TO DEFEND. If an event occurs that
entitles an Indemnitee, or that an Indemnitee believes entitles it, to
indemnification pursuant to this Article VIII, the Indemnitee shall promptly
notify the Seller. If the claim for indemnification arises out of a claim by a
third party, such notice shall occur within 15 days of the Indemnitee's receipt
of written notice of such claim; PROVIDED, HOWEVER, THAT, the failure to so
notify the Seller shall not relieve the Seller of its obligations hereunder,
except to the extent that the Seller is actually prejudiced by such failure.
The Seller shall have the right to undertake, conduct and control the defense
thereof by so notifying the Indemnitee in writing, provided that the Seller (i)
states that the settlement or defense of the claim will be conducted at all
times in good faith and in a reasonable manner (and so conducts it), (ii)
acknowledges in writing the obligation to indemnify the Indemnitee in accordance
with the terms contained in this Agreement, and (iii) promptly reimburses the
Indemnitee for all out-of-pocket expenses incurred as a result of the assumption
by the Seller of control of such settlement or defense. If the Seller provides
written notice to the Indemnitee that it elects to defend such claim, the Seller
shall be obligated to defend such claim, at its own expense and by counsel
chosen by it and reasonably satisfactory to the Indemnitee. In the event the
Seller
54
<PAGE>
elects to provide the defense of such claim pursuant to this Section 8.3, the
Indemnitee shall cooperate fully with the Seller and its counsel in the defense
of such claim and shall be entitled to full access to information with respect
thereto and to participate in the defense thereof at its own cost and expense.
Any compromise, settlement or offer of settlement of such claim by the Seller
shall require the prior written consent of the Indemnitee, which consent shall
not be unreasonably withheld and unless such consent is obtained, the Seller
shall continue the defense of such claim; PROVIDED, HOWEVER, THAT, if the
Indemnitee refuses its consent to a bona fide offer of settlement that the
Seller wishes to accept and that involves no payment by the Indemnitee not paid
by the Seller and further involves no limitation on the future conduct of the
Business as presently conducted, the Seller may reassign the defense of such
claim to the Indemnitee, who may then continue to pursue the defense of such
matter, free of any participation by the Seller at the sole cost and expense of
the Indemnitee. In such event, the obligation of the Seller with respect
thereto shall not exceed the amount of the offer of settlement that the
Indemnitee refused to accept plus the costs and expenses of the Indemnitee prior
to the date the Seller notified the Indemnitee of the offer of settlement. If
the Seller does not elect to defend any such claim, it shall nevertheless have
the right of full access to information with respect thereto and to participate
in such defense at its sole cost and expense and shall remain liable for any
indemnification obligations pursuant to this Agreement.
ARTICLE IX
55
<PAGE>
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Accruals" shall have the meaning set forth in Section 1.8 hereof.
"AR Schedule" shall have the meaning set forth in Section 1.9 hereof.
"Advertising Contracts" shall have the meaning set forth in Section
1.3(a)(iv) hereof.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
"Affiliate Transactions" shall have the meaning set forth in Section
2.21 hereof.
"Agreement" means this agreement, dated as of December 10, 1996,
together with any amendments thereto, by and among the Seller, the Parent and
the Buyer.
"AR Amount" shall have the meaning set forth in Section 1.9 hereof.
"AR Closing Payment" shall have the meaning set forth in Section 1.4
hereof.
"AR Collections" shall have the meaning set forth in Section 1.9
hereof.
"AR Schedule" shall have the meaning set forth in Section 1.9 hereof.
56
<PAGE>
"Assets" means all of the properties, contracts and other assets (of
every kind, nature, character and description, whether real, personal or mixed,
whether tangible or intangible, whether accrued, contingent or otherwise and
wherever situated), goodwill and business as a going concern of the Business,
all as of the Closing Date, other than the Excluded Assets.
"Assumed Liabilities" means (a) all obligations of the Seller pursuant
to any Lease, Permit, Advertising Contract, Customer Deposit or title documents
to Owned Real Property, (b) liability for Accruals of the Seller as set forth in
the Proration Schedule, (c) the two (2) Notes and Mortgages, each dated April
22, 1994, between MOA and Janet Greer in the original principal amounts of
$48,000 and $12,000, respectively, (d) the Union Contract and (e) all other
liabilities and obligations of the Seller set forth in the Disclosure Schedule
under an express statement to the effect that the definition of Assumed
Liabilities will include the liabilities and obligations so disclosed, other
than excluded liabilities as set forth below, to be assumed by the Buyer
pursuant to this Agreement, as provided in the Undertaking. It is understood
and agreed by the parties hereto that the Assumed Liabilities shall not include
any other liabilities of the Seller or of the Business, whether known or
unknown, disclosed or undisclosed, matured or unmatured, accrued, absolute,
contingent or otherwise, including without limitation, (a) any liability of the
Seller with respect to Taxes, (including, without limitation, with respect to
amounts not deductible under the Plans pursuant to Section 280G of the Code),
but except to the extent included in the Final Proration Schedule, (b) any
liability of the Seller for any Taxes arising in connection with the
consummation of the transactions contemplated hereby (including any Taxes
arising in connection with the Seller's transfer of Assets), (c) any liability
of the Seller for the unpaid Taxes of any Person other than the Seller under any
provision of Tax law or by
57
<PAGE>
contract or otherwise, (d) any obligation of the Seller to indemnify any Person
by reason of the fact that such Person was a director, officer, employee,
shareholder or agent of the Seller or was serving at the request of the Seller
as a partner, trustee, director, officer, employee, shareholder or agent of
another entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such indemnification is pursuant to any statute, charter
document, bylaw, agreement, or otherwise), (e) any liability of the Seller for
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, (f) any obligation of the Seller under this
Agreement, (g) any liability attributable to or incurred in connection with the
Plans for the benefit of any current or former employee of the Seller, (h) any
liability for severance pay, unemployment compensation or other similar payment
or right due or owing to or which as a result of the transactions contemplated
hereby, will become due or owing, to any officer, director or employee of the
Seller, (i) any obligations and liabilities relating to Excluded Assets, (j) any
obligations or liabilities relating to the Seller's "Pocono" or "Northeast PA"
Division or the sale thereof, (k) any other liability or obligation arising on
or before the Closing Date which is not expressly disclosed in the Disclosure
Schedule hereto as set forth in the first sentence of this paragraph or (l) any
other liability or obligation which is identified as excluded or not to be
assumed under an express statement to the effect that such will be excluded or
will not be assumed.
"Balance Sheet" shall have the meaning set forth in Section 2.5
hereof.
"Bill of Sale" means the duly executed bill of sale, substantially in
the form attached hereto as Exhibit A, which the Seller will deliver to the
Buyer effect-
58
<PAGE>
ing the sale, assignment, transfer and delivery of the Assets.
"Books and Records" shall have the meaning set forth in Section
1.3(a)(xi) hereof.
"Business" means the business of owning and operating an outdoor
advertising business as presently conducted by the Seller in the counties listed
in Section 9 of the Disclosure Schedule including, without limitation, any and
all assets owned by the Seller and used in connection therewith, but which in no
event includes the business conducted through Seller's "Pocono" or "Northeast
PA" Division or the assets used in connection therewith.
"Buyer" shall have the meaning set forth in the introduction hereto.
"Buyer Disclosure Schedule" means the disclosure schedule document
being delivered to the Seller by the Buyer in connection herewith.
"Cash Purchase Price" shall have the meaning set forth in Section 1.4
hereof.
"CIBC" shall mean Canadian Imperial Bank of Commerce, New York Agency.
"CIBC Credit Agreement" shall mean the Credit Agreement, dated as of
December 29, 1995 among the Seller, CIBC and the lenders thereunder.
"Closing" shall have the meaning set forth in Section 1.5 hereof.
"Closing Date" shall have the meaning set forth in Section 1.5 hereof.
59
<PAGE>
"Closing Payment" shall have the meaning set forth in Section 1.4
hereof.
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor law thereto).
"Consideration" means the sum of the Purchase Price and any
liabilities or indebtedness of the Seller or the Partners of the Seller, that
are assumed by the Buyer in connection with this Agreement.
"Consulting Agreement" means the duly executed consulting agreement,
substantially in the form attached hereto as Exhibit E.
"Controlled Affiliate" means any corporation, partnership, entity or
other person that directly, or indirectly through one or more intermediaries, is
or has been controlled by the Seller or under common control with the person
specified and the Seller.
"CVF" shall have the meaning set forth in Section 2.20 hereof.
"Damages" means all liability, demands, claims, actions or causes of
actions, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses including those incurred in
the investigation or defense thereof or in the enforcement of rights hereunder)
asserted against or incurred by any Indemnitee as a result of or arising out of
(i) a breach of any representation or warranty contained in Article II of this
Agreement as of the applicable date provided for therein, (ii) the breach of any
covenant or agreement of the Seller contained herein, (iii) except as otherwise
expressly provided herein, any liabilities and obligations not to be assumed by
the Buyer as provided in the Undertaking, (iv) violations of or noncompliance
with the "bulk sales", "bulk transfer"
60
<PAGE>
or similar laws of any state, (v) any liability arising out of or in connection
with the process undergone by the Seller and its financial advisors in
connection with any attempts to sell the Business or any interests therein, (vi)
liabilities arising or related to events occurring on or prior to the Closing
Date from or related to the pension plan listed on Section 2.17(c) of the
Disclosure Schedule, and (vii) the failure to perform any covenant or agreement
of the Seller.
"Deeds" means limited warranty deeds (or the statutory equivalent
thereof with covenants against grantor's acts only), in recordable form, with
respect to the Owned Real Property.
"Deposit" shall have the meaning set forth in Section 1.1 hereof.
"Disclosure Schedule" means the disclosure schedule document being
delivered to the Buyer by the Seller in connection herewith.
"Displays" shall have the meaning set forth in Section 1.3(a)(i)
hereof.
"Environmental Laws" means any and all applicable federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, judicial orders, decrees, codes, injunctions, permits, consent
decrees, consent orders and governmental restrictions, now in effect, relating
to human health, the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Sub-
61
<PAGE>
stances or wastes into the environment, including without limitation ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"Environmental Notices" shall have the meaning set forth in Section
2.19(a) hereof.
"Environmental Permits" means all permits licenses, authorizations,
certificates and approvals of governmental authorities relating to or required
by Environmental Laws and necessary or proper for the Business as currently
conducted.
"Environmental Studies" shall have the meaning set forth in Section
4.9 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business which together with
the Seller would be deemed a "single employer" within the meaning of section
4001 of ERISA.
"Estimated AR Schedule" shall have the meaning set forth in Section
1.9 hereof.
"Excluded Assets" means those assets, enumerated in Section 1.3(c),
which are expressly excluded from the Assets to be sold, conveyed, assigned, and
transferred to the Buyer and from the assets owned by the Seller.
"Final AR Collections" shall have the meaning set forth in Section 1.9
hereof.
"Final AR Schedule" shall have the meaning set forth in Section 1.9
hereof.
62
<PAGE>
"Final Proration Schedule" shall have the meaning set forth in Section
1.8 hereof.
"Financial Statements" shall have the meaning set forth in Section 2.5
hereof.
"Formation Date" shall have the meaning set forth in Section 2.3
hereof.
"GAAP" means U.S. generally accepted accounting principles.
"General Partner" shall mean MOA.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics, including, without limitation,
any substance regulated under Environmental Laws.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Improvements" shall have the meaning set forth in Section 2.8(c)
hereof.
"Indemnitees" means the Parent, the Buyer and their respective
directors, officers, employees, Affiliates, controlling persons, agents and
representatives and their successors and assigns.
Initial Term" shall have the meaning set forth in Section 1.10 hereof.
"Insurance Policies" shall have the meaning set forth in Section 2.16
hereof.
63
<PAGE>
"Intangible Property" shall have the meaning set forth in Section
1.3(a)(x).
"Lease Assignments" means all appropriate documents for the assignment
(in form suitable for filing, registration or recording, if the applicable
agreement would permit such assignment to be filed, registered or recorded) of
rights in the Leases.
"Leases" means all leases or subleases of real property and all Sign
Location Leases under which the Seller is a lessee or lessor.
"Licensed Marks" shall have the meaning set forth in Section 1.10
hereof.
"Liens" means all mortgages, pledges, security interests, liens,
charges, options, easements, rights-of-way or other encumbrances of any nature
whatsoever, excluding licenses or rights to third parties.
"Material Adverse Effect" shall have the meaning set forth in Section
6.3 hereof.
"Material Agreements" shall have the meaning set forth in Section 2.15
hereof.
"MOA" shall have the meaning set forth in Section 2.3 hereof.
"New Jersey Permit" means the permit required to be obtained by Buyer
in accordance with the laws of the State of New Jersey in order to conduct the
business of outdoor advertising in the State of New Jersey.
"Other Instruments" means such other duly executed, good and
sufficient instruments of conveyance, transfer and assignment as the parties
shall deem neces-
64
<PAGE>
sary to convey to the Buyer all of the Seller's rights, title and interests in
and to the appropriate Assets.
"Owned Real Property" shall have the meaning set forth in Section
1.3(a)(ii) hereof.
"Parent" shall have the meaning set forth in the introduction hereto.
"Partner" shall mean a general or limited partner of the Seller.
"Partnership Agreement" shall have the meaning set forth in Section
2.1 hereof.
"Permits" shall have the meaning set forth in Section 1.3(a)(v)
hereof.
"Permitted Liens" means (i) mechanics', carriers', workers',
repairers', materialmens', warehousemens' and other similar Liens arising or
incurred in the ordinary course of business which are Liens for work in progress
which are not past due or otherwise reflected on the Balance Sheet and (ii)
recorded easements, covenants and other restrictions which do not materially
impair the current use, occupancy, value, or the marketability of title; (iii)
liens for current real or personal property taxes not yet due and payable which
are accounted for in the Proration Schedule; and (iv) liens disclosed in writing
to Buyer which secure Assumed Liabilities.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Plans" shall have the meaning set forth in Section 2.17(a) hereof.
65
<PAGE>
"Pocono" shall have the meaning set forth in Section 2.5 hereof.
"Pocono Sale" shall mean the sale by Seller of the business of its
"Pocono" or "Northeast PA" Division to Adams Outdoor Advertising on November 7,
1996.
"Predecessors" shall have the meaning set forth in Section 2.5 hereof.
"Prepaid Expenses" shall have the meaning set forth in Section 1.8
hereof.
"Proration Schedule" shall have the meaning set forth in Section 1.8
hereof.
"Purchase" shall have the meaning set forth in Section 2.3 hereof.
"Purchase Agreement" shall have the meaning set forth in Section 2.3
hereof.
"Purchase Price" shall have the meaning set forth in Section 1.4
hereof.
"Real Property" means the Owned Real Property, the Slate Belt
Properties and all real property leased pursuant to a Lease and all buildings,
structures and improvements located thereon, fixtures contained thereon and
appurtenances thereto and easements and other rights relating thereto.
"Related Agreements" means those other agreements and instruments
required to be executed pursuant to this Agreement.
"Retained Employees" shall have the meaning set forth in Section 4.8
hereof.
66
<PAGE>
"Seller" shall have the meaning set forth in the introduction hereto.
"Sign Location Lease" shall mean any lease, license or other agreement
between the Seller and any person pursuant to which the Seller has obtained the
right to erect, place and maintain outdoor advertising sign structures on any
ground space, roof or wall space or upon any other improvement to real estate.
"Slate Belt Properties" shall have the meaning set forth in Section
6.1(d).
"Tax Authority" includes the Internal Revenue Service and any state,
local, foreign or other governmental authority responsible for the
administration of any Taxes.
"Tax Return" means any declaration, estimate, return, report,
information statement, schedule or other document (including any related or
supporting information) with respect to Taxes that is required to be filed with
any Tax Authority.
"Taxes" shall include all federal, provincial, territorial, state,
municipal, local, domestic, foreign or other taxes, imposts, rates, levies,
assessments and other charges including, without limitation, ad valorem,
capital, capital stock, customs duties, disability, documentary stamp,
employment, estimated, excise, fees, franchise, gains, goods and services, gross
income, gross receipts, import duties, income, intangible, inventory, license,
mortgage recording, net income, occupation, payroll, personal property,
production, profits, property, real property, recording, rent, sales, severance,
sewer, social security, stamp, transfer, transfer gains, unemployment, use,
value added, water, windfall profits, and withholding, together with any
interest, additions, fines or penalties with respect thereto or in respect of
any
67
<PAGE>
failure to comply with any requirement regarding Tax Returns and any interest in
respect of such additions, fines or penalties and shall include any transferee
liability in respect of any and all of the above.
"Treasury Regulation" means any regulation promulgated under the Code.
"Undertaking" means the duly executed undertaking, substantially in
the form attached hereto as Exhibit B, whereby the Buyer will assume and agree
to pay and discharge the Assumed Liabilities.
"Union Contract" shall mean the Collective Bargaining Agreement dated
April 1, 1995 between Seller and Sign-Pictorial & Display Union Local 230 of the
International Brotherhood of Painters and Allied Trade AFL-CIO.
"WARN Act" shall have the meaning set forth in Section 2.22 hereof.
ARTICLE X
MISCELLANEOUS
Section 1 FURTHER ASSURANCES. From time to time after the Closing
Date, at the request of either party hereto and at the expense of such party,
the parties hereto shall execute and deliver to such requesting party such
documents and take such other action as such requesting party may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
Section 2 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in
68
<PAGE>
writing and may be given by any of the following methods: (a) personal
delivery; (b) facsimile transmission; (c) registered or certified mail, postage
prepaid, return receipt requested; or (d) overnight delivery service. Notices
shall be sent to the appropriate party at its address or facsimile number given
below (or at such other address or facsimile number for such party as shall be
specified by notice given hereunder):
If to the Parent or the Buyer, to:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, Illinois 60601
Attention: Paul G. Simon
Telecopy: (312) 664-8071
and
Kelso & Company
320 Park Avenue
24th floor
New York, New York 10022
Attention: James J. Connors
Telecopy: (212) 223-2379
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Leland E. Hutchinson, Esq.
Telecopy: (312) 558-5700
and
69
<PAGE>
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Lou R. Kling, Esq.
Telecopy: (212) 735-2000
If to the Seller, to:
Matthew Outdoor Advertising
Acquisition Co., L.P.
420 A South First Street
Bangor, PA 18013
Attention: James P. McAndrew
Telecopy: 610-588-7007
with a copy to:
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street
Atlanta, GA 30303
Attention: William B. Shearer, Esq.
Telecopy: 404-572-6999
All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address, or (iii) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
70
<PAGE>
Section 3 SEVERABILITY. Should any provision of this Agreement for
any reason be declared invalid or unenforceable, such decision shall not affect
the validity or enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect and the
application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law.
Section 4 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned, directly or indirectly, including, without limitation, by operation
of law, by any party hereto without the prior written consent of the other
parties hereto; PROVIDED, HOWEVER, THAT, the Buyer may transfer or assign, in
whole or from time to time in part, to Daniel L. Simon, Kelso & Company or one
or more of any of their Affiliates, the right to purchase all or a portion of
the Assets but no such transfer or assignment shall relieve the Buyer of its
obligations hereunder.
Section 5 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the benefit of the Seller and its successors and permitted assigns, with respect
to the obligations of the Parent and the Buyer under this Agreement, and for the
benefit of the Parent and the Buyer, and their respective successors and
permitted assigns, with respect to the obligations of the Seller, under this
Agreement, and this Agreement shall not be deemed to confer upon or give to any
other third party any remedy, claim, liability, reimbursement, cause of action
or other right.
71
<PAGE>
Section 6 INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 7 JURISDICTION AND CONSENT TO SERVICE. In accordance with
Section 5.1401 of the General Obligations Law of the State of New York, and
without limiting the jurisdiction or venue of any other court, the Seller, the
Parent and the Buyer (a) agree that any suit, action or proceeding arising out
of or relating to this Agreement will be brought solely in the state or federal
courts of New York; (b) consent to the exclusive jurisdiction of each such court
in any suit, action or proceeding relating to or arising out of this Agreement;
(c) waive any objection which it may have to the laying of venue in any such
suit, action or proceeding in any such court, and (d) agree that service of any
court paper may be made in any manner as may be provided under applicable laws
or court rules governing service of process in such court.
Section 8 ENTIRE AGREEMENT. Except for this Agreement, the
Disclosure Schedule, the Buyer Disclosure Schedule and the Exhibits and other
documents referred to herein or delivered pursuant hereto which form a part
hereof constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties or any of them with
respect to the subject matter hereof.
Section 9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including
72
<PAGE>
but not limited to matters of validity, construction, effect, performance and
remedies.
Section 10 SPECIFIC PERFORMANCE. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
Section 11 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 12 EXPENSES. Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense; PROVIDED, HOWEVER, that each party hereto
shall be entitled to reasonable costs and expenses, including attorneys fees,
incurred in enforcing its rights hereunder in the event of a breach by the other
party hereto.
73
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized Partner of the Seller, the Parent and the Buyer
as of the date first above written.
MATTHEW OUTDOOR ADVERTISING
ACQUISITION CO., L.P.
By: MATTHEW OUTDOOR ADVERTISING
ACQUISITION CO., INC.
its general partner
By: /s/ James P. McAndrew
----------------------------
Name: James P. McAndrew
Title: President
MATTHEW ACQUISITION CORPORATION
By: /s/ Paul G. Simon
----------------------------
Name: Paul G. Simon
Title: Vice President
UNIVERSAL OUTDOOR, INC.
By: /s/ Brian T. Clingen
----------------------------
Name: Brian T. Clingen
Title: Vice President
<PAGE>
----------------------------------------------
----------------------------------------------
UNIVERSAL OUTDOOR, INC.
ISSUER,
AND
UNITED STATES TRUST COMPANY OF NEW YORK
-----------------------------------
INDENTURE
Dated as of December 16, 1996
------------------
$100,000,000
9 3/4% Series B Senior Subordinated Notes due 2006
---------------------------------------------
---------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
------- ---------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
i
<PAGE>
TIA INDENTURE
SECTION SECTION
------- ---------
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12;
. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
_________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE................ 1
SECTION 1.1. Definitions.............................................. 1
SECTION 1.2. Incorporation by Reference of TIA........................ 21
SECTION 1.3. Rules of Construction.................................... 21
ARTICLE II
THE SECURITIES................................ 22
SECTION 2.1. Form and Dating.......................................... 22
SECTION 2.2. Execution and Authentication............................. 22
SECTION 2.3. Registrar and Paying Agent............................... 23
SECTION 2.4. Paying Agent to Hold Assets in Trust..................... 24
SECTION 2.5. Securityholder Lists..................................... 25
SECTION 2.6. Transfer and Exchange.................................... 25
SECTION 2.7. Replacement Securities................................... 32
SECTION 2.8. Outstanding Securities................................... 33
SECTION 2.9. Treasury Securities...................................... 33
SECTION 2.10. Temporary Securities..................................... 33
SECTION 2.11. Cancellation............................................. 34
SECTION 2.12. Defaulted Interest....................................... 34
ARTICLE III
REDEMPTION.................................. 35
SECTION 3.1. Right of Redemption...................................... 35
SECTION 3.2. Notices to Trustee....................................... 36
SECTION 3.3. Selection of Securities to Be Redeemed................... 36
SECTION 3.4. Notice of Redemption..................................... 37
SECTION 3.5. Effect of Notice of Redemption........................... 38
SECTION 3.6. Deposit of Redemption Price.............................. 39
SECTION 3.7. Securities Redeemed in Part.............................. 39
iii
<PAGE>
ARTICLE IV
COVENANTS.................................. 39
SECTION 4.1. Payment of Securities.................................... 39
SECTION 4.2. Maintenance of Office or Agency.......................... 40
SECTION 4.3. Limitation on Restricted Payments........................ 40
SECTION 4.4. Corporate Existence...................................... 42
SECTION 4.5. Payment of Taxes and Other Claims........................ 42
SECTION 4.6. Compliance Certificate; Notice of Default................ 42
SECTION 4.7. Reports.................................................. 43
SECTION 4.8. Limitation on Status as Investment Company............... 43
SECTION 4.9. Limitation on Transactions with Affiliates............... 43
SECTION 4.10. Limitation on Incurrence of Additional Indebtedness
and Disqualified Capital Stock........................... 44
SECTION 4.11. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries...................... 46
SECTION 4.12. Limitation on Liens Securing Indebtedness................ 47
SECTION 4.13. Limitation on Sale of Assets and Subsidiary Stock........ 47
SECTION 4.14. Limitation on Layering Indebtedness...................... 51
SECTION 4.15. Limitation on Lines of Business.......................... 51
SECTION 4.16. Waiver of Stay, Extension or Usury Laws.................. 51
SECTION 4.17. Payment for Consent...................................... 52
ARTICLE V
SUCCESSOR CORPORATION............................ 52
SECTION 5.1. Limitation on Merger, Sale or Consolidation.............. 52
SECTION 5.2. Successor Corporation Substituted........................ 53
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES........................ 53
SECTION 6.1. Events of Default........................................ 53
SECTION 6.2. Acceleration of Maturity Date; Rescission and
Annulment................................................ 56
SECTION 6.3. Collection of Indebtedness and Suits for
Enforcement by Trustee................................... 57
SECTION 6.4. Trustee May File Proofs of Claim......................... 58
iv
<PAGE>
SECTION 6.5. Trustee May Enforce Claims Without Possession of
Securities............................................... 59
SECTION 6.6. Priorities............................................... 59
SECTION 6.7. Limitation on Suits...................................... 60
SECTION 6.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest..................................... 61
SECTION 6.9. Rights and Remedies Cumulative........................... 61
SECTION 6.10. Delay or Omission Not Waiver............................. 61
SECTION 6.11. Control by Holders....................................... 62
SECTION 6.12. Waiver of Past Default................................... 62
SECTION 6.13. Undertaking for Costs.................................... 63
SECTION 6.14. Restoration of Rights and Remedies....................... 63
ARTICLE VII
TRUSTEE................................... 63
SECTION 7.1. Duties of Trustee........................................ 64
SECTION 7.2. Rights of Trustee........................................ 65
SECTION 7.3. Individual Rights of Trustee............................. 66
SECTION 7.4. Trustee's Disclaimer..................................... 66
SECTION 7.5. Notice of Default........................................ 67
SECTION 7.6. Reports by Trustee to Holders............................ 67
SECTION 7.7. Compensation and Indemnity............................... 67
SECTION 7.8. Replacement of Trustee................................... 68
SECTION 7.9. Successor Trustee by Merger, Etc......................... 70
SECTION 7.10. Eligibility; Disqualification............................ 70
SECTION 7.11. Preferential Collection of Claims Against Company........ 70
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE................... 70
SECTION 8.1. Option to Effect Legal Defeasance or Covenant
Defeasance............................................... 70
SECTION 8.2. Legal Defeasance and Discharge........................... 70
SECTION 8.3. Covenant Defeasance...................................... 71
SECTION 8.4. Conditions to Legal or Covenant Defeasance............... 72
v
<PAGE>
SECTION 8.5. Deposited Cash and U.S. Government Obligations to be
Held in Trust; Other Miscellaneous Provisions............ 73
SECTION 8.6. Repayment to the Company................................. 74
SECTION 8.7. Reinstatement............................................ 74
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS..................... 75
SECTION 9.1. Supplemental Indentures Without Consent of Holders....... 75
SECTION 9.2. Amendments, Supplemental Indentures and Waivers with
Consent of Holders....................................... 76
SECTION 9.3. Compliance with TIA...................................... 77
SECTION 9.4. Revocation and Effect of Consents........................ 78
SECTION 9.5. Notation on or Exchange of Securities.................... 78
SECTION 9.6. Trustee to Sign Amendments, Etc.......................... 79
ARTICLE X
RIGHT TO REQUIRE REPURCHASE......................... 79
SECTION 10.1. Repurchase of Securities at Option of the Holder Upon
a Change of Control...................................... 79
ARTICLE XI
SUBORDINATION................................ 82
SECTION 11.1. Securities Subordinated to Senior Debt................... 82
SECTION 11.2. No Payment on Securities in Certain Circumstances........ 83
SECTION 11.3. Securities Subordinated to Prior Payment of All Senior
Debt on Dissolution, Liquidation or Reorganization....... 84
SECTION 11.4. Securityholders to Be Subrogated to Rights of
Holders of Senior Debt................................... 85
SECTION 11.5. Obligations of the Company Unconditional................. 86
SECTION 11.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice........................................ 86
SECTION 11.7. Application by Trustee of Assets Deposited with It....... 87
vi
<PAGE>
SECTION 11.8. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Debt................. 87
SECTION 11.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities.............................. 87
SECTION 11.10. Right of Trustee to Hold Senior Debt..................... 88
SECTION 11.11. Article XI Not to Prevent Events of Default.............. 88
SECTION 11.12. No Fiduciary Duty of Trustee to Holders of Senior Debt... 88
ARTICLE XII
MISCELLANEOUS................................ 89
SECTION 12.1. TIA Controls............................................. 89
SECTION 12.2. Notices.................................................. 89
SECTION 12.3. Communications by Holders with Other Holders............. 90
SECTION 12.4. Certificate and Opinion as to Conditions Precedent....... 91
SECTION 12.5. Statements Required in Certificate or Opinion............ 91
SECTION 12.6. Rules by Trustee, Paying Agent, Registrar................ 92
SECTION 12.7. Non-Business Days........................................ 92
SECTION 12.8. Governing Law............................................ 92
SECTION 12.9. No Adverse Interpretation of Other Agreements............ 93
SECTION 12.10. No Recourse against Others............................... 93
SECTION 12.11. Successors............................................... 93
SECTION 12.12. Duplicate Originals...................................... 93
SECTION 12.13. Severability............................................. 93
SECTION 12.14. Table of Contents, Headings, Etc......................... 93
SIGNATURES.............................................................. 94
Exhibit A...............................................................A-1
vii
<PAGE>
INDENTURE, dated as of December 16, 1996, by and among Universal
Outdoor, Inc., an Illinois corporation (the "Company"), and United States Trust
Company of New York (the "Trustee").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 9
3/4% Series B Senior Subordinated Notes due 2006:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1. DEFINITIONS.
"ACCELERATION NOTICE" shall have the meaning specified in Section 6.2.
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital
Stock of any person existing at the time such person becomes a Subsidiary of the
Company, including by designation, or is merged or consolidated into or with
the Company or one of its Subsidiaries.
"ACQUISITION" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, PROVIDED, THAT, with respect to ownership interest in the Company
and its Subsidiaries a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"AFFILIATE TRANSACTION" shall have the meaning specified in Section
4.9.
"AGENT" means any authenticating agent, Registrar, Paying Agent or
transfer agent.
<PAGE>
"ASSET SALE" shall have the meaning specified in Section 4.13.
"ASSET SALE OFFER" shall have the meaning specified in Section 4.13.
"ASSET SALE OFFER AMOUNT" shall have the meaning specified in Section
4.13.
"ASSET SALE OFFER PERIOD" shall have the meaning specified in Section
4.13.
"ASSET SALE OFFER PRICE" shall have the meaning specified in Section
4.13.
"AVERAGE LIFE" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of (a)
the product of the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"BENEFICIAL OWNER" or "BENEFICIAL OWNER" for purposes of the
definition of Change of Control has the meaning attributed to it in Rules l3d-3
and l3d-5 under the Exchange Act (as in effect on the Issue Date), whether or
not applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"BOARD OF DIRECTORS" or "BOARD" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
2
<PAGE>
"CAPITAL STOCK" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CAPITALIZED LEASE OBLIGATION" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person, as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person.
"CASH" or "CASH" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"CASH EQUIVALENT" means (a)(i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit issued by any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million or (iii)
commercial paper issued by others rated at least A-1 or the equivalent thereof
by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing within one year after
the date of acquisition or (b) shares of money market mutual funds or similar
funds having assets in excess of $500,000,000.
"CHANGE OF CONTROL" means (i) any merger or consolidation of the
Company or the Parent with or into any person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of the
assets of the Company or the Parent, on a consolidated basis, in one transaction
or a series of related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than the Parent in the case of the Company or a Permitted Holder or Holders, is
or becomes the "beneficial owner," directly or indirectly, of more than 50% of
the total voting power in the aggregate normally entitled to vote in the
election of directors, managers, or trustees, as applicable, of the
transferee(s) or surviving entity or entities, (ii) any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than the Parent in the case of the
Company or a Permitted Holder or Holders, is or becomes the "beneficial owner,"
directly
3
<PAGE>
or indirectly, of more than 50% of the total voting power in the aggregate of
all classes of Capital Stock of the Company or the Parent, as the case may be,
then outstanding normally entitled to vote in elections of directors, or (iii)
during any period of 12 consecutive months after the Issue Date, individuals who
at the beginning of any such 12-month period constituted the Board of Directors
of the Company or the Parent (together with any new directors whose election by
such Board or whose nomination for election by the shareholders of the Company
or the Parent, as the case may be, was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved), cease for any reason to constitute a majority of the Board of
Directors of the Company or the Parent, as the case may be, then in office.
"CHANGE OF CONTROL OFFER" shall have the meaning specified in Section
10.1.
"CHANGE OF CONTROL OFFER PERIOD" shall have the meaning specified in
Section 10.1.
"CHANGE OF CONTROL PURCHASE DATE" shall have the meaning specified in
Section 10.1.
"CHANGE OF CONTROL PURCHASE PRICE" shall have the meaning specified in
Section 10.1.
"COMMISSION" means the SEC.
"COMMON STOCK" means the common stock, $.01 par value, of Parent.
"COMPANY" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means such successor.
"CONSOLIDATED EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) consolidated
income tax expense, (ii) consolidated depreciation and amortization expense,
PROVIDED that consolidated depreciation and amortization of a Subsidiary that is
a less than wholly owned Subsidiary shall only be added to the extent of the
equity interest of the Company in such Subsidiary and only to the extent that
dividends in excess of such Person's PRO RATA share of net income are paid, and
(iii)
4
<PAGE>
Consolidated Fixed Charges, less the amount of all cash payments made by such
person or any of its Subsidiaries during such period to the extent such payments
relate to non-cash charges that were added back in determining Consolidated
EBITDA for such period or any prior period.
"CONSOLIDATED FIXED CHARGES" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of preferred stock (other than
by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such person or a
Subsidiary of such person of an obligation of another person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed.
"CONSOLIDATED LEVERAGE RATIO" of any person on any date of
determination (the "Transaction Date") means the ratio, on a PRO FORMA basis
after giving effect to the application of any proceeds of Indebtedness, of (a)
Indebtedness as of the end of the Reference Period to (b) the aggregate amount
of Consolidated EBITDA of such person attributable to continuing operations and
businesses (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of) for the Reference Period; PROVIDED,
that for purposes of such calculation, (i) Acquisitions which occurred during
the Reference Period or subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the first day of the
Reference Period and (ii) the incurrence of any Indebtedness or issuance of any
Disqualified Capital Stock subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the last day of the
Reference Period.
5
<PAGE>
"CONSOLIDATED NET INCOME" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains or losses which are
either extraordinary, unusual (as determined in accordance with GAAP) or are
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock or losses in connection with the Transactions), (b) the net
income, if positive, of any person, other than a wholly owned Consolidated
Subsidiary, in which such person or any of its Consolidated Subsidiaries has an
interest, except to the extent of the amount of any dividends or distributions
actually paid in cash to such person or a wholly owned Consolidated Subsidiary
of such person during such period, but in any case not in excess of such
person's PRO RATA share of such person's net income for such period and (c) the
net income, if positive, of any of such person's Consolidated Subsidiaries to
the extent that the declaration or payment of dividends or similar distributions
is not at the time permitted by operation of the terms of its charter or bylaws
or any other agreement, instrument, judgment, decree, order, or governmental
regulation applicable to such Consolidated Subsidiary.
"CONSOLIDATED NET WORTH" of any person at any date means the aggregate
consolidated stockholders' equity of such person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such person or a Consolidated Subsidiary of such person
subsequent to the Issue Date, and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in persons that are not Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such person in accordance with GAAP.
"COVENANT DEFEASANCE" shall have the meaning specified in Section 8.3.
"CREDIT AGREEMENT" means the consolidated credit agreement dated
October 31, 1996, by and among the Company, certain financial institutions and
Bankers Trust
6
<PAGE>
Company, as agent, providing for (A) an aggregate $75 million term loan facility
(subject to an amendment subsequent to the date hereof), and (B) an aggregate
$225 million revolving credit facility, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and/or related documents may be amended,
restated, supplemented, renewed, replaced or otherwise modified from time to
time whether or not with the same agent, trustee, representative lenders or
holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term "Credit Agreement" shall
include agreements in respect of Interest Swap and Hedging Obligations with
lenders party to the Credit Agreement and shall also include any amendment,
amendment and restatement, renewal, extension, restructuring, supplement or
modification to any Credit Agreement and all refundings, refinancings and
replacements of any Credit Agreement, including any agreement (i) extending the
maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii)
adding or deleting borrowers or guarantors thereunder, so long as borrowers and
issuers include one or more of the Company and its Subsidiaries and their
respective successors and assigns, (iii) increasing the amount of Indebtedness
incurred thereunder or available to be borrowed thereunder, PROVIDED that on the
date such Indebtedness is incurred it would not be prohibited by clause (f) of
Section 4.10 or (iv) otherwise altering the terms and conditions thereof in a
manner not expressly prohibited by the terms hereof.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEBT INCURRENCE RATIO" shall have the meaning specified in Section
4.10.
"DEFAULT" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"DEFAULTED INTEREST" shall have the meaning specified in Section 2.12.
"DEFINITIVE SECURITIES" means Securities that are in the form of the
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 3 thereof.
"DEPOSITARY" means, with respect to the Securities issuable or issued
in whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such
7
<PAGE>
pursuant to the applicable provision of this Indenture, and, thereafter,
"Depositary" shall mean or include such successor.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b),
with respect to any person, an Equity Interest of such person that, by its terms
or by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Securities and (b) with respect to any
Subsidiary of such person (including with respect to any Subsidiary of the
Company), any Equity Interest other than any common equity with no preference,
privileges, or redemption or repayment provisions
"DTC" shall have the meaning specified in Section 2.3.
"EQUITY INTEREST" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership interests in, such Person. Convertible or exchangeable Indebtedness
shall not be deemed to be an Equity Interest for purposes of clause (b) of the
definition of Restricted Payments to the extent acquired at any time the
conversion or exchange feature is not "in-the-money".
"EQUITY PRIVATE PLACEMENT" means any sale by the Parent of its Capital
Stock (other than Disqualified Capital Stock) not requiring registration under
the Securities Act.
"EVENT OF DEFAULT" shall have the meaning specified in Section 6.1.
"EVENT OF LOSS" means, with respect to any property or asset, any (i)
loss, destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"EXCESS PROCEEDS" shall have the meaning specified in Section 4.13.
"EXCESS PROCEEDS DATE" shall have the meaning specified in Section
4.13.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
8
<PAGE>
"EXCHANGE SECURITIES" means the 9 3/4% Series B Senior Subordinated
Notes due 2006 to be issued pursuant to this Indenture in connection with the
offer to exchange Securities for the Initial Securities that may be made by the
Company pursuant to the Registration Rights Agreement.
"FAIR MARKET VALUE" or "FAIR MARKET VALUE" means, with respect to any
assets or properties, the amount at which such assets or properties would change
hands between a willing buyer and a willing seller, within a commercially
reasonable time, each having reasonable knowledge of the relevant facts, neither
being under a compulsion to sell or buy, as such amount is determined by (i) the
Board of Directors of the Company acting in good faith or (ii) an appraisal or
valuation firm of national or regional standing selected by the Company, with
experience in the appraisal or valuation of properties or assets of the type for
which Fair Market Value is being determined.
"GAAP" means United States generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
"GLOBAL SECURITY" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
to the form of Security attached hereto as Exhibit A.
"HOLDER" or "SECURITYHOLDER" means the Person in whose name a Security
is registered on the Registrar's books.
"INCUR" or "INCURRENCE" shall have the meaning specified in Section
4.10.
"INCURRENCE DATE" shall have the meaning specified in Section 4.10.
"INDEBTEDNESS" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such any person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
(except for balances incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors and except for balances
9
<PAGE>
due and actually paid within six months of the date property is delivered or
services are rendered or, if not actually paid within six months, being
contested in good faith), (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) under any Capitalized Lease
Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such person with respect to any letter of credit; (b) all net
obligations of such person under Interest Swap and Hedging Obligations; (c) all
liabilities and obligations of others of the kind described in the preceding
clause (a) or (b) that such person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such person; (d) any
and all deferrals, renewals, extensions, refinancing and refundings (whether
direct or indirect) of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (a), (b) or (c),
or this clause (d), whether or not between or among the same parties, and (e)
all Disqualified Capital Stock of such Person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified
Capital Stock, such Fair Market Value to be determined in good faith by the
board of directors of the issuer (or managing general partner of the issuer) of
such Disqualified Capital Stock. For purposes hereof, the amount of any
Indebtedness issued with original issue discount shall be the original purchase
price plus accreted interest, PROVIDED, HOWEVER, that such accretion shall not
be deemed an incurrence of Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof, including, without limitation, the
provisions of the TIA that are deemed to be a part of and govern this instrument
and any supplemental indenture, respectively.
"INITIAL PURCHASERS" means Bear, Stearns & Co. Inc. and BT Securities
Corporation.
"INITIAL SECURITIES" means the 9 3/4% Series B Senior Subordinated
Notes due 2006, as amended or supplemented from time to time in accordance with
the terms hereof, issued under this Indenture on December 16, 1996.
"INTEREST PAYMENT DATE" means the stated due date of an installment of
interest on the Securities.
10
<PAGE>
"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"INVESTMENT" by any person in any other person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other person or any agreement obligating a person to make any such
acquisition; (b) the making by such person of any deposit (in excess of $5
million in any one transaction) with, or advance, loan or other extension of
credit to, such other person (including the purchase of property from another
person subject to an understanding or agreement, contingent or otherwise,
obligating such Person to resell such property to such other person) or any
commitment to make any such advance, loan or extension (but excluding accounts
receivable or deposits arising in the ordinary course of business); (c) other
than guarantees of Indebtedness of the Company or any Subsidiary to the extent
permitted by Section 4.10, the entering into by such person of any guarantee of,
or other credit support or contingent obligation with respect to, Indebtedness
or other liability of such other person; (d) the making of any capital
contribution by such person to such other person, other than to the Company or a
Subsidiary of the Company; and (e) the designation by the Board of Directors of
the Company of any person to be an Unrestricted Subsidiary. The Company shall
be deemed to make an Investment in an amount equal to the fair market value of
the net assets of any subsidiary (or, if neither the Company nor any of its
Subsidiaries has theretofore made an Investment in such subsidiary, in an amount
equal to the Investments being made), at the time that such subsidiary is
designated an Unrestricted Subsidiary, and any property transferred to an
Unrestricted Subsidiary from the Company or a Subsidiary shall be deemed an
Investment valued at its fair market value at the time of such transfer.
"ISSUE DATE" means the date of first issuance of the Securities under
the Indenture.
11
<PAGE>
"JUNIOR SECURITY" means any Qualified Capital Stock and any
Indebtedness of the Company that is subordinated in right of payment to Senior
Debt at least to the same extent as the Securities, and has no scheduled
installment of principal due, by redemption, sinking fund payment or otherwise,
on or prior to the Stated Maturity of the Securities.
"LEGAL DEFEASANCE" shall have the meaning specified in Section 8.2.
"LIEN" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"MATURITY DATE" means, when used with respect to any Security, the
date specified on such Security as the fixed date on which the final installment
of principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of this Indenture regarding
acceleration of Indebtedness or any Change of Control Offer or Asset Sale
Offer).
"NET CASH PROCEEDS" means the aggregate amount of Cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and by the Parent in the case of a Public Equity Offering or an Equity
Private Placement and by the Company and its Subsidiaries in respect of an Asset
Sale plus, in the case of an issuance of Qualified Capital Stock upon any
exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of the Company that were issued for
cash on or after the Issue Date, the amount of cash originally received by the
Company (to the extent not previously included in the calculation of Net Cash
Proceeds) upon the issuance of such securities (including options, warrants,
rights and convertible or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and expenses (including, without limitation, the
fees and expenses of legal counsel and investment banking fees and expenses)
incurred in connection with such Asset Sale or sale of Qualified Capital Stock
or Public Equity Offering or Equity Private Placement, and, in the case of an
Asset Sale only, less (i) the amount (estimated in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its respective Subsidiaries in connection with such Asset
Sale, (ii) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (A) is secured by a Lien
on the property or assets sold or (B) is required to be paid as a result of such
sale, and (iii) appropriate amounts to be provided by the Company or any
Subsidiary of the Company as a reserve against any liabilities associated with
such Asset Sale, including, without
12
<PAGE>
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in conformity
with GAAP.
"NOTICE OF DEFAULT" shall have the meaning specified in Section
6.1(c).
"OBLIGATION" means any principal, premium or interest payment, or
monetary penalty, or damages, due by the Company under the terms of the
Securities or the Indenture.
"OCTOBER NOTES" means the Company's 9 3/4% Senior Subordinated Notes
due 2006 issued on October 16, 1996.
"OFFICER" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means, with respect to the Company, a
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company and otherwise complying with the requirements of Sections 12.4
and 12.5, and delivered to the Trustee or an Agent, as applicable.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee (which may include counsel to the Trustee
or the Company including an employee of the Company) or an Agent, as applicable,
complying with the requirements of Sections 12.4 and 12.5, and delivered to the
Trustee or an Agent, as applicable.
"PARENT" means Universal Outdoor Holdings, Inc., a Delaware
corporation.
"PAYING AGENT" shall have the meaning specified in Section 2.3.
"PAYMENT BLOCKAGE PERIOD" shall have the meaning specified in Section
11.2.
"PAYMENT DEFAULT" shall have the meaning specified in Section 11.2.
"PAYMENT NOTICE" shall have the meaning specified in Section 11.2.
13
<PAGE>
"PERMITTED HOLDER" means Daniel L. Simon, Brian T. Clingen or Kelso &
Company, L.P. or any of their respective affiliates (as such term is defined in
Rule 12b-2 under the Exchange Act).
"PERMITTED INDEBTEDNESS" means the Indebtedness of the Company to any
wholly owned Subsidiary, and Indebtedness of any wholly owned Subsidiary to any
other wholly owned Subsidiary or to the Company; PROVIDED, that, in the case of
Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Company's obligations pursuant to the
Securities and the date of any event that causes such Subsidiary to no longer be
a wholly owned Subsidiary shall be an Incurrence Date.
"PERMITTED INVESTMENT" means (a) Investments in any of the Securities;
(b) Cash Equivalents; (c) Permitted Indebtedness; (d) Investments in Persons
who, after such Investments, will become Subsidiaries of the Company; (e) other
Investments not to exceed $25 million in aggregate at any time outstanding; and
(f) Investments in any property or assets to be used in a business in which the
Company was engaged on the date of the Indenture.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days, or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property is used by the Company or any of its Subsidiaries) or interfere with
the ordinary conduct of the business of the Company or any of its Subsidiaries;
(f) Liens arising by operation of law in connection with judgments, only to the
extent, for an amount and for a period not resulting in an Event of Default with
respect thereto; (g) pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security legislation; (h)
14
<PAGE>
Liens securing the Securities; (i) Liens securing Indebtedness of a Person
existing at the time such Person becomes a Subsidiary or is merged with or into
the Company or a Subsidiary or Liens securing Indebtedness incurred in
connection with an Acquisition, PROVIDED that such Liens were in existence prior
to the date of such acquisition, merger or consolidation, were not incurred in
anticipation thereof, and do not extend to any other assets; (j) Liens arising
from Purchase Money Indebtedness permitted to be incurred under clause (c) of
Section 4.10 provided such Liens relate to the property which is subject to such
Purchase Money Indebtedness; (k) leases or subleases granted to other persons in
the ordinary course of business not materially interfering with the conduct of
the business of the Company or any of its Subsidiaries or materially detracting
from the value of the relative assets of the Company or any Subsidiary; (l)
Liens arising from precautionary Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Company or any of its
Subsidiaries in the ordinary course of business; and (m) Liens securing
Refinancing Indebtedness incurred to refinance any Indebtedness that was
previously so secured in a manner no more adverse to the Holders of the
Securities than the terms of the Liens securing such refinanced Indebtedness
provided that the Indebtedness secured is not increased and the lien is not
extended to any additional assets or property.
"PERSON" or "PERSON" means any corporation, individual, partnership,
trust, unincorporated association, or a government or any agency or political
subdivision thereof.
"PRINCIPAL CORPORATE TRUST OFFICE OF THE TRUSTEE" means the office of
the Trustee as set forth in Section 12.2 and such other offices as the Trustee
may designate in writing from time to time.
"PROPERTY" or "PROPERTY" means any right or interest in or to property
or assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"PUBLIC EQUITY OFFERING" means an underwritten offering of Common
Stock of the Parent pursuant to an effective registration statement under the
Securities Act.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness of such person to
any seller or other person incurred to finance the acquisition (including in the
case of a Capitalized Lease Obligation, the lease) of any real or personal
tangible property which, in the reasonable good faith judgment of the Board of
Directors of the Company, is directly related to a Related Business of the
Company and which is incurred substantially concurrently with such acquisition
and is secured only by the assets so financed.
15
<PAGE>
"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
"QUALIFIED EXCHANGE" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Indebtedness of
the Company issued on or after the Issue Date with the Net Cash Proceeds
received by the Company from the substantially concurrent sale of Qualified
Capital Stock or any exchange of Qualified Capital Stock for any Capital Stock
or Indebtedness issued on or after the Issue Date.
"RECORD DATE" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security attached hereto as
Exhibit A.
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in the form of Security attached hereto as Exhibit A, which shall include,
without duplication, in each case, accrued and unpaid interest to the Redemption
Date (subject to the provisions of Section 3.5).
"REFERENCE PERIOD" with regard to any person means the four full
fiscal quarters (or such lesser period during which such person has been in
existence) for which financial statements are available ended immediately
preceding any date upon which any determination is to be made pursuant to the
terms of the Securities or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with
16
<PAGE>
GAAP) at the time of such Refinancing, plus, in each case, premium and fees and
expenses; PROVIDED, that (A) such Refinancing Indebtedness of any Subsidiary of
the Company shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Subsidiary, (B) such Refinancing Indebtedness
shall (x) not have an Average Life shorter than the Indebtedness or Disqualified
Capital Stock to be so refinanced at the time of such Refinancing and (y) in all
respects, be no less subordinated or junior, if applicable, to the rights of
Holders of the Securities than was the Indebtedness or Disqualified Capital
Stock to be refinanced and (C) such Refinancing Indebtedness shall have a final
stated maturity or redemption date, as applicable, no earlier than the final
stated maturity or redemption date, as applicable, of the Indebtedness or
Disqualified Capital Stock to be so refinanced.
"REGISTRAR" shall have the meaning specified in Section 2.3.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of the Issue Date by and between the Company and the Initial
Purchasers providing for certain registration rights for the Securities.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
"RESTRICTED PAYMENT" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such person or any parent of such person, (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Equity Interests of such person or parent of such person, (c) other than with
the proceeds from the substantially concurrent sale of, or in exchange for,
Refinancing Indebtedness any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms of
or any defeasance of, any Subordinated Indebtedness, directly or indirectly, by
such person or Subsidiary of such person prior to the scheduled maturity, any
scheduled or required repayment of principal, or scheduled sinking fund payment,
as the case may be, of such Indebtedness and (d) any Investment by such person,
other than a Permitted Investment; PROVIDED, HOWEVER, that the term "Restricted
Payment" does not include (i) any dividend, distribution or other payment on or
with respect to Capital Stock of an issuer to the extent payable solely in
shares of Qualified Capital Stock of such issuer; or (ii) any dividend,
distribution or other payment to the Company, or to any of its wholly owned
Subsidiaries, by the Company or any of its Subsidiaries.
17
<PAGE>
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means, collectively, the Initial Securities and, when and
if issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SECURITIES CUSTODIAN" means the Registrar, as custodian with respect
to the Securities in global form, or any successor entity thereto.
"SECURITYHOLDER" or "HOLDER" means the Person in whose name a Security
is registered on the Registrar's books.
"SENIOR DEBT" of the Company means Indebtedness (including any
monetary obligation in respect of the Credit Agreement, and interest, whether or
not allowable, accruing on Indebtedness incurred pursuant to the Credit
Agreement after the filing of a petition initiating any proceeding under any
bankruptcy, insolvency or similar law) of the Company arising under the Credit
Agreement or that, by the terms of the instrument creating or evidencing such
Indebtedness, is expressly designated Senior Debt or made senior in right of
payment to the Securities; PROVIDED, that in no event shall Senior Debt include
(a) Indebtedness to any Subsidiary of the Company or any officer, director or
employee of the Company or any Subsidiary of the Company, (b) Indebtedness
incurred in violation of the terms of the Indenture, (c) Indebtedness consisting
of trade payables, (d) Disqualified Capital Stock and (e) Capitalized Lease
Obligations.
"SENIOR DEBT REPRESENTATIVE" means the agent under the Credit
Agreement or the indenture trustee or other trustee, agent or representative for
the holders of an aggregate of at least $10 million principal amount outstanding
of any other Senior Debt.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any
Subsidiary of the Company that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries or (ii) as of the end
of such fiscal year, was the owner of more than 10% of the consolidated assets
of the Company and its Subsidiaries, all as set forth on the most recently
available consolidated financial statements of the Company for such fiscal year.
18
<PAGE>
"SPECIAL RECORD DATE" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.
"STATED MATURITY," when used with respect to any Security, means
October 15, 2006.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company that is
expressly subordinated in right of payment to the Securities in any respect or,
for purposes of the definition of Restricted Payments only, has a stated
maturity on or after the Stated Maturity.
"SUBSIDIARY," with respect to any person, means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such person,
by such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person, (ii) any other person (other than a corporation or
partnership) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Company or of any Subsidiary of the
Company. Unless the context requires otherwise, Subsidiary means each direct
and indirect Subsidiary of the Company.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb), as in effect on the date of the execution of this
Indenture; except as otherwise provided in Section 9.3.
"TRANSACTIONS" means the acquisition of Outdoor Advertising Holdings,
Inc. pursuant to an Agreement and Plan of Merger entered into on August 27,
1996, the tender offer and consent solicitation by the Company to purchase all
of its outstanding 11% Series A Senior Notes due 2003, the tender offer and
consent solicitation by Parent to purchase all of its outstanding 14% Senior
Secured Notes due 2004, the execution of the Credit Agreement, the purchase of
certain assets of Tanner Peck, L.L.C., TOA Enterprises, L.P., William B. Tanner,
WBT Outdoor, Inc. and The Weatherley Tanner Trust pursuant to an Option and
Asset Purchase Agreement entered into on September 12, 1996, the purchase of
certain assets of Iowa Outdoor Displays pursuant to an Asset Purchase Agreement
entered into on September 12, 1996 and the purchase of certain assets of The
19
<PAGE>
Chase Company pursuant to an Asset Purchase Agreement entered into on September
11, 1996.
"TRANSFER RESTRICTED SECURITIES" means Securities that bear or are
required to bear the legend set forth in Section 2.6 hereof.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means such successor.
"TRUST OFFICER" means any officer within the corporate trust
administration division (or any successor group) of the Trustee or any other
officer of the Trustee customarily performing functions similar to those
performed by the Persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the Trustee to whom such trust matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"U.S. GOVERNMENT OBLIGATIONS" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"UNRESTRICTED SUBSIDIARY" means any subsidiary of the Company that
does not own any Capital Stock of, or own or hold any Lien on any property of,
the Company or any other Subsidiary of the Company and that shall be designated
an Unrestricted Subsidiary by the Board of Directors of the Company; PROVIDED,
that (i) such subsidiary shall not engage, to any substantial extent, in any
line or lines of business activity other than a Related Business and (ii)
neither immediately prior thereto nor after giving pro forma effect to such
designation would there exist a Default or Event of Default. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Subsidiary, provided, that (i) no Default or Event of Default is existing or
will occur as a consequence thereof and (ii) immediately after giving effect to
such designation, on a PRO FORMA basis, the Company could incur at least $1.00
of Indebtedness pursuant to the Debt Incurrence Ratio in paragraph (a) of
Section 4.10. Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
20
<PAGE>
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Equity Interests
of which are owned by the Company or one or more wholly owned Subsidiaries of
the Company.
SECTION 2. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the SEC.
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITYHOLDER" means a Holder or a Securityholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 3. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
21
<PAGE>
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise.
THE SECURITIES
SECTION 1. FORM AND DATING.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto, which
Exhibit is part of this Indenture. The Securities may have notations, legends
or endorsements required by law, stock exchange rule or usage or the terms
hereof. The Company shall approve the form of the Securities and any notation,
legend or endorsement on them. Any such notations, legends or endorsements not
contained in the form of Security attached as Exhibit A hereto shall be
delivered in writing to the Trustee. Each Security shall be dated the date of
its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2. EXECUTION AND AUTHENTICATION.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Security for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
22
<PAGE>
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate or cause to be authenticated the
Initial Securities for original issue in the aggregate principal amount of up to
$100,000,000 and shall authenticate Exchange Securities for original issue in
the aggregate principal amount of up to $100,000,000, in each case upon a
written order of the Company in the form of an Officers' Certificate provided
that such Exchange Securities shall be issuable only upon the valid surrender
for cancellation of Initial Securities of a like aggregate principal amount. The
Officers' Certificate shall specify the amount of Securities to be authenticated
and the date on which the Securities are to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$100,000,000, except as provided in Section 2.7. Upon the written order of the
Company in the form of an Officers' Certificate, the Trustee shall authenticate
Securities in substitution of Securities originally issued to reflect any name
change of the Company.
Each Security shall be dated the date of its authentication.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
SECTION 3. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented or
surrendered for
23
<PAGE>
registration of transfer or exchange ("Registrar") and an office or agency of
the Company where Securities may be presented or surrendered for payment
("Paying Agent") and where notices and demands to or upon the Company in respect
of the Securities may be served. The Company may act as Registrar or Paying
Agent, except that for the purposes of Articles III, VIII, X and Section 4.13
and as otherwise specified in this Indenture, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Registrar" includes any co-registrar and the term "Paying Agent" includes
any additional Paying Agent. The Company hereby initially appoints the Trustee
as Registrar and Paying Agent, and by its signature hereto, the Trustee hereby
agrees so to act. The Company may at any time change any Paying Agent or
Registrar without notice to any Holder.
The Company shall enter into an appropriate written agency agreement
with any Agent (including the Paying Agent) not a party to this Indenture, which
agreement shall implement the provisions of this Indenture that relate to such
Agent, and shall furnish a copy of each such agreement to the Trustee. The
Company shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Securities.
The Company initially appoints the Registrar to act as Securities
Custodian with respect to the Global Securities.
Upon the occurrence of an Event of Default described in Section 6.1(d)
or (f), the Trustee shall, or upon the occurrence of any other Event of Default
by notice to the Company, the Registrar and the Paying Agent, the Trustee may,
assume the duties and obligations of the Registrar and the Paying Agent
hereunder.
The Trustee is authorized to enter into a letter of representation
with DTC in the form provided to the Trustee by the Company and to act in
accordance with such letter.
24
<PAGE>
SECTION 4. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, premium, if any, or interest on, the Securities (whether such
assets have been distributed to it by the Company or any other obligor on the
Securities), and shall notify the Trustee in writing of any Default in making
any such payment. If either of the Company or a Subsidiary of the Company acts
as Paying Agent, it shall segregate such assets and hold them as a separate
trust fund for the benefit of the Holders or the Trustee. The Company at any
time may require a Paying Agent to distribute all assets held by it to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any Payment Default or any Event of Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed.
Upon distribution to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent, the Paying Agent (if other than the Company)
shall have no further liability for such assets.
SECTION 5. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is
not the Registrar, the Company shall cause the Registrar to furnish to the
Trustee on or before the seventh Business Day preceding each Interest Payment
Date and at such other times as the Trustee or any such Paying Agent may request
in writing a list in such form and as of such date as the Trustee reasonably may
require of the names and addresses of Holders and the Company shall otherwise
comply with TIA Section 312(a).
SECTION 6. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When
Definitive Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized denominations,
25
<PAGE>
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; PROVIDED, HOWEVER,
that the Definitive Securities surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company, the
Registrar and the Trustee duly executed by the Holder thereof or his attorney
duly authorized in writing; and
(ii) in the case of Definitive Securities that are Transfer
Restricted Securities, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security);
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the Securities Act, a
certification to that effect (in substantially the form set forth on the reverse
of the Security); or
(C) if such Transfer Restricted Security is being
transferred (i) pursuant to an exemption from registration in accordance with
Rule 144 or Regulation S under the Securities Act or (ii) pursuant to an
effective registration statement under the Securities Act or (iii) in reliance
on another exemption from the registration requirements of the Securities Act, a
certification to that effect (in substantially the form set forth on the reverse
of the Security) and in the case of (i) and (iii) above, if the Company so
requests, a customary opinion of counsel reasonably acceptable to the Company to
the effect that such transfer is in compliance with the Security Act.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar, together with:
26
<PAGE>
(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form set forth on the reverse of
the Security, that such Definitive Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions of the Holder directing the Registrar
to make, or to direct the Securities Custodian to make, an endorsement on the
Global Security to reflect an increase in the aggregate principal amount of the
Securities represented by the Global Security, then the Registrar shall cancel
such Definitive Security and cause, or direct the Securities Custodian to cause,
in accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian, the aggregate principal amount of
Securities represented by the Global Security to be increased accordingly. If
no Global Securities are then outstanding, the Company shall issue and the
Trustee, upon receipt of an authentication order in the form of an Officers'
Certificate, shall authenticate and deliver a new Global Security in the
appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN GLOBAL
SECURITIES. The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture (including applicable restrictions on transfer set forth herein,
if any) and the procedures of the Depositary therefor which shall include
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR A
DEFINITIVE SECURITY.
(i) Any Person having a beneficial interest in a Global
Security may upon request, subject to the Company's approval in its
sole and complete discretion, exchange such beneficial interest for a
Definitive Security. Upon receipt by the Registrar of written
instructions or such other form of instructions as is customary for the
Depositary from the Depositary or its nominee on behalf of any Person
having a beneficial interest in a Global Security and upon receipt by
the Registrar of a written order or such other form of instructions as
is customary for the Depositary from the Person designated by the
Depositary as having such a beneficial interest in a Transfer Restricted
Security only, and the following additional information and documents
(all of which may be submitted by facsimile):
27
<PAGE>
(A) if such beneficial interest is being
transferred to the Person designated by the Depositary as being the
beneficial owner, a certification from such person to that effect (in
substantially the form set forth on the reverse of the Security); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under the
Securities Act a certification to that effect from the transferor (in
substantially the form set forth on the reverse of the Security); or
(C) if such beneficial interest is being
transferred (i) pursuant to an exemption from registration in accordance
with Rule 144 or Regulation S under the Securities Act or (ii) pursuant
to an effective registration statement under the Securities Act or (iii)
in reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the transferee
or transferor (in substantially the form set forth on the reverse of the
Security) and in the case of (i) and (iii) above, if the Company so
requests, a customary opinion of counsel from the transferee or
transferor reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act;
then the Registrar or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee or the Trustee's authenticating agent will
authenticate and deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section 2.6(d)
shall be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Registrar. The Registrar
shall deliver such Definitive Securities to the persons in whose names
such Securities are so registered.
28
<PAGE>
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE SECURITIES IN ABSENCE OF
DEPOSITARY.
If at any time:
(i) the Depositary for the Securities notifies the
Company that the Depositary is unwilling or unable to continue as
Depositary for the Global Securities and a successor Depositary for the
Global Securities is not appointed by the Company within 90 days after
delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the
Trustee and the Registrar in writing that they elect to cause the
issuance of Definitive Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an
Officers' Certificate requesting the authentication and delivery of
Definitive Securities, will, or its authenticating agent will,
authenticate and deliver Definitive Securities, in an aggregate
principal amount equal to the principal amount of the Global Securities,
in exchange for such Global Securities.
(g) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECURITY. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or cancelled, such Global
Security shall be returned to or retained and cancelled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Security
is exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(h) LEGENDS.
(i) Except as permitted by the following paragraph (ii),
each Security certificate evidencing the Global Securities and the
Definitive Securities
29
<PAGE>
(and all Securities issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE NOTE EVIDENCED HEREBY IS NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY
RULE 144A UNDER THE SECURITIES ACT. THE HOLDER OF
THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT
OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN
30
<PAGE>
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE
RESALE RESTRICTION SET FORTH IN (A)(l) ABOVE."
31
<PAGE>
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Security)
pursuant to Rule 144 under the Securities Act or an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security in
the case of a sale or transfer pursuant to Rule 144 under the
Securities Act, after three years from the date the Securities were
first issued (or such shorter period that may hereafter be provided
under Rule 144(k) under the Securities Act) or delivery of a customary
opinion of counsel; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in
(i) above (such sales or transfers being subject only to the
provisions of Section 2.6(c) hereof); PROVIDED, HOWEVER, that with
respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Security for a Definitive
Security that does not bear a legend, which request is made in
reliance upon Rule 144 under the Securities Act, the Holder thereof
shall certify in writing (to be accompanied by a customary opinion of
counsel) to the Registrar that such request is being made pursuant to
Rule 144 under the Securities Act (such certification to be
substantially in the form set forth on the reverse of the Security).
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
DEFINITIVE SECURITIES.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee or any authenticating agent of
the Trustee shall authenticate Definitive Securities and Global
Securities at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessment, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes, assessments,
32
<PAGE>
or similar governmental charge payable upon exchanges or transfers pursuant to
Section 2.2 (fourth paragraph), 2.10, 3.7, 4.13(8), 9.5, or 10.1 (final
paragraph)).
(iii) The Registrar shall not be required to register the
transfer of or exchange (a) any Definitive Security selected for redemption in
whole or in part pursuant to Article III, except the unredeemed portion of any
Definitive Security being redeemed in part, or (b) any Security for a period
beginning 15 Business Days before the mailing of a notice of an offer to
repurchase pursuant to Article X or Section 4.13 hereof or a notice of
redemption of Securities pursuant to Article III hereof and ending at the close
of business on the day of such mailing.
(iv) Prior to due presentment for registration or transfer of
any Security, the Trustee, any Agent and the Company may deem and treat the
Person in whose name the Security is registered as the absolute owner of such
Security, and none of the Trustee, Agent or the Company shall be affected by
notice to the contrary.
SECTION 7. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits evidence, satisfactory to the Trustee to the
effect that the Security has been lost, destroyed or wrongfully taken, in the
absence of notice to the Company and the Trustee that such Security has been
acquired by a bona-fide purchaser, the Company shall issue and the Trustee or
any authenticating agent of the Trustee shall authenticate and deliver a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may require the payment of a
sum sufficient to cover any transfer tax, assessment or similar governmental
charge that may be imposed in relation to the issuance of any new Security and
charge such Holder for its reasonable, out-of-pocket expenses (including the
fees and expenses of the Trustee) in replacing a Security.
Every replacement Security is an additional obligation of the Company.
33
<PAGE>
SECTION 8. OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee (including any Security represented by a
Global Security) except those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Security effected by
the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a BONA FIDE purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds Cash or U.S. Government
Obligations sufficient to pay all of the principal and interest and premium, if
any, due on the Securities payable on that date and payment of the Securities
called for redemption is not otherwise prohibited, then on and after that date
such Securities cease to be outstanding and interest on them ceases to accrue.
SECTION 9. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company or Affiliates of the Company shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, amendment, supplement,
waiver or consent, only Securities that a Trust Officer of the Trustee knows are
so owned shall be disregarded.
SECTION 10. TEMPORARY SECURITIES.
Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate and deliver temporary Securities.
Temporary Securities shall be substantially in the form of permanent Securities
but may have variations that the Company and the Trustee reasonably consider
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate
34
<PAGE>
Definitive Securities in exchange for temporary Securities. Until so exchanged,
the temporary Securities shall in all respects be entitled to the same rights,
privileges and benefits under this Indenture as permanent Securities
authenticated and delivered hereunder.
SECTION 11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to it or them (as applicable) for registration of
transfer, exchange or payment. The Trustee shall cancel and destroy all
Securities surrendered for transfer, exchange, payment or cancellation and shall
deliver a certificate of destruction to the Company. Subject to Section 2.7,
the Company may not issue new Securities to replace Securities that have been
paid or delivered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section 2.11, except as expressly permitted in the form of Securities
and as permitted by this Indenture.
SECTION 12. DEFAULTED INTEREST.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of Cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such Cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
Special Record
35
<PAGE>
Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the
Security register not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the persons in whose names the Securities (or
their respective predecessor Securities) are registered on such Special
Record Date and shall no longer be payable pursuant to the following clause
(2).
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
ARTICLE III
REDEMPTION
SECTION 1. RIGHT OF REDEMPTION.
Redemption of Securities, as permitted by any provision of this
Indenture, shall be made in accordance with such provision and this Article III.
The Company will not have the right to redeem any Securities prior to October
15, 2001, except as provided in the immediately following paragraph. On or
after October 15, 2001, the Company will have the right to redeem all or any
part of the Securities at the Redemption Prices specified in the form of
Security attached as Exhibit A set forth therein in Paragraph 5 thereof,
36
<PAGE>
including accrued and unpaid interest to the Redemption Date (subject to the
right of Holders of record on a Record Date to receive interest due on an
Interest Payment Date that is on or prior to such Redemption Date, and subject
to the provisions set forth in Section 3.5).
Notwithstanding the foregoing, prior to October 15, 1999, upon any
Public Equity Offering or Equity Private Placement, in each case resulting in
Net Cash Proceeds of $100 million or more which are then contributed in full to
the Company, up to $35 million aggregate principal amount of the Securities may
be redeemed at the option of the Company with cash from the Net Cash Proceeds of
such Public Equity Offering or Equity Private Placement, at 110% of principal,
PROVIDED, HOWEVER, that immediately following such redemption not less than $65
million aggregate principal amount of the Securities are outstanding, PROVIDED,
FURTHER, that such redemption shall occur within 120 days of such Public Equity
Offering or Equity Private Placement.
SECTION 2. NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall furnish to the Trustee an Officer's Certificate setting
forth (i) the Section of this Indenture pursuant to which the redemption shall
occur, (ii) Redemption Date, (iii) the principal amount of Securities to be
redeemed, (iv) the Redemption Price, and (v) whether it wants the Trustee to
give notice of redemption to the Holders in accordance with Section 3.4.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Company shall give the Officers' Certificate to the Trustee
provided for in this Section 3.2 at least 45 days before the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee). Any such notice
to the Trustee may be cancelled at any time up to one Business Day prior to
notice of such redemption being mailed to any Holder and shall thereby be void
and of no effect.
SECTION 3. SELECTION OF SECURITIES TO BE REDEEMED.
37
<PAGE>
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities or portions thereof
for redemption on a PRO RATA basis, by lot or by such other method as the
Trustee shall determine to be fair and appropriate.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company,
the Registrar and the Paying Agent, if applicable, in writing of the Securities
selected for redemption and, in the case of any Security selected for partial
redemption, the principal amount thereof to be redeemed. Securities in
denominations of $1,000 may be redeemed only in whole. The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Securities that have denominations larger than $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption.
SECTION 4. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed to
such Holder's last address as then shown on the registry books of the Registrar.
At the Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of
accrued and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone number of the
Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice to
collect the Redemption Price;
(5) that, unless the Company defaults in its
obligation to deposit Cash or U.S. Government Obligations which through the
scheduled
38
<PAGE>
payment of principal and interest in respect thereof in accordance with
their terms will provide Cash in an amount to fund the Redemption Price
with the Paying Agent in accordance with Section 3.6 hereof or such
redemption payment is otherwise prohibited, interest on Securities called
for redemption ceases to accrue on and after the Redemption Date and the
only remaining right of the Holders of such Securities is to receive
payment of the Redemption Price, including accrued and unpaid interest to
the Redemption Date, upon surrender to the Paying Agent of the Securities
called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the
portion of the principal amount equal to $1,000 or any integral multiple
thereof, of such Security to be redeemed and that, after the Redemption
Date, and upon surrender of such Security, a new Security or Securities in
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(7) if less than all the Securities are to be
redeemed, the identification of the particular Securities (or portion
thereof) to be redeemed, as well as the aggregate principal amount of such
Securities to be redeemed and the aggregate principal amount of Securities
to be outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be redeemed;
and
(9) that the notice is being sent pursuant to this
Section 3.4 and pursuant to the optional redemption provisions of Paragraph
5 of the Securities.
SECTION 5. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued and unpaid interest to the
Redemption Date. Upon surrender to the Trustee or, if the Trustee is no longer
the paying agent, to the Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, including interest, if any, accrued and
unpaid to the Redemption Date; PROVIDED that if the Redemption Date is on or
after a regular Record Date and on or prior to the Interest Payment Date to
which such Record Date relates, the accrued interest shall be payable to the
Holder of the redeemed Securities registered on the relevant Record Date and no
additional interest will be payable to Holders of the redeemed Securities on the
Redemption Date;
39
<PAGE>
and PROVIDED, FURTHER, that if a Redemption Date is not a Business Day, payment
shall be made on the next succeeding Business Day and no interest shall accrue
for the period from such Redemption Date to such succeeding Business Day.
SECTION 6. DEPOSIT OF REDEMPTION PRICE.
At least one Business Day prior to the Redemption Date, the Company
shall deposit with the Trustee or with the Paying Agent (other than the Company
or an Affiliate of the Company) Cash or U.S. Government Obligations in
immediately available funds sufficient to pay the Redemption Price of, and
accrued and unpaid interest on, all Securities to be redeemed on such Redemption
Date (other than Securities or portions thereof called for redemption on that
date that have been delivered by the Company to the Trustee for cancellation).
The Trustee or the Paying Agent shall promptly return to the Company any Cash or
U.S. Government Obligations so deposited which is not required for that purpose
upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and the Security.
SECTION 7. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, without service charge to the Holder, a new Security or Securities equal
in principal amount to the unredeemed portion of the Security surrendered.
40
<PAGE>
COVENANTS
SECTION 1. PAYMENT OF SECURITIES.
The Company shall pay the principal of and interest and premium, if
applicable, on the Securities on the dates and in the manner provided herein and
in the Securities. An installment of principal of or interest and premium, if
applicable, on the Securities shall be considered paid on the date it is due if
the Trustee or Paying Agent (other than the Company, a Subsidiary of the Company
or an Affiliate of the Company) holds for the benefit of the Holders, on or
before 10:00 a.m. New York City time on that date, Cash deposited and designated
for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 12.2 (the
"Principal Corporate Trust Office of Trustee").
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office
41
<PAGE>
or agency. The Company hereby initially designates the Principal Corporate Trust
Office of Trustee as such office.
SECTION 3. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, make any Restricted Payment if, after giving effect
to such Restricted Payment on a PRO FORMA basis, (1) a Default or an Event of
Default shall have occurred and be continuing, (2) the Company is not permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Debt
Incurrence Ratio in paragraph (a) of Section 4.10, or (3) the aggregate amount
of all Restricted Payments made by the Company and its Subsidiaries, including
after giving effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the sum of (a) Consolidated EBITDA of the Company and
its Consolidated Subsidiaries for the period (taken as one accounting period),
commencing on the first day of the first full fiscal quarter commencing after
the Issue Date, to and including the last day of the fiscal quarter ended
immediately prior to the date of each such calculation (or, in the event
Consolidated EBITDA for such period is a deficit, then minus 100% of such
deficit), minus (b) 1.5 times the Consolidated Fixed Charges over such period,
plus (c) the aggregate Net Cash Proceeds received by the Company from the sale
of its Qualified Capital Stock or Indebtedness to the extent subsequently
converted into Qualified Capital Stock (other than (i) to a Subsidiary of the
Company and (ii) to the extent applied in connection with a Qualified Exchange)
or the fair market value (as determined by the Board of Directors reasonably and
in good faith) of securities of the Parent issued in connection with an
acquisition by the Company or any of its Subsidiaries, in each case after the
Issue Date, plus (d) the net reductions in Investments (other than reductions in
Permitted Investments) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans or from designations of
Unrestricted Subsidiaries as Subsidiaries, valued in each case as provided in
the definition of "Investment," not to exceed the amount of Investments
previously made by the Company and its Subsidiaries in such Person, plus (e) $15
million.
The preceding paragraph, however, will not prohibit (w) payments in
accordance with "Use of Proceeds" section of the Offering Memorandum, dated
December 11, 1996, (x) repurchases of Capital Stock out of the proceeds of any
"key man" life insurance policies on Daniel L. Simon existing on the Issue Date
and described in the Prospectus and additional repurchases of Capital Stock from
employees of the Company or its Subsidiaries upon the death, disability or
termination of employment in an aggregate amount to all employees not to exceed
$1 million per year or $2 million in the aggregate on and after the Issue Date,
(y) a Qualified Exchange, or (z) the payment of any dividend
42
<PAGE>
on Qualified Capital Stock within 60 days after the date of its declaration if
such dividend could have been made on the date of such declaration in compliance
with the foregoing provisions. The full amount of any Restricted Payment made
pursuant to the foregoing clauses (x) and (z) of the immediately preceding
sentence, however, will be deducted in the calculation of the aggregate amount
of Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph of this Section 4.3.
43
<PAGE>
SECTION 4. CORPORATE EXISTENCE.
Except as otherwise provided or permitted in Article V or elsewhere in
this Indenture, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence in accordance
with its organizational documents (as the same may be amended from time to time)
and the rights (charter and statutory) and corporate franchises of the Company;
PROVIDED, HOWEVER, nothing in this Section will prohibit the Company from
engaging in any transaction permitted under Section 11.4 or Section 11.5 hereof
and PROVIDED, FURTHER, that the Company shall not be required to preserve any
right or franchise if the Board of Directors of the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of such entity.
SECTION 5. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except (i) as contested in good faith by appropriate proceedings and with
respect to which appropriate reserves have been taken to the extent required by
GAAP or (ii) where the failure to effect such payment is not adverse in any
material respect to the Holders.
SECTION 6. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee within 120 days
after the end of its fiscal year an Officers' Certificate complying with Section
314(a)(4) of the TIA and stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers and stating, as to each such
Officer signing such certificate, to the best of his knowledge, based on such
review, whether or not the signer knows of any Event of Default or event which
with notice or the passage of time would become an Event of Default which has
occurred and is continuing (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Defaults of which such
signer may have knowledge and what action each is taking or proposed to take
with respect thereto) and that to the best of such signer's knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Securities are prohibited or if
such event has occurred, a description of the event and what action each is
taking or proposes to take with respect thereto. The Officers' Certificate
shall also notify the Trust-
44
<PAGE>
ee should the relevant fiscal year end on any date other than the current fiscal
year end date.
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto. The Trustee shall not be deemed to have knowledge of any
Default or any Event of Default unless one of its Trust Officers receives
written notice thereof from the Company or any of the Holders.
SECTION 7. REPORTS.
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Commission, and deliver to the Trustee and to each Holder within 15 days after
it has filed such with the Commission (if the Commission will accept such
filing), annual, quarterly and other reports required by Section 13 or 15(d) of
the Exchange Act. Notwithstanding anything to the contrary herein, the Trustee
shall have no duty to review such documents for purposes of determining
compliance with any provisions of this Indenture.
SECTION 8. LIMITATION ON STATUS AS INVESTMENT COMPANY.
Neither the Company nor any Subsidiary shall be required to register
as an "investment company" (as that term is defined in the Investment Company
Act of 1940, as amended) or shall otherwise become subject to regulation under
the Investment Company Act.
SECTION 9. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
Neither the Company nor any of its Subsidiaries will be permitted
after the Issue Date to enter into or suffer to exist any contract, agreement,
arrangement or transaction (other than guarantees of the Credit Agreement by the
Company's Subsidiaries) with any Affiliate (an "Affiliate Transaction"), or any
series of related Affiliate Transactions, (i) unless it is determined that the
terms of such Affiliate Transaction are fair and reasonable to the Company, and
no less favorable to the Company than could have been obtained in an arm's
length transaction with a non-Affiliate and, (ii) if involving consideration to
either party in excess of $1 million, unless such Affiliate Transaction(s) is
evidenced by an Officers' Certificate addressed and delivered to the Trustee
certifying
45
<PAGE>
that such Affiliate Transaction (or Affiliate Transactions) has been approved by
a majority of the members of the Board of Directors that are disinterested in
such transaction and (iii) if involving consideration to either party in excess
of $10 million, unless in addition the Company, prior to the consummation
thereof, obtains a written favorable opinion as to the fairness of such
transaction to the Company from a financial point of view from an independent
investment banking firm of national reputation.
This Section 4.9 shall not apply to (i) any transaction between the
Company and any of its Subsidiaries or between Subsidiaries, (ii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company and any employment agreement entered into by the
Company or any Subsidiary in the ordinary course of business and (iii) any tax
sharing arrangement between the Company and Parent.
SECTION 10. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND
DISQUALIFIED CAPITAL STOCK.
Except as set forth in this Section 4.10, the Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, issue,
assume, guaranty, incur, become directly or indirectly liable with respect to
(including as a result of an Acquisition), or otherwise become responsible for,
contingently or otherwise (individually and collectively, to "incur" or, as
appropriate, an "incurrence"), any Indebtedness or any Disqualified Capital
Stock (including Acquired Indebtedness). Notwithstanding the foregoing:
(a) if (i) no Default or Event of Default shall have occurred
and be continuing at the time of, or would occur after giving effect on a PRO
FORMA basis to, such incurrence of Indebtedness or Disqualified Capital Stock
and (ii) on the date of such incurrence (the "Incurrence Date"), the
Consolidated Leverage Ratio of the Company as of the end of the Reference Period
immediately preceding the Incurrence Date, after giving effect on a PRO FORMA
basis to such incurrence of such Indebtedness or Disqualified Capital Stock and,
to the extent set forth in the definition of Consolidated Leverage Ratio, the
use of proceeds thereof, would not exceed 6.5 to l from the Issue Date to and
including the third anniversary of the Issue Date, 6.25 to 1 from the third
anniversary of the Issue Date to and including the fifth anniversary thereof,
and 6.0 to 1 thereafter (each, a "Debt Incurrence Ratio"), then the Company may
incur such Indebtedness or Disqualified Capital Stock;
46
<PAGE>
(b)the Company and the Subsidiaries may incur Indebtedness
evidenced by the Securities and represented by the Indenture up to the amounts
specified therein as of the date thereof;
(c)the Company and the Subsidiaries may incur Purchase Money
Indebtedness (including any Indebtedness issued to refinance, replace or refund
such Indebtedness) on or after the Issue Date, PROVIDED, that (i) the aggregate
amount of such Indebtedness incurred on or after the Issue Date and outstanding
at any time pursuant to this paragraph (c) shall not exceed $10 million, and
(ii) in each case, such Indebtedness shall not constitute more than 100% of the
cost (determined in accordance with GAAP) to the Company or such Subsidiary, as
applicable, of the property so purchased or leased;
(d)the Company and the Subsidiaries, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (a), (b) and (c) of this
Section 4.10 or which is outstanding on the Issue Date so long as, in the case
of Refinancing Indebtedness which is not Senior Debt, such Refinancing
Indebtedness is secured only by the assets that secured the Indebtedness so
refinanced;
(e)the Company and the Subsidiaries may incur Permitted
Indebtedness;
(f)Indebtedness incurred pursuant to the Credit Agreement up to
an aggregate amount outstanding (including any Indebtedness issued to refinance,
refund or replace such Indebtedness) at any time not to exceed $300 million
minus the amount of any such Indebtedness retired with Net Cash Proceeds from
any Asset Sale and plus any such Indebtedness constituting Interest Swap and
Hedging Obligations;
(g)other Indebtedness of the Company or its Subsidiaries not to
exceed $25 million at any time outstanding, of which only $10 million may be
incurred by Subsidiaries.
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with the Company or a Subsidiary of
the Company shall be deemed to have been Incurred at the time such Person
becomes such a Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Subsidiary of the Company, as applicable.
For purposes of determining amounts of Indebtedness under this Section
47
<PAGE>
4.10, (i) Indebtedness resulting from security interests granted with respect
to Indebtedness otherwise included in the determination of Indebtedness, and
guarantees (and security interests with respect thereof) of, or obligations
with respect to letters of credit supporting, Indebtedness otherwise included
in the determination of Indebtedness shall not be included in the
determination of Indebtedness, (ii) any Liens permitted hereunder supporting
Indebtedness otherwise included in the determination of Indebtedness shall
not be included in the determination of Indebtedness and (iii) Indebtedness
permitted under this Section 4.10 need not be permitted solely by reference
to one provision permitting such Indebtedness but may be permitted in part by
reference to one such provision and in part by reference to one or more other
provisions of this Section 4.10. For purposes of determining compliance with
this Section 4.10, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described above, the
Company in its sole discretion shall classify such item of Indebtedness and
shall only be required to include the amount and type of Indebtedness in one
of such categories.
SECTION 11. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, assume or suffer to exist any consensual
restriction on the ability of any Subsidiary of the Company to pay dividends or
make other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, the Company or any Subsidiary
of the Company, except (a) restrictions imposed by the Securities or the
Indenture, (b) restrictions imposed by applicable law, (c) restrictions under
any Acquired Indebtedness not incurred in violation of this Indenture or any
agreement relating to any property, asset, or business acquired by the Company
or any of its Subsidiaries, which restrictions in each case existed at the time
of acquisition, were not put in place in connection with or in anticipation of
such acquisition and are not applicable to any person, other than the person
acquired, or to any property, asset or business, other than the property, assets
and business so acquired, (d) any such restriction or requirement imposed by
Indebtedness incurred under paragraph (f) of Section 4.10, (e) restrictions with
respect solely to a Subsidiary of the Company imposed pursuant to a binding
agreement which has been entered into for the sale or disposition of all or
substantially all of the Equity Interests or of any assets of such Subsidiary,
provided such restrictions apply solely to the Equity Interests or assets of
such Subsidiary, (f) restrictions on transfer contained in Purchase Money
Indebtedness incurred pursuant to paragraph (c) of Section 4.10, provided such
restrictions relate only to the transfer of the property acquired with the
proceeds of such Purchase Money Indebtedness, and (g) in connection with and
pursuant
48
<PAGE>
to permitted Refinancing Indebtedness, replacements of restrictions imposed
pursuant to clause (a) or (f) of this Section 4.11 that are not more restrictive
than those being replaced and do not apply to any other person or assets than
those that would have been covered by the restrictions in the Indebtedness so
refinanced. Notwithstanding the foregoing, neither (a) customary provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with industry practice, nor (b) Liens permitted
under the terms of this Indenture shall in and of themselves be considered a
restriction on the ability of the applicable Subsidiary to transfer such
agreement or assets, as the case may be.
SECTION 12. LIMITATION ON LIENS SECURING INDEBTEDNESS.
The Company shall not, and shall not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien of any kind, other than Permitted
Liens, upon any of their respective assets now owned or acquired on or after the
date of the Indenture or upon any income or profits therefrom securing any
Indebtedness of the Company other than Senior Debt of the Company, unless the
Company provides, and causes its Subsidiaries to provide, concurrently or
immediately thereafter, that the Securities are equally and ratably so secured
so long as such Lien exists, PROVIDED that, if such Indebtedness is Subordinated
Indebtedness, the Lien securing such Subordinated Indebtedness shall be
subordinate and junior to the Lien securing the Securities with the same
relative priority as such Subordinated Indebtedness shall have with respect to
the Securities.
SECTION 13. LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, in one or a series of related transactions, convey, sell, transfer, assign
or otherwise dispose of, directly or indirectly, any of its property, business
or assets, including by merger or consolidation (other than a merger or
consolidation of the Company), and including any sale or other transfer or
issuance of any Equity Interests of any Subsidiary of the Company, whether by
the Company or a Subsidiary of either or through the issuance, sale or transfer
of Equity Interests by a Subsidiary of the Company (an "Asset Sale"), unless
(l)(a) within 210 days after the date of such Asset Sale, the Net Cash Proceeds
therefrom (the "Asset Sale Offer Amount") are applied to the optional redemption
of the Securities in accordance with the terms hereof or to the repurchase of
Securities pursuant to a cash offer (the "Asset Sale Offer") to repurchase
Securities at a purchase price (the "Asset Sale Offer Price") of 100% of
principal amount, plus accrued interest to the date of payment, made within 180
days of such Asset Sale or (b) within 180 days following such Asset Sale
49
<PAGE>
(subject to the right under the Indenture, dated as of October 16, 1996,
governing the October Notes to accumulate $15 million in proceeds), the Asset
Sale Offer Amount is (i) invested (or committed to be invested, and in fact is
so invested, within an additional 90 days) in assets and property other than
notes, bonds, obligation and securities (except in connection with the
acquisition of a wholly owned Subsidiary) which in the good faith reasonable
judgment of the Board will immediately constitute or be a part of a Related
Business of the Company or such Subsidiary immediately following such
transaction or (ii) used to permanently reduce Senior Debt (PROVIDED that in the
case of a revolver or similar arrangement that makes credit available, such
commitment is also permanently reduced by such amount) or redeem or purchase the
October Notes, (2) at least 75% of the consideration for such Asset Sale or
series of related Asset Sales consists of Cash, Cash Equivalents or Permitted
Investments, (3) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a PRO forma
basis, to, such Asset Sale, and (4) the Board of Directors of the Company
determines in good faith that the Company or such Subsidiary, as applicable,
receives fair market value for such Asset Sale.
Notwithstanding the foregoing provisions of the prior paragraph:
(i)the Company and its Subsidiaries may, in the ordinary
course of business, convey, sell, transfer, assign or otherwise dispose of
inventory acquired and held for resale in the ordinary course of business;
(ii)the Company and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with the limitation on mergers, sales or consolidations
provisions in this Indenture;
(iii)the Company and its Subsidiaries may sell or dispose of
damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Subsidiary, as applicable;
(iv)the Subsidiaries may convey, sell, transfer, assign or
otherwise dispose of assets to the Company or any of its wholly owned
Subsidiaries; and
(v)the Company and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets (in addition to those
transactions
50
<PAGE>
described in clause (i) through (iv) of this Section 4.13) with an
aggregate fair market value of $5 million in any fiscal year.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds from Asset Sales not applied to the uses set forth in clause (l) of the
first paragraph of this Section 4.10 (the "Excess Proceeds") exceeds $15 million
and that each Asset Sale Offer shall remain open for 20 Business Days following
its commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset
Sale Offer Period, the Company shall apply the Asset Sale Offer Amount plus an
amount equal to accrued interest to the purchase of all Securities properly
tendered (on a PRO RATA basis if the Asset Sale Offer Amount is insufficient to
purchase all Securities so tendered) at the Asset Sale Offer Price (together
with accrued interest). To the extent that the aggregate amount of Securities
tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer
Amount, the Company may use any remaining Net Cash Proceeds for general
corporate purposes as otherwise permitted by this Indenture and following each
Asset Sale Offer the Excess Proceeds amount shall be reset to zero. For
purposes of clause (2) of the first paragraph of this Section 4.13 total
consideration received means the total consideration received for such Asset
Sales minus the amount of (a) Senior Debt assumed by a transferee and (b)
property that within 30 days of such Asset Sale is converted into Cash or Cash
Equivalents.
All Net Cash Proceeds from an Event of Loss shall be invested, used
for prepayment of Senior Debt, or used to repurchase Securities, all within the
period and as otherwise provided above in clause 1(a) or 1(b) of the first
paragraph of this Section 4.13.
Notice of an Asset Sale Offer will be sent 20 Business Days prior to
the close of business on the third Business Day prior to the date set by the
Company to repurchase Securities pursuant to this Section 4.13 (the "Purchase
Date"), by first-class mail, by the Company to each Holder at its registered
address, with a copy to the Trustee. The notice to the Holders will contain all
information, instructions and materials required by applicable law. The notice,
which (to the extent consistent with this Indenture) shall govern the terms of
the Asset Sale Offer, shall state:
(1)that the Asset Sale Offer is being made pursuant to
such notice and this Section 4.13;
(2)the Asset Sale Offer, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), and the Purchase
Date,
51
<PAGE>
which Purchase Date shall be on or prior to 45 Business Days following the
Excess Proceeds Date;
(3)that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
(4)that, unless the Company defaults in depositing Cash
with the Paying Agent in accordance with the provisions of this Section
4.13, any Security, or portion thereof, accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest after the Purchase
Date;
(5)that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Asset Sale Offer will be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 4.13, notwithstanding anything
in this Indenture to the contrary, be the Company or any Affiliate of the
Company) at the address specified in the notice prior to the close of
business on the third Business Day prior to the Purchase Date;
(6)that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent receives, up to the
close of business on the third Business Day prior to the Purchase Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Securities the Holder is
withholding and a statement that such Holder is withdrawing his election to
have such principal amount of Securities purchased;
(7)that if Securities in a principal amount in excess
of the principal amount of Securities to be acquired pursuant to the Asset
Sale Offer are tendered and not withdrawn, the Company shall purchase
Securities on a PRO RATA basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
(8)that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
52
<PAGE>
(9)a brief description of the circumstances and
relevant facts regarding such Asset Sales.
On or before the Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the Asset
Sale Offer on or before the third Business Day prior to the Purchase Date (on a
PRO RATA basis if required pursuant to paragraph (7) hereof) and (ii) deposit
with the Paying Agent Cash sufficient to pay the Asset Sale Offer Price for all
Securities or portions thereof so tendered and accepted plus accrued and unpaid
interest thereon to the Purchase Date. On the Purchase Date, the Company shall
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall on the Purchase Date mail or deliver to Holders
of Securities so accepted payment in an amount equal to the Asset Sale Offer
Price for such Securities (together with accrued and unpaid interest), and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered. Any Security not so accepted shall be promptly mailed or delivered
by the Company to the Holder thereof. The Company agrees that any Asset Sale
Offer shall be made in compliance with all applicable laws, rules, and
regulations, including, if applicable, Regulation 14E of the Exchange Act and
the rules and regulations thereunder and all other applicable Federal and state
securities laws, and any provisions of this Indenture which conflict with such
laws shall be deemed to be superseded by the provisions of such laws.
SECTION 14. LIMITATION ON LAYERING INDEBTEDNESS.
The Company shall not, directly or indirectly, incur, or suffer to
exist any Indebtedness that is expressly subordinate in right of payment to any
other Indebtedness of the Company unless, by its terms, such Indebtedness is
subordinate in right of payment to, or ranks PARI PASSU with, the Securities.
SECTION 15. LIMITATION ON LINES OF BUSINESS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, engage to any substantial extent in any line or
lines of business activity other than that which, in the reasonable good faith
judgment of the Board of Directors of the Company, is a Related Business.
SECTION 16. WAIVER OF STAY, EXTENSION OR USURY LAWS.
53
<PAGE>
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time voluntarily insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the principal of, premium of, or interest on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee relating to any such law, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 17. PAYMENT FOR CONSENT.
Neither the Company nor any of its Subsidiaries or Unrestricted
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Securities for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of this Indenture or the Securities unless such
consideration is offered to be paid or agreed to be paid to all holders of the
Securities which so consent, waive or agree to amend in the time frame set forth
in solicitation documents relating to such consent, waiver or agreement.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 1. LIMITATION ON MERGER, SALE OR CONSOLIDATION.
The Company shall not, directly or indirectly, consolidate with or
merge with or into another person or sell, lease, convey or transfer all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons, unless (i) either (a) the Company is the continuing
entity or (b) the resulting, surviving or transferee entity is a corporation
organized under the laws of the United States, any state thereof or the District
of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Securities and this Indenture;
(ii) no Default or Event of Default shall exist or shall occur immediately after
giving effect on a PRO FORMA basis to such transaction; (iii) immediately after
giving effect to such
54
<PAGE>
transaction on a PRO FORMA basis, the Consolidated Net Worth of the consolidated
resulting, surviving or transferee entity is at least equal to the Consolidated
Net Worth of the Company immediately prior to such transaction; and (iv)
immediately after giving effect to such transaction on a PRO FORMA basis, the
consolidated resulting, surviving or transferee entity would immediately
thereafter be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio set forth in paragraph (a) of Section
4.10.
On or prior to the consummation of the proposed transaction, the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that (a) such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture executed in connection therewith comply with this Indenture and (b)
this transaction shall not impair the rights and powers of the Trustee and
Holders of the Securities thereunder. The Trustee shall be entitled to
conclusively rely upon such Officer's Certificate and Opinion of Counsel.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of all or substantially all of the properties and assets of
one or more Subsidiaries, the Company's interest in which constitutes all or
substantially all of the properties and assets of the Company shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
SECTION 2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or consummation of a plan of
liquidation in accordance with Section 5.1, the successor Person formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named herein as the Company, and the Company shall be
released from all obligations under the Securities and this Indenture except
with respect to any obligations that arise from, or are related to, such
transaction.
55
<PAGE>
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 1. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) the failure by the Company to pay any installment of interest
on the Securities as and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Company to pay all or any part of the
principal, or premium, if any, on the Securities when and as the same becomes
due and payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control Purchase Price
or the Asset Sale Offer Price, or otherwise;
(c) the failure by the Company or any Subsidiary to observe or
perform any other covenant or agreement contained in the Securities or this
Indenture (other than a default in the performance of any covenant or agreement
which is specifically dealt with elsewhere in this Section 6.1) and the
continuance of such failure for a period of 30 days after written notice is
given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Securities
outstanding specifying such Default and requiring that it be remedied (PROVIDED,
HOWEVER, that the grace period after notice for an Event of Default arising as a
result of the Company's inability to repay Senior Debt in full, or to obtain
requisite consents from holders of Senior Debt to repurchase Securities,
following a Change of Control, or to make the Change of Control Offer as
described in Section 10.1 shall be five days);
(d) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of its
Significant Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order shall
have continued undischarged and unstayed for
56
<PAGE>
a period of 60 consecutive days; or a decree or order of a court of competent
jurisdiction, judgment appointing a receiver, liquidator, trustee, or assignee
in bankruptcy or insolvency for the Company, any of its Significant
Subsidiaries, or any substantial part of the property of any such Person, or for
the winding up or liquidation of the affairs of any such Person, shall have been
entered, and such decree, judgment, or order shall have remained in force
undischarged and unstayed for a period of 60 days;
(e) a default in the payment of principal on any issue of
Indebtedness of the Company or any of its Subsidiaries at final stated maturity
or any acceleration for any other reason of the stated maturity of any
Indebtedness of the Company or any of its Subsidiaries in each case with an
aggregate principal amount in excess of $10 million; and
(f) the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a Custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any substantial part of its assets
or property, or shall make a general assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
take any corporate action in furtherance of or to facilitate, conditionally or
otherwise, any of the foregoing; and
(g) final unsatisfied judgments not covered by insurance
aggregating in excess of $10 million, at any one time rendered against the
Company or any of its Subsidiaries and either (i) the commencement by any
creditor of any enforcement proceeding upon any such judgment or order or (ii)
such judgment or order is not stayed, bonded or discharged within 60 days.
Notwithstanding the period and notice requirement contained in Section
6.1(c) above, (i) with respect to a default under Article X, the five day period
referred to in Section 6.1(c) shall be deemed to have begun as of the date
notice of a Change of Control Offer is required to be sent to the Holders in the
event that the Company has not complied with the provisions of Section 10.1, and
the Trustee or Holders of at least 25% in principal amount of the outstanding
Securities thereafter give the Notice of Default referred to in Section 6.1(c)
in respect of such compliance to the Company and, if applicable, the Trustee;
PROVIDED, HOWEVER, that if the breach or default is a result of a default in the
payment when due of the Change of Control Purchase Price on the Change of
57
<PAGE>
Control Payment Date, such default shall be deemed, for purposes of this Section
6.1, to arise on the Change of Control Payment Date; and (ii) with respect to a
default under Section 4.13 requiring the giving of such notice, the 30-day
period referred to in Section 6.1(c) shall be deemed to have begun as of the
date the notice of an Asset Sale Offer is required to be sent in the event that
the Company has not complied with the provisions of Section 4.13, and the
Trustee or Holders of at least 25% in principal amount of the outstanding
Securities thereafter give the Notice of Default referred to in Section 6.1(c)
in respect of such compliance to the Company and, if applicable, the Trustee;
PROVIDED, HOWEVER, that if the breach or default is a result of a default in the
payment when due of the Asset Sale Offer Price on the Purchase Date, such
default shall be deemed, for purposes of this Section 6.1, to arise no later
than on the Purchase Date.
SECTION 2. ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clauses (d) and (f) of Section 6.1, relating to the
Company only) then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of the Securities then outstanding,
by notice in writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all principal, determined as set forth
below, and accrued interest thereon to be due and payable immediately; PROVIDED,
HOWEVER, that if any Senior Debt is outstanding pursuant to the Credit
Agreement, upon a declaration of such acceleration, such principal and interest
shall be due and payable upon the earlier of (x) the third Business Day after
the sending to the Company and the Senior Debt Representatives of such written
notice, unless such Event of Default is cured or waived prior to such date and
(y) the date of acceleration of any Senior Debt under the Credit Agreement. If
an Event of Default specified in clauses (d) and (f) of Section 6.1, relating to
the Company only occurs, all principal and accrued interest thereon will be
immediately due and payable on all outstanding Securities without any
declaration or other act on the part of Trustee or the Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of not less
than a majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
58
<PAGE>
(1) the Company has paid or deposited with the Trustee
Cash sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due other than by reason
of such declaration of acceleration, and interest thereon at the rate borne
by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by the Securities,
(D) all sums paid or advanced by the Trustee
hereunder and the compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel (provided, however, that nothing
contained in this Indenture shall be deemed to imply that the Trustee is
required to pay or advance any funds), and any other amounts due the
Trustee under Section 7.7, and
(2) all Events of Default, other than the non-payment of
the principal of, premium, if any, and interest on Securities which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 6.12, including, if applicable, any Event of
Default relating to the covenants contained in Section 10.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to (i) any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent default or impair any
right consequent thereon.
The Trustee shall provide to each Senior Debt Representative a copy of
each Acceleration Notice that it sends, and of each Acceleration Notice and
notice of rescission of a declaration of acceleration that it receives, under
this Section 6.2, on the date that the Trustee sends any such notice, and as
promptly as possible following the date that the Trustee receives any such
notice.
59
<PAGE>
SECTION 3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clause (a) or (b) of Section 6.1
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses, disbursements and advances
of the Trustee and its agents and counsel and all other amounts due the Trustee
under Section 7.7.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 4. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal and premium, if any, or
60
<PAGE>
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in respect of
the Securities and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel and all
other amounts due the Trustee under Section 7.7) and of the Holders allowed
in such judicial proceeding, and
(2) to collect and receive any moneys or securities or
other property payable or deliverable upon conversion or exchange of the
Securities or upon any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 7.7. To the extent that the payment
of any such compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.7
out of the estate in any such proceeding shall be denied for any reason, payment
of the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
61
<PAGE>
SECTION 5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel and
all other amounts due the Trustee under Section 7.7, be for the ratable benefit
of the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 6. PRIORITIES.
Any money collected by the Trustee pursuant to this Article VI shall,
subject to Article XI, be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal, premium (if any) or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal, premium (if any) and interest,
respectively; and
THIRD: To the Company or such other Person as a court of competent
jurisdiction shall direct, the remainder, if any.
The Trustee may, but shall not be obligated to, fix a record date and
payment date for any payment to the Holders under this Section 6.6.
62
<PAGE>
SECTION 7. LIMITATION ON SUITS.
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in aggregate principal
amount of then outstanding Securities shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities to be incurred or reasonably probable to be incurred in
compliance with such request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(E) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and interest on, such
Security on the respective dates such payments are due as expressed in such
Security (in the case of redemption, the
63
<PAGE>
Redemption Price on the applicable Redemption Date, in the case of an Asset Sale
Offer, the Asset Sale Offer Price, on the date of payment thereof and in the
case of a Change of Control, the Change of Control Offer Price, on the date of
payment thereof) and to institute suit for the enforcement of any such payment
after such respective dates, and such rights shall not be impaired without the
consent of such Holder.
SECTION 9. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 10. DELAY OR OMISSION NOT WAIVER.
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VI or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 11. CONTROL BY HOLDERS.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, PROVIDED, that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture or involve the Trustee in personal liability,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction or that may involve the Trustee in personal liability, and
64
<PAGE>
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 12. WAIVER OF PAST DEFAULT.
Subject to Section 6.8, prior to the declaration of acceleration of
the maturity of the Securities, the Holder or Holders of not less than a
majority in aggregate principal amount of the Securities then outstanding may,
on behalf of all Holders, waive any past default hereunder and its consequences,
except a default
(A) in the payment of the principal of, premium, if
any, or interest on, any Security as specified in clauses (a) and (b) of
Section 6.1 and not yet cured; or
(B) in respect of a covenant or provision hereof which,
under Article IX, cannot be modified or amended without the consent of the
Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair the exercise of any right arising
therefrom.
In the case of any such waiver, the Company, the Trustee and the
Holders of all the Securities shall be restored to their former positions and
rights hereunder, respectively.
SECTION 13. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted to be taken by it
as Trustee, any court may in its discretion require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this
65
<PAGE>
Section 6.13 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in aggregate principal amount of the outstanding Securities, or to any
suit instituted by any Holder for enforcement of the payment of principal of, or
premium (if any) or interest on, any Security on or after the respective due
dates expressed in such Security (including, in the case of redemption, on or
after the Redemption Date).
SECTION 14. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed, subject to
the terms hereof.
SECTION 1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no covenants
or obligations shall be implied in or read into this Indenture which are
adverse to the Trustee, and
66
<PAGE>
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1,
(2) The Trustee shall not be liable for any error of judgment
made in good faith by it, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts, and
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(4) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take
any action under this Indenture or at the request, order or direction of
the Holders or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
(d) Whether or not therein expressly provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.1.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may otherwise agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
67
<PAGE>
SECTION 2. RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document believed
by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion
of Counsel, which shall conform to Sections 13.4 and 13.5. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture, nor for any action
permitted to be taken or omitted hereunder by any Agent.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as
it may see fit.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
(g) Unless otherwise specifically provided for in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
68
<PAGE>
(h) The Trustee shall have no duty to inquire as to the
performance of the Company's covenants in Article IV hereof or as to the
performance by any Agent of its duties hereunder. In addition, the Trustee
shall not be deemed to have knowledge of any Default or Event of Default
except any Default or Event of Default of which the Trustee shall have
received written notification or with respect to which a Trust Officer shall
have actual knowledge.
(i) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate.
SECTION 3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any of
its Subsidiaries, or its Affiliates with the same rights the Trustee would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
SECTION 4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication (if executed by the Trustee), or the use or
application of any funds received by a Paying Agent other than the Trustee.
SECTION 5. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder and the
Senior Debt Representatives notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs. Except in the
case of a Default or an Event of Default in payment of principal (or premium, if
any) of, or interest on, any Security (including the payment of the Change of
Control Purchase Price on the Change of Control Purchase Date, the payment of
the Redemption Price on the Redemption Date and the payment of the Asset Sale
Price on the date of payment thereof), the Trustee may withhold the notice
69
<PAGE>
if and so long as the Board of Directors, the executive committee or a trust
committee of the directors and/or Trust Officers in good faith determines that
withholding the notice is in the interest of the Securityholders.
SECTION 6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each January 31, beginning with January 31, 1997,
the Trustee shall mail to each Securityholder a brief report dated as of such
January 31 that complies with TIA Section 313(a); but if no event described in
TIA Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted. If applicable, Trustee also shall comply
with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
SECTION 7. COMPENSATION AND INDEMNITY.
The Company agrees to pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances, if any, incurred or made by it in accordance with this Indenture.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it and each of them harmless against, any claim, demand, expense
(including but not limited to reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel), loss or liability incurred by it
without negligence or bad faith on the part of the Trustee, arising out of or in
connection with the administration of this trust and its rights or duties
hereunder including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Trustee agrees to notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. The Company need not reimburse
70
<PAGE>
any expense or indemnify against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(d) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any Lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article VIII of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
SECTION 8. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company in writing, to
become effective upon the appointment of a successor trustee. The Holder or
Holders of a majority in aggregate principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee and the Holder of any Securities who has been a
beneficial Holder of a Security for at least six months may, on behalf of such
Holder and all Holders similarly situated, petition any court of competent
competition for the removal of the Trustee and the appointment of a successor
trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes charge
of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
71
<PAGE>
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company or the court of competent
jurisdiction, as the case may be, shall promptly appoint a successor Trustee.
If, within one year after such resignation or removal no successor Trustee has
been appointed, the Holder or Holders of a majority in aggregate principal
amount of the Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in Section
7.7 have been paid, the retiring Trustee shall transfer all property held by it
as trustee to the successor Trustee, subject to the lien provided in Section
7.7, the resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in aggregate principal amount of the
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
SECTION 9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
72
<PAGE>
SECTION 10. ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times satisfy the requirements of TIA
Section 310(a)(1), (2) and (5). The Trustee (together with its corporate
parent) shall have a combined capital and surplus of at least $25,000,000 as set
forth in its most recent published annual report of condition. The Trustee is
subject to TIA Section 310(b).
SECTION 11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option and at any time, elect to have Section
8.2 or Section 8.3 applied to all outstanding Securities upon compliance with
the conditions set forth below in this Article VIII.
SECTION 2. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.2, the Company shall be deemed to have been discharged from
its obligations with respect to all outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of the Sections of this Indenture referred to in (a) through (d)
below, and to have satisfied all its other obligations under such Securities and
this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due from the trust funds described below; (b) the
73
<PAGE>
Company's obligations with respect to such Securities concerning issuing
temporary Securities, registration of Securities, mutilated, destroyed, lost or
stolen Securities, and the maintenance of an office or agency for payment and
money for security payments held in trust; (c) the rights, powers, trust,
duties, and immunities of the Trustee, and the Company's obligations in
connection therewith; and (d) this Article VIII. Subject to compliance with
this Article VIII, the Company may exercise its option under this Section 8.2
notwithstanding the prior exercise of its option under Section 8.3 with respect
to the Securities.
SECTION 3. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.3, the Company shall be released from its obligations under
the covenants contained in Sections 4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11,
4.12, 4.13, 4.14, and 4.15, Article V and Article X with respect to the
outstanding Securities on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities, the Company
need not comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document (and Section 6.1(c) shall not apply to any such covenant),
but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.1 of the option applicable to this Section 8.3,
Sections 6.1(d) through 6.1(g) shall not constitute Events of Default.
SECTION 4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfactory to the Trustee
satisfying the re-
74
<PAGE>
quirements of Section 7.10 who shall agree to comply with the provisions of this
Article VIII applicable to it) as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (a) Cash in an amount,
or (b) U.S. Government Obligations (not subject to prepayment or redemption
prior to maturity) which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms will provide, not later than
one day before the due date of any payment, Cash in an amount, or (c) a
combination thereof, in such amounts, as in each case will be sufficient without
the need to reinvest, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which shall be applied by the
Paying Agent (or other qualifying trustee) to pay and discharge the principal
of, premium, if any, and interest on the outstanding Securities on the stated
maturity or on the applicable redemption date, as the case may be, of such
principal or installment of principal, premium, if any, or interest on the
Securities; PROVIDED that the Paying Agent shall have been irrevocably
instructed to apply such Cash and the proceeds of such U.S. Government
Obligations to said payments with respect to the Securities. The Paying Agent
shall promptly advise the Trustee in writing of any Cash or Securities deposited
pursuant to this Section 8.4;
(b) In the case of an election under Section 8.2, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.3, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to Federal income tax in the same amount, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
75
<PAGE>
(d) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or, insofar as
Section 6.1(d) or Section 6.1(f) is concerned, at any time in the period ending
on the 91st day after the date of such deposit (it being understood that this
condition is a condition subsequent which shall not be deemed satisfied until
the expiration of such period, but in the case of Covenant Defeasance, the
covenants which are defeased under Section 8.3 will cease to be in effect unless
an Event of Default under Section 6.1(d) or Section 6.1(f) occurs during such
period);
(e) Such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) In the case of an election under either Section 8.2 or 8.3,
the Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.2
or 8.3 was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the conditions
precedent provided for in, in the case of the Officer's Certificate, clauses (a)
through (f), and, in the case of the Opinion of Counsel, clauses (a) (with
respect to the validity and perfection of the security interest), (b), (c) and
(e) of this Section 8.4 have been complied with.
SECTION 5. DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6, all Cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Paying Agent (or other
qualifying trustee, collectively for purposes of this Section 8.5, the "Paying
Agent") pursuant to Section 8.4 in respect of the outstanding Securities shall
be held in trust and applied by the Paying Agent, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any other Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
76
<PAGE>
SECTION 6. REPAYMENT TO THE COMPANY.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee or the Paying Agent, as applicable, shall deliver or pay to the Company
from time to time upon the request of the Company any Cash or U.S. Government
Obligations held by it as provided in Section 8.4 hereof which in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4(a) hereof), are in excess of the amount thereof that
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.
Any Cash and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall,
subject to the requirements of applicable law, be paid to the Company on its
request; and the Holder of such Security shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in the
NEW YORK TIMES and THE WALL STREET JOURNAL (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any Cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3
until such time as the Trustee or Paying Agent is permitted to apply such money
in accordance with Section 8.2 and 8.3, as the case may be; PROVIDED, HOWEVER,
that, if the Company makes any payment of principal of, premium, if any, or
interest on any Security following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive
77
<PAGE>
such payment from the Cash and U.S. Government Obligations held by the Trustee
or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture,
PROVIDED such action pursuant to this clause shall not adversely affect the
interests of the Holders;
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon the
Company;
(3) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the obligations of the Company,
herein and in the Securities in accordance with Article V;
(4) to comply with the TIA;
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities;
(6) to secure the Securities in accordance with the provisions
of Section 4.12; or
(7) to provide for the issuance and authentication of the
Exchange Securities in exchange for the Initial Securities in compliance with
this Indenture and the Registration Rights Agreement.
78
<PAGE>
SECTION 2. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH
CONSENT OF HOLDERS.
Subject to Section 6.8, with the consent of the Holders of not less
than a majority in aggregate principal amount of then outstanding Securities, by
written act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture or the Securities or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Securities or of modifying in any manner the rights of the Holders under
this Indenture or the Securities. Subject to Section 6.8, the Holder or Holders
of not less than a majority in aggregate principal amount of then outstanding
Securities may waive compliance by the Company with any provision of this
Indenture or the Securities. Notwithstanding any of the above, however, no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holder of each outstanding Security affected thereby:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any provision of
this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on any
Security;
(3) reduce the principal or premium amount of any Security, or reduce
the Change of Control Purchase Price, the Asset Sale Offer Price or the
Redemption Price, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
(4) change the Stated Maturity;
(5) alter the redemption provisions of Article III (including the
defined terms therein) in a manner adverse to any Holder;
(6) make any changes in the provisions concerning waivers of Defaults
or Events of Default by Holders of the Securities or the rights of Holders to
recover the principal or premium of, interest on, or redemption payment with
respect to, any Security, including without limitation any changes in
Section 6.8, 6.12 or this third sentence of this Section 9.2, except to increase
any required percentage or to provide that certain other
79
<PAGE>
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each outstanding Security affected thereby;
(7) make the principal of, or the interest or premium on, any
Security payable with anything or in any manner other than as provided for in
this Indenture (including changing the place of payment where, or the coin or
currency in which, any Security or any premium or the interest thereon is
payable) and the Securities as in effect on the date hereof; or
(8) make the Securities further subordinated in right of payment to
any extent or under any circumstances to any other Indebtedness (it being
understood that amendments to Section 4.10 hereof which may have the effect of
increasing the amount of Senior Debt that the Company may Incur shall not, for
purposes of this clause (8), be deemed to make the Securities further
subordinated in right of payment to any extent or under any circumstances to any
other Indebtedness).
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 3. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
80
<PAGE>
SECTION 4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by written notice to the
Company or the Person designated by the Company as the Person to whom consents
should be sent if such revocation is received by the Company or such Person
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; PROVIDED, that any such
waiver shall not impair or affect the right of any other Holder to receive
payment of principal and premium of and interest on a Security, on or after the
respective dates set for such amounts to become due and payable expressed in
such Security, or to bring suit for the enforcement of any such payment on or
after such respective dates.
SECTION 5. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an
81
<PAGE>
appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Any failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
SECTION 6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; PROVIDED, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in conclusively relying upon, an Officers' Certificate and an Opinion
of Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article IX is authorized or permitted by this
Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 1. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A
CHANGE OF CONTROL.
(a)In the event that a Change of Control occurs, each Holder
shall have the right, at such Holder's option, pursuant to an irrevocable and
unconditional offer by the Company (the "Change of Control Offer") subject to
the terms and conditions of this Indenture, to require the Company to repurchase
all or any part of such Holder's Securities (PROVIDED, that the principal amount
of such Securities at maturity must be $1,000 or an integral multiple thereof)
on a date selected by the Company that is no later than 35 Business Days after
the occurrence of such Change of Control (the "Change of Control Purchase
Date"), at a cash price (the "Change of Control Purchase Price") equal to 101%
of the principal amount thereof, plus (subject to the right of Holders of record
on a Record Date to receive interest due on an Interest Payment Date that is on
or prior to such repurchase date and subject to clause (b)(4) below) accrued and
unpaid interest, if any, to the Change of Control Purchase Date.
If the terms of any outstanding Senior Debt prohibit the Company from
repurchasing Securities in accordance with the terms of paragraph (a) of this
Section 10.1,
82
<PAGE>
then prior to the making of the offer, but in any event within 10 Business Days
following any Change of Control, the Company covenants to (i) repay in full such
Senior Debt or offer to repay in full such Senior Debt and repay such Senior
Debt of each holder thereof who has accepted such offer or (ii) obtain the
requisite consent under such Senior Debt to permit the repurchase of Securities
in accordance with the terms of this Section 10.1. The Company shall first
comply with the preceding sentence before it shall be required to repurchase
Securities pursuant to this Section 10.1.
(b) In the event of a Change of Control, the Company shall be
required to commence an offer to purchase Securities (a "Change of Control
Offer") as follows:
(1) the Change of Control Offer shall commence within 10 Business
Days following the occurrence of the Change of Control;
(2) the Change of Control Offer shall remain open for not less
than 20 Business Days following its commencement (the "Change of Control
Offer Period");
(3) upon the expiration of the Change of Control Offer Period, the
Company shall purchase all of the properly tendered Securities at the
Change of Control Purchase Price, plus accrued and unpaid interest thereon;
(4) if the Change of Control Purchase Date is on or after a Record
Date and on or before the related interest payment date, any accrued
interest will be paid to the Person in whose name a Security is registered
at the close of business on such Record Date, and no additional interest
will be payable to Securityholders who tender Securities pursuant to the
Change of Control Offer;
(5) the Company shall provide the Trustee and the Paying Agent
with written notice of the Change of Control Offer at least three Business
Days before the commencement of any Change of Control Offer; and
(6) on or before the commencement of any Change of Control Offer,
the Company or the Registrar (upon the request and at the expense of the
Company) shall send, by first-class mail, a notice to each of the
Securityholders, which (to the extent consistent with this Indenture) shall
govern the terms of the Change of Control Offer and shall state:
83
<PAGE>
(i) that the Change of Control Offer is being made pursuant
to such notice and this Section 10.1 and that all Securities, or portions
thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the
amount of accrued and unpaid interest, subject to clause (b)(4) above) and
the Change of Control Purchase Date;
(iii) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing Cash
with the Paying Agent in accordance with the last paragraph of this Article
X or such payment is prevented, any Security, or portion thereof, accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be required
to surrender the Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security completed, to the Paying
Agent (which may not for purposes of this Section 10.1, notwithstanding
anything in this Indenture to the contrary, be the Company or any Affiliate
of the Company) at the address specified in the notice prior to the
expiration of the Change of Control Offer;
(vi) that Holders will be entitled to withdraw their
election, in whole or in part, if the Paying Agent (which may not for
purposes of this Section 10.1, notwithstanding anything in this Indenture
to the contrary, be the Company or any Affiliate of the Company) receives,
prior to the expiration of the Change of Control Offer, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have such
principal amount of Securities purchased; and
(vii) a brief description of the events resulting in such
Change of Control.
Any such Change of Control Offer shall be made in compliance with all
applicable Federal and state laws, rules and regulations, including, if
applicable, Regula-
84
<PAGE>
tion 14E under the Exchange Act and the rules thereunder and all other
applicable Federal and state securities laws, and any provisions of this
Indenture which conflict with such laws shall be deemed to be superseded by the
provisions of such laws.
On or before the Change of Control Purchase Date, the Company shall
(i) accept for payment Securities or portions thereof properly tendered pursuant
to the Change of Control Offer prior to the expiration of the Change of Control
Offer, (ii) deposit with the Paying Agent Cash sufficient to pay the Change of
Control Purchase Price (together with accrued and unpaid interest, subject to
clause (b)(4) above) for all Securities or portions thereof so tendered and
(iii) deliver to the Trustee Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to Holders of Securities so
accepted payment in an amount equal to the Change of Control Purchase Price
(together with accrued and unpaid interest, subject to clause (b)(4) above), for
such Securities (subject to clause (b)(4) above), and the Trustee or its
authenticating agent shall promptly authenticate and mail or deliver (or cause
to be transferred by book entry) to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered;
PROVIDED, HOWEVER, that each such new Security will be in a principal amount of
$1,000 or an integral multiple thereof. Any Securities not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Purchase Date.
ARTICLE XI
SUBORDINATION
SECTION 1. SECURITIES SUBORDINATED TO SENIOR DEBT.
The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of and interest on the Securities and (b)
any other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company (including, without
limitation, pursuant to Section 4.13 or 10.1) is subordinated, to the extent and
in the manner provided in this Article XI, to the prior payment in full in Cash
or Cash Equivalents of all Senior Debt of the Company and that these
subordination provisions are for the benefit of the holders of Senior Debt.
85
<PAGE>
This Article XI shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt, and such provisions are made for the benefit of the holders of
Senior Debt, and such holders are made obligees hereunder and any one or more of
them may enforce such provisions.
SECTION 2. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) No payment (by set-off or otherwise) shall be made by or on
behalf of the Company on account of the principal of, premium, if any, or
interest on the Securities (including any repurchases of Securities), or on
account of the redemption provisions of the Securities or any Obligation in
respect of the Securities, for cash or property (other than Junior Securities),
(i) upon the maturity of any Senior Debt of the Company by lapse of time,
acceleration (unless waived) or otherwise, unless and until all principal of,
premium, if any, and interest on such Senior Debt are first paid in full in cash
or Cash Equivalents (or such payment is duly provided for) or otherwise to the
extent holders accept satisfaction of amounts due by settlement in other than
cash or Cash Equivalents, or (ii) in the event of default in the payment of any
principal of, premium, if any, or interest on Senior Debt of the Company when it
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise (a "Payment Default"), unless and until such
Payment Default has been cured or waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a
Payment Default) that permits the holders of Senior Debt to declare such Senior
Debt to be due and payable and (ii) written notice of such event of default
given to the Company and the Trustee by the Senior Debt Representatives (a
"Payment Notice"), then, unless and until such event of default has been cured
or waived or otherwise has ceased to exist, no payment (by set-off or otherwise)
may be made by or on behalf of the Company which is an obligor on such Senior
Debt on account of the principal of, premium, if any, or interest on the
Securities (including any repurchases of any of the Securities), or on account
of the redemption provisions of the Securities or any Obligation in respect of
the Securities, in any such case, other than payments made with Junior
Securities. Notwithstanding the foregoing, unless the Senior Debt in respect of
which such event of default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period") (and such declaration has not been
rescinded or waived), at the end of the Payment Blockage Period, the Company
shall, unless a Payment Default exists, be required to pay all sums not paid to
the Holders of the Securities during the Payment Blockage Period due to the
foregoing prohibitions and to resume all other payments as and when due on the
Securities. Any number of Payment
86
<PAGE>
Notices may be given; PROVIDED, HOWEVER, that (i) not more than one Payment
Notice shall be given within a period of any 360 consecutive days, and (ii) no
default that existed upon the date of such Payment Notice or the commencement of
such Payment Blockage Period (whether or not such event of default is on the
same issue of Senior Debt) shall be made the basis for the commencement of any
other Payment Blockage Period.
(c) In furtherance of the provisions of Section 11.1, in the event
that, notwithstanding the foregoing provisions of this Section 11.2, any payment
or distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee at a time when such payment or distribution is
prohibited by the provisions of this Section 11.2, such payment or distribution
shall be held in trust for the benefit of the holders of such Senior Debt, and
shall be paid or delivered by the Trustee, to the holders of such Senior Debt
remaining unpaid or unprovided for or to their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Debt may have been issued,
ratably according to the aggregate principal amounts remaining unpaid on account
of such Senior Debt held or represented by each, for application to the payment
of all such Senior Debt remaining unpaid, to the extent necessary to pay of
provide for the payment of all such Senior Debt in full in cash or Cash
Equivalents after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
SECTION 3. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
DEBT ON DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(a) the holders of all Senior Debt of the Company will first be
entitled to receive payment in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment on account of the principal of,
premium, if any, and interest on the Securities or any Obligation in respect of
the Securities (other than Junior Securities);
(b) any payment or distribution of assets of the Company of any
kind or character from any source, whether in cash, property or securities
(other than Junior Securities) to which the Holders or the Trustee on behalf of
the Holders would be entitled (by set-off or otherwise), except for the
provisions of this Article XI, shall be paid by the liquidating trustee or agent
or other person making such a payment or distribution
87
<PAGE>
directly to the holders of such Senior Debt or their representative to the
extent necessary to make payment in full (or have such payment duly provided
for) on all such Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt; and
(c) in the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee at a time when such payment or distribution is
prohibited by the foregoing provisions, such payment or distribution shall be
held in trust for the benefit of the holders of such Senior Debt, and shall be
paid or delivered by the Trustee to the holders of such Senior Debt remaining
unpaid to their representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing any of such
Senior Debt may have been issued, ratably according to the aggregate principal
amounts remaining unpaid on account of such Senior Debt held or represented by
each, for application to the payment of all such Senior Debt remaining unpaid,
to the extent necessary to pay all such Senior Debt in full in cash or Cash
Equivalents after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
SECTION 4. SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF
SENIOR DEBT.
Subject to the payment in full in Cash or Cash Equivalents of all
Senior Debt of the Company as provided herein, the Holders of Securities shall
be subrogated to the rights of the holders of such Senior Debt to receive
payments or distributions of assets of the Company applicable to the Senior Debt
until all amounts owing on the Securities shall be paid in full, and for the
purpose of such subrogation no such payments or distributions to the holders of
such Senior Debt by or on behalf of the Company, or by or on behalf of the
Holders by virtue of this Article XI, which otherwise would have been made to
the Holders shall, as between the Company and the Holders, be deemed to be
payment by the Company or on account of such Senior Debt, it being understood
that the provisions of this Article XI are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of such Senior Debt, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XI shall have been
applied, pursuant to the provisions of this Article XI, to the payment of
amounts payable under Senior Debt of the Company, then the Holders shall be
entitled to receive from the holders of such Senior Debt any payments or
distributions received by such holders of Senior Debt in
88
<PAGE>
excess of the amount sufficient to pay all amounts payable under or in respect
of such Senior Debt in full in Cash or Cash Equivalents.
SECTION 5. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article XI or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Company and the
Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Debt, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
XI, of the holders of Senior Debt in respect of cash, property or securities of
the Company received upon the exercise of any such remedy. Notwithstanding
anything to the contrary in this Article XI or elsewhere in this Indenture or in
the Securities, upon any distribution of assets of the Company referred to in
this Article XI, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
and the Holders shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating Trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Debt and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XI so long as such court has been apprised of the provisions of,
or the order, decree or certificate makes reference to, the provisions of this
Article XI. Nothing in this Section 11.5 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.7.
SECTION 6. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than two Business Days prior to such payment,
written notice thereof from the Company or from one or more holders of Senior
Debt or from any representative therefor and, prior to the receipt of any such
written notice, the Trustee, subject to the
89
<PAGE>
provisions of Sections 7.1 and 7.2, shall be entitled in all respects
conclusively to assume that no such fact exists.
SECTION 7. APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Securityholders
and, to the extent allocated for the payment of Securities, shall not be subject
to the subordination provisions of this Article XI. Otherwise, any deposit of
assets with the Trustee or the Agent (whether or not in trust) for the payment
of principal of or interest on any Securities shall be subject to the provisions
of Sections 11.1, 11.2, 11.3 and 11.4; PROVIDED that, if prior to two Business
Days preceding the date on which by the terms of this Indenture any such assets
may become distributable for any purpose (including without limitation, the
payment of either principal of or interest on any Security) the Trustee or such
Paying Agent shall not have received with respect to such assets the written
notice provided for in Section 11.6, then the Trustee or such Paying Agent shall
have full power and authority to receive such assets and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such date.
SECTION 8. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE COMPANY OR HOLDERS OF SENIOR DEBT.
No right of any present or future holders of any Senior Debt to
enforce subordination provisions contained in this Article XI shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Debt may extend, renew, modify or
amend the terms of the Senior Debt or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Company, all without
affecting the liabilities and obligations of the parties to this Indenture or
the Holders.
SECTION 9. SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article XI and to
90
<PAGE>
protect the rights of the Holders pursuant to this Indenture, and appoints the
Trustee his attorney-in-fact for such purpose, including, in the event of any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of assets and liabilities of
the Company), the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Debt or their representative to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee or
the holders of Senior Debt or their representative to vote in respect of the
claim of any Securityholder in any such proceeding.
SECTION 10. RIGHT OF TRUSTEE TO HOLD SENIOR DEBT.
The Trustee shall be entitled to all of the rights set forth in this
Article XI in respect of any Senior Debt at any time held by it to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall
be construed to deprive the Trustee of any of its rights as such holder.
SECTION 11. ARTICLE XI NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of, premium, if
any, or interest on the Securities by reason of any provision of this Article XI
shall not be construed as preventing the occurrence of a Default or an Event of
Default under Section 6.1 or in any way limit the rights of the Trustee or any
Holder to pursue any other rights or remedies with respect to the Securities.
SECTION 12. NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR DEBT.
Notwithstanding anything to the contrary herein, the Trustee shall not
be deemed to owe any fiduciary duty to any present or future holders of Senior
Debt, and shall not be liable to any such holders (other than for its willful
misconduct or gross negligence) if it shall in good faith mistakenly pay over or
distribute to the Holders of
91
<PAGE>
Securities or the Company or any other Person, cash, property or securities to
which any holders of Senior Debt shall be entitled by virtue of this Article XI
or otherwise. The Trustee undertakes to perform or to observe only such of the
covenants and obligations as are specifically set forth in this Article XI, and
no implied covenants or obligations with respect to such holders of Senior Debt
shall be implied in this Indenture against the Trustee. Nothing in this Section
11.12 shall affect the obligation of any other such Person to hold such payment
for the benefit of, and to pay such payment over to, the holders of Senior Debt
or their representative. In the event of any conflict between the fiduciary
duty of the Trustee to the Holders of Securities and to the holders of Senior
Debt, the Trustee is expressly authorized to resolve such conflict in favor of
the Holders.
ARTICLE XII
MISCELLANEOUS
SECTION 1. TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
SECTION 2. NOTICES.
Any notices or other communications to the Company, Paying Agent,
Registrar, Securities Custodian, transfer agent or the Trustee required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier, nationally recognized overnight
courier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, Il 60610
Attention: Daniel L. Simon
Telephone: (312) 644-8673
Telecopy: (312) 644-8071
92
<PAGE>
93
<PAGE>
if to the Trustee:
United States Trust Company
of New York
114 West 47th Street
New York, NY 10036-15
Attention: Corporate Trust and
Agency Division
Telephone: (212) 852-1000
Telecopy: (212) 852-1626
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and five Business Days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him or her by first-class mail or other equivalent means at his or her
address as it appears on the registration books of the Registrar and shall be
sufficiently given to him or her if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee at the same time.
SECTION 3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
94
<PAGE>
SECTION 4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, such Person shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been met; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been met;
PROVIDED, HOWEVER, that in the case of any such request or application as to
which the furnishing of particular documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished under this Section 13.4.
SECTION 5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been met; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been met; PROVIDED, HOWEVER,
that with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
95
<PAGE>
SECTION 6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 7. NON-BUSINESS DAYS.
If a payment date is not a Business Day at such place, payment may be
made at such place on the next succeeding day that is a Business Day, and no
interest shall accrue for the intervening period.
SECTION 8. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE
AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
96
<PAGE>
SECTION 9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 10. NO RECOURSE AGAINST OTHERS.
No direct or indirect stockholder, employee, officer or director, as
such, past, present or future of the Company or any successor entity, shall have
any personal liability in respect of the obligations of the Company under the
Securities or this Indenture by reason of his, her or its status as such
stockholder, employee, officer or director. Each Securityholder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
SECTION 11. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities
shall bind its successors and assigns. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 12. DUPLICATE ORIGINALS.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
97
<PAGE>
SECTION 14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents and headings of the Articles and the Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
98
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
UNIVERSAL OUTDOOR, INC.
By: /s/ Brian T. Clingen
----------------------------------
Name: Brian T. Clingen
Title: Vice President
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ John Guiliano
----------------------------------
Name: John Guiliano
Title: Vice President
99
<PAGE>
Exhibit A
UNIVERSAL OUTDOOR, INC.
9 3/4% SERIES B SENIOR SUBORDINATED NOTE
DUE 2006
CUSIP: ________
No. $ ______
Universal Outdoor, Inc., an Illinois corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________________ , or registered assigns, the principal sum of ______________
Dollars, on October 15, 2006.
Interest Payment Dates: April 15 and October 15 commencing April 15,
1997.
Record Dates: April 1 and October 1
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated:
UNIVERSAL OUTDOOR, INC., an
Illinois corporation
[Seal]
By:
---------------------------------------
Name:
Title:
Attest:
------------------
Secretary
A-1
<PAGE>
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned
Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee and
Authenticating Agent
By:
--------------------
Authorized Signatory
Dated:
---------------------
A-2
<PAGE>
UNIVERSAL OUTDOOR INC.
9 3/4% SERIES B SENIOR SUBORDINATED NOTE
DUE 2006
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.(1)
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED
___________________
(1) This paragraph should only be added if the Security is issued in global
form.
A-3
<PAGE>
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A)(l) ABOVE.(2)
1. INTEREST.
Universal Outdoor, Inc., an Illinois corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of 9 3/4% per annum from December 16, 1996 until
maturity. To the extent it is lawful, the Company promises to pay interest on
any interest payment due but unpaid on such principal amount at a rate of 9 3/4%
per annum compounded semi-annually.
The Company will pay interest semi-annually on April 15 and October 15
of each year or, if any such day is not a Business Day, on the next succeeding
Business Day (each, an "Interest Payment Date"), commencing April 15, 1997.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the Securities, from
the date of issuance. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the April 1 or October 1 immediately preceding the Interest Payment Date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. Except as provided below, the Company shall pay principal and
interest in such coin or currency of the United States of
___________________
(2) This paragraph should be included only for the Transfer Restricted
Securities.
A-4
<PAGE>
America as at the time of payment shall be legal tender for payment of public
and private debts ("Cash"). The Securities will be payable as to principal,
premium, if any, and interest, and the Securities may be presented for
registration of transfer or exchange, at the office or agency of the Company
maintained for such purpose within or without the Borough of Manhattan, the City
and State of New York or, at the option of the Company, payment of interest may
be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and PROVIDED that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest and
premium on all Global Securities and all other Securities the Holders of which
shall have provided wire transfer instructions to an account within the United
States to the Company or the Paying Agent. Until otherwise designated by the
Company, the Company's office or agency will be the corporate trust office of
the Trustee presently located at the Trustee's agency at 114 West 47th Street,
New York, New York 10036-15.
3. PAYING AGENT AND REGISTRAR.
Initially, the United States Trust Company of New York (the "Trustee,"
which term includes any successor Trustee under the Indenture) will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. INDENTURE.
The Company issued the Securities under an Indenture, dated as of
December16, 1996 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are senior
subordinated, unsecured general obligations of the Company limited in aggregate
principal amount to $100,000,000. The Securities are subordinated in right of
payment to certain other debt obligations of the Company.
5. REDEMPTION.
The Securities may be redeemed, at the option of the Company, in
whole or in part, at any time on or after October 15, 2001, at the Redemption
Price (expressed
A-5
<PAGE>
as a percentage of principal amount) set forth below with respect to the
indicated Redemption Date, together with any accrued but unpaid interest to the
Redemption Date (subject to the right of Holders of record on a Record Date to
receive interest due on the Interest Payment Date that is on or prior to such
Redemption Date). The Securities may not be so redeemed prior to October 15,
2001, except as provided in the immediately following paragraph.
If redeemed during
the 12-month period
commencing October 15 Redemption Price
--------------------- ----------------
2001 . . . . . . . . . . . . . 104.875%
2002 . . . . . . . . . . . . . 103.250%
2003 . . . . . . . . . . . . . 101.625%
2004 and thereafter . . . . . 100.000%
Notwithstanding the foregoing, prior to October 15, 1999, upon any
Public Equity Offering or Equity Private Placement, in each case resulting in
Net Cash Proceeds of $100 million or more which are then contributed in full to
the Company, up to $35 million aggregate principal amount of the Securities may
be redeemed at the option of the Company with cash from the Net Cash Proceeds of
such Public Equity Offering or Equity Private Placement, at 110% of principal,
PROVIDED, HOWEVER, that immediately following such redemption not less than $65
million aggregate principal amount of the Securities are outstanding, PROVIDED,
FURTHER, that such redemption shall occur within 120 days of such Public Equity
Offering or Equity Private Placement.
Any such redemption will comply with Article III of the Indenture.
6. NOTICE OF REDEMPTION.
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to the Redemption Date to the Holder of
each Security to be redeemed at such Holder's last address as then shown upon
the registry books of the Registrar. Securities may be redeemed in part in
multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date and payment of
the Securities called for redemption is not otherwise prohibited, the Securities
called for redemption will cease
A-6
<PAGE>
to bear interest and the only right of the Holders of such Securities will be to
receive payment of the Redemption Price.
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of Securities in accordance with the Indenture. No service charge
will be made for any registration of transfer or exchange of the Securities, but
the Company may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental
charge payable in connection therewith. The Registrar need not register the
transfer of or exchange any Securities selected for redemption.
8. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee
and any such Paying Agent(s) with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, Cash, U.S.
Government Obligations or a combination thereof, in such amounts as will be
sufficient in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
Securities to redemption or maturity and comply with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Securities (including the restrictive
covenants described in paragraph 12 below, but excluding their obligation to pay
the principal of and interest on the Securities).
A-7
<PAGE>
11. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may under certain circumstances amend or supplement
the Indenture or the Securities to, among other things, cure any ambiguity,
defect or inconsistency, or make any other change that does not adversely affect
the rights of any Holder of a Security.
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the
Company to, among other things, incur additional Indebtedness and Disqualified
Capital Stock, pay dividends or make certain other restricted payments, enter
into certain transactions with Affiliates, incur Liens, sell assets, merge or
consolidate with any other Person or transfer (by lease, assignment or
otherwise) substantially all of the properties and assets of the Company. The
limitations are subject to a number of important qualifications and exceptions.
The Company must periodically report to the Trustee on compliance with such
limitations.
13. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
offer to purchase on the Change of Control Purchase Date all outstanding
Securities at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Purchase
Date. Holders of Securities will receive a Change of Control Offer from the
Company prior to any related Change of Control Purchase Date and may elect to
have such Securities purchased by completing the form entitled "Option of Holder
to Elect Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability of the
Company to sell assets. In the event the proceeds from a permitted Asset Sale
exceed certain amounts, as specified in the Indenture, the Company generally
will be required either to reinvest the proceeds of such Asset Sale in its
business, use such proceeds to retire debt, or to make an asset sale offer to
purchase a certain amount of each Holder's Securities at 100% of the principal
amount thereof, plus accrued interest, if any, to the purchase date, as more
fully set forth in the Indenture
A-8
<PAGE>
A-9
<PAGE>
14. RANKING.
Payment of principal, premium, if any, and interest on the Securities
is subordinated, in the manner and to the extent set forth in the Indenture, to
the prior payment in full of all Senior Debt.
15. SUCCESSORS.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
16. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing (other than an Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable in the manner and with the
effect provided in the Indenture. Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest), if it determines that withholding
notice is in their interest.
17. TRUSTEE OR AGENT DEALINGS WITH COMPANY.
The Trustee and each Agent under the Indenture, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates as if it were not the Trustee and such Agent.
18. NO RECOURSE AGAINST OTHERS.
A-10
<PAGE>
No direct or indirect stockholder, employee, officer or director, as
such, past, present or future, of the Company or any successor entity shall have
any personal liability in respect of the obligations of the Company under the
Securities or the Indenture by reason of his or its status as such stockholder,
employee, officer or director. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
19. AUTHENTICATION.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
20. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. ADDITIONAL RIGHTS OF HOLDERS OF SECURITIES.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, IL 60610
Attention: Corporate Secretary
A-11
<PAGE>
ASSIGNMENT
I or we assign this Security to
__________________________________________________________
__________________________________________________________
__________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
_________________________
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Dated: __________ Signed: ______________________________
__________________________________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee**
____________________
** NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.13 or Article X of the Indenture, check the appropriate
box:
/ / Section 4.13
/ / Article X
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.13 or Article X of the Indenture, as the case
may be, state the amount you want to be purchased: $________
Date: ________________ Signature: ________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee**
______________________
** NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-13
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
Principal Amount
Amount of Amount of of this Signature of
decrease in increase in Global Security authorized
Principal Amount Principal Amount following such officer of
Date of of this of this decrease (or Trustee or
Exchange Global Security Global Security increase) Securities
Custodian
- --------------------------------------------------------------------------------
____________________
(2) This schedule should only be added if the Security is issued in global
form.
A-14
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES
Re: 9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2006 OF UNIVERSAL OUTDOOR,
INC.
This Certificate relates to $______ principal amount of Securities held in
(check applicable box) / / book-entry or / / definitive form by ___________
(the "Transferor").
The Transferor (check applicable box):
/ / has requested the Registrar by written order to deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
/ / has requested the Registrar by written order to exchange or register
the transfer of a Security or Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above-captioned Securities and as provided in Section
2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because (check
applicable box):
/ / Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
/ / Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.6(a)(ii)(B) or Section 2.6(d)(i)(B) of the Indenture) or pursuant to an
effective registration
A-15
<PAGE>
statement under the Securities Act (in satisfaction of Section 2.6(a)(ii)(C) or
Section 2.6(d)(i)(C) of the Indenture).
/ / Such Security is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an exemption from registration in accordance
with Regulation S under the Securities Act, and an Opinion of Counsel to the
effect that such transfer does not require registration under the Securities Act
accompanies this Certificate (in satisfaction of Section 2.6(a)(ii)(C) or
Section 2.6(d)(i)(C) of the Indenture).
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, in accordance with Rule 144 under the Securities Act, and
an Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
_________________________________
[INSERT NAME OF TRANSFEROR]
By:______________________________
Date: _________________________
A-16
<PAGE>
$100,000,000
UNIVERSAL OUTDOOR, INC.
9 3/4% Series B Senior Subordinated Notes due 2006
PURCHASE AGREEMENT
December 11, 1996
<PAGE>
PURCHASE AGREEMENT
December 11, 1996
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
Universal Outdoor, Inc., a corporation organized and existing under
the laws of Illinois (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to you (the "Initial Purchasers")
$100,000,000 aggregate principal amount of its 9 3/4% Series B Senior
Subordinated Notes due 2006 (the "Securities"), to be issued pursuant to an
indenture dated as of December 16, 1996 (the "Indenture") between the Company
and United States Trust Company of New York, as trustee (the "Trustee").
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on an exemption therefrom. The Company has prepared a
preliminary offering memorandum, dated December 9, 1996 (such preliminary
offering memorandum, being hereinafter referred to as the "Preliminary Offering
Memorandum"), and an offering memorandum, dated December 11, 1996 (such offering
memorandum, in the form first furnished to the Initial Purchasers for use in
connection with the offering of Securities, being hereinafter referred to as the
"Offering Memorandum"), setting forth information regarding the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Securities.
<PAGE>
The Company understands that you propose to make an offering of the
Securities on the terms set forth in the Offering Memorandum, as soon as you
deem advisable after this Agreement has been executed as delivered, (i) to
persons in the United States whom you reasonably believe to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
promulgated by the Securities and Exchange Commission (the "Commission") under
the Act, as such rule may be amended from time to time ("Rule 144A"), in a
transaction under Rule 144A and (ii) to institutional "accredited investors" (as
defined in Rule 501(A)(1), (2), (3) or (7) under the Act), provided that such
offers and sales are made in the manner contemplated by Section 3(a), (d) and
(e) hereof.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, you that:
(a) Each of the Preliminary Closing Memorandum and the Offering
Memorandum, as of its date, contains all the information that, if requested by a
prospective purchaser of the Securities, would be required to be provided
pursuant to Rule 144A(d)(4) under the Act. As of its date, the Offering
Memorandum does not, and at the Closing Date will not, contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Offering Memorandum in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Initial Purchaser
specifically for use therein.
(b) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Illinois, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Each of the subsidiaries
of the Company (collectively, the "Subsidiaries") has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority to own or
lease its properties and conduct its business as de-
2
<PAGE>
scribed in the Offering Memorandum. The Subsidiaries are the only subsidiaries,
direct or indirect, of the Company. The Company and each of the Subsidiaries
are duly qualified to transact business in all jurisdictions in which the
conduct of their business requires such qualification. The outstanding shares
of capital stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by the Company
or another Subsidiary free and clear of all liens, encumbrances and equities and
claims, except for the pledge of the issued and outstanding common stock of each
Subsidiary pursuant to the Amended and Restated Credit Facility (the "Credit
Facility"), each among the Company, LaSalle National Bank and Bankers Trust
Company (collectively, the "Existing Stock Pledges"); and no options, warrants
or other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into shares of capital stock or ownership
interests in the Subsidiaries are outstanding.
(c) The outstanding shares of common stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable.
(d) The information set forth under the caption "Capitalization"
in the Offering Memorandum is true and correct. All of the Securities conform
to the description thereof contained in the Offering Memorandum. The form of
certificates for the Securities conforms to the corporate law of the
jurisdiction of the Company's incorporation.
(e) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Offering Memorandum, present fairly the financial position and the results of
operations and cash flows of the Company and the consolidated Subsidiaries, at
the indicated dates and for the indicated periods. Such financial statements
and related schedules have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods involved,
except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included in the Offering Memorandum presents fairly the
information
3
<PAGE>
shown therein and such data has been compiled on a basis consistent with the
financial statements presented therein and the books and records of the Company.
The pro forma financial statements and other pro forma financial information
included in the Offering Memorandum present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(f) Price Waterhouse LLP, who have certified certain of the
financial statements set forth in the Offering Memorandum, are independent
public accountants as defined in the Act and the rules and regulations
promulgated thereunder (the "Rules and Regulations").
(g) Except as set forth in the Offering Memorandum, there is
neither (i) any action, suit, claim or proceeding pending or, to the knowledge
of the Company, threatened against the Company or any of the Subsidiaries before
any court or administrative agency or otherwise which, if determined adversely
to the Company or any of its Subsidiaries, might result in, nor (ii) any
legislation, statute, regulation, rule or ordinance to the knowledge of the
Company proposed or pending before any legislative body or administrative
agency, which, if enacted or promulgated, might result in, any material adverse
change in the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
of the Subsidiaries taken as a whole or to prevent the consummation of the
transactions contemplated hereby,
(h) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets reflected in the financial statements
(or as described in the Offering Memorandum) hereinabove described, subject to
no lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements (or as described in the Offering
Memorandum) or which are not material in amount. The Company and the
Subsidiaries occupy their leased properties or proper-
4
<PAGE>
ties subject to easement under valid and binding leases or easements,
respectively.
(i) The Company and the Subsidiaries have filed all Federal,
state, local and foreign income tax returns which have been required to be filed
and have paid all taxes indicated by said returns and all assessments received
by them or any of them to the extent that such taxes have become due and are not
being contested in good faith. All tax liabilities have been adequately
provided for in the financial statements of the Company.
(j) Since the date as of which information is given in the
Offering Memorandum, there has not been any material adverse change or any
development involving a prospective material adverse change in or affecting the
earnings, business, management, properties, assets (including for these purposes
the assets of the Memphis/Tunica Sellers (as defined in the Offering Memorandum)
to be sold pursuant to the Option Agreement (as defined below) as if they were
owned by the Company or any of its Subsidiaries), rights, operations, condition
(financial or otherwise), or prospects of the Company and its Subsidiaries taken
as a whole, whether or not occurring in the ordinary course of business, and
there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or the
Subsidiaries, other than transactions in the ordinary course of business and
changes and transactions described in the Offering Memorandum. The Company and
the Subsidiaries have no material contingent obligations which are not disclosed
in the Company's financial statements which are included in the Offering
Memorandum.
(k) Neither the Company nor any of the Subsidiaries is or, with
the giving of notice or lapse of time or both, will be, in violation of or in
default under its Articles of Incorporation or By-Laws as presently in effect or
under any agreement, lease, contract, indenture or other instrument or
obligation (including, but not limited to, the Credit Facility or the indenture
with respect to the Company's 9 3/4% Senior Subordinated Notes due 2006 (the
"Existing Indenture")) to which it is a party or by which it, or any of its
properties, is bound and which default is of material significance in respect of
the condition, financial or otherwise of the
5
<PAGE>
Company and its Subsidiaries taken as a whole or the business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and the Subsidiaries taken as a whole. The execution
and delivery of this Agreement, the registration agreement of even date herewith
relating to the Securities (the "Registration Agreement") and the Indenture and
the consummation of the transactions therein contemplated and the fulfillment of
the terms thereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or any
Subsidiary is a party (including, but not limited to, the Credit Facility or the
Existing Indenture), or of the Articles of Incorporation or By-laws of the
Company as presently in effect or any Subsidiary or any order, rule or
regulation applicable to the Company or any Subsidiary of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
(l) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the Indenture and the consummation of the
transactions herein contemplated (except such additional steps as may be
necessary to qualify the Securities under state securities or Blue Sky laws) has
been obtained or made and is in full force and effect.
(m) The Company and each of the Subsidiaries hold all material
licenses, consents, authorizations, approvals, orders, certificates and permits
(collectively, "Licenses") of and from, and have made all declarations and
filings with and satisfied all eligibility and other similar requirements
imposed by, all Federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, in each case
as required for the conduct of the business in which it is engaged, and each
such License is in full force and effect, except to the extent that the failure
to obtain any such License or to make any such declaration or filing or satisfy
any such requirement would not have a material adverse effect on the earnings,
business, management, properties, assets,
6
<PAGE>
rights, operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, taken as a whole.
(n) The Company and its Subsidiaries are in compliance with all
applicable Federal, state and local laws and regulations relating to (i) zoning,
land use, protection of the environment, human health and safety or hazardous or
toxic substances, wastes, pollutants or contaminants and (ii) employee or
occupational safety, discrimination in hiring, promotion or pay of employees,
employee hours and wages or employee benefits, except where such noncompliance
would not, singly or in the aggregate, have a material adverse effect on the
earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole.
(o) Neither the Company nor any of the Subsidiaries has
infringed any patents, patent rights, trade names, trademarks or copyrights,
which infringement is material to the business of the Company and the
Subsidiaries taken as a whole. The Company knows of no material infringement by
others of patents, patent rights, trade names, trademarks or copyrights owned by
or licensed to the Company.
(p) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940 (the "1940 Act") and the rules and regulations of the Commission
thereunder.
(q) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
7
<PAGE>
(r) The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(s) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (A) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (B) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(t) The Option and Asset Purchase Agreement, dated September 12,
1996, between the Company, Tanner Acquisition Corporation ("Acquisition
Corporation") and the Memphis/Tunica Sellers (the "Option Agreement") has been
duly authorized, executed and delivered by the parties thereto and constitutes a
valid and binding agreement of the parties thereto, enforceable against the
parties thereto in accordance with its terms, except to the extent that
enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity.
(u) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and the Company
further agrees that if it commences engaging
8
<PAGE>
in business with the government of Cuba or with any person or affiliate located
in Cuba after the date of the Offering Memorandum, or if the information
contained in the Offering Memorandum, if any, concerning the Company's business
with Cuba or with any person or affiliate located in Cuba changes in any
material way, the Company will provide the Florida Department of Banking and
Finance (the "Department") notice of such business or change, as appropriate, in
a form acceptable to the Department.
(v) The Securities have been duly and validly authorized by the
Company and the Securities, when they are authenticated by the Trustee and
issued, sold and delivered in accordance with this Agreement and the Indenture,
will have been duly and validly executed, authenticated, issued and delivered
and will constitute valid and binding obligations of the Company, enforceable
against the Company, in accordance with their terms and entitled to the benefits
provided by the Indenture, except to the extent that enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (B) general principles of equity.
(w) The Indenture and the Securities conform to the description
thereof contained in the Offering Memorandum, and the Indenture has been duly
and validly authorized and, when executed and delivered by the Company and the
Trustee, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity.
(x) Each of this Agreement and the Registration Agreement has
been duly and validly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except to the extent that enforcement
thereof may be limited by (A) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
9
<PAGE>
creditors' rights generally and (B) general principals of equity.
(y) When the Securities are issued and delivered pursuant to
this Agreement, such Securities will not be of the same class (within the
meaning of Rule 144A) as securities of the Company which are listed on a
national securities exchange registered under Section 6 of the Exchange Act of
1934 (the "Exchange Act") or quoted in a U.S. automated inter-dealer quotation
system.
(z) None of the Company or the Subsidiaries or any affiliate of
any of them (as defined in Rule 501(b) under the Act) has, directly or through
any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Act) which is subject
to integration with the sale of the Securities in a manner that would require
the registration of the Securities under the Act.
(aa) None of the Company or the Subsidiaries or any person
acting on their behalf has engaged, in connection with the offering of the
Securities, in any form of general solicitation or general advertising (as those
terms are used within the meaning of Regulation D under the Act); it has not
solicited offers for, or offered or sold, such Securities by means of any form
of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, you agree to purchase from
the Company, at a purchase price of 98.5% of the principal amount thereof, plus
accrued interest, if any, from December 16, 1996 to the Closing Date.
Delivery of and payment of the purchase price for the Firm Securities
shall be made in your offices at 245 Park Avenue, New York, New York 10167, or
at such other location as may be mutually acceptable. Such delivery and payment
shall be made at 10:00 a.m., New York time, on December 16, 1996, or at such
other time as shall be agreed upon by you and the Company. The time
10
<PAGE>
and date of such delivery and payment are herein called the "Closing Date."
Delivery of the Securities shall be made to you for your account against payment
of the purchase price for the Securities by wire transfer of immediately
available funds to an account or accounts to be designated by the Company at
least one business day prior to the Closing Date, and the Company shall promptly
reimburse you for the costs of obtaining such funds.
The Securities shall be registered in such name or names and in such
authorized denominations as you may request in writing at least two full
business days prior to the Closing Date. The Company will permit you to examine
and package such Securities for delivery at least one full business day prior to
the Closing Date.
The Initial Purchasers have advised the Company that they propose to
offer the Securities for resale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. The Initial Purchasers hereby,
severally, and not jointly, represent and warrant to, and agree with, the
Company that they (i) have not and will not solicit offers for, or offer or
sell, such Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Act, (ii) will solicit offers for such Securities pursuant to Rule 144A or
resales not involving a public offering, as applicable, only from, and will
offer, sell or deliver such Securities, as part of its distribution, only to,
respectively, (A) persons in the United States whom it reasonably believes to be
qualified institutional buyers within the meaning of Rule 144A ("Qualified
Institutional Buyers") and (B) institutional "accredited investors," as defined
in Rule 501(a)(1), (2), (3) or (7) under the Act, provided, however, that such
"accredited investor" must complete and deliver to it an investment letter
substantially in the form of Annex A to the Offering Memorandum prior to
acceptance of any order, (iii) are Qualified Institutional Buyers, with such
knowledge and experience in financial and business matters as are necessary in
order to evaluate the merits and risks of an investment in the Securities and
(iv) will, during their initial distribution of the Securities, unless
prohibited by applicable law, furnish to each person to whom they
11
<PAGE>
offer any Securities a copy of the Preliminary Offering Memorandum or inform
each such person that a copy of such Preliminary Offering Memorandum is
available upon request and will, during their initial distribution of the
Securities, furnish to each person to whom they sell any Securities a copy of
the Offering Memorandum.
3. COVENANTS OF THE COMPANY: The Company covenants and agrees with
you as follows:
(a) The Company will cooperate with the Initial Purchasers in
endeavoring to qualify the Securities for sale under the securities laws of such
jurisdictions as the Initial Purchasers may reasonably have designated in
writing and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Initial Purchasers may reasonably request for distribution of the
Securities.
(b) At any time prior to the completion of the distribution of
the Securities by the Initial Purchasers to purchasers who are not affiliates
thereof, the Company will give the Initial Purchasers notice of its intention to
prepare any supplement or amendment to the Offering Memorandum, will furnish the
Initial Purchasers with copies of any such amendment, supplement or other
document a reasonable amount of time prior to such proposed filing or use, and
will not use any such amendment or supplement to which the Initial Purchasers or
counsel for the Initial Purchasers shall object within five days of being
furnished a copy thereof.
(c) The Company has furnished or will furnish to the Initial
Purchasers such number of copies of the Offering Memorandum (as amended or
supplemented) as the Initial Purchasers may reasonably request.
(d) At any time prior to the completion of the distribution of
the Securities by the Initial
12
<PAGE>
Purchasers to purchasers who are not affiliates thereof, if any event shall
occur as a result of which it is necessary, in the reasonable opinion of counsel
for the Initial Purchasers, to amend or supplement the Offering Memorandum in
order to make the Offering Memorandum not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Company
will forthwith amend or supplement the Offering Memorandum (in form and
substance reasonably satisfactory to counsel for the Initial Purchasers) so
that, as so amended or supplemented, the Offering Memorandum will not include an
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances existing
at the time it is delivered to the purchaser, not misleading, and the Company
will furnish to the Initial Purchasers a reasonable number of copies of such
amendment or supplement.
(e) At any time prior to completion of the distribution of the
Securities by the Initial Purchasers to purchasers who are not affiliates
thereof, the Company will, as required, subject to Section 3(b), file promptly
all documents required to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act.
(f) None of the Company and its Subsidiaries will solicit any
offer to buy or offer or sell the Securities by means of any form of general
solicitation or general advertising.
(g) None of the Company and its Subsidiaries or any affiliate of
any of them (as defined in Rule 501(b) of the Act) will offer, sell or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
the Act) which will be integrated with the sale of the Securities in a manner
that would require the registration of the Securities under the Act.
(h) During the period from the Closing Date to three years
after the Closing Date, the Company and its Subsidiaries will not, and will
not permit any of "affiliate" (as defined in Rule 144 under the Act) of the
Company to, resell any of the Securities that have been reacquired by them,
except for Securities purchased by the Company and its Subsidiaries or any of
their affiliates
13
<PAGE>
and resold in a transaction registered under the Act.
(i) The Company will, so long as the Securities are outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3) under the
Act, either (i) file reports and other information with the Commission under
Section 13 or 15(d) of the Exchange Act, or (ii) in the event it is not subject
to Section 13 or 15(d) of the Exchange Act, make available to holders of the
Securities and prospective purchasers of the Securities designated by such
holders, upon request of such prospective purchasers, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Act to permit compliance
with Rule 144A in connection with resales of the Securities.
(j) The Company will, if requested by the Initial Purchasers,
use its best efforts in cooperation with the Initial Purchasers to permit the
Securities to be eligible for clearance and settlement through The Depository
Trust Company.
(k) Each of the Securities will bear the legend contained in
"Notice to Investors" in the Offering Memorandum and upon the other terms stated
therein, except after such Securities are resold or exchanged pursuant to a
registration statement effective under the Act.
(l) The Company will, for a period of five years from the
Closing Date, deliver to the Initial Purchasers copies of annual reports and
copies of all other documents, reports and information furnished by the Company
to its stockholders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act or the
Exchange Act. The Company will deliver to the Initial Purchasers similar
reports with respect to significant subsidiaries, as that term is defined in the
Rules and Regulations, which are not consolidated in the Company's financial
statements.
(m) The Company shall apply the net proceeds of its sale of the
Securities as set forth in the Offering Memorandum.
14
<PAGE>
(n) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Securities in such a manner as
would require the Company or any of the Subsidiaries to register as an
investment company under the 1940 Act or the rules and regulations thereunder.
(o) For a period of 180 days after the date of this Agreement,
except as described in or contemplated by the Offering Memorandum, the Company
will not, without your prior written consent, issue, sell, offer or agree to
sell, or otherwise dispose of, directly or indirectly, any debt securities of
the Company.
(p) The Company will not claim the benefit of any usury laws
against any holders of the Securities.
4. PAYMENT OF EXPENSE. Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with
(i) preparing, printing, duplicating, filing and distributing the Offering
Memorandum and all amendments thereof, any preliminary offering memoranda and
any amendments thereof or supplements thereto (including, without limitation,
fees and expenses of the Company's accountants and counsel), the Indenture, the
underwriting documents (including this Agreement and the Registration
Agreement), and all other documents related to the offering of the Securities
(including those supplied to you in quantities as hereinabove stated), (ii) the
issuance, transfer and delivery of the Securities to you, including any transfer
or other taxes payable thereon, (iii) the qualification of the Securities under
state and foreign securities or Blue Sky laws and the eligibility of the
Securities for investment under state and foreign law, including the costs of
printing and mailing a preliminary and final "Blue Sky Survey" and a "Legal
Investment Memorandum" and the reasonable fees of your counsel and such
counsel's reasonable disbursements in relation thereto, (iv) the rating of the
Securities by one or more rating agencies and (v) the fees and expenses of the
Trustee and any agent of the Trustee and the fees and disbursements of
15
<PAGE>
counsel for the Trustee in connection with the Indenture and the Securities.
5. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. Your obligations to
purchase and pay for the Securities on the Closing Date shall be subject to the
accuracy of the representations and warranties of the Company contained as of
the date hereof and as of the Closing Date, to the absence from any
certificates, opinions, written statements or letters furnished to you pursuant
to this Section 5 or to your counsel, Skadden, Arps, Slate, Meagher & Flom LLP
("Initial Purchasers' Counsel") pursuant to this Section 5 of any material
misstatement or omission, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Underwriters shall have received on the Closing Date the
opinion of Winston & Strawn, counsel for the Company, dated the Closing Date,
addressed to the Initial Purchasers to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Illinois, with corporate power and authority to own or
lease its properties and conduct its business as described in the
Offering Memorandum; each of the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own or lease its properties and
conduct its business as described in the Offering Memorandum; the
Company and each of the Subsidiaries are duly qualified to transact
business in all jurisdictions in which the failure to qualify would
have a materially adverse effect upon the business of the Company
taken as a whole; and the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable and are owned by the Company or a
Subsidiary; and, to the best of such counsel's knowledge, the
outstanding shares of capital stock of each of the Subsidiaries is
owned free
16
<PAGE>
and clear of all liens, encumbrances and equities and claims except for the
Existing Stock Pledges, and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligations into any shares of capital stock or of ownership
interests in the Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization" in the
Offering Memorandum; the authorized shares of the Company's common
stock have been duly authorized; the outstanding shares of the
Company's common stock have been duly authorized and validly issued
and are fully paid and non-assessable.
(iii) The statements in the Offering Memorandum under
the captions "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources," "Description of Indebtedness and Other Commitments,"
"Certain Transactions," and "Management -- The 1996 Warrant Plan," as
such statements constitute a summary of the legal matters or documents
referred to therein or matters of law, fairly summarize in all
material respects the information required to be shown (except that
such counsel need express no opinion as to the financial or
statistical data therein).
(iv) Such counsel does not know of any contracts or
other documents of a character required to be described in the
Offering Memorandum which are not so described, and such contracts and
documents as are summarized in the Offering Memorandum are fairly
summarized in all material respects.
(v) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or
any of the Subsidiaries except as set forth in the Offering
Memorandum.
17
<PAGE>
(vi) The execution and delivery of this Agreement, the
Registration Agreement and the Indenture and the consummation of the
transactions therein contemplated do not and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, the Articles of Incorporation or By-laws of the
Company, or any material agreement or instrument to which the Company
or any of the Subsidiaries is a party or by which the Company or any
of the Subsidiaries is bound.
(vii) Each of this Agreement and the Registration
Agreement has been duly authorized, executed and delivered by the
Company and the Registration Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by (A) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (B) general principals of equity.
(viii) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body which has not been received
or granted is required in connection with the execution and delivery
of this Agreement and the Indenture and the consummation of the
transactions herein contemplated (other than as may be required by
state securities and Blue Sky laws as to which such counsel need
express no opinion).
(ix) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by this
Agreement, and application of the net proceeds therefrom as described
in the Offering Memorandum, required to register as an investment
company under the 1940 Act.
18
<PAGE>
(x) The Option Agreement has been duly authorized,
executed and delivered by each of the Company and Acquisition
Corporation and constitutes a valid and binding agreement of each of
the Company and Acquisition Corporation, enforceable against each of
the Company and Acquisition Corporation in accordance with its terms,
except to the extent that enforcement thereof may be limited by
(A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity.
(xi) The Indenture has been duly and validly
authorized, executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforcement may
be subject to (A) bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or conveyance or other similar laws now or hereafter
in effect relating to creditors' rights generally and (B) general
principles of equity (regardless of whether such enforcement may be
sought in a proceeding in equity or at law), and except to the extent
that a waiver of rights under any usury laws may be unenforceable. No
taxes or fees are required to be paid with respect to the execution of
the Indenture by the Company and the issuance of the Securities. The
Securities have been duly and validly authorized, executed, authenticated,
issued and delivered and constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms
and entitled to the benefits of the Indenture, except as such enforcement
may be subject to (A) bankruptcy, insolvency, reorganization, fraudulent
transfer or conveyance, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (B) general
principles of equity (regardless of whether such enforcement may be
sought in a proceeding in equity or at law), and except to the extent
that a waiver of rights
19
<PAGE>
under any usury laws may be unenforceable. The Initial Purchasers will
receive good, valid and marketable title to the Securities being sold by
the Company hereunder, free and clear of all liens, encumbrances, claims,
security interests, restrictions or transfer, shareholders' agreements,
voting trusts and other defects of title whatsoever. The Securities and
the Indenture conform to the descriptions thereof contained in the Offering
Memorandum.
(xii) the offer, issuance, sale and delivery of the
Securities to the Initial Purchasers and, assuming compliance with the
transfer restrictions, the reoffer, resale and delivery by the Initial
Purchasers in the manner and to the persons contemplated by this
Agreement and the Offering Memorandum do not require registration
under the Act or qualification of the Indenture under the Trust
Indenture Act of 1939.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that no facts have come to the attention of
such counsel which led them to believe that either the Offering Memorandum or
any amendment or supplement thereto, as of its date and the Closing Date,
contained an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Winston &
Strawn may state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
The Initial Purchasers shall also have received on the Closing Date
the opinion of local counsel for the Company experienced in such matters in
Jacksonville, dated the Closing Date addressed to the Initial Purchasers to the
effect that the statements under the caption "Business-Government Regulation,"
insofar as such statements constitute a summary of regulatory matters in such
jurisdiction relating to the outdoor advertising indus-
20
<PAGE>
try, fairly describe the regulatory matters relating to such industry.
(b) The Initial Purchasers shall have received from Skadden,
Arps, Slate, Meagher & Flom LLP, counsel for the Initial Purchasers, an opinion
dated the Closing Date as to such matters as the Initial Purchasers may
reasonably require. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel which leads them to believe that either the Offering
Memorandum or any amendment or supplement thereto, as of its date and the
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact, necessary in order to make the statements, in the light
of the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Skadden,
Arps, Slate, Meagher & Flom LLP may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(c) The Initial Purchase shall have received at or prior to the
Closing Date from Skadden, Arps, Slate, Meagher & Flom LLP a memorandum or
summary, in form and substance satisfactory to the Initial Purchasers, with
respect to the qualification for offering and sale by the Initial Purchasers of
the Securities under the state securities or Blue Sky laws of such jurisdictions
as the Initial Purchasers may reasonably have designated to the Company.
(d) The Initial Purchasers shall have received, on each of the
dates hereof and the Closing Date letters dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to you, of Price
Waterhouse LLP, Ernst & Young LLP, BDO Siedman, LLP and Arthur Andersen LLP
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them comply in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and Regulations; and
containing such other
21
<PAGE>
statements and information as is ordinarily included in accountants' "comfort
letters" to Initial Purchasers with respect to the financial statements and
certain financial and statistical information contained in the Offering
Memorandum.
(e) The Securities shall have been approved for inclusion on the
PORTAL system, subject to official issuance.
(f) The Registration Agreement shall have been executed and
delivered by the Company.
(g) The Initial Purchasers shall have received on the Closing
Date a certificate or certificates of the President and Chief Executive Officer
and the Chief Financial Officer of the Company to the effect that, as of the
Closing Date each of them severally represents as follows:
(i) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing
Date;
(ii) He has carefully examined the Offering Memorandum
and, in his opinion, as of the date of the Offering Memorandum, the
statements contained in the Offering Memorandum were true and correct,
and such Offering Memorandum did not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, and since the date of the Offering
Memorandum, no event has occurred which should have been set forth in
a supplement to or an amendment of the Offering Memorandum which has
not been so set forth in such supplement or amendment; and
(iii) Since the date as of which information is given
in the Offering Memorandum, there has not been any material adverse
change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a
22
<PAGE>
whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company
and the Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Initial Purchasers and to Skadden, Arps,
Slate, Meagher & Flom LLP, counsel for the Underwriters.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Initial Purchasers' Counsel pursuant to this Section 5 shall not be in all
material respects reasonably satisfactory in form and substance to you and to
Initial Purchasers' Counsel, all your obligations hereunder may be cancelled by
you at, or at any time prior to, the Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone, telex or telegraph,
confirmed in writing.
6 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you and
each person, if any, who controls you within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and out-of-pocket expenses whatsoever (including
but not limited to reasonable attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which you or any such person may become subject under the Act, the Exchange Act
or otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any supple-
23
<PAGE>
ment thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that the Company will not be liable in any such case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of you expressly for use therein and PROVIDED, further, that the Company
will not be liable to you or any person who controls you with respect to any
untrue statement or omission or alleged untrue statement or omission made in the
Preliminary Offering Memorandum which is corrected in the Offering Memorandum,
or in any supplement thereto or amendment thereof, if the Company sustains the
burden of proving that you sold securities to the person asserting any such
loss, liability, claim or damage without sending or giving, at or prior to the
written confirmation of the sale of such securities to such person, a copy of
the Offering Memorandum (as amended or supplemented), if the Company had
previously furnished copies thereof to you. This indemnity agreement will be in
addition to any liability which the Company may otherwise have, including, under
this Agreement.
(b) You agree to indemnify and hold harmless the Company, each
of its directors and each other person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any amendment thereof or
supplement thereto, or arise out of or are based upon
24
<PAGE>
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of you expressly for use therein; PROVIDED, HOWEVER,
that in no case shall you be liable or responsible for any amount in excess of
the underwriting discount received by you. This indemnity will be in addition
to any liability which you may otherwise have including under this Agreement.
The Company acknowledges that the statements set forth in the last paragraph of
the cover page and the third paragraph under the caption "Plan of Distribution"
in the Offering Memorandum constitute the only information furnished in writing
by or on behalf of you expressly for use in the Offering Memorandum or the
Preliminary Offering Memorandum or in any amendment thereof or supplement
thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection
25
<PAGE>
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties, it being
understood, however, that the indemnifying parties shall not, in connection with
any one such action or separate but substantially similar related actions
arising out of the same general allegations or circumstances, be liable for fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for the indemnified parties. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its written
consent; PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
7. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 6 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
you shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than you, who may also be liable for
contribution, including persons who control the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and directors of the
Company) to which the Company and you may be subject, in such proportions as is
appropriate to reflect the relative benefits received by the Company and you
from the offering of the Securities or, if such allocation is not
26
<PAGE>
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 6
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and you in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and you
shall be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and (y) the underwriting discounts and
commissions received by you, respectively, in each case as set forth in the
table on the cover page of the Offering Memorandum. The relative fault of the
Company and of you shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or you and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 7, (i) in no case shall you be liable or responsible for any amount
in excess of the underwriting discount applicable to the Securities purchased by
you hereunder, and (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
Notwithstanding the provisions of this Section 7, you shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities purchased by you hereunder exceeds the amount of any damages that
you have otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. For purposes of this
Section 7, each person, if any, who controls you within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same
rights to contribution as you, and each person, if any,
27
<PAGE>
who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this Section 7. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; PROVIDED, HOWEVER, that such consent was not unreasonably
withheld.
8. DEFAULT BY AN INITIAL PURCHASER.
(a) If any Initial Purchaser shall default in its obligation to
purchase the Securities hereunder, the other Initial Purchaser may in its
discretion arrange for itself or for another party or parties to purchase such
Securities to which such default relates on the terms contained herein. In the
event that within five (5) calendar days after such a default you do not arrange
for the purchase of the Securities to which such default relates as provided in
this Section 8, this Agreement shall thereupon terminate, without liability on
the part of the Company with respect thereto (except in each case as provided in
Section 4, 6(a) and 7 hereof) or the non-defaulting Initial Purchaser, but
nothing in this Agreement shall relieve a defaulting Initial Purchaser of its
liability, if any, to the other Initial Purchaser and the Company for damages
occasioned by its or their default hereunder.
(b) In the event that the Securities to which the default
relates are to be purchased by the non-defaulting Initial Purchaser, or are to
be purchased by another party or parties as aforesaid, you or the Company shall
have the right to postpone the Closing Date for a period, not exceeding seven
(7) business days, in order to effect whatever changes may thereby be made
necessary in the Offering Memorandum or in any other documents and arrangements.
The term "Initial Purchaser" as used in
28
<PAGE>
this Agreement shall include any party substituted under this Section 8 with
like effect as if it had originally been a party to this Agreement with respect
to such Securities.
9. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS.
All representations and warranties, covenants and agreements of
you and the Company contained in this Agreement, including the agreements
contained in Section 4, the indemnity agreements contained in Section 6 and the
contribution agreements contained in Section 7, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
you or any controlling person thereof or by or on behalf of the Company, any of
its officers and directors or any controlling person thereof, and shall survive
delivery of any payment for the Securities to and by you. The representations
contained in Section 1 and the agreements contained in Sections 4, 6, 7 and
10(c) hereof shall survive the termination of this Agreement including pursuant
to Section 10 hereof.
10. TERMINATION.
(a) You shall have the right to terminate this Agreement at any
time prior to the Closing Date if (A) any domestic or international event or act
or occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or securities
in general; or (B) if trading on the New York or American Stock Exchanges shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York or American Stock Exchanges by the New York or American Stock
Exchanges or by order of the Commission or any other governmental authority
having jurisdiction; or (C) if a banking moratorium has been declared by a state
or federal authority or if any new restriction materially adversely affecting
the distribution of the Securities shall have become effective; or (D)(i) if the
United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (ii) if there shall have been a change
in political, financial or economic conditions if the effect of any such event
in (i)
29
<PAGE>
or (ii) is such as in your judgment makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Securities on the terms
contemplated by the Prospectus.
(b) Any notice of termination pursuant to this Section 10 shall
be by telephone, telex, or telegraph, confirmed in writing by letter.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 10(a) hereof, or if the sale of the Securities provided for
herein is not consummated because any condition to your obligations set forth
herein is not satisfied or because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any provision
hereof, the Company will, subject to demand by you, reimburse you for all out-
of-pocket expenses (including the fees and expenses of your counsel), incurred
by you in connection herewith.
11. NOTICE. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to you shall be
mailed, delivered, or telexed or telegraphed and confirmed in writing, to Bear,
Stearns & Co. Inc., 245 Park Avenue, New York, NY 10167, Attention: Corporate
Finance Department; if sent to the Company, shall be mailed, delivered, or
telegraphed and confirmed in writing to Universal Outdoor, Inc., 321 North Clark
Street, Suite 1010, Chicago, IL 60610, Attention: Chief Financial Officer.
12. PARTIES. This Agreement shall inure solely to the benefit of,
and shall be binding upon you and the Company and the controlling persons,
directors, officers, employees and agents referred to in Sections 6 and 7,
and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. The term "successors and assigns" shall not include a purchaser,
in its capacity as such, of Securities from you.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW
30
<PAGE>
YORK, BUT WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
31
<PAGE>
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
UNIVERSAL OUTDOOR, INC.
By: /s/ Brian T. Clingen
------------------------------
Name: Brian T. Clingen
Title: Vice President
Accepted, as of the date first above written.
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
By: BEAR, STEARNS & CO. INC.
By: /s/ Philip Berney
-----------------------------
Name: Philip Berney
Title: Senior Managing Director
32
<PAGE>
UNIVERSAL OUTDOOR, INC.
9 3/4% SERIES B SENIOR SUBORDINATED EXCHANGE NOTE
DUE 2006
CUSIP: ________
No. $ ______
Universal Outdoor, Inc., an Illinois corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________________ , or registered assigns, the principal sum of ______________
Dollars, on October 15, 2006.
Interest Payment Dates: April 15 and October 15 commencing April 15,
1997.
Record Dates: April 1 and October 1
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated:
UNIVERSAL OUTDOOR, INC., an
Illinois corporation
[Seal]
By:
---------------------------------------
Name:
Title:
Attest:
------------------
Secretary
A-1
<PAGE>
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned
Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee and
Authenticating Agent
By:
--------------------
Authorized Signatory
Dated:
---------------------
A-2
<PAGE>
UNIVERSAL OUTDOOR INC.
9 3/4% SERIES B SENIOR SUBORDINATED EXCHANGE NOTE
DUE 2006
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
A-3
<PAGE>
1. INTEREST.
Universal Outdoor, Inc., an Illinois corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of 9 3/4% per annum from December 16, 1996 until
maturity. To the extent it is lawful, the Company promises to pay interest on
any interest payment due but unpaid on such principal amount at a rate of 9 3/4%
per annum compounded semi-annually.
The Company will pay interest semi-annually on April 15 and October 15
of each year or, if any such day is not a Business Day, on the next succeeding
Business Day (each, an "Interest Payment Date"), commencing April 15, 1997.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the Securities, from
the date of issuance. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the April 1 or October 1 immediately preceding the Interest Payment Date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. Except as provided below, the Company shall pay principal and
interest in such coin or currency of the United States of
A-4
<PAGE>
America as at the time of payment shall be legal tender for payment of public
and private debts ("Cash"). The Securities will be payable as to principal,
premium, if any, and interest, and the Securities may be presented for
registration of transfer or exchange, at the office or agency of the Company
maintained for such purpose within or without the Borough of Manhattan, the City
and State of New York or, at the option of the Company, payment of interest may
be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and PROVIDED that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest and
premium on all Global Securities and all other Securities the Holders of which
shall have provided wire transfer instructions to an account within the United
States to the Company or the Paying Agent. Until otherwise designated by the
Company, the Company's office or agency will be the corporate trust office of
the Trustee presently located at the Trustee's agency at 114 West 47th Street,
New York, New York 10036-15.
3. PAYING AGENT AND REGISTRAR.
Initially, the United States Trust Company of New York (the "Trustee,"
which term includes any successor Trustee under the Indenture) will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. INDENTURE.
The Company issued the Securities under an Indenture, dated as of
December16, 1996 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are senior
subordinated, unsecured general obligations of the Company limited in aggregate
principal amount to $100,000,000. The Securities are subordinated in right of
payment to certain other debt obligations of the Company.
5. REDEMPTION.
The Securities may be redeemed, at the option of the Company, in
whole or in part, at any time on or after October 15, 2001, at the Redemption
Price (expressed
A-5
<PAGE>
as a percentage of principal amount) set forth below with respect to the
indicated Redemption Date, together with any accrued but unpaid interest to the
Redemption Date (subject to the right of Holders of record on a Record Date to
receive interest due on the Interest Payment Date that is on or prior to such
Redemption Date). The Securities may not be so redeemed prior to October 15,
2001, except as provided in the immediately following paragraph.
If redeemed during
the 12-month period
commencing October 15 Redemption Price
--------------------- ----------------
2001 . . . . . . . . . . . . . 104.875%
2002 . . . . . . . . . . . . . 103.250%
2003 . . . . . . . . . . . . . 101.625%
2004 and thereafter . . . . . 100.000%
Notwithstanding the foregoing, prior to October 15, 1999, upon any
Public Equity Offering or Equity Private Placement, in each case resulting in
Net Cash Proceeds of $100 million or more which are then contributed in full to
the Company, up to $35 million aggregate principal amount of the Securities may
be redeemed at the option of the Company with cash from the Net Cash Proceeds of
such Public Equity Offering or Equity Private Placement, at 110% of principal,
PROVIDED, HOWEVER, that immediately following such redemption not less than $65
million aggregate principal amount of the Securities are outstanding, PROVIDED,
FURTHER, that such redemption shall occur within 120 days of such Public Equity
Offering or Equity Private Placement.
Any such redemption will comply with Article III of the Indenture.
6. NOTICE OF REDEMPTION.
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to the Redemption Date to the Holder of
each Security to be redeemed at such Holder's last address as then shown upon
the registry books of the Registrar. Securities may be redeemed in part in
multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date and payment of
the Securities called for redemption is not otherwise prohibited, the Securities
called for redemption will cease
A-6
<PAGE>
to bear interest and the only right of the Holders of such Securities will be to
receive payment of the Redemption Price.
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of Securities in accordance with the Indenture. No service charge
will be made for any registration of transfer or exchange of the Securities, but
the Company may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental
charge payable in connection therewith. The Registrar need not register the
transfer of or exchange any Securities selected for redemption.
8. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee
and any such Paying Agent(s) with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, Cash, U.S.
Government Obligations or a combination thereof, in such amounts as will be
sufficient in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
Securities to redemption or maturity and comply with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Securities (including the restrictive
covenants described in paragraph 12 below, but excluding their obligation to pay
the principal of and interest on the Securities).
A-7
<PAGE>
11. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may under certain circumstances amend or supplement
the Indenture or the Securities to, among other things, cure any ambiguity,
defect or inconsistency, or make any other change that does not adversely affect
the rights of any Holder of a Security.
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the
Company to, among other things, incur additional Indebtedness and Disqualified
Capital Stock, pay dividends or make certain other restricted payments, enter
into certain transactions with Affiliates, incur Liens, sell assets, merge or
consolidate with any other Person or transfer (by lease, assignment or
otherwise) substantially all of the properties and assets of the Company. The
limitations are subject to a number of important qualifications and exceptions.
The Company must periodically report to the Trustee on compliance with such
limitations.
13. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
offer to purchase on the Change of Control Purchase Date all outstanding
Securities at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Purchase
Date. Holders of Securities will receive a Change of Control Offer from the
Company prior to any related Change of Control Purchase Date and may elect to
have such Securities purchased by completing the form entitled "Option of Holder
to Elect Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability of the
Company to sell assets. In the event the proceeds from a permitted Asset Sale
exceed certain amounts, as specified in the Indenture, the Company generally
will be required either to reinvest the proceeds of such Asset Sale in its
business, use such proceeds to retire debt, or to make an asset sale offer to
purchase a certain amount of each Holder's Securities at 100% of the principal
amount thereof, plus accrued interest, if any, to the purchase date, as more
fully set forth in the Indenture
A-8
<PAGE>
A-9
<PAGE>
14. RANKING.
Payment of principal, premium, if any, and interest on the Securities
is subordinated, in the manner and to the extent set forth in the Indenture, to
the prior payment in full of all Senior Debt.
15. SUCCESSORS.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
16. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing (other than an Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable in the manner and with the
effect provided in the Indenture. Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest), if it determines that withholding
notice is in their interest.
17. TRUSTEE OR AGENT DEALINGS WITH COMPANY.
The Trustee and each Agent under the Indenture, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates as if it were not the Trustee and such Agent.
18. NO RECOURSE AGAINST OTHERS.
A-10
<PAGE>
No direct or indirect stockholder, employee, officer or director, as
such, past, present or future, of the Company or any successor entity shall have
any personal liability in respect of the obligations of the Company under the
Securities or the Indenture by reason of his or its status as such stockholder,
employee, officer or director. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
19. AUTHENTICATION.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
20. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. ADDITIONAL RIGHTS OF HOLDERS OF SECURITIES.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, IL 60610
Attention: Corporate Secretary
A-11
<PAGE>
ASSIGNMENT
I or we assign this Security to
__________________________________________________________
__________________________________________________________
__________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
_________________________
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Dated: __________ Signed: ______________________________
__________________________________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee**
____________________
** NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.13 or Article X of the Indenture, check the appropriate
box:
/ / Section 4.13
/ / Article X
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.13 or Article X of the Indenture, as the case
may be, state the amount you want to be purchased: $________
Date: ________________ Signature: ________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee**
______________________
** NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-13
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
Principal Amount
Amount of Amount of of this Signature of
decrease in increase in Global Security authorized
Principal Amount Principal Amount following such officer of
Date of of this of this decrease (or Trustee or
Exchange Global Security Global Security increase) Securities
Custodian
- --------------------------------------------------------------------------------
A-14
<PAGE>
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF DECEMBER 16, 1996
BY AND AMONG
UNIVERSAL OUTDOOR, INC.
AS ISSUER
AND
BEAR, STEARNS & CO. INC.
AND
BT SECURITIES CORPORATION
AS INITIAL PURCHASERS
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), is made and entered
into as of December 16, 1996, among Universal Outdoor, Inc., an Illinois
corporation (the "Issuer"), and Bear, Stearns & Co. Inc. and BT Securities
Corporation (together, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated December
11, 1996, among the Issuer and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Issuer to the Initial Purchasers
of $100,000,000 aggregate principal amount of 9 3/4% Series B Senior Notes due
2006 (the "Notes"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Issuer has agreed to provide to the Initial Purchasers
and their respective direct and indirect transferees, among other things, the
registration rights for the Notes set forth in this Agreement. The execution of
this Agreement is a condition to the closing of the transactions contemplated by
the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (and, unless otherwise indicated, capitalized terms used herein without
definition shall have the respective meanings ascribed to them by the Purchase
Agreement):
APPLICABLE PERIOD: See Section 2(b) hereof.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in The City
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
CLOSING DATE: The Closing Date as defined in the Purchase Agreement.
EFFECTIVENESS PERIOD: See Section 3(a) hereof.
EFFECTIVENESS TARGET DATE: The 105th day following the Closing Date.
1
<PAGE>
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
EXCHANGE NOTES: See Section 2(a) hereof.
EXCHANGE OFFER: See Section 2(a) hereof.
EXCHANGE OFFER REGISTRATION STATEMENT: See Section 2(a) hereof.
FILING DATE: The 45th day after the Closing Date.
HOLDER: Any holder of Transfer Restricted Notes.
INDEMNIFIED PARTY: See Section 7 hereof.
INDEMNIFIED PERSON: See Section 7 hereof.
INDEMNIFYING PERSON: See Section 7 hereof.
INDENTURE: The Indenture, dated as of December 16, 1996, by and between
the Issuer and United States Trust Company of New York, as Trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
INITIAL PURCHASERS: See the introductory paragraph to this Agreement.
INSPECTORS: See Section 3(m) hereof.
ISSUER: See the introductory paragraph of this Agreement.
LIQUIDATED DAMAGES: See Section 4(a) hereof.
NOTES: See the introductory paragraphs to this Agreement.
PARTICIPATING BROKER-DEALER: See Section 2(b) hereof.
2
<PAGE>
PERSON or PERSON: An individual, trustee, corporation, partnership, joint
stock company, trust, unincorporated association, union, business association,
limited liability company, limited liability partnership, firm or other legal
entity.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Exchange Notes and/or the Transfer Restricted Notes (as applicable),
covered by such Registration Statement, and all other amendments and supplements
to the Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
RECORDS: See Section 4(m) hereof.
REGISTRATION DEFAULT: See Section 4(a) hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuer,
including, but not limited to, the Exchange Offer Registration Statement, Shelf
Registration or a registration statement of the Issuer that otherwise covers any
of the Transfer Restricted Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
RULE 144: Rule 144 promulgated pursuant to the Securities Act, as
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
RULE 144A: Rule 144A promulgated pursuant to the Securities Act, as
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
RULE 415: Rule 415 promulgated pursuant to the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
3
<PAGE>
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
SHELF NOTICE: See Section 2(c) hereof.
SHELF REGISTRATION: See Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
TRANSFER RESTRICTED NOTES: The Notes upon original issuance thereof and at
all times subsequent thereto, until (i) a Registration Statement covering such
Notes has been declared effective by the SEC and such Notes have been disposed
of in accordance with such effective Registration Statement, (ii) such Notes are
sold in compliance with Rule 144 or (iii) such Notes cease to be outstanding.
TRUSTEE: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of the Issuer are sold to an underwriter for reoffering to the
public.
4
<PAGE>
2. EXCHANGE OFFER
5
<PAGE>
(a) The Issuer agrees to file with the SEC as soon as practicable after
the Closing Date, but in no event later than the Filing Date, an offer to
exchange (the "Exchange Offer"), any and all of the Transfer Restricted Notes
for a like aggregate principal amount of debt securities of the Issuer (the
"Exchange Notes"), which Exchange Notes will be (i) substantially identical
in all material respects to the Notes, except that such Exchange Notes will
not contain terms with respect to transfer restrictions, (ii) entitled to the
benefits of the Indenture or a trust indenture which is identical to the
Indenture (other than such changes to the Indenture or any such identical
trust indenture as are necessary to comply with any requirements of the SEC
to effect or maintain the qualification thereof under the TIA), and which, in
either case, has been qualified under the TIA, and (iii) registered pursuant
to an effective Registration Statement in compliance with the Securities Act.
The Exchange Offer will be registered pursuant to the Securities Act on an
appropriate form of Registration Statement (the "Exchange Offer Registration
Statement"), and will comply with all applicable tender offer rules and
regulations promulgated pursuant to the Exchange Act and shall be duly
registered or qualified pursuant to all applicable state securities or Blue
Sky laws. The Exchange Offer shall not be subject to any condition, other
than that the Exchange Offer does not violate any applicable law, policy or
interpretation of the staff of the SEC. No securities shall be included in
the Exchange Offer Registration Statement other than the Exchange Notes. The
Issuer agrees to use its best efforts to (x) cause the Exchange Offer
Registration Statement to become effective pursuant to the Securities Act on
or before the Effectiveness Target Date; and (y) keep the Exchange Offer open
for not less than 20 Business Days (or such longer period required by
applicable law), after the date that the notice of the Exchange Offer
referred to below is mailed to Holders. Each Holder who participates in the
Exchange Offer will be required to represent that any Exchange Notes received
by it will be acquired in the ordinary course of its business, that at the
time of the consummation of the Exchange Offer such Holder will have no
arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, and that such Holder is not an
"affiliate" of the Issuer within the meaning of Rule 405 of the Securities
Act (or that if it is such an affiliate, it will comply with the registration
and prospectus delivery requirements of the Securities Act to the extent
applicable). Each Holder that is not a Participating Broker-Dealer will be
required to represent that it is not engaged in, and does not intend to
engage in, the distribution of the Exchange Notes. Each Holder that (i) is a
Participating Broker-Dealer and (ii) will receive Exchange Notes for its own
account in exchange for the Transfer Restricted Notes that it acquired as the
result of market-making or other trading activities will be required to
acknowledge that it will deliver a Prospectus as required by law in
connection with any resale of such Exchange
6
<PAGE>
Notes. Upon consummation of the Exchange Offer in accordance with this
Agreement, the Issuer shall have no further obligation to register Transfer
Restricted Notes pursuant to Section 3 of this Agreement.
(b) The Issuer shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
acceptable to the Initial Purchasers, which shall contain a summary statement of
the positions taken or policies made by the staff of the SEC with respect to the
potential "underwriter" status of any broker-dealer that is the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), of Exchange Notes received by
such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer").
Such "Plan of Distribution" section shall also allow the use of the Prospectus
by all persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Notes.
The Issuer shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Notes; PROVIDED that such period shall not
exceed 180 days after consummation of the Exchange Offer (or such longer period
if extended pursuant to the last paragraph of Section 5 hereof) (the "Applicable
Period").
In connection with the Exchange Offer, the Issuer shall:
(i) mail as promptly as practicable to each Holder a copy of the
Prospectus forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York; and
(iii) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last Business Day on which the
Exchange Offer shall remain open by sending to the institution and at the
address (located in the Borough of Manhattan, The City of New York)
7
<PAGE>
specified in the notice, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Transfer Restricted Securities delivered for exchange and a statement that
such Holder is withdrawing his or her election to have such Transfer
Restricted Securities exchanged.
As soon as practicable after the close of the Exchange Offer, the Issuer
shall:
(i) accept for exchange all Notes tendered and not validly withdrawn
pursuant to the Exchange Offer;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes so accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes equal in principal amount to the Notes of
such Holder so accepted for exchange.
(b) If (1) prior to the consummation of the Exchange Offer, applicable
interpretations of the staff of the SEC do not permit the Issuer to effect the
Exchange Offer, or (2) if for any other reason the Exchange Offer is not
consummated within 150 days of the Closing Date, then the Issuer shall promptly
deliver to the Holders and the Trustee written notice thereof (the "Shelf
Notice"), and the Issuer shall file a Registration Statement pursuant to Section
3 hereof. Following the delivery of a Shelf Notice to the Holders of Transfer
Restricted Notes, the Issuer shall not have any further obligation to conduct
the Exchange Offer pursuant to this Section 2, PROVIDED, that the Issuer shall
have the right, nonetheless, to proceed to consummate the Exchange Offer
notwithstanding its obligations pursuant to this Section 2(c) (and, upon such
consummation, its obligation to consummate a Shelf Registration pursuant to
clause 2 above shall terminate).
3. SHELF REGISTRATION
If the Issuer is required to deliver a Shelf Notice as contemplated by
Section 2(c) hereof, then:
(a) SHELF REGISTRATION. The Issuer shall prepare and file with the SEC,
as promptly as practicable following the Shelf Notice, a Registration Statement
for an
8
<PAGE>
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Transfer Restricted Notes (the "Shelf Registration"). The Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of the Transfer Restricted Notes for resale by the Holders in the
manner or manners reasonably designated by them (including, without limitation,
one or more underwritten offerings). The Issuer shall not permit any securities
other than the Transfer Restricted Notes to be included in the Shelf
Registration. The Issuer shall use its best efforts, as described in Section
5(b) hereof, to cause the Shelf Registration to be declared effective pursuant
to the Securities Act as promptly as practicable after the filing of such Shelf
Registration and to keep the Shelf Registration continuously effective under the
Securities Act until the earlier of (i) the date which is 36 months after the
Closing Date, (ii) the date that all Transfer Restricted Notes covered by the
Shelf Registration have been sold in the manner set forth and as contemplated in
the Shelf Registration or (iii) the date that there ceases to be outstanding any
Transfer Restricted Notes (the "Effectiveness Period").
(b) SUPPLEMENTS AND AMENDMENTS. The Issuer shall use its best efforts to
keep the Shelf Registration continuously effective by supplementing and amending
the Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form used for such Shelf Registration, if
required by the Securities Act, or if reasonably requested by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Notes covered
by such Registration Statement or by any underwriter of such Transfer Restricted
Notes.
3. LIQUIDATED DAMAGES
(a) The Issuer and the Initial Purchasers agree that the Holders of
Transfer Restricted Notes will suffer damages if the Issuer fails to fulfill its
obligations pursuant to Section 2 or Section 3 hereof and that it would not be
possible to ascertain the extent of such damages. Accordingly, in the event of
such failure by the Issuer to fulfill such obligations, the Issuer hereby agrees
to pay liquidated damages ("Liquidated Damages") to each Holder of Transfer
Restricted Notes under the circumstances and to the extent set forth below:
(i) if neither the Exchange Offer Registration Statement nor the
Shelf Registration has been filed with the SEC on or prior to the Filing
Date; or
9
<PAGE>
(ii) if neither the Exchange Offer Registration Statement nor the
Shelf Registration is declared effective by the SEC on or prior to the
Effectiveness Target Date; or
(iii) if an Exchange Offer Registration Statement is declared
effective by the SEC, and on or prior to 45 days following the earlier of
(A) the effectiveness thereof or (B) the Effectiveness Target Date, the
Issuer has not exchanged Exchange Notes for all Notes validly tendered in
accordance with the terms of the Exchange Offer; or
(iv) the Shelf Registration has been declared effective by the SEC and
such Shelf Registration ceases to be effective or usable at any time during
the Effectiveness Period, without being succeeded on the same day
immediately by a post-effective amendment to such Shelf Registration that
cures such failure and that is itself immediately declared effective on the
same day;
(any of the foregoing, a "Registration Default"), then, with respect
to the first 90-day period following such Registration Default, the Issuer shall
pay to each Holder of Transfer Restricted Notes Liquidated Damages in an amount
equal to $0.05 per week per $1,000 principal amount of Transfer Restricted Notes
held by such Holder for each week or portion thereof that the Registration
Default continues. The amount of such Liquidated Damages will increase by an
additional $0.05 per week per $1,000 principal amount of Transfer Restricted
Notes with respect to each subsequent 90-day period until all Registration
Defaults have been cured; PROVIDED, HOWEVER, that Liquidated Damages shall not
at any time exceed $0.50 per week per $1,000 principal amount of Transfer
Restricted Notes (regardless of whether one or more than one Registration
Defaults has occurred and is continuing). Following the cure of all
Registration Defaults relating to any Transfer Restricted Notes, the accrual of
Liquidated Damages with respect to such Transfer Restricted Notes will cease. A
Registration Default under clause (i) above shall be cured on the date that
either the Exchange Offer Registration Statement or the Shelf Registration is
filed with the SEC; a Registration Default under clause (ii) above shall be
cured on the date that either the Exchange Offer Registration Statement or the
Shelf Registration is declared effective by the SEC; a Registration Default
under clause (iii) above shall be cured on the earlier of the date (A) the
Exchange Offer is consummated or (B) a Shelf Registration is declared effective;
and a Registration Default under clause (iv) above shall be cured on the earlier
of (A) the date that the post-effective amendment curing the deficiency in the
Shelf Registration is declared effective or (B) the Effectiveness Period
expires.
10
<PAGE>
(b) The Issuer shall notify the Trustee within one Business Day after each
and every date on which a Registration Default first occurs. Liquidated Damages
shall be paid by the Issuer to the Holders by wire transfer of immediately
available funds to the accounts specified by them or by mailing checks to their
respective addresses as such addresses appear in the Security Register if no
such accounts have been specified on or before the semi-annual interest payment
date provided in the Indenture and on each payment date provided in the
Indenture including, without limitation, whether upon redemption, maturity (by
acceleration or otherwise), purchase upon a Change of Control or purchase upon a
sale of assets. Each obligation to pay Liquidated Damages shall be deemed to
commence accruing on the date of the applicable Registration Default and to
cease accruing when all Registration Defaults have been cured. In no event
shall the Issuer pay Liquidated Damages in excess of the applicable maximum
weekly amount set forth above, regardless of whether one or multiple
Registration Defaults exist.
(c) The parties hereto agree that the Liquidated Damages provided for in
this Section 4 constitute a reasonable estimate of the damages that will be
suffered by Holders by reason of the failure to file the Exchange Offer
Registration Statement or the Shelf Registration Statement, the failure of the
Exchange Offer Registration Statement or the Shelf Registration Statement to be
declared effective, the failure to consummate the Exchange offer or the failure
of the Shelf Registration Statement to remain effective, as the case may be, in
accordance with this Agreement.
11
<PAGE>
4. REGISTRATION PROCEDURES
In connection with the registration of any Exchange Notes or Transfer
Restricted Notes pursuant to Sections 2 or 3 hereof, the Issuer shall effect
such registration to permit the sale of such Exchange Notes or Transfer
Restricted Notes (as applicable), in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Issuer shall:
(a) prepare and file with the SEC a Registration Statement or Registration
Statements as prescribed by Section 2 or Section 3 hereof, and use its best
efforts to cause such Registration Statement to become effective and remain
effective as provided herein; PROVIDED that, if (1) such filing is pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Issuer shall furnish to and afford the Holders of the Transfer Restricted
Notes and each such Participating Broker-Dealer, as the case may be, covered by
such Registration Statement, their counsel and the managing underwriters, if
any, a reasonable opportunity to review copies of all such documents (including
copies of any documents to be incorporated by reference therein and all exhibits
thereto), proposed to be filed (at least 3 Business Days prior to such filing,
or such later date as is reasonable under the circumstances). The Issuer shall
not file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders, pursuant to this Agreement,
must be afforded an opportunity to review prior to the filing of such document,
if the Holders of a majority in aggregate principal amount of the Transfer
Restricted Notes covered by such Registration Statement, or such Participating
Broker-Dealer, as the case may be, their counsel, or the managing underwriters,
if any, shall reasonably object on a timely basis (except that documents filed
as exhibits that are incorporated by reference or deemed to be incorporated by
reference shall not be subject to such objections);
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Offer Registration Statement,
as the case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be, or such shorter period as will terminate when all Transfer
Restricted Notes covered by
12
<PAGE>
such Registration Statement have been sold; cause the related Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force), under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
with respect to the disposition of all securities covered by such Registration
Statement, as so amended, or in such Prospectus, as so supplemented, and with
respect to the subsequent resale of any Notes being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Issuer shall be deemed not to
have used its best efforts to keep a Registration Statement effective during the
Applicable Period if it voluntarily takes any action that would result in
selling Holders of the Transfer Restricted Notes covered thereby or
Participating Broker-Dealers seeking to sell Exchange Notes not being able to
sell such Transfer Restricted Notes or such Exchange Notes during that period,
unless (i) such action is required by applicable law, or (ii) such action is
taken by it in good faith and for valid business reasons (not including
avoidance of its obligations hereunder), including the acquisition or
divestiture of assets;
(c) if (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, notify the selling Holders of Transfer Restricted Notes,
or each known Participating Broker-Dealer, as the case may be, their counsel and
the managing underwriters, if any, promptly and confirm such notice in writing,
(i) when a Prospectus, any prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective (including in such notice a
written statement that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference and exhibits), (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when a
Prospectus is required by the Securities Act to be delivered in connection with
sales of the Transfer Restricted Notes the representations and warranties of the
Issuer contained in any agreement (including any underwriting agreement),
contemplated by Section 5(l) hereof cease to be true and correct, (iv) of the
receipt by the Issuer of any notification with respect to the suspension of the
qualification or exemption from quali-
13
<PAGE>
fication of a Registration Statement or any of the Transfer Restricted Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer for offer
or sale in any jurisdiction, or the initiation of any proceeding for such
purpose, (v) of the happening of any event or any information becoming known
that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or that requires the making of
any changes in such Registration Statement, Prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
and that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
Issuer's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate;
(d) if (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification), of any of the Transfer Restricted Notes or
the Exchange Notes (as applicable), to be sold by any Participating Broker-
Dealer, for sale in any jurisdiction, and, if any such order is issued, to use
its best efforts to obtain the withdrawal of any such order at the earliest
possible moment;
(e) if a Shelf Registration is filed pursuant to Section 3 hereof and if
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Transfer Restricted Notes being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information relating to
underwriters, if any, any Holder of Transfer Restricted Notes or the plan of
distribution of the Transfer Restricted Notes as the managing underwriter, if
any, or such Holders may reasonably request to be included therein, (ii) make
all required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Issuer has received notification of
the matters to be incorporated in such prospectus supplement or post-
14
<PAGE>
effective amendment pursuant to clause (i), and (iii) supplement or make
amendments to such Registration Statement with such information as is required
in connection with any request made pursuant to clause (i);
(f) if (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Transfer Restricted
Notes and to each such Participating Broker-Dealer who so requests and to
counsel and each managing underwriter, if any, without charge, one conformed
copy of the Registration Statement or Registration Statements and each post-
effective amendment thereto, including financial statements and schedules, and,
if requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits;
(g) if (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Transfer Restricted
Notes, or each such Participating Broker-Dealer, as the case may be, its
counsel, and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of preliminary Prospectus), and
each amendment or supplement thereto and any documents incorporated by reference
therein, as such Persons may reasonably request; and, subject to the last
paragraph of this Section 5 hereof, the Issuer hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the selling
Holders of Transfer Restricted Notes or each such Participating Broker-Dealer,
as the case may be, and their underwriters or agents, if any, and dealers, if
any, in connection with the offering and sale of the Transfer Restricted Notes
covered by or the sale by Participating Broker-Dealers of the Exchange Notes
pursuant to such Prospectus and any amendment or supplement thereto;
(h) prior to any public offering of Transfer Restricted Notes or any
delivery of a Prospectus contained in the Exchange Offer Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, to use its best efforts to register or qualify, and to
cooperate with the selling Holders of Transfer Restricted Notes or each such
Participating Broker-Dealer, as the case may be, the underwriters, if any, and
their respective counsel in connection with
15
<PAGE>
the registration or qualification (or exemption from such registration or
qualification), of such Transfer Restricted Notes for offer and sale under the
securities or Blue Sky laws of such jurisdictions as any selling Holder,
Participating Broker-Dealer, or the managing underwriters reasonably request in
writing; keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Exchange Notes
held by Participating Broker-Dealers or the Transfer Restricted Notes covered by
the applicable Registration Statement; PROVIDED that the Issuer shall not be
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) subject it to taxation in any such jurisdiction where it is not so subject;
(i) if a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Transfer Restricted Notes and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company ("DTC"), and enable such
Transfer Restricted Notes to be in such denominations and registered in such
names as the managing underwriters, if any, or Holders may reasonably request at
least two Business Days prior to any sale of the Transfer Restricted Notes;
(j) if (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) above, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the expense of the
Issuer, a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Transfer Restricted Notes
being sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a
16
<PAGE>
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(k) prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Notes, (i) provide the Trustee with
certificates for the Transfer Restricted Notes in a form eligible for deposit
with DTC and (ii) use its best efforts to provide a CUSIP number for the
Transfer Restricted Notes;
(l) in connection with an underwritten offering of Transfer Restricted
Notes pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings and take all such other actions as are
reasonably requested by the managing underwriters in order to expedite or
facilitate the registration or the disposition of such Transfer Restricted
Notes, and in such connection, (i) make such representations and warranties to
the underwriters, with respect to the business of the Issuer, its subsidiaries
and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to the
Issuer and updates thereof in form and substance reasonably satisfactory to the
managing underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by underwriters; (iii) obtain "cold
comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriters from the independent certified public
accountants of the Issuer (and, if necessary, any other independent certified
public accountants of any subsidiary of the Issuer or of any business acquired
by any of them for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as are reasonably requested by
underwriters as permitted by STATEMENT ON AUDITING STANDARDS NO. 72; and (iv) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those set forth
in Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of outstanding Transfer
Restricted Notes covered by such Registration Statement and the managing
underwriters or agents), with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder;
17
<PAGE>
(m) if (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder of
such Transfer Restricted Notes being sold, or each such Participating Broker-
Dealer, as the case may be, any underwriter participating in any such
disposition of Transfer Restricted Notes, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable business
hours, all financial and other records, pertinent corporate documents and
properties of the Issuer and its subsidiaries (collectively, the "Records"), as
shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
the Issuer and its subsidiaries to supply all information in each case
reasonably requested by any such Inspector in connection with such Registration
Statement;
(n) provide an indenture trustee for the Transfer Restricted Notes or the
Exchange Notes, as the case may be, and cause the Indenture to be qualified
under the TIA not later than the effective date of the Exchange Offer or the
first Registration Statement relating to the Transfer Restricted Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Transfer Restricted Notes, to effect such changes to such
indenture as may be required for such indenture to be so qualified in accordance
with the terms of the TIA; and execute, and use its best efforts to cause such
trustee to execute, all customary documents as may be required to effect such
changes, and all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner;
(o) comply with all applicable rules and regulations of the SEC and, as
soon as reasonably practicable, make generally available to the holders of
Exchange Notes and the Holders, if any, consolidated earning statements of the
Issuer that satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(p) If an Exchange Offer is to be consummated, upon delivery of the
Transfer Restricted Notes by Holders to the Issuer (or to such other Person as
directed by the Issuer), in exchange for the Exchange Notes, the Issuer shall
mark, or cause to be marked, on such Transfer Restricted Notes that such
Transfer Restricted Notes are
18
<PAGE>
being cancelled in exchange for the Exchange Notes; in no event shall such
Transfer Restricted Notes be marked as paid or otherwise satisfied.
(q) cooperate with each seller of Transfer Restricted Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Transfer Restricted Notes and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD");
(r) use its best efforts to take all other steps necessary to effect the
registration of the Transfer Restricted Notes or the Exchange Notes covered by a
Registration Statement contemplated hereby; and
(s) use its best efforts to cause the Transfer Restricted Notes or the
Exchange Notes, as applicable, covered by an effective registration statement
required by Section 2 or Section 3 hereof to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in aggregate
principal amount of Transfer Restricted Notes relating to such registration
statement or the managing underwriters in connection therewith, if any.
The Issuer may require each seller of Transfer Restricted Notes or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuer such information regarding such seller or Participating
Broker-Dealer and the distribution of such Transfer Restricted Notes or Exchange
Notes to be sold by such Participating Broker-Dealer, as the case may be, as the
Issuer may, from time to time, reasonably request. The Issuer may exclude from
such registration the Transfer Restricted Notes or Exchange Notes of any seller
or Participating Broker-Dealer, as the case may be, who fails to furnish such
information within a reasonable time after receiving such request.
Each Holder of Transfer Restricted Notes and each Participating Broker-
Dealer agrees by acquisition of such Transfer Restricted Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from the Issuer of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such Holder
shall forthwith discontinue disposition of such Transfer Restricted Notes
covered by such Registration Statement or Prospectus or such Exchange Notes to
be sold by such Participating Broker-Dealer, as the case may be, until such
Holder's receipt of the copies of the supplemented or
19
<PAGE>
amended Prospectus contemplated by Section 5(j) hereof, or until it is advised
in writing by the Issuer that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto.
20
<PAGE>
5. REGISTRATION EXPENSES
21
<PAGE>
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuer shall be borne by the Issuer, whether or
not the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to
be made with the NASD in connection with an underwritten offering and (B)
fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel
in connection with Blue Sky qualifications of the Transfer Restricted Notes
or Exchange Notes and determination of the eligibility of the Transfer
Restricted Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the Holders of Transfer Restricted Notes are located,
in the case of the Exchange Notes, or (y) as provided in Section 5(h) hereof,
in the case of Transfer Restricted Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses (including, without limitation, expenses of printing certificates
for Transfer Restricted Notes or Exchange Notes in a form eligible for
deposit with DTC and of printing Prospectuses if the printing of Prospectuses
is requested by the managing underwriters, if any, or, in respect of Transfer
Restricted Notes or Exchange Notes to be sold by any Participating
Broker-Dealer during the Applicable Period, by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Notes included in any
Registration Statement or of such Exchange Notes, as the case may be),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements
of counsel for the Issuer, (v) fees and disbursements of all independent
certified public accountants referred to in Section 5(l)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, (vii) Securities Act liability insurance, if the Issuer desires
such insurance, (viii) fees and expenses of all other Persons retained by the
Issuer, (ix) internal expenses of the Issuer (including, without limitation,
all salaries and expenses of officers and employees of the Issuer and its
subsidiaries performing legal or accounting duties), (x) the expense of any
annual audit and (xi) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange.
Nothing contained in this Section 6 shall create an obligation on the part of
the Issuer to pay or reimburse any Holder for any underwriting commission or
discount attributable to any such Holder's Transfer Restricted Notes included
in an underwritten offering pursuant to a Registration Statement filed in
accordance with the terms of this Agreement, or to guarantee such Holder any
profit or proceeds from the sale of such Notes.
22
<PAGE>
(b) In connection with any Shelf Registration hereunder, the Issuer shall
reimburse the Holders of the Transfer Restricted Notes being registered in such
registration for the reasonable fees and disbursements of not more than one
counsel (in addition to appropriate local counsel), chosen by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Notes to be
included in such Registration Statement.
6. INDEMNIFICATION
The Issuer agrees to indemnify and hold harmless (i) the Initial
Purchasers, each Holder of Transfer Restricted Notes, each initial Holder of
Exchange Notes and each Participating Broker-Dealer, (ii) each person, if
any, who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act), any such Person (any of the persons referred
to in this clause (ii) being hereinafter referred to as a "controlling
person"), and (iii) the respective officers, directors, partners, employees,
representatives and agents of any of such Person or any controlling person
(any person referred to in clause (i), (ii) or (iii) may hereinafter be
referred to as an "Indemnified Person"), to the fullest extent lawful, from
and against any and all losses, claims, damages, judgments, actions,
expenses, and other liabilities (the "Liabilities"), including without
limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person, directly or indirectly related to, based upon, arising
out of or in connection with any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement or Prospectus (as
amended or supplemented if the Issuer shall have furnished to such
Indemnified Person any amendments or supplements thereto), or any preliminary
prospectus, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such Liabilities arise out of or are based upon
(i) any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to any
Indemnified Person furnished to the Issuer or any underwriter in writing by
such Indemnified Person expressly for use therein, or (ii) any untrue
statement contained in or omission from a preliminary prospectus if a copy of
the Prospectus (as then amended or supplemented, if the Issuer shall have
furnished to or on behalf of the Holder participating in the distribution
relating to the relevant Registration Statement any amendments or supplements
thereto) was not sent or given by or on behalf of such
23
<PAGE>
Holder to the person asserting any such Liabilities who purchased Notes, if such
Prospectus (or Prospectus as amended or supplemented), is required by law at or
prior to the written confirmation of the sale of such Notes to such person and
the untrue statement contained in or omission from such preliminary prospectus
was completely corrected in the Prospectus (or the Prospectus as amended or
supplemented). The Issuer shall notify the Holders promptly of the institution,
threat or assertion of any claim, proceeding (including any governmental
investigation), or litigation of which it shall have become aware in connection
with the matters addressed by this Agreement which involves the Issuer, any
subsidiary of the Issuer or an Indemnified Person.
In connection with any Registration Statement in which a Holder of Transfer
Restricted Notes is participating, such Holder of Transfer Restricted Notes
agrees, severally and not jointly, to indemnify and hold harmless the Issuer,
each person who controls the Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and the respective partners,
directors, officers, representatives, employees and agents of such person or
controlling person to the same extent as the foregoing indemnity from the Issuer
to each Indemnified Person, but only with reference to information relating to
such Indemnified Person furnished to the Issuer in writing by such Indemnified
Person expressly for use in any Registration Statement or Prospectus, any
amendment or supplement thereto, or any preliminary Prospectus. The liability
of any Indemnified Person pursuant to this paragraph shall in no event exceed
the net proceeds received by such Indemnified Person from sales of Transfer
Restricted Notes giving rise to such obligations.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "Indemnified Party"), shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person"), in writing, and the Indemnifying Person, upon request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding. In any such proceeding, any Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party, unless (i) the Indemnifying Person
and the Indemnified Party shall have mutually agreed in writing to the contrary,
(ii) the Indemnifying Person failed promptly to assume the defense and employ
counsel
24
<PAGE>
reasonably satisfactory to the Indemnified Party or (iii) the named parties to
any such action (including any impleaded parties), include both such Indemnified
Party and the Indemnifying Person, or any affiliate of the Indemnifying Person,
and such Indemnified Party shall have been reasonably advised by counsel that,
either (x) there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Person or
such affiliate of the Indemnifying Person or (y) a conflict may exist between
such Indemnified Party and the Indemnifying Person or such affiliate of the
Indemnifying Person (in which case the Indemnifying Person shall not have the
right to assume the defense of such action on behalf of such Indemnified Party,
it being understood, however, that the Indemnifying Person shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel), for all such
indemnified parties, which firm shall be designated in writing by those
indemnified parties who sold a majority in outstanding aggregate principal
amount of Transfer Restricted Notes sold by all such indemnified parties and any
such separate firm for the Issuer, its directors, its officers and such control
persons of the Issuer as shall be designated in writing by the Issuer. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Party in respect of any
Liabilities referred to therein (other than by reason of the exceptions provided
therein), then each Indemnifying Person under such paragraphs, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Liabilities (i) in
such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Person(s) on the other in
connection with the statements or omissions that resulted in such Liabilities,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Indemnifying Person(s) and the Indemnified Party, as well as any other
relevant equitable considerations. The relative fault of the Issuer on the one
hand and any Indemnified Persons on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer
25
<PAGE>
or by such Indemnified Persons and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The parties agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by PRO RATA allocation (even if such
indemnified parties were treated as one entity for such purpose), or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of any Liabilities referred
to in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 7, in
no event shall an Indemnified Person be required to contribute any amount in
excess of the amount by which proceeds received by such Indemnified Person from
sales of Transfer Restricted Notes or Exchange Notes exceeds the amount of any
damages that such Indemnified Person has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act), shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7 will
be in addition to any liability which the indemnifying parties may otherwise
have to the indemnified parties referred to above. The Indemnified Persons'
obligations to contribute pursuant to this Section 7 are several in proportion
to the respective principal amount of Notes sold by each of the Indemnified
Persons hereunder and not joint.
7. RULES 144 AND 144A
The Issuer covenants that it will file the reports required to be filed by
it pursuant to the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
the Issuer is not required to file such reports, it will, upon the request of
any Holder of Transfer Restricted Notes, make available information required by
Rule 144 and Rule 144A under the Securities Act in order to permit sales
pursuant to Rule 144 and Rule 144A. The Issuer further covenants that it will
take such further action as any Holder of Transfer Restricted Notes may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Transfer Restricted Notes without registration under the
26
<PAGE>
Securities Act within the limitation of the exemptions provided by (a) Rule 144
and Rule 144A or (b) any similar rule or regulation hereafter adopted by the
SEC.
8. UNDERWRITTEN REGISTRATIONS
(a) If any of the Transfer Restricted Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Transfer Restricted Notes included in such offering and shall be reasonably
acceptable to the Issuer.
No Holder of Transfer Restricted Notes may participate in any
underwritten registration hereunder, unless such Holder (a) agrees to sell
such Holder's Transfer Restricted Notes on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
(b) Each Holder of Transfer Restricted Notes agrees, if requested
(pursuant to a timely written notice), by the managing underwriters in an
underwritten offering or by a placement agent in a private offering of the
Issuer's debt securities, not to effect any private sale or distribution
(including a sale pursuant to Rule 144(k) or Rule 144A under the Securities Act,
but excluding non-public sales to any of its affiliates, officers, directors,
employees and controlling persons), of any of the Notes except pursuant to an
Exchange Offer, during the period beginning 10 days prior to, and ending 90 days
after, the closing date of the underwritten offering.
The foregoing provisions shall not apply to any Holder of Transfer
Restricted Notes if such Holder is prevented by applicable statute or regulation
from entering into any such agreement.
9. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Issuer of any of its
obligations under this Agreement, each Holder of Transfer Restricted Notes and
each Participating Broker-Dealer holding Exchange Notes, in addition to being
entitled to exercise all rights provided herein, in the Indenture or, in the
case of the Initial Purchasers, in the Purchase Agreement, or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.
27
<PAGE>
Subject to Section 4, the Issuer agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to or departures from the provisions hereof may not be
given, unless the Issuer has obtained the written consent of holders of at least
a majority of the then outstanding aggregate principal amount of Transfer
Restricted Notes and Exchange Notes held by Participating Broker-Dealers taken
as one class. Notwithstanding the foregoing, a waiver or consent to or
departure from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and Participating Broker-Dealers holding
Exchange Notes whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders and Participating Broker-Dealers holding
Exchange Notes may be given by holders of at least a majority in aggregate
principal amount of the Transfer Restricted Notes and Exchange Notes held by
Participating Broker-Dealers being sold by such Holders and Participating
Broker-Dealers pursuant to such Registration Statement; PROVIDED that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(c) NOTICES. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee), provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:
(i) if to a Holder of Transfer Restricted Notes, at the most current
address given by the Trustee to the Issuer; and
28
<PAGE>
(ii) if to the Issuer, Universal Outdoor, Inc., 321 North Clark
Street, Suite 1010, Chicago, Illinois 60610, Attention: Chief Financial
Officer.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; one Business Day after
being timely delivered to a nationally recognized next-day air courier, if made
by next-day air courier; and when receipt is acknowledged by the addressee, if
telecopied on a Business Day on such Business Day, if not on a Business Day, on
the first Business Day thereafter.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto,
including, without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Notes. The Issuer agrees that the
Holders of Transfer Restricted Notes and Participating Broker-Dealers holding
Exchange Notes shall be third party beneficiaries to the agreements made
hereunder by the Initial Purchasers and the Issuer, and each Holder and
Participating Broker-Dealer shall have the right to enforce such agreements
directly to the extent it deems such enforcement necessary or advisable to
protect its rights hereunder.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
29
<PAGE>
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(h) SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties hereto that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(i) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, is intended by the parties hereto as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
NOTES HELD BY THE ISSUER OR ITS AFFILIATES. Whenever the consent or
approval of Holders of a specified percentage of Transfer Restricted Notes is
required hereunder, Transfer Restricted Notes held by the Issuer or its
affiliates (as such term is
30
<PAGE>
defined in Rule 405 under the Securities Act), shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(k) SURVIVAL. This Agreement is intended to survive the consummation of
the transactions contemplated by the Purchase Agreement. The indemnification
and contribution obligations under Section 7 of this Agreement shall survive the
termination of the Issuer's obligations under Sections 2 and 3 of this
Agreement.
31
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
UNIVERSAL OUTDOOR, INC.
By: /s/ Brian T. Clingen
-------------------------------------
Name: Brian T. Clingen
Title: Vice President
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first
above written.
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
By: BEAR, STEARNS & CO. INC.
By: /s/ Philip Berney
--------------------------------
Name: Philip Berney
Title: Senior Managing Director
<PAGE>
Exhibit 5.1
February 13, 1997
Universal Outdoor, Inc.
321 North Clark Street
Chicago, Illinois 60610
Re: 9-3/4% Series B Senior Subordinated Exchange Notes Due 2006
------------------------------------------------------------
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-1 (the
"REGISTRATION STATEMENT") being filed by Universal Outdoor, Inc., an Illinois
corporation (the "COMPANY"), with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), relating
to the registration of $100 million aggregate principal amount of the
Company's 9-3/4% Series B Senior Subordinated Exchange Notes due 2006 (the
"DEBT SECURITIES"). The Debt Securities are to be issued under the Indenture
dated as of December 16, 1996 (the "INDENTURE") between the Company and
United States Trust Company of New York , as trustee (the "TRUSTEE"). The
Company intends to offer, upon the terms and subject to the conditions set
forth in the Registration Statement, to exchange $1,000 principal amount of
the Debt Securities for each $1,000 principal amount of its outstanding
9-3/4% Series B Senior Subordinated Notes due 2006 (the "OLD NOTES"), of which
$100,000,000 aggregate principal amount is outstanding (the "EXCHANGE OFFER").
This opinion is being delivered to you pursuant to the requirements
of Item 601(b)(5) of Regulation S-K under the Securities Act.
We are familiar with the proceedings to date with respect to the
proposed issuance and delivery of the Debt Securities and have examined such
records, documents and questions of law, and satisfied ourselves as to such
matters of fact, as we have considered relevant and necessary as a basis for
this opinion.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Company, we have
assumed that such parties had the power, corporate or other, to enter into
and perform all obligations thereunder and have also
<PAGE>
assumed the due authorization by all requisite action, corporate or other,
and execution and delivery by such parties of such documents and the validity
and binding effect thereof. As to any facts material to the opinions
expressed herein which we did not independently establish or verify, we have
relied upon oral and written statements and representations of officers and
other representatives of the Company and others. In addition, we have also
relied upon the accuracy and completeness of all certificates and other
statements, representations, documents, records, financial statements and
papers reviewed by us, and the accuracy and completeness of all
representations, warranties, schedules and exhibits contained in such
documents, with respect to the factual matters set forth therein.
Based on the foregoing, we are of the opinion that when (i) the
Registration Statement, as finally amended, shall have become effective under
the Securities Act and the Indenture shall have been qualified under the
Trust Indenture Act of 1939, as amended and (ii) the Debt Securities shall
have been duly executed and authenticated as provided in the Indenture and
shall have been duly delivered to the holders of the Old Notes in accordance
with the terms and conditions of the Exchange Offer, the Debt Securities will
constitute legally valid and binding obligations of the Company enforceable
in accordance with their terms, and entitled to the benefits of the Indenture
(subject to the effect of bankruptcy, fraudulent conveyance or transfer,
insolvency, reorganization, arrangement, liquidation, conservatorship and
moratorium laws and subject to the limitations imposed by other laws and
judicial decisions relating to or affecting the rights of creditors
generally, to general principles of equity, regardless of whether enforcement
is considered in proceedings in equity or at law, and to an implied covenant
of good faith and fair dealing).
We do not find it necessary for the purposes of this opinion to
cover, and accordingly we express no opinion as to, the application of the
securities or blue sky laws of the various states to the offer and exchange
of the Debt Securities.
This opinion is limited to the laws of the United States of America
and the State of New York, and we express no opinion with respect to the laws
of any state or other jurisdiction.
Our opinions set forth in this letter are based on the facts in
existence and the laws in effect on the date hereof and we expressly disclaim
any obligation to update our opinions herein, regardless of whether changes
in such facts or laws come to our attention after the delivery hereof.
<PAGE>
We hereby consent to the filing of this opinion as an Exhibit to
the Registration Statement and to all references to our firm included in or
made a part of the Registration Statement. In giving such consent, we do not
concede that we are experts within the meaning of the Securities Act or the
rules and regulations thereunder or that this consent is required by Section
7 of the Securities Act.
Very truly yours,
Winston & Strawn
<PAGE>
CONSOLIDATION AND AMENDMENT
CONSOLIDATION AND AMENDMENT (this "Agreement"), dated as of October 31,
1996, among Universal Outdoor, Inc., an Illinois corporation, and the lending
institutions party to the Restated Credit Agreements referred to below
immediately before giving effect to this agreement (the "Existing Banks")
and each of the lenders listed on Schedule I hereto that executes a counterpart
of this Agreement (the "New Banks"). All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such terms in
the Consolidated Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Existing Banks and LaSalle National Bank,
as Co-Agent, and Bankers Trust Company, as Agent, are parties to a
Restatement and Amendment dated as of October 8, 1996 to Acquisition Credit
Agreement dated as of March 29, 1996 (as amended, modified or supplemented to
the date hereof, the "Restated Acquisition Credit Agreement");
WHEREAS, the Borrower, the Existing Banks, LaSalle National Bank, as
Co-Agent, and Bankers Trust Company, as Agent, are parties to a Restatement
and Amendment dated as of October 8, 1996 to Revolving Credit Agreement dated
as of March 29, 1996 (as amended, modified or supplemented to the date
hereof, the "Restated Revolving Credit Agreement" and together with the
Restated Acquisition Credit Agreement, the "Restated Credit Agreements"); and
WHEREAS, the parties hereto desire to consolidate the Total Revolving
Commitment established under the Restated Revolving Credit Agreement into the
Restated Acquisition Credit Agreement, to otherwise amend the Restated
Acquisition Credit Agreement as contemplated by Section 12.16 thereof and to
include the New Banks as Banks thereunder;
NOW THEREFORE, it is agreed:
1. On the Consolidation Date (as defined below), the Restated
Acquisition Credit Agreement shall be restated in its entirety to read as set
forth as
-2-
<PAGE>
Schedule II to this Agreement, such restatement to (x) incorporate therein
the Total Revolving Commitment heretofore provided for under the Restated
Revolving Credit Agreement and (y) effect the other amendments contemplated
by Section 12.16 thereof. Upon such restatement and consolidation, the
Restated Acquisition Credit Agreement shall be renamed, and shall be
hereinafter referred to herein as, the "Consolidated Credit Agreement."
2. On the Consolidation Date, the Restated Revolving Credit
Agreement shall terminate.
3. The Existing Banks hereby sell and assign to the New Banks
without recourse and without representation or warranty (other than as
expressly provided herein), and the New Banks hereby purchase and assume from
the Existing Banks such interests in and to the respective Existing Banks'
rights and obligations under the Consolidated Credit Agreement with respect
to all periods on or after the Consolidation Date so that after giving effect
thereto each Existing Bank and each New Bank (collectively, the "Banks")
shall have the AR Commitment, if any, and Revolving Commitment, if any, set
forth opposite its name on Annex I to the Consolidated Credit Agreement
attached hereto as Schedule II.
4. Each Existing Bank (i) represents and warrants that it is the
legal and beneficial owner of the interests being sold and assigned by it
hereunder and that such interests are free and clear of any adverse claim, it
is not aware of the existence of an Event of Default and it is not in breach
of any funding obligation under the Consolidated Credit Agreement as of the
date hereof; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Consolidated Credit Agreement or the other
Credit Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Consolidated Credit Agreement or the
other Credit Documents or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Holdings, the
Borrower or any of its Subsidiaries or the performance or observance by the
Credit Parties of any of their obligations under the Credit Agreement or the
other Credit Documents to or any other instrument or document furnished
pursuant thereto.
5. Each of the New Banks (i) confirms that it has received a copy of
the Consolidated Credit Agreement and the other Credit Documents, together
with copies of the financial statements referred to therein and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Amendment; (ii) agrees that it will,
independently and without reliance
-3-
<PAGE>
upon the Agent or any other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Consolidated Credit
Agreement; (iii) confirms that it is an eligible transferee under
Section 12.04(b) of the Consolidated Credit Agreement; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Consolidated Credit Agreement and the other Credit
Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations arising on or
after the Consolidation Date which by the terms of the Consolidated Credit
Agreement are required to be performed by it as a Bank and (vi) agrees that it
will promptly submit all applicable tax forms required by Section 12.04(b).
6. Each of the Banks hereby agrees that all amounts accrued with
respect to the Revolving Commitment, the AR Commitment and the Loans of each
Existing Bank and to each Existing Bank's participation in Letters of Credit
prior to the Consolidation Date shall be for the account of the respective
Existing Banks and that all such amounts accrued on and after the
Consolidation Date shall be for the account of all the Banks to the extent of
their respective Revolving Commitments, AR Commitments, Loans (if any) and/or
participations in Letters of Credit.
7. As of the Consolidation Date, each of the New Banks shall become
a "Bank" under, and for all purposes of, the Consolidated Credit Agreement
and the other Credit Documents.
8. If for any reason, any lender listed on Schedule I hereto shall
not have signed a counterpart hereof and delivered the same to the Agent at
its Notice Office on or prior to 5:00 p.m. (New York time) on the
Consolidation Date, then (x) Annex I to the Consolidated Credit Agreement
shall be modified to delete any such lender, with such lender's share being
reallocated back to the Existing Banks on the same basis as their respective
interests are being sold pursuant to Section 3 above and (y) the signature
pages of this Agreement shall be deemed revised to delete such lender's name
therefrom.
9. In order to induce the Banks to enter into this Agreement, the
Borrower hereby represents and warrants that (x) no Default or Event of
Default exists on the Consolidation Date, after giving effect to this
Agreement, and (y) all of the representations and warranties contained in the
Credit Documents shall be true and correct in all material respects on the
Consolidation Date after giving effect to this Agreement, with the same
effect as though such representations and warranties had been made on and as
of the Consolidation Date (it being understood that any
-4-
<PAGE>
representation or warranty made as of a specific date shall be true and
correct in all material respects as of such specific date).
10. Each of the parties hereto agree that the Borrower Pledge
Agreement and the Security Agreement shall be amended and restated as of the
Consolidation Date to read as set forth in Exhibit C and Exhibit E,
respectively, to the Consolidated Credit Agreement attached hereto as
Schedule II.
11. This Agreement is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Restated
Credit Agreements or any other Credit Document.
12. This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Agent.
13. This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of
the State of New York.
14. This Agreement shall become effective as of the date (the
"Consolidation Date") when the following conditions have been met to the
satisfaction of the Agent:
(i) Each of the Borrower, each Existing Bank and (except as provided
in Section 8 above) each New Bank shall have duly executed a copy hereof
(whether the same or different copies) and shall have delivered (including
by way of facsimile transmission) the same to the Agent at its Notice
Office.
(ii) There shall have been delivered to the Agent for the account of
each Bank the appropriate AR Note and Revolving Note and, in the case of
BTCo, Swingline Note, in each case, executed by the Borrower, and in the
amount, maturity and as otherwise provided in the Consolidated Credit
Agreement.
(iii) The Agent shall have received an opinion, addressed to the
Agent, and each of the Banks and dated the Consolidation Date, from
Winston & Strawn, counsel to Holdings and the Borrower, which opinion shall
cover such matters relating to the Agreement as reasonably requested by,
and shall be reasonably satisfactory to, the Agent; and
-5-
<PAGE>
(iv) (a) Holdings shall have duly authorized, executed and delivered
the Holdings Pledge Agreement and shall have delivered to the Collateral
Agent, as pledgee thereunder, all of the certificates representing the
Pledged Securities referred to therein to the extent not previously
delivered to the Collateral Agent, accompanied by executed and undated stock
powers, and such Pledge Agreement shall be in full force and effect.
(b) Holdings shall have duly authorized, executed and delivered the
Holdings Guaranty and the Holdings Guaranty shall be in full force and
effect.
-6-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the
date first above written.
UNIVERSAL OUTDOOR, INC.
By /s/ Brian T. Clingen
----------------------------------------
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Dana Klein
----------------------------------------
Title: Vice President
LA SALLE NATIONAL BANK,
Individually and as a Co-Agent
By /s/ Jeffrey D. Steele
----------------------------------------
Title: Senior Vice President
BANK OF AMERICA ILLINOIS
By /s/ John P. Hesselmann
----------------------------------------
Title: Senior Vice President
FIRST NATIONAL BANK OF BOSTON
By /s/ Julie V. Jalelian
----------------------------------------
Title: Vice President
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By /s/ Bill Gooch
----------------------------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ Jerome Kapellos
----------------------------------------
Title: Vice President
BANQUE PARIBAS
By /s/ Errol R. Antzis
----------------------------------------
Title: Group Vice President
BANQUE PARIBAS
By /s/ Phillippe Vuarchex
----------------------------------------
Title: Vice President
CREDIT LYONNAIS
By /s/ Robert Ivosevich
----------------------------------------
Title: Senior Vice President
THE FIRST NATIONAL BANK
OF CHICAGO
By /s/ Jeff Bakalar
----------------------------------------
Title: Vice President
<PAGE>
FLEET BANK, N.A.
By /s/ Tanya Crossley
----------------------------------------
Title: Vice President
HELLER FINANCIAL, INC.
By /s/ Linda W. Wolf
----------------------------------------
Title: Senior Vice President
STATE STREET BANK AND TRUST
COMPANY
By /s/ John H. Tyler
----------------------------------------
Title: Vice President
SUN TRUST BANK
By /s/ Ronald K. Reuve
----------------------------------------
Title: Vice President
VAN KAMPEN CAPITAL PRIME RATE
INCOME FUND
By /s/ Brian W. Good
----------------------------------------
Title: Vice President
<PAGE>
SCHEDULE I
NEW BANKS
Bank of America Illinois
Union Bank of California, N.A.
The Bank of New York
Banque Paribas
Credit Lyonnais
The First National Bank of Chicago
Fleet Bank, N.A.
Heller Financial, Inc.
State Street Bank and Trust Company
Sun Trust Bank
Van Kampen American Capital Prime Rate Income Trust
<PAGE>
SCHEDULE II
-----------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
CONSOLIDATED
CREDIT AGREEMENT
among
UNIVERSAL OUTDOOR, INC.
VARIOUS LENDING INSTITUTIONS,
LA SALLE NATIONAL BANK,
AS CO-AGENT
and
BANKERS TRUST COMPANY,
AS AGENT
____________________________________
Dated as of October 31, 1996
____________________________________
$225,000,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . 1
1.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Borrowing Amounts, etc. . . . . . . . . . . . . . . . . . 3
1.03 Notice of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . 3
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . 4
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . 6
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . 9
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . 11
1.13 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . 12
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 12
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . . . 13
2.03 Letter of Credit Requests; Notices of Issuance. . . . . . . . . . 13
2.04 Agreement to Repay Letter of Credit Drawings. . . . . . . . . . . 13
2.05 Letter of Credit Participations . . . . . . . . . . . . . . . . . 14
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3. Fees; Commitments. . . . . . . . . . . . . . . . . . . . . . . . 17
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.02 Voluntary Reduction of Commitments. . . . . . . . . . . . . . . . 18
3.03 Mandatory Adjustments of Commitments, etc.. . . . . . . . . . . . 19
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . 19
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . 20
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . 23
(i)
<PAGE>
Page
----
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 25
5.01 Conditions Precedent to All Credit Events . . . . . . . . . . . . 25
SECTION 6. Representations, Warranties and Agreements . . . . . . . . . . . 26
6.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . 26
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . 26
6.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.04 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 27
6.06 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 27
6.07 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 27
6.08 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 27
6.09 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . 27
6.10 Financial Condition; Financial Statements . . . . . . . . . . . . 28
6.11 Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 29
6.12 Representations and Warranties in Transaction Documents . . . . . 29
6.13 Consummation of Transaction . . . . . . . . . . . . . . . . . . . 30
6.14 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . 30
6.15 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 30
6.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.17 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.18 Pollution and Other Regulations . . . . . . . . . . . . . . . . . 31
6.19 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 33
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . 33
7.02 Books, Records and Inspections. . . . . . . . . . . . . . . . . . 36
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.04 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 36
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . . . . 37
7.06 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . 37
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.08 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.09 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . . 38
7.10 Additional Security; Further Assurances . . . . . . . . . . . . . 38
7.11 Corporate Separateness. . . . . . . . . . . . . . . . . . . . . . 39
7.12 Compliance with Environmental Laws. . . . . . . . . . . . . . . . 40
(ii)
<PAGE>
Page
----
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 40
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . . . . 40
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. . . . . . 41
8.03 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.05 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . 45
8.06 Investments and Loans . . . . . . . . . . . . . . . . . . . . . . 46
8.07 Subsidiaries; etc.. . . . . . . . . . . . . . . . . . . . . . . . 46
8.08 Prepayments of Indebtedness, etc. . . . . . . . . . . . . . . . . 46
8.09 Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 48
8.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . 48
8.12 Minimum Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . 49
8.13 Senior Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 49
9.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . 49
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.04 Default Under Other Agreements. . . . . . . . . . . . . . . . . . 50
9.05 Bankruptcy, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 50
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.07 Credit Documents. . . . . . . . . . . . . . . . . . . . . . . . . 51
9.08 Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . 81
11.03 Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . . 81
11.04 Certain Rights of the Agent. . . . . . . . . . . . . . . . . . . 81
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 82
11.07 The Agent in Its Individual Capacity . . . . . . . . . . . . . . 82
11.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . . 83
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . . 83
(iii)
<PAGE>
Page
----
12.02 Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 84
12.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . 85
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . 87
12.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . . 87
12.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . 88
12.08 Governing Law; Submission to Jurisdiction; Venue;
Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . 88
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.10 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . 89
12.12 Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . . 89
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . . 90
12.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 90
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Management Fees
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B-1 -- Form of AR Note
EXHIBIT B-2 -- Form of Revolving Note
EXHIBIT B-3 -- Form of Swingline Note
EXHIBIT C -- Form of Borrower Pledge Agreement
EXHIBIT D -- Form of Holdings Pledge Agreement
EXHIBIT E -- Form of Security Agreement
EXHIBIT F -- Form of Holdings Guaranty
EXHIBIT G -- Adjusted EBITDA
EXHIBIT H -- Form of Assignment Agreement
(iv)
<PAGE>
CONSOLIDATED CREDIT AGREEMENT dated as of October 31, 1996, among
UNIVERSAL OUTDOOR, INC., an Illinois corporation, the lending institutions
listed from time to time on Annex I hereto (each a "Bank" and, collectively,
the "Banks"), LA SALLE NATIONAL BANK, as Co-Agent and BANKERS TRUST COMPANY,
as agent (the "Agent"). Unless otherwise defined herein, all capitalized
terms used herein and defined in Section 10 are used herein as so defined.
W I T N E S S E T H:
-------------------
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrower the credit
facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.011 COMMITMENT. (A) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make or continue loans
(together with the Swingline Loans referred to below, each a "Loan" and,
collectively, the "Loans") to the Borrower, which Loans shall be drawn or
continued, as the case may be, to the extent such Bank has a commitment under
such Facility, under the AR Facility and the Revolving Facility, as set forth
below:
(a) Loans under the AR Facility (each an "AR Loan" and, collectively,
the "AR Loans") (i) may be made at any time and from time to time on and
after the Consolidation Date and prior to the AR Termination Date, (ii)
except as hereinafter provided, may, at the option of the Borrower, be
incurred and maintained as, and/or converted into, Base Rate Loans or
Eurodollar Loans, provided that all AR Loans made as part of the same
Borrowing shall, unless otherwise specifically provided herein, consist of
Loans of the same Type, (iii) may be repaid and, prior to the AR
Termination Date, be reborrowed in accordance with the provisions hereof
and (iv) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when combined with the aggregate
outstanding principal amount of all other AR Loans of such Bank, equals the
AR Commitment, if any, of such Bank at such time.
<PAGE>
(b) Loans under the Revolving Facility (each a "Revolving Loan" and,
collectively, the "Revolving Loans") (i) may be made at any time and from
time to time on and after the Consolidation Date and prior to the Expiry
Date, (ii) except as hereinafter provided, may, at the option of the
Borrower, be incurred and maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, provided that all Revolving Loans made as part
of the same Borrowing shall, unless otherwise specifically provided
herein, consist of Loans of the same Type, (iii) may be repaid and be
reborrowed in accordance with the provisions hereof and (iv) shall not
exceed for any Bank at any time outstanding that aggregate principal
amount which, when combined with the aggregate outstanding principal amount
of all other Revolving Loans of such Bank and with such Bank's Adjusted
RC Percentage of the sum of (x) the Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time and (y) the outstanding principal amount of
Swingline Loans (exclusive of Swingline Loans which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time, equals (1) if such Bank is a
Non-Defaulting Bank, the Adjusted Revolving Commitment of such Bank at
such time and (2) if such Bank is a Defaulting Bank, the Revolving
Commitment of such Bank at such time.
(B) (a) Subject to and upon the terms and conditions herein set
forth, BTCo in its individual capacity agrees to make at any time and from
time to time on or after the Consolidation Date and prior to the Swingline
Expiry Date, a loan or loans to the Borrower (each a "Swingline Loan," and,
collectively, the "Swingline Loans"), which Swingline Loans (i) shall be made
and maintained as Base Rate Loans, (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed in aggregate
principal amount at any time outstanding, when combined with the aggregate
principal amount of all Revolving Loans made by Non-Defaulting Banks then
outstanding and the Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Swingline Loans) at such time, an
amount equal to the Adjusted Total Revolving Commitment then in effect and
(iv) shall not exceed in aggregate principal amount at any time outstanding
the Maximum Swingline Amount. BTCo will not make a Swingline Loan after it
has received written notice from the Required Banks that one or more of the
applicable conditions to Credit Events specified in Section 5.01 are not then
satisfied.
(b) On any Business Day, BTCo may, in its sole discretion, give
notice to the Banks that its outstanding Swingline Loans shall be funded with
a Borrowing of Revolving Loans (PROVIDED that each such notice shall be
deemed to have been automatically given upon the occurrence of an Event of
Default under Section 9.05 or upon the exercise of any of the remedies
provided in the last paragraph of Section 9), in which
-2-
<PAGE>
case a Borrowing of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the immediately
succeeding Business Day by all Banks PRO RATA based on each Bank's Adjusted
RC Percentage, and the proceeds thereof shall be applied directly to repay
BTCo for such outstanding Swingline Loans. Each Bank hereby irrevocably
agrees to make Base Rate Loans upon one Business Day's notice pursuant to
each Mandatory Borrowing in the amount and in the manner specified in the
preceding sentence and on the date specified in writing by BTCo
notwithstanding (i) that the amount of the Mandatory Borrowing may not comply
with the Minimum Borrowing Amount otherwise required hereunder, (ii) that any
conditions specified in Section 5 may not be then satisfied, (iii) that a
Default or an Event of Default has occurred and is continuing, (iv) the date
of such Mandatory Borrowing and (v) any reduction in the Total Revolving
Commitment or the Adjusted Total Revolving Commitment after any such
Swingline Loans were made. In the event that any Mandatory Borrowing cannot
for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code in respect of the Borrower), each Bank (other than BTCo)
hereby agrees that it shall forthwith purchase from BTCo (without recourse or
warranty) such assignment of the outstanding Swingline Loans as shall be
necessary to cause the Banks to share in such Swingline Loans ratably based
upon their respective Adjusted RC Percentages, provided that all interest
payable on the Swingline Loans shall be for the account of BTCo until the
date the respective assignment is purchased and, to the extent attributable
to the purchased assignment, shall be payable to the Bank purchasing same
from and after such date of purchase.
1.012 MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal
amount of each Borrowing shall not be less than the Minimum Borrowing Amount.
More than one Borrowing may be incurred on any day, provided that at no time
shall there be outstanding more than seven Borrowings of Eurodollar Loans
hereunder.
1.013 NOTICE OF BORROWING, ETC. (a) Whenever the Borrower
desires to incur AR Loans or Revolving Loans, it shall give the Agent at its
Notice Office, prior to 11:00 A.M. (New York time), at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing of Eurodollar Loans and at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing of Base Rate Loans to be made hereunder. Each
such notice (each a "Notice of Borrowing") shall be in the form of Exhibit
A-1 and shall be irrevocable and shall specify (i) the Facility pursuant to
which each Borrowing is being made, (ii) the aggregate principal amount of
the Loans to be made pursuant to each Borrowing, (iii) the date of Borrowing
(which shall be a Business Day) and (iv) whether any respective Borrowing
shall consist of Base Rate Loans or Eurodollar Loans and, if Eurodollar
Loans, the Interest Period to be initially applicable thereto. The Agent
shall promptly give each Bank written notice (or telephonic notice promptly
confirmed in writing)
-3-
<PAGE>
of each proposed Borrowing, of such Bank's proportionate share thereof and of
the other matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo, prior to 11:00 A.M. (New York
time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in
each case (x) the date of such Borrowing (which shall be a Business Day) and
(y) the aggregate principal amount of the Swingline Loan to be made pursuant
to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified
in Section 1.01(B)(b), with the Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of Mandatory Borrowings as
set forth in such Section.
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent may prior to receipt of written confirmation act without liability upon
the basis of such telephonic notice, believed by the Agent in good faith to
be from an Authorized Officer of the Borrower. In each such case, the
Borrower hereby waives the right to dispute the Agent's record of the terms
of such telephonic notice.
1.014 DISBURSEMENT OF FUNDS. (a) No later than 1:00 P.M. (New
York time) on the date specified in a Notice of Borrowing, each Bank with a
Commitment under the respective Facility will make available its PRO RATA
share of each Borrowing requested to be made on such date in the manner
provided below, provided that Swingline Loans shall be made available by BTCo
no later than 2:00 P.M. (New York time) on the date requested. All such
amounts shall be made available to the Agent in U.S. dollars and immediately
available funds at the Payment Office and the Agent promptly will make
available to the Borrower by depositing to its account at the Payment Office
the aggregate of the amounts so made available in the type of funds received.
Unless the Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Agent its
portion of the Borrowing or Borrowings to be made on such date, the Agent may
assume that such Bank has made such amount available to the Agent on such
date of Borrowing, and the Agent, in reliance upon such assumption, may (in
its sole discretion and without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Agent by such Bank and the Agent has made
available same to the Borrower, the Agent shall be entitled to recover such
corresponding amount from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
shall promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Agent. The Agent shall also be entitled to
recover on demand from
-4-
<PAGE>
such Bank or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
made available by the Agent to the Borrower to the date such corresponding
amount is recovered by the Agent, at a rate per annum equal to (x) if paid by
such Bank, the overnight Federal Funds Effective Rate or (y) if paid by the
Borrower, the then applicable rate of interest, calculated in accordance with
Section 1.08, for the respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights
which the Borrower may have against any Bank as a result of any default by
such Bank hereunder.
1.015 NOTES. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made to it by each Bank shall be evidenced (i)
if AR Loans, by a promissory note substantially in the form of Exhibit B-1
with blanks appropriately completed in conformity herewith (each an "AR Note"
and, collectively, the "AR Notes"), (ii) if Revolving Loans, by a promissory
note substantially in the form of Exhibit B-2 with blanks appropriately
completed in conformity herewith (each a "Revolving Note" and, collectively,
the "Revolving Notes") and (iii) if Swingline Loans, by a promissory note
substantially in the form of Exhibit B-3 with blanks appropriately completed
in conformity herewith (the "Swingline Note").
(b) The AR Note issued to each Bank with an AR Commitment shall
(i) be executed by the Borrower, (ii) be payable to the order of such Bank
and be dated the Consolidation Date, (iii) be in a stated principal amount
equal to the AR Commitment of such Bank and be payable in the principal
amount of the AR Loans evidenced thereby, (iv) mature on the AR Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08
in respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(c) The Revolving Note issued to each Bank shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank and be dated the
Consolidation Date, (iii) be in a stated principal amount equal to the
Revolving Commitment of such Bank and be payable in the principal amount of
the Revolving Loans evidenced thereby, (iv) mature on the Expiry Date, (v)
bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(d) The Swingline Note issued to BTCo shall (i) be
executed by the Borrower, (ii) be payable to the order of BTCo
and be dated the Consolidation Date, (iii) be in a stated
principal amount equal to the Maximum Swingline Amount and be
payable
-5-
<PAGE>
in the principal amount of Swingline Loans evidenced thereby, (iv) mature on
the Swingline Expiry Date, (v) bear interest as provided in Section 1.08 in
respect of the Base Rate Loans evidenced thereby and (vi) be entitled to the
benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of such
Loans.
1.016 CONVERSIONS. The Borrower shall have the option to convert
on any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans owing
pursuant to a single Facility into a Borrowing or Borrowings pursuant to such
Facility of another Type of Loan (with Swingline Loans at all times to be
maintained as Base Rate Loans), provided that (i) except as otherwise
provided in Section 1.10(b), Eurodollar Loans may be converted into Base Rate
Loans only on the last day of an Interest Period applicable thereto and no
partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of the Eurodollar Loans made pursuant to such
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
Base Rate Loans may not be converted into Eurodollar Loans if any violation
of Section 9.01 or any Event of Default is then in existence to the extent
that the Agent or the Required Banks have determined that any such conversion
at such time would be disadvantageous to the Banks and (iii) Borrowings of
Eurodollar Loans resulting from this Section 1.06 shall be limited in number
as provided in Section 1.02. Each such conversion shall be effected by the
Borrower giving the Agent at its Notice Office, prior to 11:00 A.M. (New York
time), at least three Business Days' (or two Business Days', in the case of a
conversion into Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) (each a "Notice of Conversion") specifying the
Loans to be so converted, the Type of Loans to be converted into and, if to
be converted into a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall give each Bank prompt notice
of any such proposed conversion affecting any of its Loans.
1.017 PRO RATA BORROWINGS. All AR Loans and all Revolving Loans
shall be made by the Banks PRO RATA on the basis of their respective Adjusted
AR Percentages and Adjusted RC Percentages, as the case may be. It is
understood that no Bank shall be responsible for any default by any other
Bank in its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless
of the failure of any other Bank to fulfill its commitments hereunder.
-6-
<PAGE>
1.08 INTEREST. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which
shall at all times be the Applicable Base Rate Margin plus the Base Rate in
effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be
the Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity
(whether by acceleration or otherwise) at a rate per annum less than 2% plus
the rate of interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the
last Business Day of each February, May, August and November, (ii) in respect
of each Eurodollar Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period of six months, on the date
occurring three months after the first day of such Interest Period and (iii)
in respect of each Loan, on any prepayment or conversion (other than the
prepayment and conversion of Loans that are Base Rate Loans) (on the amount
prepaid or converted), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any
Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the Borrower and the Banks thereof.
1.09 INTEREST PERIODS. (a) At the time the Borrower gives a
Notice of Borrowing or Notice of Conversion in respect of the making of, or
conversion into, a Borrowing of Eurodollar Loans (in the case of the initial
Interest Period applicable thereto) or prior to 10:00 A.M. (New York time) on
the third Business Day prior to the expiration of an Interest Period
applicable to a Borrowing of Eurodollar Loans, it shall have the right to
elect by giving the Agent written notice (or telephonic notice promptly
confirmed in writing) of the Interest Period applicable to such Borrowing,
which Interest Period shall,
-7-
<PAGE>
at the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond (x) in the case of AR
Loans, the AR Maturity Date and (y) in the case of Revolving Loans, the
Expiry Date;
(v) no Interest Period with respect to any Borrowing of AR Loans may
be elected that would extend beyond any date upon which a Scheduled
Repayment is required to be made if, after giving effect to the selection
of such Interest Period, the aggregate principal amount of AR Loans
maintained as Eurodollar Loans with Interest Periods ending after such date
would exceed the aggregate principal amount of AR Loans permitted to be
outstanding after such Scheduled Repayment; and
(vi) no Interest Period may be elected at any time when a violation
of Section 9.01 or an Event of Default is then in existence if the Agent
or the Required Banks have determined that such an election at such time
would be disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower
has failed to (or may not) elect a new Interest Period to be applicable to
the respective Borrowing of Eurodollar Loans as provided above, the Borrower
shall be deemed to have elected to convert such Borrowing into a Borrowing of
Base Rate Loans effective as of the expiration date of such current Interest
Period.
-8-
<PAGE>
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x)
in the case of clause (i) below, the Agent or (y) in the case of clauses (ii)
and (iii) below, any Bank shall have determined (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the Restatement
Effective Date affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Restatement Effective Date in any applicable law, governmental rule,
regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to,
a change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Bank in good faith with any
law, governmental rule, regulation, guideline (or would conflict with any
such governmental rule, regulation, guideline or order not having the force
of law but with which such Bank customarily complies even though the
failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the Restatement
Effective Date which materially and adversely affects the interbank
Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause
(i) above) shall (x) on such date and (y) within ten Business Days of the
date on which such event no longer exists give notice (by telephone confirmed
in writing) to the Borrower and to the Agent of such determination (which
notice the Agent shall promptly transmit to each of the other Banks).
Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no
longer be available until such time as the Agent notifies the Borrower and
the Banks that the circumstances giving rise to such notice by the Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by
the Borrower with respect to Eurodollar Loans which have not yet been
incurred shall be deemed rescinded by the Borrower, (y)
-9-
<PAGE>
in the case of clause (ii) above, the Borrower shall pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to
compensate such Bank for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed to
such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive
and binding upon all parties hereto) and (z) in the case of clause (iii)
above, the Borrower shall take one of the actions specified in Section
1.10(b) as promptly as possible and, in any event, within the time period
required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may
(and in the case of a Eurodollar Loan affected pursuant to Section
1.10(a)(iii) the Borrower shall) either (i) if the affected Eurodollar Loan
is then being made pursuant to a Borrowing, cancel said Borrowing by giving
the Agent telephonic notice (confirmed promptly in writing) thereof on the
same date that the Borrower was notified by a Bank pursuant to Section
1.10(a)(ii) or (iii), or (ii) if the affected Eurodollar Loan is then
outstanding, upon at least three Business Days' notice to the Agent, require
the affected Bank to convert each such Eurodollar Loan into a Base Rate Loan,
provided that if more than one Bank is affected at any time, then all
affected Banks must be treated the same pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by such Bank with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on such Bank's capital or assets as
a consequence of its commitments or obligations hereunder to a level below
that which such Bank could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy), then from time to time, within 15
days after demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amount or amounts as will compensate such
Bank for such reduction. Each Bank, upon determining in good faith that any
additional amounts will be payable pursuant to this Section 1.10(c), will
give prompt written notice thereof to the Borrower, which notice shall set
forth the basis of the calculation of such additional amounts, although the
failure to give any such notice shall not release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice.
-10-
<PAGE>
1.11 COMPENSATION. (a) The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Bank to fund its Eurodollar Loans but excluding in any
event the loss of anticipated profits) which such Bank may sustain: (i) if
for any reason (other than a default by such Bank or the Agent) a Borrowing
of Eurodollar Loans does not occur on a date specified therefor in a Notice
of Borrowing or Notice of Conversion (whether or not withdrawn by the
Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any
prepayment, repayment or conversion of any of its Eurodollar Loans occurs on
a date which is not the last day of an Interest Period applicable thereto;
(iii) if any prepayment of any of its Eurodollar Loans is not made on any
date specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Eurodollar
Loans when required by the terms of this Agreement or (y) an election made
pursuant to Sections 1.10(b) and 1.13.
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Bank more than 180 days after such Bank obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the
additional costs of the type described in such Section, such Bank shall not
be entitled to compensation under Section 1.10, 2.06 or 4.04 for any amounts
incurred or accruing prior to the giving of such notice to the Borrower.
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii)
or (iii), 1.10(c), 2.06 or 4.04 with respect to such Bank, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any
Loans affected by such event, provided that such designation is made on such
terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such Section. Nothing in this
Section 1.12 shall affect or postpone any of the obligations of the Borrower
or the right of any Bank provided in Section 1.10, 2.06 or 4.04.
1.13 REPLACEMENT OF BANKS. (x) Upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section
1.10(c), 2.06 or Section 4.04 with respect to any Bank which results in such
Bank charging to the Borrower increased costs in excess of those being
generally charged by the other Banks, (y) if a Bank becomes a Defaulting Bank
and/or (z) in the case of a refusal by a Bank to consent to a proposed
change, waiver, discharge or termination with respect to this Agreement which
has been approved by the Required Banks or Super Majority Banks, as the case
may be, as provided in Section 12.12, the Borrower shall have the right, if
no Default or Event of Default then
-11-
<PAGE>
exists, to replace such Bank (the "Replaced Bank") with one or more other
transferee or transferees who shall be acceptable to the Agent and none of
whom shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank") reasonably acceptable to the Agent,
provided that (i) at the time of any replacement pursuant to this Section
1.13, the Replacement Bank shall enter into one or more Assignment Agreements
pursuant to Section 12.04(b) (and with all fees payable pursuant to said
Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans
of the Replaced Bank and, in connection therewith, shall pay to the Replaced
Bank in respect thereof an amount equal to the sum of (A) an amount equal to
the principal of, and all accrued interest on, all outstanding Loans of the
Replaced Bank and (B) an amount equal to all accrued, but theretofore unpaid,
Fees owing to the Replaced Bank pursuant to Section 3.01 and (ii) all
obligations of the Borrower owing to the Replaced Bank (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in
full to such Replaced Bank concurrently with such replacement. Upon the
execution of the respective Assignment Agreement, the payment of amounts
referred to in clauses (i) and (ii) above and, if so requested by the
Replacement Bank, delivery to the Replacement Bank of the appropriate Note or
Notes executed by the Borrower, the Replacement Bank shall become a Bank
hereunder and the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions applicable to the Replaced
Bank under this Agreement, which shall survive as to such Replaced Bank.
SECTION 2. LETTERS OF CREDIT.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that a Letter of Credit
Issuer at any time and from time to time on or after the Restatement
Effective Date and prior to the Expiry Date to issue, for the account of the
Borrower and in support of such standby obligations of the Borrower that are
acceptable to the Agent (each such letter of credit a "Letter of Credit" and,
collectively, the "Letters of Credit"), and subject to and upon the terms and
conditions herein set forth the Letter of Credit Issuer agrees to issue from
time to time, irrevocable letters of credit denominated in U.S. dollars in
such form as may be approved by the Letter of Credit Issuer and the Agent.
Letters of Credit shall include the Existing Letters of Credit, which shall
be deemed issued, for purposes of Sections 2.05(a), 3.01(b) and 3.01(c), on
the Restatement Effective Date.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall
be issued, the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of,
and prior to the issuance of, the respective Letter of Credit) at such time,
would exceed either (x) $5,000,000 or (y) when added to the aggregate
principal amount of all Revolving Loans made by Non-Defaulting
-12-
<PAGE>
Banks and Swingline Loans then outstanding, the Adjusted Total Revolving
Commitment at such time; and (ii) each Letter of Credit shall have an expiry
date occurring not later than one year after such Letter of Credit's date of
issuance (other than Existing Letters of Credit) although any Letter of
Credit may be extendable for successive periods of up to 12 months, but not
beyond the Business Day next preceding the Expiry Date, on terms acceptable
to the Letter of Credit Issuer and in no event shall any Letter of Credit
have an expiry date occurring later than the Business Day next preceding the
Expiry Date.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, the Letter of Credit Issuer shall not be required to issue any Letter
of Credit unless the Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate the Letter of Credit
Issuer's risk with respect to the participation in Letters of Credit of the
Defaulting Bank or Banks, including by cash collateralizing such Defaulting
Bank's or Banks' Percentage of the Letter of Credit Outstandings.
2.02 MINIMUM STATED AMOUNT. The initial Stated Amount of each
Letter of Credit shall be not less than $25,000 or such lesser amount
acceptable to the Letter of Credit Issuer.
2.03 LETTER OF CREDIT REQUESTS; NOTICES OF ISSUANCE. (a)
Whenever it desires that a Letter of Credit be issued after the Initial
Borrowing Date, the Borrower shall give the Agent and the Letter of Credit
Issuer written notice (including by way of telecopier) in the form of Exhibit
A-2 thereof prior to 1:00 P.M. (New York time) at least three Business Days
(or such shorter period as may be acceptable to the Letter of Credit Issuer)
prior to the proposed date of issuance (which shall be a Business Day) (each
a "Letter of Credit Request"), which Letter of Credit Request shall include
any other documents that the Letter of Credit Issuer customarily requires in
connection therewith.
(b) The Letter of Credit Issuer shall, promptly after each
issuance of a Letter of Credit by it, give the Agent, each Bank and the
Borrower written notice of the issuance of such Letter of Credit, accompanied
by a copy to the Agent of the Letter of Credit or Letters of Credit issued by
it.
2.04 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The
Borrower hereby agrees to reimburse the Letter of Credit Issuer, by making
payment to the Agent at the Payment Office, for any payment or disbursement
made by the Letter of Credit Issuer under any Letter of Credit (each such
amount so paid or disbursed until reimbursed, an "Unpaid Drawing")
immediately after, and in any event on the date on which the Borrower is
notified by the Letter of Credit Issuer of such payment or disbursement with
interest on the amount so paid or disbursed by the Letter of Credit Issuer,
to the extent not reimbursed prior to 1:00 P.M. (New York time) on the date
of such payment or disbursement, from and including the date paid or
disbursed to but not including the date the Letter of Credit
-13
<PAGE>
Issuer is reimbursed therefor at a rate per annum which shall be the
Applicable Margin in excess of the Base Rate as in effect from time to time
(plus an additional 2% per annum if not reimbursed by the third Business Day
after the date of such notice of payment or disbursement), such interest also
to be payable on demand.
(b) The Borrower's obligation under this Section 2.04 to reimburse
the Letter of Credit Issuer with respect to Unpaid Drawings (including, in
each case, interest thereon) shall be absolute and unconditional under any
and all circumstances and irrespective of any setoff, counterclaim or defense
to payment which the Borrower may have or have had against the Letter of
Credit Issuer, the Agent or any Bank, including, without limitation, any
defense based upon the failure of any drawing under a Letter of Credit to
conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing; PROVIDED,
HOWEVER, that the Borrower shall not be obligated to reimburse the Letter of
Credit Issuer for any wrongful payment made by the Letter of Credit Issuer
under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of the Letter of Credit
Issuer.
2.05 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, (and on the
Restatement Effective Date with respect to any Existing Letter of Credit),
the Letter of Credit Issuer shall be deemed to have sold and transferred to
each other Bank, and each such Bank (each a "Participant") shall be deemed
irrevocably and unconditionally to have purchased and received from such
Letter of Credit Issuer, without recourse or warranty, an undivided interest
and participation, to the extent of such Bank's Adjusted RC Percentage, in
such Letter of Credit, each substitute letter of credit, each drawing made
thereunder and the obligations of the Borrower under this Agreement with
respect thereto (although the Letter of Credit Fee shall be payable directly
to the Agent for the account of the Banks as provided in Section 3.01(b) and
the Participants shall have no right to receive any portion of any Facing
Fees) and any security therefor or guaranty pertaining thereto. Upon any
change in the Revolving Commitments or Adjusted RC Percentages of the Banks
pursuant to Section 12.04(b) or upon a Bank Default, it is hereby agreed
that, with respect to all outstanding Letters of Credit and Unpaid Drawings,
there shall be an automatic adjustment to the participations pursuant to this
Section 2.05 to reflect the new Adjusted RC Percentages of the assigning and
assignee Bank or of all Banks, as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be
delivered under such Letter of Credit have been delivered and that they
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by the Letter of Credit
Issuer under or in connection with any Letter of Credit if taken or omitted
in the absence of gross
-14-
<PAGE>
negligence or willful misconduct, shall not create for the Letter of Credit
Issuer any resulting liability.
(c) In the event that the Letter of Credit Issuer makes any
payment under any Letter of Credit and the Borrower shall not have reimbursed
such amount in full to the Letter of Credit Issuer pursuant to Section
2.04(a), the Letter of Credit Issuer shall promptly notify the Agent, and the
Agent shall promptly notify each Participant of such failure, and each
Participant shall promptly and unconditionally pay to the Agent for the
account of the Letter of Credit Issuer, the amount of such Participant's
Adjusted RC Percentage of such payment in U.S. dollars and in same day funds;
PROVIDED, HOWEVER, that no Participant shall be obligated to pay to the Agent
its Adjusted RC Percentage of such unreimbursed amount for any wrongful
payment made by the Letter of Credit Issuer under a Letter of Credit as a
result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer. If the Agent so
notifies any Participant required to fund an Unpaid Drawing under a Letter of
Credit prior to 11:00 A.M. (New York time) on any Business Day, such
Participant shall make available to the Agent for the account of the Letter
of Credit Issuer such Participant's Adjusted RC Percentage of the amount of
such payment on such Business Day in same day funds. If and to the extent
such Participant shall not have so made its Adjusted RC Percentage of the
amount of such Unpaid Drawing available to the Agent for the account of the
Letter of Credit Issuer, such Participant agrees to pay to the Agent for the
account of the Letter of Credit Issuer, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date
such amount is paid to the Agent for the account of the Letter of Credit
Issuer at the overnight Federal Funds Effective Rate. The failure of any
Participant to make available to the Agent for the account of the Letter of
Credit Issuer its Adjusted RC Percentage of any Unpaid Drawing under any
Letter of Credit shall not relieve any other Participant of its obligation
hereunder to make available to the Agent for the account of the Letter of
Credit Issuer its Adjusted RC Percentage of any payment under any Letter of
Credit on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Agent for the account of the Letter of Credit Issuer such other Participant's
Adjusted RC Percentage of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account
of the Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, the Letter of Credit Issuer shall pay to the Agent and the
Agent shall promptly pay to each Participant which has paid its Adjusted RC
Percentage thereof, in U.S. dollars and in same day funds, an amount equal to
such Participant's Adjusted RC Percentage of the principal amount thereof and
interest thereon accruing at the overnight Federal Funds Effective Rate after
the purchase of the respective participations.
-15-
<PAGE>
(e) The obligations of the Participants to make payments to the
Agent for the account of the Letter of Credit Issuer with respect to Letters
of Credit shall be irrevocable and not subject to counterclaim, set-off or
other defense or any other qualification or exception whatsoever (provided
that no Participant shall be required to make payments resulting from the
Agent's gross negligence or willful misconduct) and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary named in
a Letter of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), the Agent, the
Letter of Credit Issuer, any Bank or other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transaction between the Borrower and the beneficiary named
in any such Letter of Credit);
(iii) any draft, certificate or other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified
by the Borrower, the Participants will reimburse and indemnify the Letter of
Credit Issuer, in proportion to their respective Adjusted RC Percentages, for
and against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever
kind or nature which may be imposed on, asserted against or incurred by the
Letter of Credit Issuer in performing its respective duties in any way
relating to or arising out of its issuance of Letters of Credit; PROVIDED
that no Participants shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Letter of Credit Issuer's gross
negligence or willful misconduct.
2.06 INCREASED COSTS. If at any time after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation, or any change
-16-
<PAGE>
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Letter of
Credit Issuer or any Bank with any request or directive (whether or not
having the force of law) by any such authority, central bank or comparable
agency shall either (i) impose, modify or make applicable any reserve,
deposit, capital adequacy or similar requirement against Letters of Credit
issued by the Letter of Credit Issuer or such Bank's participation therein,
or (ii) shall impose on the Letter of Credit Issuer or any Bank any other
conditions affecting this Agreement, any Letter of Credit or such Bank's
participation therein; and the result of any of the foregoing is to increase
the cost to the Letter of Credit Issuer or such Bank of issuing, maintaining
or participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by the Letter of Credit Issuer or such Bank hereunder
(other than any increased cost or reduction in the amount received or
receivable resulting from the imposition of or a change in the rate of taxes
or similar charges), then, upon demand to the Borrower by the Letter of
Credit Issuer or such Bank (a copy of which notice shall be sent by the
Letter of Credit Issuer or such Bank to the Agent), the Borrower shall pay to
the Letter of Credit Issuer or such Bank such additional amount or amounts as
will compensate the Letter of Credit Issuer or such Bank for such increased
cost or reduction. A certificate submitted to the Borrower by the Letter of
Credit Issuer or such Bank, as the case may be (a copy of which certificate
shall be sent by the Letter of Credit Issuer or such Bank to the Agent),
setting forth the basis for the determination of such additional amount or
amounts necessary to compensate the Letter of Credit Issuer or such Bank as
aforesaid shall be conclusive and binding on the Borrower absent manifest
error, although the failure to deliver any such certificate shall not release
or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.06 upon the subsequent receipt thereof.
SECTION 3. FEES; COMMITMENTS.
3.01 FEES. (a) The Borrower agrees to pay to the Agent a
commitment commission ("AR Commitment Commission") for the account of each
Non-Defaulting Bank with an AR Commitment for the period from and including
the Restatement Effective Date to, but not including, the AR Termination
Date, or, if earlier, the date upon which the Total AR Commitment has been
terminated, computed at a rate for each day equal to 1/2 of 1% per annum on
such Bank's unutilized AR Commitment on such day. Such AR Commitment
Commission shall be due and payable in arrears on the last Business Day of
each February, May, August and November and on the AR Termination Date.
(b) The Borrower agrees to pay to the Agent a commitment
commission ("RC Commitment Commission") for the account of each
Non-Defaulting Bank with a Revolving Commitment for the period from and
including the Restatement Effective Date to, but not including, the Expiry
Date, or, if earlier, the date upon which the Total Revolving Commitment has
been terminated, computed at a rate for each day equal to 1/2
-17-
<PAGE>
of 1% per annum on such Bank's Unutilized Revolving Commitment on such day.
Such RC Commitment Commission shall be due and payable in arrears on the last
Business Day of each February, May, August and November and on the Expiry
Date, or, if earlier, the date upon which the Total Revolving Commitment is
terminated.
(c) The Borrower agrees to pay to the Agent for the account of
each Non-Defaulting Bank with a Revolving Commitment PRO RATA on the basis of
their respective Adjusted RC Percentages, a fee in respect of each Letter of
Credit (the "Letter of Credit Fee") computed for each day at the rate equal
to the Applicable Eurodollar Margin then in effect on the Stated Amount of
such Letter of Credit on such day. Accrued Letter of Credit Fees shall be
due and payable quarterly in arrears on the last Business Day of each
February, May, August and November of each year and on the date upon which
the Total Revolving Commitment is terminated.
(d) The Borrower agrees to pay directly to the Letter of Credit
Issuer a fee in respect of each Letter of Credit (the "Facing Fee") computed
for each day at the rate of 1/4 of 1% per annum on the Stated Amount of such
Letter of Credit on such day provided that in no event shall the annual
Facing Fee be less than $500. Accrued Facing Fees shall be due and payable
quarterly in arrears on the last Business Day of each February, May, August
and November of each year and on the date upon which the Total Revolving
Commitment is terminated.
(e) The Borrower agrees to pay directly to the Letter of Credit
Issuer upon each issuance of, payment under, and/or amendment of, a Letter of
Credit such amount as shall at the time of such issuance, payment or
amendment be the administrative charge which the Letter of Credit Issuer is
customarily charging for issuances of, payments under or amendments of,
letters of credit issued by it.
(f) The Borrower shall pay to the Agent for its own account such
other fees as agreed to between the Borrower and the Agent, when and as due.
(g) All computations of Fees shall be made in accordance with
Section 12.07(b).
3.02 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks), the Borrower shall have the right,
without premium or penalty, to terminate or partially reduce the unutilized
Total AR Commitment and/or the Unutilized Total Revolving Commitment,
provided that (w) any such termination shall apply to proportionately and
permanently reduce the AR Commitment and/or Revolving Commitment, as the case
may be, of each Bank, (x) no such reduction shall reduce any Non-Defaulting
Bank's AR Commitment to
-18-
<PAGE>
an amount that is less than the outstanding AR Loans of such Bank, (y) no
such reduction shall reduce any Non-Defaulting Bank's Revolving Commitment to
an amount that is less than the sum of (A) the outstanding Revolving Loans of
such Bank and (B) such Bank's Adjusted RC Percentage of outstanding Swingline
Loans and of Letter of Credit Outstandings and (z) any partial reduction
pursuant to this Section 3.02 of either the Total AR Commitment or the Total
Revolving Commitment shall be in the amount of at least $1,000,000.
3.03 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total AR
Commitment shall terminate on the earlier of (x) the AR Termination Date and
(y) the date on which any Change of Control occurs.
(b) The Total Revolving Commitment shall terminate on the earlier
of (x) the Expiry Date and (y) the date on which any Change of Control occurs.
(c) The Total AR Commitment shall be reduced, at the time that any
required mandatory repayment of AR Loans would be made prior to the AR
Termination Date pursuant to Section 4.02(A)(c), (e) or (f) if AR Loans were
then outstanding, in the amount of such required repayment (determined as if
an unlimited amount of AR Loans were then outstanding).
(d) Each partial reduction of the Total AR Commitment pursuant to
this Section 3.03 shall apply proportionately to the AR Commitment, if any,
of each Bank.
SECTION 4. PAYMENTS.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to
time on the following terms and conditions: (i) the Borrower shall give the
Agent at the Payment Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay the Loans, whether such Loans
are AR Loans, Revolving Loans or Swingline Loans, the amount of such
prepayment and (in the case of Eurodollar Loans) the specific Borrowing(s)
pursuant to which made, which notice shall be given by the Borrower at least
one Business Day prior to the date of such prepayment with respect to Base
Rate Loans (except that any such notice with respect to Swingline Loans may
be given prior to 1:00 P.M. (New York time) on the date of prepayment) and
two Business Days prior to the date of such prepayment with respect to
Eurodollar Loans, which notice shall promptly be transmitted by the Agent to
each of the Banks; (ii) each partial prepayment of any Borrowing shall be in
an aggregate principal amount of at least $500,000 and, if greater, in an
integral multiple of $100,000, provided that (x) Swingline Loans may be
prepaid in an aggregate amount of at least $250,000 and (y) no partial
prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce the
aggregate principal amount of the Eurodollar Loans outstanding
-19-
<PAGE>
pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount applicable thereto; (iii) at the time of any prepayment of Eurodollar
Loans pursuant to this Section 4.01 on any date other than the last day of
the Interest Period applicable thereto, the Borrower shall pay the amounts
required pursuant to Section 1.11; (iv) each prepayment in respect of any
Loans made pursuant to a Borrowing shall be applied PRO RATA among such
Loans, provided, that at the Borrower's election in connection with any
prepayment pursuant to this Section 4.01 of (x) AR Loans prior to the AR
Termination Date or (y) Revolving Loans, such prepayment shall not be applied
to any AR Loans or Revolving Loans, as the case may be, of a Defaulting Bank;
and (v) each prepayment made after the AR Termination Date of AR Loans
pursuant to this Section 4.01 shall reduce the remaining Scheduled Repayments
on a PRO RATA basis (based upon the then remaining principal amount of each
such Scheduled Repayment).
4.02 MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(a) (i) If on any date prior to the AR Termination Date the
aggregate outstanding principal amount of AR Loans made by Non-Defaulting
Banks exceeds the Adjusted Total AR Commitment as then in effect, the
Borrower shall repay on such date the principal of AR Loans of
Non-Defaulting Banks in an aggregate amount equal to such excess.
(ii) If on any date prior to the AR Termination Date the aggregate
outstanding principal amount of the AR Loans made by a Defaulting Bank
exceeds the AR Commitment of such Defaulting Bank, the Borrower shall repay
principal of the AR Loans of such Defaulting Bank in an amount equal to such
excess.
(iii) If on any date the sum of the aggregate outstanding
principal amount of Revolving Loans made by Non-Defaulting Banks, Swingline
Loans and the Letter of Credit Outstandings exceeds the Adjusted Total
Revolving Commitment as then in effect, the Borrower shall repay on such date
the principal of Swingline Loans, and if no Swingline Loans are or remain
outstanding, Revolving Loans of Non-Defaulting Banks, in an aggregate amount
equal to such excess. If, after giving effect to the repayment of all
outstanding Swingline Loans and Revolving Loans of Non-Defaulting Banks, the
aggregate amount of Letter of Credit Outstandings exceeds the Adjusted Total
Revolving Commitment then in effect, the Borrower shall pay to the Agent an
amount in cash and/or Cash Equivalents equal to such excess and the Agent
shall hold such payment as security for the obligations of the Borrower
hereunder pursuant to a cash collateral agreement to be entered into in form
and substance satisfactory to the Agent (which shall permit certain
investments in Cash Equivalents satisfactory to the Agent, until the proceeds
are applied to the secured obligations).
-20-
<PAGE>
(iv) If on any date the aggregate outstanding principal amount of
the Revolving Loans made by a Defaulting Bank exceeds the Revolving
Commitment of such Defaulting Bank, the Borrower shall repay principal of the
Revolving Loans of such Defaulting Bank in an amount equal to such excess.
(b) On each date set forth below, the Borrower shall be required
to repay the AR Repayment Percentage of the principal amount of AR Loans set
forth opposite such date (each such repayment, a "Scheduled Repayment").
Date AMOUNT
---- -----------
December 31, 1999 $10,625,000
March 31, 2000 $10,625,000
June 30, 2000 $10,625,000
September 30, 2000 $10,625,000
December 31, 2000 $13,281,250
March 31, 2001 $13,281,250
June 30, 2001 $13,281,250
September 30, 2001 $13,281,250
December 31, 2001 $14,609,375
March 31, 2002 $14,609,375
June 30, 2003 $14,609,375
September 30, 2002 $14,609,375
December 31, 2002 $14,609,375
March 31, 2003 $14,609,375
June 30, 2003 $14,609,375
AR Maturity Date $14,609,375
(c) On the Business Day following the date of receipt thereof by
Holdings, the Borrower and/or any of its Subsidiaries of the Cash Proceeds
from any Asset Sale, an amount equal to 100% of the Net Cash Proceeds from
such Asset Sale shall be applied as a mandatory repayment of the principal of
the then outstanding AR Loans, provided that such Net Cash Proceeds from
Permitted Asset Sales shall not be required to be used to so repay Loans to
the extent the Borrower elects, as hereinafter provided, to cause such Net
Cash Proceeds to be reinvested in Reinvestment Assets (a "Reinvestment
Election"). The Borrower may exercise its Reinvestment Election (within the
parameters specified in the preceding sentence) with respect to an Asset Sale
if (x) no Default or Event of Default exists and (y) the Borrower delivers a
Reinvestment Notice to the Agent on the Business Day following the date of
the consummation of the respective Asset Sale, with such Reinvestment
Election being effective with respect to the Net Cash Proceeds of such Asset
Sale equal to the Anticipated Reinvestment Amount specified in such
Reinvestment Notice.
-21-
<PAGE>
(d) On the date of the receipt thereof by Holdings or the
Borrower, as the case may be, an amount equal to 75% of the cash proceeds
(net of underwriting discounts and commissions and other reasonable costs
associated therewith) of any sale or issuance of equity by Holdings or the
Borrower, respectively (other than equity issued to management and other
employees of Holdings, the Borrower or its Subsidiaries, the exercise of any
warrants outstanding on the Restatement Effective Date and/or any amount of
cash received by Holdings or the Borrower in connection with any capital
contributions made by any of the Designated UOH Stockholders or, in the case
of the Borrower, by Holdings) shall be applied as a mandatory repayment of
the principal of the then outstanding AR Loans provided that the first
$5,000,000 of such proceeds in the aggregate do not have to be so applied to
repay Loans.
(e) On each date which is 90 days after the last day of each
fiscal year of the Borrower (commencing with the fiscal year ending on
December 31, 1999), 50% of Excess Cash Flow for the fiscal year then last
ended shall be applied as a mandatory repayment of the principal of the then
outstanding AR Loans.
(f) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment Amount,
if any, for such Reinvestment Election shall be applied as a repayment of the
principal of the then outstanding AR Loans.
(g) On the date on which any Change of Control occurs, the
outstanding principal amount of all Loans shall become due and payable in
full.
(B) APPLICATION:
(a) Each mandatory repayment made after the AR Termination Date of
AR Loans pursuant to Section 4.02(A) (other than pursuant to clause (a) or
(b) thereof) shall be applied to reduce the Scheduled Repayments on a PRO
RATA basis (based upon the then remaining outstanding principal amount of
each such Scheduled Repayment).
(b) With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid
and the specific Borrowing(s) under the affected Facility pursuant to which
made, provided that (i) Eurodollar Loans may so be designated for prepayment
pursuant to this Section 4.02 only on the last day of an Interest Period
applicable thereto unless all Eurodollar Loans made pursuant to such Facility
with Interest Periods ending on such date of required prepayment and all Base
Rate Loans made pursuant to such Facility have been paid in full; (ii) if any
prepayment of Eurodollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount for such Borrowing, such Borrowing
shall be immediately converted into Base Rate
-22-
<PAGE>
Loans; (iii) each prepayment of any AR Loans or Revolving Loans made by
Non-Defaulting Banks pursuant to a Borrowing shall be applied PRO RATA among
such AR Loans or Revolving Loans, as the case may be; and (iv) each
prepayment of any AR Loans or Revolving Loans made by Defaulting Banks
pursuant to a Borrowing shall be applied PRO RATA among such AR Loans or
Revolving Loans, as the case may be. In the absence of a designation by the
Borrower as described in the preceding sentence, the Agent shall, subject to
the above, make such designation in its sole discretion with a view, but no
obligation, to minimize breakage costs owing under Section 1.11.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement shall be made
to the Agent for the ratable (based on its PRO RATA share) account of the
Banks entitled thereto, not later than 1:00 P.M. (New York time) on the date
when due and shall be made in immediately available funds and in lawful money
of the United States of America at the Payment Office, it being understood
that written notice by the Borrower to the Agent to make a payment from the
funds in the Borrower's account at the Payment Office shall constitute the
making of such payment to the extent of such funds held in such account. Any
payments under this Agreement which are made later than 1:00 P.M. (New York
time) shall be deemed to have been made on the next succeeding Business Day.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in
effect immediately prior to such extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower
hereunder, under any Note or any other Credit Document, will be made without
setoff, counterclaim or other defense. Except as provided for in Section
4.04(b), all such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein (but excluding, except as provided in the
second succeeding sentence, any tax imposed on or measured by the net income
(or any franchise tax) of a Bank pursuant to the laws of the jurisdiction in
which the principal office or applicable lending office of such Bank is
located or under the laws of any political subdivision or taxing authority of
any such jurisdiction in which the principal office or applicable lending
office of such Bank is located) and all interest, penalties or similar
liabilities with respect thereto (collectively, "Taxes"). If any Taxes are
so levied or imposed, the Borrower agrees to pay the full amount of such
Taxes and such additional amounts as may be necessary so that every payment
of all amounts due hereunder, under any Note or under any other Credit
Document, after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein or in such Note or in such
other Credit Document. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, then the
-23-
<PAGE>
Borrower shall also reimburse each Bank, upon the written request of such
Bank, for taxes imposed on or measured by the net income of such Bank
pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or of any political
subdivision or taxing authority of any such jurisdiction and for any
withholding of income or similar taxes imposed by the United States of
America as such Bank shall determine are payable by, or withheld from, such
Bank in respect of Taxes paid to or on behalf of such Bank pursuant to this
or the preceding sentence. The Borrower will furnish to the Agent within 45
days after the date the payment of any Taxes, or any withholding or deduction
on account thereof, is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Borrower. The Borrower will indemnify
and hold harmless the Agent and each Bank, and reimburse the Agent or such
Bank upon its written request, for the amount of any Taxes so levied or
imposed and paid or withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) to provide to the Borrower on or prior to the Initial Borrowing
Date two original signed copies of Internal Revenue Service Form 4224 or Form
1001 certifying to such Bank's entitlement to a complete exemption from
United States withholding tax with respect to payments to be made under this
Agreement, under any Note and under any other Credit Document and (ii) that,
(x) to the extent legally entitled to do so, with respect to a Bank that is
an assignee or transferee of an interest under this Agreement pursuant to
Section 12.04 hereof (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), upon the date of such
assignment or transfer to such Bank, and (y) with respect to any Bank which
is not a United States person (as such term is defined in Section 7701(a)(30)
of the Code) for U.S. Federal income tax purposes (including, without
limitation, any assignee or transferee), from time to time, upon the
reasonable request by the Borrower or the Agent after the Restatement
Effective Date, such Bank will provide to each of the Borrower and the Agent
two original signed copies of Internal Revenue Service Form 4224 or Form 1001
(or any successor forms) certifying to such Bank's entitlement to a complete
exemption from, or reduction in, United States withholding tax with respect
to payments to be made under this Agreement, under any Note and under any
other Credit Document. Notwithstanding anything to the contrary contained in
Section 4.04(a), the Borrower shall be entitled, to the extent it is required
to do so by law, to deduct or withhold income or other similar taxes imposed
by the United States (or any political subdivision or taxing authority
thereof or therein) from interest, fees or other amounts payable hereunder
(without any obligation under Section 4.04(a) to pay the respective Bank such
taxes or any additional amounts with respect thereto) for the account of any
Bank which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for United States federal income tax purposes and
which has not provided to the Borrower such forms required to be provided to
the Borrower by a Bank pursuant to the first sentence of this Section
4.04(b), provided that if the Borrower shall so deduct or withhold any such
taxes,
-24-
<PAGE>
it shall provide a statement to the Agent and such Bank, setting forth the
amount of such taxes so deducted or withheld, the applicable rate and any
other information or documentation which such Bank may reasonably request for
assisting such Bank in obtaining any allowable credits or deductions for the
taxes so deducted or withheld in the jurisdiction or jurisdictions in which
such Bank is subject to tax. Notwithstanding anything to the contrary
contained in the preceding sentence, the Borrower agrees to indemnify each
Bank in the manner set forth in Section 4.04(a) in respect of any amounts
deducted or withheld by it as described in the previous sentence as a result
of any changes after the Restatement Effective Date in any applicable law,
treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of income or
similar Taxes.
SECTION 5. CONDITIONS PRECEDENT.
5.01 CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligation of
the Banks to make each Loan and of the Letter of Credit Issuer to issue each
Letter of Credit is subject, at the time thereof, to the satisfaction of the
following conditions:
(a) NOTICE OF BORROWING. The Agent shall have received a Notice
of Borrowing meeting the requirements of Section 1.02 or a Letter of Credit
Request meeting the requirements of Section 2.03.
(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
each Credit Event and also after giving effect thereto, (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and correct
in all material respects with the same effect as though such representations
and warranties had been made on and as of the date of such Credit Event,
except to the extent that such representations and warranties expressly
relate to an earlier date.
(c) TESTED BORROWINGS. At the time of incurring any Tested
Borrowing, each of the covenants set forth in Sections 8.11 through 8.14
shall have been satisfied as of, and no Event of Default under Section
9.08(B) or (C) shall exist as of, the Measurement Date relating to such
Tested Borrowing determined on a PRO FORMA basis as if such Tested Borrowing
occurred on such Measurement Date and, in the case of a Tested Borrowing
financing a Permitted Acquisition, such Permitted Acquisition was consummated
on the first day of the 12-month period ending on such Measurement Date.
The acceptance of the benefits of each Credit Event shall
constitute a representation and warranty by the Borrower to the Agent and
each of the Banks that all of the applicable conditions specified above exist
as of that time.
-25-
<PAGE>
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order
to induce the Banks to enter into this Agreement and to make the Loans, the
Borrower makes the following representations and warranties to, and
agreements with, the Banks, all of which shall survive the execution and
delivery of this Agreement and the making of the Loans.
6.01 CORPORATE STATUS. Each of Holdings, the Borrower and its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact
the business in which it is engaged and presently proposes to engage and (ii)
has duly qualified and is authorized to do business and is in good standing
in all jurisdictions where it is required to be so qualified and where the
failure to be so qualified would have a Material Adverse Effect.
6.02 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery and
performance of the Transaction Documents to which it is a party. Each Credit
Party has duly executed and delivered each Transaction Document to which it
is a party and each such Transaction Document constitutes the legal, valid
and binding obligation of such Credit Party enforceable in accordance with
its terms.
6.03 NO VIOLATION. Neither the execution, delivery and
performance by any Credit Party of the Transaction Documents to which it is
a party nor compliance with the terms and provisions thereof, nor the
consummation of the transactions contemplated therein (i) will contravene any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict or be inconsistent with or result in any breach of, any of the
terms, covenants, conditions or provisions of, or constitute a default under,
or (other than pursuant to the Security Documents) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of
the property or assets of any Credit Party or any of its Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust, agreement or
other instrument to which Holdings, the Borrower or any of its Subsidiaries
is a party or by which it or any of its property or assets are bound or to
which it may be subject or (iii) will violate any provision of the Charter or
By-Laws of any Credit Party or any of its Subsidiaries.
6.04 LITIGATION. There are no actions, suits or proceedings
pending or, to the Borrower's knowledge, threatened with respect to Holdings,
the Borrower or any of its Subsidiaries (i) that are likely to have a
Material Adverse Effect or (ii) that could reasonably be expected to have a
material adverse effect on the rights or remedies of the
-26-
<PAGE>
Banks or on the ability of the Credit Parties to perform their obligations to
them under the Credit Documents.
6.05 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of AR
Loans may be used to finance Permitted Acquisitions.
(b) The proceeds of Revolving Loans and Swingline Loans may be
used for the general corporate and working capital purposes of the Borrower
and its Subsidiaries.
(c) Neither the making or continuance of any Loan hereunder, nor
the use of the proceeds thereof, will violate or be inconsistent with the
provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System and no part of the proceeds of any Loan will be used
to purchase or carry any Margin Stock in violation of Regulation U or to
extend credit for the purpose of purchasing or carrying any Margin Stock.
6.06 GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the Security Documents, and those items listed on Annex III,
no order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any foreign or
domestic governmental or public body or authority, or any subdivision
thereof, that has not been obtained or made is required to authorize or is
required in connection with (i) the execution, delivery and performance of
any Transaction Document or (ii) the legality, validity, binding effect or
enforceability of any Credit Document.
6.07 INVESTMENT COMPANY ACT. None of Holdings, the Borrower nor
any of its Subsidiaries is an "investment company" or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act
of 1940, as amended.
6.08 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company," or
of a "subsidiary company" of a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
6.09 TRUE AND COMPLETE DISCLOSURE. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of
Holdings, the Borrower or any of its Subsidiaries in writing to the Agent or
any Bank for purposes of or in connection with this Agreement or any
transaction contemplated herein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of any such Person in
writing to any Bank will be, true and accurate in all material respects on
the date
-27-
<PAGE>
as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information (taken
as a whole) not misleading at such time in light of the circumstances under
which such information was provided. The projections and PRO FORMA financial
information contained in such materials are based on good faith estimates and
assumptions believed by such Persons to be reasonable at the time made, it
being recognized by the Banks that such projections as to future events are
not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected
results. There is no fact known to the Borrower which would have a Material
Adverse Effect, which has not been disclosed herein or in such other
documents, certificates and statements furnished to the Banks for use in
connection with the transactions contemplated hereby.
6.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of
the Restatement Effective Date, on a PRO forma basis after giving effect to
the Transaction and to all Indebtedness incurred, and to be incurred, and
Liens created, and to be created, in connection therewith, (x) the sum of the
assets, at a fair valuation, of the Borrower and its Subsidiaries, and of
Holdings and is Subsidiaries, taken as a whole will exceed their debts, (y)
the Borrower and its Subsidiaries, and Holdings and its Subsidiaries, taken
as a whole will not have incurred or intended to, or believe that they will,
incur debts beyond their ability to pay such debts as such debts mature and
(z) the Borrower and its Subsidiaries, and Holdings and its Subsidiaries,
taken as a whole will not have unreasonably small capital with which to
conduct their business. For purposes of this Section 6.10, "debt" means any
liability on a claim, and "claim" means (i) right to payment whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right
to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
(b)(i) The consolidated balance sheet of Holdings and of the
Borrower at December 31, 1994 and December 31, 1995 and at June 30, 1996 and
the related consolidated statements of operations and cash flows of Holdings
and of the Borrower for the fiscal years or six months ended as of said
dates, which, in the case of the annual financial statements, have been
examined by Price Waterhouse LLP, independent certified public accountants,
who delivered an unqualified opinion in respect therewith, (ii) the Financial
Statements (as defined in the Acquisition Agreement) of OAH and its
Subsidiaries and (iii) the PRO FORMA consolidated balance sheet of the
Borrower as of June 30, 1996, copies of which have heretofore been furnished
to each Bank, present fairly the financial position of such entities at the
dates of said statements and the results for the period covered thereby (or,
in the case of the PRO FORMA balance sheet, presents a good faith estimate of
the consolidated PRO FORMA financial condition of the Borrower (after giving
effect to the Transaction and the related financing thereof) at the date
thereof) in accordance with
-28-
<PAGE>
GAAP, except to the extent provided in the notes to said financial
statements. All such financial statements (other than the aforesaid PRO
forma balance sheets) have been prepared in accordance with generally
accepted accounting principles and practices consistently applied except to
the extent provided in the notes to said financial statements. Except for the
incurrence of Indebtedness to finance the Acquisition, nothing has occurred
since December 31, 1995 that has had or could reasonably be expected to have
a Material Adverse Effect.
(c) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Restatement
Effective Date no liabilities or obligations with respect to Holdings, the
Borrower or any of its Subsidiaries of a nature (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or
in aggregate, would be material to the Borrower and its Subsidiaries, and to
Holdings and its Subsidiaries, taken as a whole, except as incurred in the
ordinary course of business consistent with past practices subsequent to
December 31, 1995 and except for the Indebtedness incurred pursuant to the
Original Credit Agreements or to finance the Acquisition.
6.11 SECURITY INTERESTS. On and after the Restatement Effective
Date (or the date of the execution and delivery thereof, in the case of all
Security Documents first executed after such date), each of the Security
Documents create, as security for the Obligations purported to be secured
thereby, a valid and enforceable perfected security interest in and Lien on
all of the Collateral subject thereto, superior to and prior to the rights of
all third Persons and subject to no other Liens (except (x) that the Security
Agreement Collateral may be subject to the security interests evidenced by
Permitted Liens relating thereto and (y) the Mortgaged Properties may be
subject to Permitted Encumbrances relating thereto), in favor of the
Collateral Agent for the benefit of the Banks. No filings or recordings are
required in order to perfect the security interests created under any
Security Document except for filings or recordings required in connection
with any such Security Document (other than the Pledge Agreements) which
shall have been made upon or prior to (or are the subject of arrangements,
satisfactory to the Agent, for filing on or promptly after the date of) the
execution and delivery thereof.
6.12 REPRESENTATIONS AND WARRANTIES IN TRANSACTION DOCUMENTS. All
representations and warranties set forth in the Transaction Documents were
true and correct in all material respects as of the time such representations
and warranties were made and shall be true and correct in all material
respects as of the Restatement Effective Date as if such representations and
warranties were made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations and warranties
shall be true and correct in all material respects as of such earlier date.
-29-
<PAGE>
6.13 CONSUMMATION OF TRANSACTION. As of the Restatement Effective
Date, the Transaction shall have been consummated in accordance with the
terms and conditions of the Transaction Documents and all applicable laws.
All applicable waiting periods with respect thereto have or, prior to the
time when required, will have, expired without, in all such cases, any action
being taken by any competent authority which restrains, prevents, or imposes
material adverse conditions upon the consummation of the Transaction. As of
the Restatement Effective Date, there does not exist any judgment, order, or
injunction prohibiting the consummation of the Transaction, or the making of
Loans or the performance by the Borrower of its obligations under the
Documents.
6.14 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
its Subsidiaries has filed all federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and
has paid all material taxes and assessments payable by it which have become
due, other than those not yet delinquent and except for those contested in
good faith. Holdings, the Borrower and its Subsidiaries have paid, or have
provided adequate reserves (in the good faith judgment of the management of
the Borrower) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to the
date hereof.
6.15 COMPLIANCE WITH ERISA. Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither the Borrower, nor any Subsidiary nor any
ERISA Affiliate has incurred any material liability to or on account of a
Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the
Code or expects to incur any liability (including any indirect, contingent or
secondary liability) under any of the foregoing Sections with respect to any
Plan; no proceedings have been instituted to terminate or appoint a trustee
to administer any Plan; no condition exists which presents a material risk to
the Borrower or any Subsidiary or any ERISA Affiliate of incurring a
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of the Borrower and its Subsidiaries and its ERISA Affiliates to
all Plans which are multiemployer plans (as defined in Section 4001(a)(3) of
ERISA) in the event of a complete withdrawal therefrom, as of the close of
the most recent fiscal year of each such Plan ended prior to the date of the
most recent Credit Event, would not exceed $150,000; no lien imposed under
the Code or ERISA on the assets of the Borrower or any Subsidiary or any
ERISA Affiliate exists or is likely to arise on account of any Plan; and
Holdings, the Borrower and its Subsidiaries do not maintain or contribute to
any employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides benefits to
-30-
<PAGE>
retired employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA), except
to the extent that all events described in the preceding clauses of this
Section 6.15 and then in existence would not, in the aggregate, have or be
likely to have a Material Adverse Effect. With respect to Plans that are
multiemployer plans (within the meaning of Section 4001(a)(3) of ERISA) the
representations and warranties in this Section 6.15 are made to the best
knowledge of the Borrower.
6.16 SUBSIDIARIES. (a) Annex IV hereto lists each Subsidiary of
the Borrower existing on the Restatement Effective Date. The Borrower owns
100% of the outstanding capital stock of each such Subsidiary. The Borrower
will at all times own directly 100% of the outstanding capital stock of all
of said entities except to the extent otherwise permitted pursuant to Section
8.02.
(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or
other assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this
Agreement, the other Credit Documents or any Subordinated Debt Indenture,
(ii) applicable law, (iii) customary non-assignment provisions entered into
in the ordinary course of business and consistent with past practices, (iv)
any restriction or encumbrance with respect to a Subsidiary of the Borrower
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the capital stock or assets of
such Subsidiary, so long as such sale or disposition is permitted under this
Agreement, and (v) any documents or instruments governing the terms of any
Indebtedness or other obligations secured by Liens permitted by Section 8.03,
provided that such prohibitions or restrictions apply only to the assets
subject to such Liens.
6.17 PATENTS, ETC. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions,
that are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
6.18 POLLUTION AND OTHER REGULATIONS. (a) Each of Holdings, the
Borrower and its Subsidiaries is in compliance with all Environmental Laws
governing its business for which failure to comply is reasonably likely to
have a Material Adverse Effect, and neither Holdings, the Borrower nor any of
its Subsidiaries is liable for any material penalties, fines or forfeitures
for failure to comply with any of the foregoing in the manner set forth
above. All licenses, permits, registrations or approvals required for the
business of the Borrower and each of its Subsidiaries, as conducted as of the
Restatement Effective Date, under any Environmental Law have been secured and
the Borrower and each of its Subsidiaries is in substantial compliance
therewith, except such licenses, permits, registrations or approvals the
failure to secure or to comply therewith is not likely to have a
-31-
<PAGE>
Material Adverse Effect. Neither Holdings, the Borrower nor any of its
Subsidiaries is in noncompliance with, breach of or default under any
applicable writ, order, judgment, injunction, or decree to which Holdings,
the Borrower or such Subsidiary is a party or which would affect the ability
of the Borrower or such Subsidiary to operate any real property and no event
has occurred and is continuing which, with the passage of time or the giving
of notice or both, would constitute noncompliance, breach of or default
thereunder, except in each such case, such noncompliance, breaches or
defaults as are not likely to, in the aggregate, have a Material Adverse
Effect. There are as of the Restatement Effective Date no Environmental
Claims pending or, to the best knowledge of the Borrower, threatened, which
(a) challenge the validity, term or entitlement of the Borrower or any of its
Subsidiaries for any permit, license, order or registration required for the
operation of any facility under the Environmental Laws which the Borrower or
any of its Subsidiaries operates and (b) wherein an unfavorable decision,
ruling or finding would be reasonably likely to have a Material Adverse
Effect. There are no facts, circumstances, conditions or occurrences
concerning Holdings, the Borrower or any of its Subsidiaries, any of their
operations or on any Real Property or, to the knowledge of the Borrower, on
any property adjacent to any such Real Property that could reasonably be
expected (i) to form the basis of an Environmental Claim against the
Borrower, any of its Subsidiaries or any Real Property of the Borrower or any
of its Subsidiaries, or (ii) to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law, except in each such case, such
Environmental Claims or restrictions that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of
the Borrower or any of its Subsidiaries or (ii) released on any Real
Property, in each case where such occurrence or event individually or in the
aggregate is reasonably likely to have a Material Adverse Effect.
6.19 PROPERTIES. The Borrower and each of its Subsidiaries have
good and marketable title to all properties owned by them, including all
property reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, and the Financial Statements, referred to in Section 6.10(b),
free and clear of all Liens, other than (i) as referred to in the
consolidated balance sheet, or the Financial Statements, or, in either case,
in the notes thereto or (ii) otherwise permitted by Section 8.03. Annex V
contains a true and complete list of each Real Property owned or leased by
the Borrower or any of its Subsidiaries on the Restatement Effective Date
(other than properties that are solely sign locations) and the type of
interest therein held by the Borrower or the respective Subsidiary. Holdings
owns no properties or assets (other than the Tax Sharing Agreement) other
than all of the capital stock of the Borrower.
-32-
<PAGE>
6.20 LABOR RELATIONS. Holdings, the Borrower and its Subsidiaries
are not engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect. There is (i) no unfair labor
practice complaint pending against Holdings, the Borrower or any of its
Subsidiaries or threatened against any of them, before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against any of them
or threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings, the Borrower or any of its Subsidiaries or
threatened against any of them and (iii) no union representation question
existing with respect to the employees of Holdings, the Borrower or any of
its Subsidiaries and no union organizing activities are taking place, except
with respect to any matter specified in clause (i), (ii) or (iii) above,
either individually or in the aggregate, such as is not reasonably likely to
have a Material Adverse Effect.
6.21 EXISTING INDEBTEDNESS. Annex VI sets forth a true and
complete list of all Indebtedness of Holdings, the Borrower and each of its
Subsidiaries as of the Consolidation Date that is in excess of $5,000 for any
one issue and is to remain outstanding thereafter (all such Indebtedness, of
whatever size, but excluding Indebtedness hereunder, the "Existing
Indebtedness"), in each case showing the aggregate principal amount thereof
and the name of the respective borrower (or issuer) and any other entity
which directly or indirectly guaranteed such debt.
SECTION 7. AFFIRMATIVE COVENANTS. The Borrower covenants and
agrees that on the Restatement Effective Date and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated, no
Notes are outstanding and the Loans, together with interest, Fees and all
other Obligations incurred hereunder, are paid in full:
7.01 INFORMATION COVENANTS. The Borrower will furnish to each
Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close
of each fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as at the
end of such fiscal year and the related consolidated statements of income and
retained earnings and of cash flows for such fiscal year, in each case
setting forth comparative consolidated figures for the preceding fiscal year,
and examined by independent certified public accountants of recognized
national standing whose opinion shall not be qualified as to the scope of
audit and as to the status of Holdings, the Borrower or any of its
Subsidiaries as a going concern, together with a certificate of such
accounting firm stating that in the course of its regular audit of the
business of Holdings and of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards, such accounting firm
has obtained no knowledge of any Default or Event of Default which has
occurred and is continuing or, if in the opinion
-33-
<PAGE>
of such accounting firm such a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in
any event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of the
Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as at the
end of such quarterly period and the related consolidated statements of
income and retained earnings and of cash flows for such quarterly period and
for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, and in each case setting forth comparative consolidated
figures for the related periods in the prior fiscal year, all of which shall
be certified by the chief financial officer or controller of the Borrower or
Holdings, as appropriate, subject to changes resulting from audit and normal
year-end audit adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event
within 30 days, after the end of each monthly accounting period of each
fiscal year the consolidated balance sheet of the Borrower and its
Subsidiaries and of Holdings and its Subsidiaries, as at the end of such
period, and the related consolidated statements of income and retained
earnings for such period, setting forth comparative figures for the
corresponding period of the previous year, all of which shall be certified by
the chief financial officer or controller of the Borrower or Holdings, as
appropriate, subject to changes resulting from audit and normal year-end
audit adjustments.
(d) BUDGETS; ETC. Not more than 60 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its
Subsidiaries in reasonable detail for each of the twelve months of such
fiscal year. Together with each delivery of consolidated financial
statements pursuant to Sections 7.01(a), (b) and (c), a comparison of the
current year to date financial results against the budgets required to be
submitted pursuant to this clause (d) shall be presented.
(e) OFFICER'S CERTIFICATES. (i) At the time of the delivery of
the financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate, shall set forth the
calculations required to establish (I) the Modified Holdings Leverage Ratio
for the Relevant Determination Date occurring on the last day of such fiscal
year, quarter or month, (II) whether the Borrower and its Subsidiaries were
in compliance with the provisions of Sections 8.11, 8.12 and 8.13, as
applicable, as at the end of such fiscal period or year, as the case may be
and (III) whether there was any Event of Default under Section 9.08(B) and/or
9.08(C) as at the end of such fiscal period.
-34-
<PAGE>
(ii) At the time of any incurrence of Consolidated Debt of Holdings
and its Subsidiaries at a time when the Margin Reduction Discount is (or
based on the last officer's certificate delivered pursuant to clause (i)
above will be) greater than zero, a certificate of any of the persons
specified in clause (i) above setting forth the calculations establishing the
Modified Holdings Leverage Ratio after giving effect to the incurrence of
such Consolidated Debt.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof,
notice of (x) the occurrence of any event which constitutes a Default or
Event of Default which notice shall specify the nature thereof, the period of
existence thereof and what action the Borrower proposes to take with respect
thereto and (y) the commencement of or any significant development in any
litigation or governmental proceeding pending against Holdings, the Borrower
or any of its Subsidiaries which is likely to have a Material Adverse Effect
or is likely to have a material adverse effect on the ability of the Borrower
to perform its obligations hereunder or under any other Credit Document.
(g) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of
each other final report or "management letter" submitted to Holdings or the
Borrower by its independent accountants in connection with any annual,
interim or special audit made by it of the books of Holdings and/or the
Borrower.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within
20 Business Days after an officer of Holdings, the Borrower or any Subsidiary
obtains knowledge thereof, notice of one or more of the following
environmental matters: (i) any pending or threatened (in writing) material
Environmental Claim against, or for which liability would attach to, the
Borrower or any of its Subsidiaries or any Real Property owned or operated by
the Borrower or any of its Subsidiaries; (ii) any condition or occurrence on
or arising from any Real Property owned or operated by the Borrower or any of
its Subsidiaries that (a) results in material noncompliance by Holdings, the
Borrower or any of its Subsidiaries with any applicable material
Environmental Law or (b) would reasonably be expected to form the basis of a
material Environmental Claim against, or for which liability would attach to,
the Borrower or any of its Subsidiaries or any such Real Property; (iii) any
condition or occurrence on any Real Property owned or operated by the
Borrower or any of its Subsidiaries that could reasonably be expected to
cause such Real Property to be subject to any material restrictions on the
ownership, occupancy, use or transferability by the Borrower or any of its
Subsidiaries of such Real Property under any Environmental Law; and (iv) the
taking of any material removal or remedial action in response to the actual
or alleged presence of any Hazardous Material on any Real Property owned or
operated by the Borrower or any of its Subsidiaries as required by any
Environmental Law or any governmental or other administrative agency, and all
such notices shall describe in reasonable detail the nature of the claim,
investigation, condition,
-35-
<PAGE>
occurrence or removal or remedial action and the Borrower's or such
Subsidiary's response thereto.
(i) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the Securities
and Exchange Commission or any successor thereto (the "SEC") by Holdings, the
Borrower or any of its Subsidiaries and (ii) with reasonable promptness, such
other information or documents (financial or otherwise) as the Agent on its
own behalf or on behalf of the Required Banks may reasonably request from
time to time.
7.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief
financial officer, controller or any other Authorized Officer of the Borrower
officers and designated representatives of the Agent or the Required Banks to
visit and inspect any of the properties or assets of the Borrower and any of
its Subsidiaries in whomsoever's possession, and to examine the books of
account of Holdings, the Borrower and any of its Subsidiaries and discuss the
affairs, finances and accounts of Holdings, the Borrower and of any of its
Subsidiaries with, and be advised as to the same by, its and their officers
and independent accountants, all at such reasonable times and intervals and
to such reasonable extent as the Agent or the Required Banks may desire.
7.03 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles
or self-insured retentions as are in accordance with normal industry
practice, provided that in no event will any such deductible or self-insured
retention in respect of liability claims or in respect of casualty damage,
exceed, in each such case, (i) $250,000 per occurrence or (ii) $1,000,000 in
the aggregate per fiscal year. At any time that insurance at the levels
described in Annex VII is not being maintained by the Borrower and its
Subsidiaries, the Borrower will notify the Banks in writing thereof and, if
thereafter notified by the Agent to do so, the Borrower will, and will cause
its Subsidiaries to, obtain insurance at such levels at least equal to those
set forth in Annex VII to the extent then generally available (but in any
event within the deductible or self-insured retention limitations set forth
in the preceding sentence) or otherwise as are acceptable to the Agent. The
Borrower will, and will cause each of its Subsidiaries to, furnish on the
Restatement Effective Date and annually thereafter to the Agent a summary of
the insurance carried together with certificates of insurance and other
evidence of such insurance, if any, naming the Collateral Agent as an
additional insured and/or loss payee.
7.04 PAYMENT OF TAXES. The Borrower will pay and discharge, and
will cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any properties belonging to it, prior to the date on which penalties
attach thereto, and all lawful claims
-36-
<PAGE>
which, if unpaid, might become a Lien or charge upon any properties of
Holdings, the Borrower or any of its Subsidiaries, provided that neither
Holdings, the Borrower nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if it has maintained adequate reserves (in the good
faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP.
7.05 CONSOLIDATED CORPORATE FRANCHISES. The Borrower will do, and
will cause each Subsidiary to do, or cause to be done, all things necessary
to preserve and keep in full force and effect its existence, material rights
and authority, provided that any transaction permitted by Section 8.02 will
not constitute a breach of this Section 7.05.
7.06 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property other than those the non-compliance with which
would not have a Material Adverse Effect or would not have a material adverse
effect on the ability of the Borrower to perform its obligations under any
Credit Document.
7.07 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or
has reason to know of the occurrence of any of the following, the Borrower
will deliver to each of the Banks a certificate of the chief financial
officer of the Borrower setting forth details as to such occurrence and such
action, if any, which the Borrower, such Subsidiary or such ERISA Affiliate
is required or proposes to take, together with any notices required or
proposed to be given to or filed with or by the Borrower, the Subsidiary, the
ERISA Affiliate, the PBGC, a Plan participant (other than notices relating to
an individual participant's benefits) or the Plan administrator with respect
thereto: that a Reportable Event has occurred; that an accumulated funding
deficiency has been incurred or an application is reasonably likely to be or
has been made to the Secretary of the Treasury for a waiver or modification
of the minimum funding standard (including any required installment payments)
or an extension of any amortization period under Section 412 of the Code with
respect to a Plan; that a Plan which has an Unfunded Current Liability has
been or may be terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA; that a Plan has an Unfunded Current Liability and
there is a failure to make a required contribution, which gives rise to a
lien under ERISA or the Code; that proceedings are reasonably likely to be or
have been instituted to terminate a Plan which has an Unfunded Current
Liability; that a proceeding has been instituted pursuant to Section 515 of
ERISA to collect a delinquent contribution to a Plan; that the Borrower, any
Subsidiary or any ERISA Affiliate will or may incur any liability (including,
any contingent or secondary liability) to or on account of the termination of
or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201,
-37-
<PAGE>
4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409, 502(l) or 502(l) of ERISA or
that the Borrower or any Subsidiary or Holdings may incur any material
liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Upon
request of a Bank, the Borrower will deliver to such Bank a complete copy of
the annual report (Form 5500) of each Plan required to be filed with the
Internal Revenue Service. In addition to any certificates or notices
delivered to the Banks pursuant to the first sentence hereof, copies of any
annual reports and any other material notices received by Holdings, the
Borrower or any Subsidiary with respect to a Plan shall be delivered to the
Banks no later than 10 days after the later of the date such notice has been
filed with the Internal Revenue Service or the PBGC, given to Plan
participants (other than notices relating to an individual participant's
benefits) or received by Holdings, the Borrower or such Subsidiary.
7.08 GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in
its business in whomsoever's possession they may be, are kept in good repair,
working order and condition, normal wear and tear excepted, and, subject to
Section 8.05, that from time to time there are made in such properties and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the
manner useful or customary for companies in similar businesses.
7.09 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each
of its, and each of its Subsidiaries' fiscal quarters to end on March 31,
June 30, September 30 and December 31 of each year.
7.10 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) No later than
30 days following the Consolidation Date, the Borrower shall deliver to the
Agent a duly authorized and executed counterpart or counterparts of deeds of
trust, mortgages and similar documents in form and substance reasonably
satisfactory to the Agent (the "Additional Mortgages") covering all of the
Real Property owned by the Borrower not subject to Mortgages on the
Consolidation Date (x) which Additional Mortgages shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons
and subject to no other Liens except as permitted by Section 8.03 and (y)
which Additional Mortgages (or instruments related thereto) shall have been
duly recorded or filed in such manner and in such places as are required by
law to establish, perfect, preserve and protect the Liens in favor of the
Collateral Agent required to be granted thereunder and all taxes, fees and
other charges payable in connection therewith shall have been paid in full,
with each such Additional Mortgage to be accompanied by mortgage policies
relating thereto reasonably satisfactory to the Agent.
-38-
<PAGE>
(b) The Borrower will, and will cause the Subsidiary Guarantors
to, grant to the Collateral Agent security interests and mortgages (each a
"New Mortgage") in such owned Real Property (x) of the Borrower acquired
(including as a result of the merger of one or more Subsidiaries with the
Borrower) after the Consolidation Date or (y) of a Subsidiary Guarantor owned
on the date it first becomes a Subsidiary Guarantor or thereafter acquired,
in each case as may be requested from time to time by the Agent. Such New
Mortgages shall be granted pursuant to documentation reasonably satisfactory
in form and substance to the Agent and shall constitute valid and enforceable
Liens superior to and prior to the rights of all third Persons and subject to
no other Liens except as are permitted by Section 8.03. The New Mortgages or
instruments related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens in favor of the Collateral Agent required to
be granted pursuant to the New Mortgages and all taxes, fees and other
charges payable in connection therewith shall have been paid in full, with
each New Mortgage to be accompanied by mortgage policies related thereto
reasonably satisfactory to the Agent.
(c) The Borrower will, and will cause its Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, real property
surveys, reports and other assurances or instruments and take such further
steps relating to the collateral covered by any of the Security Documents as
the Collateral Agent may reasonably require. Furthermore, the Borrower shall
cause to be delivered to the Collateral Agent such opinions of counsel, title
insurance and other related documents as may be requested by the Agent to
assure themselves that this Section 7.10 has been complied with.
(d) The Borrower agrees that each action required above by Section
7.10(b) or (c) shall be completed as soon as possible, but in no event later
than 60 days after such action is requested to be taken by the Agent or the
Required Banks, provided that in no event shall the Borrower be required to
take any action, other than using its reasonable commercial efforts without
any material expenditure, to obtain consents from third parties with respect
to its compliance with this Section 7.10.
7.11 CORPORATE SEPARATENESS. The Borrower will take, and will
cause each of its Subsidiaries to take, all such action as is necessary to
keep the operations of the Borrower and its Subsidiaries separate and apart
from those of Holdings, including, without limitation, ensuring that all
customary formalities regarding corporate existence, including holding
regular board of directors' meetings and maintenance of corporate records,
are followed. All financial statements of the Borrower and its Subsidiaries
provided to creditors will clearly evidence the corporate separateness of the
Borrower and its Subsidiaries from Holdings. Finally, neither the Borrower
nor any of its Subsidiaries will
-39-
<PAGE>
take any action, or conduct its affairs in a manner which is likely to result
in the corporate existence of Holdings on the one hand, and the Borrower and
its Subsidiaries on the other, being ignored, or in the assets and
liabilities of the Borrower or any of its Subsidiaries being substantively
consolidated with those of Holdings in a bankruptcy, reorganization or other
insolvency proceeding. No action expressly provided for in this Agreement or
the other Credit Documents will breach this covenant.
7.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (i) The Borrower will
comply, and the Borrower will cause each of its Subsidiaries to comply, with
all Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, and will keep or cause
to be kept all such Real Property free and clear of any Liens imposed
pursuant to such Environmental Laws and (ii) neither the Borrower nor any of
its Subsidiaries will generate, use, treat, store, release or dispose of, or
permit the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
operated by the Borrower or any of its Subsidiaries, or transport or permit
the transportation of Hazardous Materials to or from any such Real Property,
except to the extent that the failure to comply with the requirements
specified in clause (i) or (ii) above, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect. If required to do so under any applicable directive or order of any
governmental agency, the Borrower agrees to undertake, and cause each of its
Subsidiaries to undertake, any clean up, removal, remedial or other action
necessary to remove and clean up any Hazardous Materials from any Real
Property owned, leased or operated by the Borrower or any of its Subsidiaries
in accordance with, in all material respects, the requirements of all
applicable Environmental Laws and in accordance with, in all material
respects, such orders and directives of all governmental authorities, except
to the extent that the Borrower or such Subsidiary is contesting such order
or directive in good faith and by appropriate proceedings and for which
adequate reserves have been established to the extent required by generally
accepted accounting principles.
SECTION 8. NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees, as of the Restatement Effective Date and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated, no
Notes are outstanding and the Loans, together with interest, Fees and all
other Obligations incurred hereunder, are paid in full, that:
8.01 CHANGES IN BUSINESS. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any line of business other than
the business of outdoor advertising, including transit and bus shelter,
stadium, transport terminal and other similar out-of-home advertising
services and any administrative or similar activities reasonably related
thereto.
-40-
<PAGE>
8.02 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate
or dissolve its affairs, or enter into any transaction of merger or
consolidation, sell or otherwise dispose of all or any part of its property
or assets (other than inventory or obsolete equipment or excess equipment no
longer needed in the conduct of the business in the ordinary course of
business) or purchase, lease or otherwise acquire all or any part of the
property or assets of any Person (other than purchases or other acquisitions
of inventory, leases, materials and equipment in the ordinary course of
business) or agree to do any of the foregoing at any future time, except that
the following shall be permitted:
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into, or be liquidated into, the Borrower (so long as the Borrower
is the surviving corporation) or any other Subsidiary (so long as a
Subsidiary Guarantor, if a party thereto, is the surviving corporation), or
all or any part of its business, properties and assets may be conveyed,
leased, sold or transferred to the Borrower or any other Subsidiary
Guarantor;
(b) capital expenditures to the extent within the limitations set
forth in Section 8.05 hereof;
(c) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.06;
(d) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
such lease does not create a Capitalized Lease Obligation not otherwise
permitted by Section 8.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary of
software, customer lists, trademarks and other intellectual property in
the ordinary course of business, provided, that such licenses or
sublicenses shall not interfere with the business of the Borrower or
any Subsidiary;
(f) other sales or dispositions of assets (I) for cash in an amount
equal to the fair market value thereof as determined by the Borrower and/or
(II) in exchange for other assets permitted to be held under Section 8.01
provided that, in each case, (i) the assets so sold or disposed of,
together with all other assets, previously sold or disposed of pursuant to
this clause (f) after or during the Calculation Period applicable to such
sale or disposition, shall not have generated Adjusted EBITDA of the
Borrower during such Calculation Period (taken as one accounting period)
equal to 15% or more of the aggregate Adjusted EBITDA of the Borrower
during such Calculation Period (taken as one accounting period), (ii) the
assets so sold or disposed of, together with all other assets previously
sold or disposed of pursuant
-41-
<PAGE>
to this clause (f) after the Restatement Effective Date, shall not have
generated Adjusted EBITDA of the Borrower during the period (taken as one
accounting period) commencing on the Restatement Effective Date and ending
on the last day of the last month for which financial statements of the
Borrower are reasonably available equal to 25% or more of the aggregate
Adjusted EBITDA of the Borrower during such period (taken as one accounting
period) and (iii) the Net Cash Proceeds, if any, of any such sale are
applied to repay the Loans to the extent required by Section 4.02(A)(c),
and, provided further, that the sale or disposition of the capital stock of
any Subsidiary of the Borrower shall be prohibited unless it is for all of
the outstanding capital stock of such Subsidiary owned by the Borrower;
(g) other sales or dispositions of assets in each case to the extent
the Required Banks have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary may be liquidated into the Borrower; and
(i) Permitted Acquisitions provided that after giving effect thereto
and the related borrowings to finance same there would be no default under
Sections 8.11 through 8.14 or 9.08(B) or (C) determined on a PRO FORMA
basis as if such Permitted Acquisition and the related borrowings were
consummated on the first day of the 12-month period ending on the
Measurement Date last to occur and with pro forma adjustments to the
Consolidated EBITDA of the Person being acquired to give effect to
contemplated cost savings as estimated in good faith by the Borrower and
agreed to by the Agent.
8.03 LIENS. The Borrower will not, and will notpermit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets of any kind (real or personal,
tangible or intangible) of the Borrower or any such Subsidiary whether now
owned or hereafter acquired, or sell any such property or assets subject to
an understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable or notes with
recourse to the Borrower or any of its Subsidiaries) or assign any right to
receive income, or file or permit the filing of any financing statement under
the UCC or any other similar notice of Lien under any similar recording or
notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested
in good faith and by appropriate proceedings for which adequate reserves
(in the good faith judgment of the management of the Borrower) have been
established;
-42-
<PAGE>
(b) Liens in respect of property or assets of the Borrower or any
of its Subsidiaries imposed by law which were incurred in the ordinary
course of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the
ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Borrower or
any Subsidiary or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement or the other
Credit Documents;
(d) (x) Liens on assets of the Borrower and each Subsidiary existing
on the Consolidation Date and listed on Part A of Annex VIII hereto,
without giving effect to any subsequent extensions or renewals thereof and
(y) immaterial Liens on assets of the Borrower and each Subsidiary existing
on the Consolidation Date at the locations listed on Part B of Annex VIII;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof,
except as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money) provided, that the aggregate amount of
deposits at any time pursuant to this clause (f) shall not exceed
$500,000;
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
-43-
<PAGE>
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) Purchase money Liens securing payables arising from the purchase
by the Borrower of any equipment or goods in the normal course of business,
provided that such payables shall not constitute Indebtedness;
(k) Any interest or title of a lessor or any lien on the interest or
title of a lessor under any lease permitted by this Agreement;
(l) Liens arising pursuant to purchase money mortgages relating to,
or security interests securing Indebtedness representing the purchase
price of, assets acquired by the Borrower or any Subsidiary Guarantor after
the Restatement Effective Date, provided that any such Liens attach only to
the assets so acquired and that all Indebtedness secured by Liens created
pursuant to this clause (l) shall not exceed $5,000,000 at any time
outstanding;
(m) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(d);
(n) Liens on assets of Subsidiaries of the Borrower in favor of the
Borrower;
(o) Liens securing Indebtedness permitted by Section 8.04(i) provided
that such Liens attach only to the assets (or to the assets of the Person
whose stock is being) acquired; and
(p) Liens on assets of the Borrower securing Indebtedness not in
excess of $1,000,000 at any time outstanding.
8.04 INDEBTEDNESS. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Indebtedness owing by (i) any Subsidiary to the Borrower or
another Subsidiary and (ii) the Borrower to any Subsidiary;
(c) Permitted Subordinated Debt;
-44-
<PAGE>
(d) Capitalized Lease Obligations of the Borrower or
any Subsidiary Guarantor, provided that the aggregate
Capitalized Lease Obligations under all Capital Leases
entered into after the Restatement Effective Date shall not
exceed $10,000,000;
(e) Existing Indebtedness, without giving effect to
any subsequent extension, renewal or refinancing thereof;
(f) Additional Subordinated Debt;
(g) to the extent same has been assumed by the
Borrower, Indebtedness evidenced by the promissory note
originally executed by Holdings in favor of William H. Smith
(the "Smith Note");
(h) Indebtedness incurred pursuant to purchase money
mortgages permitted by Section 8.03(l);
(i) Indebtedness of a Person, or secured by assets,
acquired after the Restatement Effective Date pursuant to a
Permitted Acquisition provided that such Indebtedness (x)
existed at the time of such Permitted Acquisition and was
not created in connection therewith or in anticipation
thereof, (y) is not guaranteed in any respect by the
Borrower or any of its Subsidiaries, except to the extent
such Person merges into, or such assets are directly
acquired by, the Borrower or such Subsidiary and (z) shall
not exceed in the aggregate for all Indebtedness permitted
by this clause (i) $10,000,000 at any time outstanding,
without giving effect to any subsequent extension, renewal
or refinancing thereof; and
(j) additional Indebtedness of the Borrower not to
exceed an aggregate outstanding principal amount of
$5,000,000 at any time.
8.05 CAPITAL EXPENDITURES. (a) The Borrower will not, and will
not permit any of its Subsidiaries to, incur Consolidated Capital
Expenditures, provided that the Borrower and any Subsidiary Guarantor may
make Consolidated Capital Expenditures (x) during the period from the
Restatement Effective Date through December 31, 1996 (taken as one accounting
period) in an aggregate amount not in excess of $3,000,000 plus the
Additional Cap Ex for such period, (y) during the fiscal year of the Borrower
ended December 31, 1997, $12,000,000 plus the Additional Cap Ex for such
fiscal year and (z) during each successive fiscal year of the Borrower, in an
aggregate amount not in excess of 105% of the maximum amount for the prior
fiscal year, determined by excluding the Additional Cap Ex for such prior
fiscal year, plus the Modified Additional Cap Ex for each such fiscal year.
-45-
<PAGE>
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal
year pursuant to Section 8.05(a) (without giving effect to this clause (b))
is not fully expended during such fiscal year, the maximum amount which may
be expended during the immediately succeeding fiscal year pursuant to
Section 8.05(a) shall be increased by such unutilized amount provided that such
increase shall not exceed $5,000,000 in any fiscal year.
(c) In addition to the foregoing, the Borrower and any Subsidiary
Guarantor may make Consolidated Capital Expenditures in amounts in excess of
those permitted under Sections 8.05(a) and (b) provided that the amount of
such additional Consolidated Capital Expenditures shall not exceed the sum of
(x) the Available ECF Amount and (y) the Available Equity Amount in each case
as determined at the time of, but immediately prior to, the making thereof.
8.06 INVESTMENTS AND LOANS. The Borrower will not make or permit
to exist any Investments or Loans in or to any other Person or acquire or
establish any Subsidiary, except for Permitted Investments or as permitted by
the next sentence. Notwithstanding anything contained in this Section 8.06 to
the contrary, Borrower may acquire 100% of the Capital Stock of any other
Person if the following conditions are satisfied: (i) an Event of Default
has not occurred and is continuing under this Agreement and will not occur as
a result of, in connection with or after giving effect to such acquisition;
(ii) the Person being acquired engages exclusively in the business permitted
to be engaged in by Borrower and its Subsidiaries pursuant to Section 8.01;
(iii) title to all of the assets acquired in such acquisition is transferred
by operation of law, assignment, sale or otherwise, to Borrower within 60
days of the consummation of such acquisition provided that such transfer
shall not be required if the assets are held by a Subsidiary Guarantor; and
(iv) such acquired assets are expressly made subject to the Liens created by
the Security Documents.
8.07 SUBSIDIARIES; ETC. The Borrower will not (x) sell, assign
or otherwise encumber or dispose of, and will not permit any of its
Subsidiaries directly or indirectly to issue, sell, assign, pledge or
otherwise encumber or dispose of, any shares of a Subsidiary's capital stock
or other securities (or warrants, rights or options to acquire shares or
other equity securities) of such Subsidiary, except to the Borrower (to the
extent otherwise permitted hereunder) and except for dispositions permitted
by Section 8.02 and (y) after the Restatement Effective Date, create or
permit to be created any new Subsidiary except to the extent created in
compliance with the second sentence of Section 8.06.
8.08 PREPAYMENTS OF INDEBTEDNESS, ETC. The Borrower will not,
and will not permit any of its Subsidiaries to:
-46-
<PAGE>
(a) make (or give any notice in respect thereof) any
voluntary or optional payment or prepayment or redemption or
acquisition for value of (including, without limitation, by
way of depositing with the trustee with respect thereto
money or securities before due for the purpose of paying
when due) or exchange of any Subordinated Debt, the Smith
Note or any other Existing Indebtedness;
(b) amend or modify, or permit the amendment or
modification of, any provisions of any Subordinated Debt
Documents; and/or
(c) amend, modify or change in any manner adverse to
the interests of the Banks the Certificate of Incorporation
(including, without limitation, by the filing of any
certificate of designation) or By-Laws of the Borrower or
any agreement entered into by the Borrower, with respect to
its capital stock, or the Acquisition Documents or enter
into any new agreement in any manner adverse to the
interests of the Banks with respect to the capital stock of
the Borrower.
8.09 DIVIDENDS, ETC. (a) The Borrower will not redeem, retire,
purchase or otherwise acquire, directly or indirectly, any Capital Stock of
Borrower or other evidence of ownership interest, or declare or pay dividends
upon any Capital Stock of Borrower or make any distribution of Borrower's
property or assets (any of the foregoing, a "Dividend"), provided that this
Section 8.09 will not prohibit, so long as no Event of Default shall have
occurred and is continuing or would occur as a consequence thereof, (i) the
repurchase, redemption or other acquisition or retirement for value of any
shares of Capital Stock of the Borrower from the estate of Daniel L. Simon
solely out of the proceeds of any policy of insurance maintained to provide
funds for such purpose, (ii) to the extent the Indebtedness evidenced by such
Note has not been assumed by the Borrower, the payment of dividends to
Holdings in an annual amount not to exceed $120,000 to fund payments of
interest on the Smith Note, (iii) the payment of cash Dividends to Holdings
to the extent the proceeds are promptly used to pay administrative costs
arising in the ordinary course of business and cash interest when due on the
Permitted Holdings Debt and (iv) the payment of cash Dividends to Holdings to
be promptly utilized by Holdings to purchase its Common Stock (or options or
warrants to purchase such Common Stock) from officers, employees and
directors (or their estates) upon the death, permanent disability, retirement
or termination of employment of any such Person or otherwise in accordance
with any stock option plan or any employee stock ownership plan or any
warrant plan.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance
or restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or
advances to the Borrower or any Subsidiary or (c) transfer any of its
properties or assets to the Borrower or any Subsidiary or (B) the ability of
the Borrower or any other
-47-
<PAGE>
Subsidiary of the Borrower to create, incur, assume or suffer to exist any
Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of: (i) this
Agreement, the other Credit Documents and any Subordinated Debt Indenture
(once executed);(ii) applicable law;(iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices;(iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement; and (v) Liens permitted under Section 8.03 and any
documents or instruments governing the terms of any Indebtedness or other
obligations secured by any such Liens, provided that such prohibitions or
restrictions apply only to the assets subject to such Liens.
8.10 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any Subsidiary to, sell, lease, license, transfer, exchange,
or otherwise dispose of any of its properties, assets or services to, or
purchase, lease, or license the use of any property, assets or services from,
or transfer funds to, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, to or for the benefit of, any Affiliate
(each of the foregoing, an "Affiliate Transaction," whether constituting one
transaction or a series of related transactions), unless (a) such Affiliate
Transaction is on terms that are no less favorable to the Borrower or the
relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Borrower or such Subsidiary with an unrelated person and
(b) Borrower delivers to the Agent (i) with respect to any Affiliate
Transaction involving aggregate payments in excess of $250,000, an officers'
certificate setting forth a resolution of the Board of Directors of the
Borrower approved by a majority of the members of the Board of Directors (and
a majority of the disinterested members of the Board of Directors, if any)
certifying that such Affiliate Transaction complies with clause(a) above and
(ii) with respect to any Affiliate Transaction involving aggregate payments
in excess of $3.0 million, an opinion as to the fairness, from a financial
point of view, of such Affiliate Transaction to the Borrower or such
Subsidiary issued by an independent investment banking firm of national
standing with total assets in excess of $1.0 billion. The foregoing
limitation does not limit, and shall not apply to, (i) the payment of
reasonable annual compensation to directors or executive officers of the
Borrower or any Subsidiary thereof, (ii) transactions described in Annex IX
hereto, provided that the fees described in Annex IX shall accrue and not be
paid at any time that a Default or an Event of Default specified in Section 9.01
shall occur and be continuing or (iii) payments by the Borrower to Holdings
under the Tax Sharing Agreement.
8.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit
the ratio of (i) Adjusted EBITDA of the Borrower to (ii) Consolidated Fixed
Charges of the Borrower for any 12 month period (taken as one accounting
period) ending on a
-48-
<PAGE>
Measurement Date (or if less the period from the Initial Borrowing Date to
such Measurement Date) to be less than 1.00 to 1.
8.12 MINIMUM ADJUSTED EBITDA. The Borrower will not permit
Adjusted EBITDA of the Borrower for any 12 month period (taken as one
accounting period) ending on a Measurement Date occurring in a period set
forth below to be less than (A) the amount set forth opposite such period
plus (B) the Aggregate Acquired EBITDA as of such Measurement Date:
Period Amount
------ ------
Restatement Effective Date through
December 30, 1997 $57,000,000
December 31, 1997 through
December 30, 1998 $58,400,000
December 31, 1998 through
December 30, 1999 $60,750,000
December 31, 1999 through
December 30, 2000 $65,750,000
December 31, 2000 and
thereafter $70,500,000
8.13 SENIOR LEVERAGE RATIO. On and after the Consolidation Date
the Borrower will not permit the Senior Leverage Ratio as of any Measurement
Date occurring in a period set forth below to be more than the ratio set
forth opposite such period:
Period Ratio
------ -----
Consolidation Date through
December 30, 1997 5.50 to 1.0
December 31, 1997 through
December 30, 1998 5.00 to 1.0
December 31, 1998 and
thereafter 4.50 to 1.0
SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 PAYMENTS. The Borrower shall (i) default in the payment
when due of any principal of the Loans or (ii) default, and such default
shall continue for five or more days, in the payment when due of any interest
on the Loans or any Fees or any other amounts owing hereunder or under any
other Credit Document; or
9.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by the Borrower herein or in any other Credit Document or in
any statement or certificate
-49-
<PAGE>
delivered or required to be delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made; or
9.03 COVENANTS. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained
in Sections 7.10, 7.11 or 8, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those
referred to in Section 9.01, 9.02 or clause (a) of this Section 9.03)
contained in this Agreement and such default shall continue unremedied for a
period of at least 30 days after notice to the defaulting party by the Agent
or the Required Banks; or
9.04 DEFAULT UNDER OTHER AGREEMENTS. (a) Holdings, the Borrower
or any of its Subsidiaries shall (i) default in any payment with respect to
any Indebtedness (other than the Obligations) beyond the period of grace, if
any, applicable thereto or (ii) default in the observance or performance of
any agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or holders)
to cause any such Indebtedness to become due prior to its stated maturity; or
(b) any such Indebtedness of Holdings, the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof, provided that it shall not constitute an Event of
Default pursuant to this Section 9.04 unless the principal amount of such
Indebtedness exceeds $2,500,000 individually or in the aggregate at any one
time; or
9.05 BANKRUPTCY, ETC. Holdings, the Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself under Title 11
of the United States Code entitled "Bankruptcy," as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary
case is commenced against Holdings, the Borrower or any of its Subsidiaries
and the petition is not controverted within 10 days, or is not dismissed
within 60 days, after commencement of the case; or a custodian (as defined in
the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of Holdings, the Borrower or any of its
Subsidiaries; or Holdings, the Borrower or any of its Subsidiaries commences
any other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to
Holdings, the Borrower or any of its Subsidiaries; or there is commenced
against Holdings, the Borrower or any of its Subsidiaries any such proceeding
which remains undismissed for a period of 60 days; or Holdings, the Borrower
or any of its Subsidiaries
-50-
<PAGE>
is adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; Holdings, the Borrower or
any of its Subsidiaries suffers any appointment of any custodian or the like
for it or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or Holdings, the Borrower or any of its
Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by Holdings, the Borrower or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. (a) A single-employer plan (as defined in Section
4001 of ERISA) established by the Borrower, any of its Subsidiaries or any
ERISA Affiliate shall fail to maintain the minimum funding standard required
by Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412
of the Code or shall provide security to induce the issuance of such waiver
or extension, (b) any Plan is or shall have been or is likely to be
terminated or the subject of termination proceedings under ERISA or an event
has occurred entitling the PBGC to terminate a Plan under Section 4042(a) of
ERISA, (c) any Plan shall have an Unfunded Current Liability or (d) the
Borrower or a Subsidiary or any ERISA Affiliate has incurred or is likely to
incur a material liability to or on account of a termination of or a
withdrawal from a Plan under Section 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA; and there shall result from any such event or events described in the
preceding clauses of this Section 9.06 the imposition of a Lien upon the
assets of Holdings, the Borrower or any Subsidiary, the granting of a
security interest, or a liability or a material risk of incurring a liability
to the PBGC or a Plan or a trustee appointed under ERISA or a penalty under
Section 4971 of the Code, in each case which would have, in the opinion of
the Required Banks a Material Adverse Effect; or
9.07 CREDIT DOCUMENTS. Any Security Document or Guaranty (once
executed) shall cease to be in full force and effect (except as provided for
therein), or any Security Document shall cease to give the Collateral Agent
any Lien encumbering assets with an aggregate fair market value in excess of
$2,500,000 (and, if encumbering assets with a fair market value of less than
$2,500,000, for a period greater than thirty or more days), or any material
rights, powers and privileges purported to be created thereby in favor of the
Collateral Agent or any Credit Party shall default in any material respect in
the due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any such Security Document or
Guaranty or shall disaffirm or seek to disaffirm any Guaranty; or
9.08 HOLDINGS. (A) Holdings shall after the Restatement
Effective Date (i) incur any Indebtedness except for Permitted Holdings Debt
and the Holdings Guaranty, (ii) grant or create any Lien on any of its assets
that secures Indebtedness other than pursuant to the Holdings Pledge
Agreement, (iii) modify or amend, or prepay, any Permitted Holdings Debt,
(iv) engage in any business or activity other than the ownership of all of
the capital stock of the Borrower and administrative activities directly
related thereto, (v) sell or dispose of any of, or otherwise cease to own all
of, the capital stock of the Borrower, (vi) change its fiscal quarters or
fiscal year from those applicable also to the Borrower, (vii) fail to
maintain its own payroll and books of account and bank accounts
-51-
<PAGE>
separate from those of the Borrower and its Subsidiaries, (viii) fail to pay
its liabilities, including all administrative expenses, from its own separate
assets, (ix) fail to separately identify and segregate its assets from the
assets of the Borrower and its Subsidiaries and/or (x) amend, modify or
change in any way adverse to the interests of the Banks, its Certificate of
Incorporation (including, without limitation, by the filing or modification
of any certificate of designation) or By-Laws or any agreement entered into
by Holdings with respect to its capital stock, except in each case (a) as
expressly required by any of the Shareholders' Agreements, Management
Agreements, Tax Sharing Agreements and subscription agreements with members
of management, all as in effect on the Restatement Effective Date, (b) as
expressly required by law and (c) Holdings issuing Capital Stock in any
public offering to the extent the proceeds thereof are used to repay the
Loans as required by Section 4.02(A)(d) hereof;
(B) The Holdings Leverage Ratio as of any Measurement Date
occurring in a period set forth below is more than the ratio set forth
opposite such period:
Period Ratio
------ -----
Restatement Effective Date through
June 29, 1998 6.50 to 1.0
June 30, 1998 through
December 30, 1999 6.25 to 1.0
December 31, 1999 and
thereafter 6.00 to 1.0
(C) The ratio of (i) Adjusted EBITDA of Holdings to (ii)
Consolidated Interest Expense of Holdings for any 12 month period (taken as
one accounting period) ending on a Measurement Date occurring in a period
set forth below is less than the ratio set forth opposite such period:
Period Ratio
------ -----
Restatement Date through
December 30, 1997 1.50 to 1.0
December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
-52-
<PAGE>
9.09 JUDGMENTS. One or more judgments or decrees shall be
entered against Holdings, the Borrower and/or any of its Subsidiaries
involving a liability of $2,500,000 or more or in the aggregate (not paid or
to the extent not covered by insurance) and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded pending appeal
within 60 days from the entry thereof;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Agent shall, upon the written request
of the Required Banks, by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of the Agent or any
Bank to enforce its claims against the Borrower, except as otherwise
specifically provided for in this Agreement (provided that, if an Event of
Default specified in Section 9.05 shall occur with respect to the Borrower,
the result which would occur upon the giving of written notice by the Agent
as specified in clauses (i) and (ii) below shall occur automatically without
the giving of any such notice): (i) declare the Total Commitment terminated,
whereupon the Commitment of each Bank shall forthwith terminate immediately
and any Commitment Commission shall forthwith become due and payable without
any other notice of any kind; (ii) declare the principal of and any accrued
interest in respect of all Loans and all obligations owing hereunder to be,
whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and/or (iii) enforce, as Collateral Agent (or
direct the Collateral Agent to enforce), any or all of the Liens and security
interests created pursuant to the Security Documents.
SECTION 10. DEFINITIONS. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise
requires. Defined terms in this Agreement shall include in the singular
number the plural and in the plural the singular:
"Acquisition" and "Acquisition Documents" shall each have the
meaning provided in the Restated Acquisition Credit Agreement.
"Additional Cap Ex" for any fiscal year (or portion thereof) shall
mean an amount equal to the aggregate of (x) the "Prior Year Cap Ex" of each
Person acquired by the Borrower and its Subsidiaries during such fiscal year
(or portion thereof) pursuant to a Permitted Acquisition times (y) the
"Remaining Percentage" applicable to such acquisition, with the "Prior Year
Cap Ex" for each such Person to be 105% of the consolidated capital
expenditures for such Person for the fiscal year of such Person last ended
prior to such acquisition and "Remaining Percentage" for an acquisition shall
mean the percentage determined by dividing the days remaining in such fiscal
year after such acquisition by the total number of days in such fiscal year.
"Additional Mortgages" shall have the meaning provided in Section 7.10.
-53-
<PAGE>
"Additional Subordinated Debt" shall mean subordinated debt issued
by the Borrower after the Consolidation Date, provided that (i) the terms and
conditions (other than pricing and maturities, provided that no scheduled
payment of principal shall be due and payable prior to the Final Maturity
Date) are (in the reasonable opinion of the Agent) substantially the same as
those contained in the Permitted Subordinated Debt or are consented to by the
Required Banks and (ii) the Additional Subordinated Debt shall not exceed in
the aggregate (x) $150 million less (y) the aggregate principal amount of
Permitted Holdings Debt.
"Adjusted Additional Cap Ex" for any fiscal year shall mean the
Additional Cap Ex for such year determined in each case as if the Remaining
Percentage for such year were equal to 100%.
"Adjusted AR Percentage" shall mean (x) for each Bank that is a
Defaulting Bank, zero and (y) for each other Bank the percentage obtained by
dividing such Bank's AR Commitment at such time by the Adjusted Total AR
Commitment at such time.
"Adjusted Cash Flow" for any fiscal year shall mean Consolidated
Net Income of the Borrower for such fiscal year (after provision for taxes)
plus the amount of all net non-cash charges (including, without limitation,
depreciation, deferred tax expense, non-cash interest expense, amortization
and other non-cash charges) that were deducted in arriving at such
Consolidated Net Income for such fiscal year, minus the amount of all
non-cash gains and gains from sales of assets (other than sales of inventory
and equipment in the normal course of business) that were added in arriving
at such Consolidated Net Income for such fiscal year.
"Adjusted EBITDA" of any Person shall mean, for any period (x) the
Consolidated EBITDA of such Person for such period plus or minus (y) the
adjustments thereto provided for in Exhibit G.
"Adjusted RC Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank such Bank's RC Percentage and (y) at a time
when a Bank Default exists (i) for each Bank that is a Defaulting Bank, zero
and (ii) for each Bank that is a Non-Defaulting Bank, the percentage
determined by dividing such Bank's Revolving Commitment at such time by the
Adjusted Total Revolving Commitment at such time, it being understood that
all references herein to Revolving Commitments and the Adjusted Total
Revolving Commitment at a time when the Total Revolving Commitment or
Adjusted Total Revolving Commitment, as the case may be, has been terminated
shall be references to the Revolving Loan Commitments or Adjusted Total
Revolving Commitment, as the case may be, in effect immediately prior to such
termination, PROVIDED that (A) no Bank's Adjusted RC Percentage shall change
upon the occurrence of a Bank Default from that in effect immediately prior
to such Bank Default if, after giving effect to such Bank Default
-54-
<PAGE>
and any repayment of Revolving Loans and Swingline Loans at such time
pursuant to Section 4.02(A)(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-Defaulting Banks
plus (ii) the aggregate outstanding principal amount of Swingline Loans plus
(iii) the Letter of Credit Outstandings, exceeds the Adjusted Total Revolving
Loan Commitment; (B) the changes to the Adjusted RC Percentage that would
have become effective upon the occurrence of a Bank Default but that did not
become effective as a result of the preceding clause (A) shall become
effective on the first date after the occurrence of the relevant Bank Default
on which the sum of (i) the aggregate outstanding principal amount of the
Revolving Loans of all Non-Defaulting Banks plus (ii) the aggregate
outstanding principal amount of the Swingline Loans plus (iii) the Letter of
Credit Outstandings is equal to or less than the Adjusted Total Revolving
Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted RC Percentage is
changed pursuant to the preceding clause (B) and (ii) any repayment of such
Bank's Revolving Loans, or of Unpaid Drawings or of Swingline Loans, that
were made during the period commencing after the date of the relevant Bank
Default and ending on the date of such change to its Adjusted RC Percentage
must be returned to the Borrower as a preferential or similar payment in any
bankruptcy or similar proceeding of the Borrower, then the change to such
Non-Defaulting Bank's Adjusted RC Percentage effected pursuant to said clause
(B) shall be reduced to that positive change, if any, as would have been made
to its Adjusted RC Percentage if (x) such repayments had not been made and
(y) the maximum change to its Adjusted RC Percentage would have resulted in
the sum of the outstanding principal of Revolving Loans made by such Bank
plus such Bank's new Adjusted RC Percentage of the outstanding principal
amount of Swingline Loans and of Letter of Credit Outstandings equalling such
Bank's Revolving Commitment at such time.
"Adjusted Revolving Commitment" for each Non-Defaulting Bank shall
mean at any time the product of such Bank's Adjusted RC Percentage and the
Adjusted Total Revolving Commitment.
"Adjusted Total AR Commitment" shall mean at any time the Total AR
Commitment less the aggregate AR Commitments of all Defaulting Banks.
"Adjusted Total Revolving Commitment" shall mean at any time the
Total Revolving Commitment less the aggregate Revolving Commitments of all
Defaulting Banks.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including, but not limited to, all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power (i) to vote 10% or more of the securities having ordinary voting power
for the election of directors of such corporation or (ii) to direct or cause
the direction
-55-
<PAGE>
of the management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of
this Agreement and shall include any successor to the Agent appointed
pursuant to Section 11.09.
"Aggregate Acquired EBITDA" shall mean, as at any Measurement Date,
an amount equal to the aggregate of 85% of the "12-month Consolidated EBITDA"
of each Person acquired by the Borrower and its Subsidiaries after the
Restatement Effective Date, with the "12-month Consolidated EBITDA" of each
such Person to be the Consolidated EBITDA of such Person for the 12 months
last ended prior to the acquisition of such Person with a pro forma
adjustment thereto to give effect to contemplated cost savings as estimated
in good faith by the Borrower and agreed to by the Agent.
"Agreement" shall mean this Consolidated Credit Agreement, as the
same may be from time to time further modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice
delivered by the Borrower in connection therewith as the amount of the Net
Cash Proceeds from the related Permitted Asset Sale that the Borrower intends
to use to purchase, construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean 1.75% less the Margin
Reduction Discount, if any.
"Applicable Eurodollar Margin" shall mean 2.75% less the Margin
Reduction Discount, if any.
"AR Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Annex I hereto directly below the
column entitled "AR Commitment," as the same may be reduced from time to time
pursuant to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to time as
a result of assignments to or from such Bank pursuant to Section 12.04.
"AR Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"AR Facility" shall mean the Facility evidenced by the Total AR
Commitment.
-56-
<PAGE>
"AR Loan" shall have the meaning provided in Section 1.01(A)(a).
"AR Maturity Date" shall mean September 30, 2003.
"AR Note" shall have the meaning provided in Section 1.05(a).
"AR Repayment Percentage" shall mean the percentage obtained by
dividing (x) the aggregate principal amount of AR Loans outstanding on the AR
Termination Date by (y) $212,500,000.
"AR Termination Date" shall mean September 30, 1999 or if earlier
the date on which the Total AR Commitment is terminated.
"Asset Sale" shall mean and include (x) the sale, transfer or other
disposition by the Borrower or any Subsidiary to any Person other than the
Borrower or any Subsidiary of any asset of the Borrower or such Subsidiary
(other than sales, transfers or other dispositions in the ordinary course of
business of inventory and/or obsolete or excess equipment and other than
sales in which the Net Cash Proceeds are $50,000 or less) and/or (y) the
receipt by the Borrower or any Subsidiary of any insurance, condemnation or
similar proceeds in connection with a casualty or taking of any of its assets.
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower in each case to
the extent acceptable to the Agent.
"Available ECF Amount" shall mean at any time, an amount equal to
(A) 50% of Excess Cash Flow determined for the fiscal year of the Borrower
(commencing with the fiscal year ending on December 31, 1999) then last ended
less (B) the aggregate Consolidated Capital Expenditures theretofore made
during the then current fiscal year pursuant to Section 8.05(c)(x).
"Available Equity Amount" shall mean at any time (A) an amount
equal to the aggregate net cash proceeds at such time from the sale or
issuance of equity by Holdings or the Borrower after the Consolidation Date
not required to be utilized to repay AR Loans under Section 4.02(A)(d)
(whether or not AR Loans are then outstanding) less (B) the aggregate of any
amounts theretofore expended after the Restatement Effective Date pursuant to
Section 8.05(c)(y) of this Agreement to the extent in excess of the Available
ECF Amount at such time.
"Bank" shall have the meaning provided in the first paragraph of
this Agreement.
-57-
<PAGE>
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans
or to fund its portion of any unreimbursed payments under Section 2.05(c) or
(ii) a Bank having notified the Agent and/or the Borrower that it does not
intend to comply with the obligations under Section 1.01 or under Section
2.05(c), in the case of either (i) or (ii) as a result of the appointment of
a receiver or conservator with respect to such Bank at the direction or
request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher, (i) the rate which
is 1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall mean Universal Outdoor, Inc., an Illinois
corporation.
"Borrower Pledge Agreement" shall mean the Pledge Agreement
executed and delivered by the Borrower in the form of Exhibit C hereto.
"Borrowing" shall mean the incurrence of (i) Swingline Loans by the
Borrower from BTCo on a given date and (ii) one Type of Loan pursuant to a
single Facility by the Borrower from all of the Banks having Commitments with
respect to such Facility on a PRo RATA basis on a given date (or resulting
from conversions on a given date), having in the case of Eurodollar Loans the
same Interest Period; provided that Base Rate Loans incurred pursuant to
Section 1.10(b) shall be considered part of any related Borrowing of
Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which
banking institutions are authorized by law or other governmental actions to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) and which is also a day for
trading by and between banks in U.S. dollar deposits in the interbank
Eurodollar market.
"Calculation Period" shall mean, with respect to any sale or
disposition of assets made pursuant to Section 8.02(f), the last 12 month
period for which financial statements of the Borrower are reasonably
available.
-58-
<PAGE>
"Capital Lease" as applied to any Person shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, whether or not voting, including but not limited to common
stock, preferred stock, convertible debentures, warrants, options or similar
rights to acquire such capital stock, and all agreements, instruments and
documents convertible, in whole or in part, into any one or more or all of
the foregoing.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken
at the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities of
not more than six months from the date of acquisition, (ii) U.S. dollar
denominated time deposits, certificates of deposit and bankers' acceptances
of (x) any Bank, (y) any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 or (z) any bank (or the
parent company of such bank) whose short-term commercial paper rating from
Standard & Poor's Corporation ("S&P") is at least A-1 or the equivalent
thereof or from Moody's Investors Service, Inc. ("Moody's") is at least P-1
or the equivalent thereof (any such bank, an "Approved Bank"), in each case
with maturities of not more than six months from the date of acquisition,
(iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (ii) above, (iv)
commercial paper issued by any Bank or Approved Bank or by the parent company
of any Bank or Approved Bank and commercial paper issued by, or guaranteed
by, any industrial or financial company with a short-term commercial paper
rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody's (any such company, an "Approved Company"),
or guaranteed by any industrial company with a long term unsecured debt
rating of at least A or A2, or the equivalent of each thereof, from S&P or
Moody's, as the case may be, and in each case maturing within six months
after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred
payment pursuant to a note receivable issued in connection with such Asset
Sale, other than the portion of such
-59-
<PAGE>
deferred payment constituting interest, but only as and when so received)
and/or insurance or condemnation proceeds received by the Borrower and/or any
Subsidiary from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601
et seq.
"Change of Control" shall mean (i) Holdings shall cease to own
legally and beneficially 100% of the outstanding capital stock of the
Borrower, (ii) Management Investors or their Permitted Transferees shall
cease to be the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act) of 75% or more (on a fully diluted basis) of (x) the Common
Stock so beneficially owned by the Management Investors on the Restatement
Effective Date less (y) the Common Stock (not exceeding 750,000 shares) sold
by Management Investors pursuant to the Proposed Equity Offering, (iii) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than one or more Permitted Holders, is or becomes the beneficial
owner (as defined in clause (ii) above, except that a person shall be deemed
to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 30% of the total
voting and economic ownership interests of Holdings; PROVIDED, HOWEVER, that
the Permitted Holders "beneficially own" (as defined in clause (ii) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting and economic ownership interests of Holdings than such other person
and do not have the right or ability by voting power, contract or otherwise
to elect or designate for election a majority of the Board of Directors of
Holdings, (iv) during any period of two consecutive years individuals who at
the beginning of such period constituted the Board of Directors of Holdings
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of Holdings was approved by
either (i) the Permitted Holders or (ii) a vote of a majority of the
directors of Holdings then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Holdings then in office or (v) any "Change of Control"
or similar term as defined in any Subordinated Debt Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect at
the Effective Date and any subsequent provisions of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
-60-
<PAGE>
"Collateral Agent" shall mean the Agent acting as collateral agent
for the Banks.
"Commitment" shall mean, with respect to each Bank, such Bank's AR
Commitment and Revolving Commitment, if any.
"Commitment Commission" shall mean and include AR Commitment
Commission and RC Commitment Commission.
"Common Stock" shall mean the common stock of Holdings.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with
GAAP, are or are required to be included in the property, plant or equipment
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, provided that Consolidated Capital Expenditures shall in any
event exclude the purchase price paid in connection with any Permitted
Acquisition (whether or not allocable to property, plant and equipment).
"Consolidated Cash Interest Expense" of any Person shall mean, for
any period, Consolidated Interest Expense of such Person, but excluding,
however, interest expense not payable in cash and amortization of discount
and deferred issuance and financing costs.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such
Person and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at
any time, the current liabilities of such Person and its Subsidiaries
determined on a consolidated basis in accordance with GAAP, but excluding all
short-term Indebtedness for borrowed money and the current portion of any
long-term Indebtedness of such Person or its Subsidiaries, in each case to
the extent otherwise included therein.
"Consolidated Debt" of any Person shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness
of such Person and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP.
"Consolidated EBIT" of any Person shall mean, for any period, (A)
the sum of the amounts for such period for such Person of (i) Consolidated
Net Income, (ii)
-61-
<PAGE>
provisions for taxes based on income, (iii) Consolidated Interest Expense and
(iv) losses on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary losses less (B) the amount for such period
of gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated EBITDA" of any Person shall mean, for any period, the
sum of the amounts for such period for such Person of (i) Consolidated EBIT,
(ii) depreciation expense and (iii) amortization expense, all as determined
on a consolidated basis for such Person and its Subsidiaries in accordance
with GAAP.
"Consolidated Fixed Charges" of any Person shall mean, for any
period, the sum, without duplication, for such Person of the amounts for such
period of (i) Consolidated Cash Interest Expense, (ii) Dividends paid to
Holdings, (iii) Consolidated Capital Expenditures (x) made other than
pursuant to Section 8.05(c) and (y) paid in cash, (iv) taxes paid or payable
in cash and (v) scheduled payments on the Loans and Existing Indebtedness,
all as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" of any Person shall mean, for any
period, total interest expense (including that attributable to Capital Leases
in accordance with GAAP) of such Person and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of such
Person and its Subsidiaries, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financing and net costs under Interest Rate
Agreements.
"Consolidated Net Income" of any Person (a "Designated Person")
shall mean for any period, the net income (or loss) of such Designated Person
and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined in conformity with GAAP, provided that
there shall be (A) deducted, in the case of the Borrower, any Dividends paid
to Holdings and (B) excluded (i) the income (or loss) of any Person (other
than Subsidiaries of the Designated Person) in which any other Person (other
than the Designated Person or any of its Subsidiaries) has a joint interest,
except to the extent of the amount of dividends or other distributions
actually paid to the Designated Person or any of its Subsidiaries by such
Person during such period, (ii) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of the Designated Person or is
merged into or consolidated with the Designated Person or any of its
Subsidiaries or that Person's assets are acquired by the Designated Person or
any of its Subsidiaries, (iii) the income of any Subsidiary of the Designated
Person to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
-62-
<PAGE>
applicable to that Subsidiary, (iv) Transaction Expenses, (v) barter revenues
and barter expenses, in each case other than those relating to goods
reasonably expected to be used in the ordinary course of business and (vi)
compensation expense resulting from the issuance of capital stock, stock
options or stock appreciation rights issued to employees, including officers,
of the Designated Person or any Subsidiary, or the exercise of such options
or rights, in each case to the extent the obligation (if any) associated
therewith is not expected to be settled by the payment of cash by the
Designated Person or any Affiliate of the Designated Person and compensation
expense resulting from the repurchase of any such capital stock, options and
rights.
"Consolidated Senior Debt" of any Person shall mean, as of any date
of determination, (x) the Consolidated Debt of such Person less (y) all
Permitted Subordinated Debt included in determining such Consolidated Debt.
"Consolidation Agreement" shall mean the Consolidation and
Amendment, dated as of October 31, 1996, among Holdings, the Borrower and the
Banks.
"Consolidation Date" shall have the meaning provided in the
Consolidation Agreement.
"Contingent Obligations" shall mean as to any Person any obligation
of such Person guaranteeing or intending to guarantee any Indebtedness,
leases, dividends or other obligations ("primary obligations") of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d) otherwise
to assure or hold harmless the owner of such primary obligation against loss
in respect thereof, provided however, that the term Contingent Obligation
shall not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the
Security Documents, any documents executed in connection therewith and the
Guaranties.
-63-
<PAGE>
"Credit Event" shall mean the making or continuance of a Loan or
the issuance of a Letter of Credit.
"Credit Party" shall mean the Borrower and each Guarantor.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated UOH Stockholders" shall mean the Management Investors,
Kelso Investment Associates V, L.P. and Kelso Equity Partners V, L.P.
"Dividends" shall have the meaning provided in Section 8.09.
"Domestic Subsidiary" shall mean a Subsidiary of the Borrower that
is organized under the laws of the United States or any state thereof.
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports
prepared by the Borrower or any of its Subsidiaries solely in the ordinary
course of such Person's business and not in response to any third party
action or request of any kind) or proceedings relating to any Environmental
Law or any permit issued, or any written approval given, under any such
Environmental Law (hereafter, "Claims"), including, without limitation, (a)
any and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law, and (b) any and all Claims by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule
of common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251 ET SEQ.; the Toxic Substances Control Act, 15
U.S.C. Section 7401 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3808 ET SEQ.; the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ. and any applicable
state and local or foreign counterparts or equivalents.
-64-
<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the Initial Borrowing Date and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Holdings, the Borrower or a Subsidiary
would be deemed to be a "single employer" within the meaning of Sections
414(b), (c), (m) and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the
rates provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period
for a Eurodollar Loan, (i) the offered quotation to first-class banks in the
interbank Eurodollar market by the Agent for dollar deposits of amounts in
same day funds comparable to the outstanding principal amount of the
Eurodollar Loan of the Agent for which an interest rate is then being
determined with maturities comparable to the Interest Period to be applicable
to such Eurodollar Loan, determined as of 10:00 A.M. (New York time) on the
date which is two Business Days prior to the commencement of such Interest
Period divided (and rounded upward to the next whole multiple of 1/16 of 1%)
by (ii) a percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Excess Cash Flow" shall mean, for any fiscal year, the remainder
of (i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y) the
decrease, if any, in Working Capital from the first day to the last day of
such fiscal year, plus (ii) to the extent not included in (i) above, any
amounts received by the Borrower and its Subsidiaries in settlement of, or in
payment of any judgments resulting from, actions, suits or proceedings with
respect to the Borrower and/or its Subsidiaries from the first day to the
last day of such fiscal year, plus (iii) to the extent not included in (i)
above, any amounts received by the Borrower and/or its Subsidiaries in
connection with the repayment or redemption of any long-term promissory notes
and/or preferred stock of other Persons held by them, minus (iv) the sum of
(x) the amount of Consolidated Capital Expenditures (except to the extent (x)
financed through the incurrence of Indebtedness other than Revolving Loans or
(y) made pursuant to Section 8.05(c)) made during such fiscal year and (y)
the increase, if any, in Working Capital from the first day to the last day
of such fiscal year and (z) any
-65-
<PAGE>
repayments or prepayments of the principal amount of (I) Existing
Indebtedness or (II) AR Loans on and after the AR Termination Date pursuant
to Section 4.01 or 4.02(A)(b).
"Existing Indebtedness" shall have the meaning provided in Section
6.21.
"Existing Letters of Credit" shall mean each Letter of Credit under
the Original Credit Agreement that continued as a Letter of Credit under the
Restated Revolving Credit Agreement.
"Expiry Date" shall mean September 30, 2003.
"Facility" shall mean any of the credit facilities established
under this Agreement, I.E., the AR Facility and the Revolving Facility.
"Facing Fee" shall have the meaning provided in Section 3.01(d).
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by the Agent from
three Federal Funds brokers of recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 3.01.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for
purposes of Section 8, including defined terms as used therein, are subject
(to the extent provided therein) to Section 12.07(a).
"Guarantor" shall mean and include Holdings and, once created, each
Subsidiary Guarantor.
"Guaranties" shall mean and include the Holdings Guaranty and, once
executed, the Subsidiary Guaranty.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
that contained, electric fluid
-66-
<PAGE>
containing levels of polychlorinated biphenyls, and radon gas; and (b) any
chemicals, materials or substances defined as or included in the definition
of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any Environmental Law.
"Holdings" shall mean Universal Outdoor Holdings, Inc., a Delaware
corporation.
"Holdings Guaranty" shall mean the Guaranty executed by Holdings in
the form of Exhibit F hereto.
"Holdings Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of Holdings on such date to (y) Adjusted
EBITDA of Holdings for the 12-month period (taken as one accounting period)
ending on such date.
"Holdings Pledge Agreement" shall mean the Pledge Agreement
executed by Holdings in the form of Exhibit D hereto.
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on
the liability side of the balance sheet of such Person, (iii) the face amount
of all letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person,
whether or not such indebtedness has been assumed, (v) all Capitalized Lease
Obligations of such Person, (vi) all obligations of such Person to pay a
specified purchase price for goods or services whether or not delivered or
accepted, I.E., take-or-pay and similar obligations, (vii) all net
obligations of such Person under Interest Rate Agreements and (viii) all
Contingent Obligations of such Person, (other than Contingent Obligations
arising from the guaranty by such Person of the obligations of the Borrower
and/or its Subsidiaries to the extent such guaranteed obligations do not
constitute Indebtedness and are otherwise permitted hereunder) provided that
Indebtedness shall not include trade payables and accrued expenses, in each
case arising in the ordinary course of business.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, any interest rate cap agreement, any interest rate collar
agreement or other similar agreement or arrangement designed to protect the
Borrower or any Subsidiary against fluctuations in interest rates.
-67-
<PAGE>
"Investment" shall mean, with respect to any Person, all
investments by such Person in other Persons (including Affiliates and
Subsidiaries) in the forms of loans, guarantees, advances or capital
contributions (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Capital Stock or other
securities and all other items that are or would be classified as investments
on a balance sheet prepared in accordance with GAAP.
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited
partnership doing business as Kelso & Company.
"Kelso Designees" shall mean William A. Marquard, John F.
McGillicuddy, David M. Roderick, John Rutledge IRA, Michael Rapoport,
Patricia Hetter Kelso and George L. Shinn.
"LaSalle" shall mean LaSalle National Bank.
"Leasehold" of any Person means all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(c).
"Letter of Credit Issuer" shall mean BTCo, LaSalle with respect to
the Existing Letters of Credit and/or any Bank which at the request of the
Borrower and with the consent of the Agent agrees, in such Bank's sole
discretion, to become a Letter of Credit Issuer for purposes of issuing
Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum
of, without duplication, (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement or
any lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
-68-
<PAGE>
"Management Agreements" shall mean those agreements with members
of, or with respect to, the management of Holdings, the Borrower or any
Subsidiary that were made available to the Agent pursuant to Section 5.06 of
the Original Credit Agreement.
"Management Investors" shall mean Daniel Simon and Brian Clingen.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(B)(b).
"Margin Reduction Discount" shall mean zero, provided that the
Margin Reduction Discount shall be increased to 1/4 of 1%, 3/4 of 1%, 1-1/4%
or 1-3/4%, as the case may be, as specified in clauses (i), (ii), (iii) or
(iv) below, at any time after the Restatement Effective Date, when, and for
so long as, the ratio set forth in such clause has been satisfied as at the
Relevant Determination Date:
(i) the Margin Reduction Discount shall be 1/4 of 1% in the event
that at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 5.0 to 1 but less than 6.0 to 1;
(ii) the Margin Reduction Discount shall be 3/4 of 1% in the event
that as at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 4.0 to 1 but less than 5.0 to 1;
(iii) the Margin Reduction Discount shall be 1-1/4% in the event that
as at the Relevant Determination Date the Modified Holdings Leverage Ratio
is equal to or greater than 3.0 to 1 but less than 4.0 to 1; or
(iv) the Margin Reduction Discount shall be 1-3/4% in the event that
as at the Relevant Determination Date the Modified Holdings Leverage Ratio
is less than 3.0 to 1.
The Modified Holdings Leverage Ratio shall be determined (x) for the last day
of a fiscal month, quarter or year, by delivery of an officer's certificate
of the Borrower to the Banks pursuant to Section 7.01(e)(i) and (y) for the
date of the incurrence of Consolidated Debt after delivery of the officer's
certificate referred to in clause (x), by delivery of an officer's
certificate of the Borrower to the Banks pursuant to Section 7.01(e)(ii),
each of which certificates shall set forth the calculation of the Modified
Holdings Leverage Ratio. The Margin Reduction Discount so determined shall
apply, except as set forth below, from five Business Days after the date on
which such officer's certificate is delivered to the Agent to the earlier of
(x) the date on which the next certificate is delivered to the Agent pursuant
to Section 7.01(e)(i) or (ii) and (y) the 30th day following the end of the
fiscal month in which such first certificate was delivered to the Agent
pursuant to Section 7.01(e)(i).
-69-
<PAGE>
Notwithstanding anything to the contrary contained above, the Margin
Reduction Discount shall be zero (x) if no officer's certificate has been
delivered to the Banks pursuant to Section 7.01(e) (i) which sets forth the
Modified Holdings Leverage Ratio for the Relevant Determination Date or the
financial statements upon which any such calculations are based have not been
delivered, until such a certificate and/or financial statements are delivered
and (y) at all times when there shall exist a violation of Section 9.01 or an
Event of Default. It is understood and agreed that the Margin Reduction
Discount as provided above shall in no event be cumulative and only the
Margin Reduction Discount applicable under either clause (i), (ii), (iii) or
(iv), if any, contained in this definition shall be applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
the business, property, assets, liabilities, operations, condition (financial
or otherwise) or prospects of (x) Holdings and its Subsidiaries taken as a
whole and/or (y) the Borrower and its Subsidiaries taken as a whole.
"Maximum Swingline Amount" shall mean $5,000,000.
"Measurement Date" shall mean (x) the last day of each fiscal
quarter of the Borrower and (y) the last day of the last month ended prior to
the date of a Tested Borrowing.
"Minimum Borrowing Amount" shall mean (i) for AR Loans and
Revolving Loans maintained as Base Rate Loans, $500,000, (ii) for Loans
maintained as Eurodollar Loans, $1,000,000 and (iii) for Swingline Loans,
$250,000.
"Modified Additional Cap Ex" shall mean for any fiscal year the sum
of (i) the Additional Cap Ex for such fiscal year plus (ii) the Adjusted
Additional Cap Ex for the preceding fiscal year.
"Modified Holdings Leverage Ratio" shall mean, with respect to any
Relevant Measurement Date, the Holdings Leverage Ratio determined as of such
date, modified by the inclusion in the computation thereof of any incremental
Consolidated Debt of Holdings incurred after such Relevant Measurement Date
and prior to the delivery of an officer's certificate pursuant to Section
7.01(e)(i) in respect of the next Relevant Measurement Date.
"Mortgage" shall mean the mortgages, deeds and trust and similar
documents executed and delivered pursuant to the Original Credit Agreements
and amended as provided in the Restated Acquisition Credit Agreement.
-70-
<PAGE>
"Mortgaged Properties" shall mean the Real Properties subject to
the Mortgages.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale or recovery
(including payment of principal, premium and interest of Indebtedness secured
by the assets which are the subject of the Asset Sale and required to be, and
which is, repaid under the terms thereof as a result of such Asset Sale), and
incremental taxes paid or payable as a result thereof.
"New Mortgage" shall have the meaning provided in Section 7.10.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Note" shall mean and include each AR Note, each Revolving Note and
the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time
existing, owing to the Agent, the Collateral Agent or any Bank pursuant to
the terms of this Agreement or any other Credit Document.
"Original Credit Agreements" shall mean and include each of the
Acquisition Credit Agreement and the Revolving Credit Agreement, each dated
as of March 29, 1996, and as in effect immediately prior to the effectiveness
of the Restated Credit Agreements.
"Participant" shall have the meaning provided in Section 2.05(a).
"Payment Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
-71-
<PAGE>
"Permitted Acquisition" shall mean any acquisition (including
through a stock acquisition) of property or assets of a nature or type, or
which will be used in a business, permitted to be held or engaged in by
Section 8.01 provided that (x) the Holdings Leverage Ratio as of the last
Measurement Date prior to the consummation of such acquisition was less than
5.50 to 1.0 determined on a pro forma basis as if the Permitted Acquisition
and the related borrowings were consummated on the first day of the 12-month
period ending on such Measurement Date and giving effect to pro forma
adjustments to the Consolidated EBITDA of the Person being acquired to give
effect to contemplated cost savings as estimated in good faith by the
Borrower and agreed to by the Agent, or (y) aggregate amount expended for all
such acquisitions after the Restatement Effective Date to the extent not
effected in compliance with clause (x) above or clause (z) below does not
exceed $50,000,000 or (z) consented to in writing by the Super-Majority Banks.
"Permitted Asset Sale" shall mean an Asset Sale (x) permitted by
the expressed language of Section 8.02 (and not by the parenthetical in the
lead in paragraph of Section 8) and (y) resulting from a casualty or taking
of assets of the Borrower or any Subsidiary.
"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent.
"Permitted Holders" means Kelso and its Affiliates, the Kelso
Designees, the Management Investors, any employee stock ownership plan
established by the Borrower for the benefit of the employees of the Borrower
or any Subsidiary and their Permitted Transferees.
"Permitted Holdings Debt" shall mean debt of Holdings, subordinated
to Holdings' obligations under the Holdings Guaranty, issued by Holdings
after the Consolidation Date provided that (i) all proceeds of such debt
shall be contributed as common capital to the Borrower, (ii) the terms and
conditions (other than the issuer, pricing (including whether cash pay or
pay-in-kind) and maturities, provided that no scheduled payment of principal
or any one-time cash payment of all accreted interest under a pay-in-kind
issue, shall be due and payable prior to the Final Maturity Date) are (in the
reasonable opinion of the Agent) substantially the same as, or no more
adverse to the interests of the Banks than, those contained in the Permitted
Subordinated Debt or are consented to by the Required Banks, (iii) such debt
shall not be guaranteed by the Borrower or any of its Subsidiaries and (iv)
the Permitted Holdings Debt shall not exceed in the aggregate (x) $150
million less (y) the aggregate principal amount of Additional Subordinated
Debt.
-72-
<PAGE>
"Permitted Investments" shall mean (a) cash and Cash Equivalents,
(b) Investments in Subsidiary Guarantors, (c) Investments in all other
Subsidiaries up to $1,000,000 in the aggregate, including Investments in a
Person that becomes a Subsidiary of the Borrower immediately after such
Investment, provided (i) an Event of Default has not occurred and is
continuing and will not occur as a result of, in connection with or after
giving effect to such Investment and (ii) such Person, at the time of such
Investment or at the time such Person becomes a Subsidiary, engages
exclusively in the business permitted to be engaged in by Borrower and its
Subsidiaries pursuant to Section 8.01, (c) loans and advances of money in the
ordinary course of business and consistent with past practice to officers and
employees of Borrower or any of its Subsidiaries, (d) investments in
receivables owing to the Borrower and/or any Subsidiary, if created or
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, and (e) investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course
of business.
"Permitted Liens" shall mean Liens described in clauses (a), (b)
and (d) of Section 8.03.
"Permitted Subordinated Debt" shall mean the $225 million principal
amount of Senior Subordinated Notes, due 2006, issued by the Borrower on
October 11, 1996.
"Permitted Subordinated Debt Documents" shall mean all indentures,
agreements, notes and other instruments governing or evidencing Permitted
Subordinated Debt as in effect on the Consolidation Date.
"Permitted Transferees" means (i) in the case of Kelso, (A) any
Affiliate thereof (other than any corporation or other Person (except for any
corporation or other Person engaged in a business similar, complementary or
related to the nature or type of the business of Holdings and its
Subsidiaries) controlled by, or any investment fund (other than Kelso
Investment Associates V, L.P. or any investment fund that is solely comprised
of current and former professionals of Kelso) managed by, Kelso), (B) any
managing director, general partner, limited partner, director, officer or
employee of Kelso or any Affiliate thereof (collectively, "Kelso
Associates"), (C) the heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of any Kelso Associate or Kelso Designee
and (D) any trust, the beneficiaries of which, or a corporation or
partnership, the stockholders or partners of which, include only a Kelso
Associate or Kelso Designee, his spouse, parents, siblings, or direct lineal
descendants, and (ii) in the case of any Management Investors, (A) his
executor, administrator, testamentary trustee, legatee or beneficiaries, (B)
his spouse, parents, siblings, members of his or her immediate family
(including adopted children) and/or direct lineal descendants or (C) a trust,
the beneficiaries
-73-
<PAGE>
of which, or a corporation or partnership, the stockholders or partners of
which, include only the Management Investor, as the case may be, and his
spouse, parents, siblings, members of his or her immediate family (including
adopted children) and/or direct lineal descendants.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of) Holdings, the Borrower,
a Subsidiary or an ERISA Affiliate, and each such plan for the five year
period immediately following the latest date on which Holdings, the Borrower,
a Subsidiary, or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreements" shall mean the Borrower Pledge Agreement, the
Holdings Pledge Agreement and, once executed, the Subsidiary Pledge
Agreement.
"Pledged Securities" shall mean all the Pledged Securities as
defined in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean the rate which Bankers Trust
Company announces from time to time as its prime lending rate, the Prime
Lending Rate to change when and as such prime lending rate changes. The
Prime Lending Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. Bankers Trust Company
may make commercial loans or other loans at rates of interest at, above or
below the Prime Lending Rate.
"RC Commitment Commission" shall have the meaning provided in
Section 3.01(b).
"RC Percentage" shall mean at any time for each Bank with a
Revolving Commitment the percentage obtained by dividing such Bank's
Revolving Commitment by the Total Revolving Commitment, PROVIDED that if the
Total Revolving Commitment has been terminated, the RC Percentage of each
Bank shall be determined by dividing such Bank's Revolving Commitment
immediately prior to such termination by the Total Revolving Commitment
immediately prior to such termination.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C.
-74-
<PAGE>
"Real Property" of any Person shall mean all of the right, title
and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as permitted by Section 8.01.
"Reinvestment Election" shall have the meaning provided in Section
4.02(A)(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash
Proceeds of a Permitted Asset Sale to purchase, construct or otherwise
acquire Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment
Date relating thereto by which (a) the Anticipated Reinvestment Amount in
respect of such Reinvestment Election exceeds (b) the aggregate amount
thereof expended by the Borrower and its Subsidiaries to acquire Reinvestment
Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Banks, shall have delivered a written
termination notice to the Borrower, provided that such notice may only be
given while an Event of Default exists, (ii) the date occurring 180 days
after such Reinvestment Election and (iii) the date on which the Borrower
shall have determined not to, or shall have otherwise ceased to, proceed with
the purchase, construction or other acquisition of Reinvestment Assets with
the related Anticipated Reinvestment Amount.
"Relevant Determination Date" shall mean, at any time, (x) the last
day of the then most recently ended fiscal month, quarter or year of Holdings
with respect to which an officer's certificate has been, or is required to
be, delivered to the Banks pursuant to Section 7.01(e)(i) or (y) if the
Margin Reduction Discount is then greater than zero, the
-75-
<PAGE>
last date subsequent to the date specified in clause (x) on which any
Consolidated Debt of Holdings and its Subsidiaries has been incurred.
"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks whose AR
Commitments (or, if after the AR Termination Date, outstanding AR Loans) and
Revolving Commitments (or if terminated, as in effect immediately prior to
such termination) constitute greater than 50% of the sum of (i) the Adjusted
Total AR Commitment (or, if after the AR Termination Date, the total
outstanding AR Loans of Non-Defaulting Banks) and (ii) the Revolving
Commitments (or if terminated, as in effect immediately prior to such
termination) of all Non-Defaulting Banks.
"Restated Acquisition Credit Agreement" shall mean the Amendment
and Restatement dated as of October 8, 1996 to Acquisition Credit Agreement
dated as of March 29, 1996 among the Borrowers and the Banks party thereto,
as in effect immediately prior to the Consolidation Date.
"Restated Credit Agreements" shall mean and include the Restated
Acquisition Credit Agreement and the Restated Revolving Credit Agreement.
"Restated Revolving Credit Agreement" shall mean the Amendment and
Restatement dated as of October 8, 1996 to Revolving Credit Agreement dated
as of March 29, 1996 among the Borrower and the Banks party thereto, as in
effect immediately prior to the Consolidation Date.
"Restatement Effective Date" shall have the meaning provided in the
Restated Acquisition Credit Agreement (i.e., October 8, 1996).
"Revolving Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I hereto directly below
the column entitled "Revolving Commitment," as the same may be (x) reduced
from time to time pursuant to Section 3.02, 3.03 and/or 9 or (y) adjusted
from time to time as a result of assignments to or from such Bank pursuant to
Section 12.04.
"Revolving Facility" shall mean the Facility evidenced by the Total
Revolving Commitments.
"Revolving Loan" shall have the meaning provided in Section
1.01(A)(b).
-76-
<PAGE>
"Revolving Note" has the meaning provided in Section 1.05(a).
"Scheduled Repayment" shall have the meaning provided in Section
4.02(A)(b).
"SEC" shall have the meaning provided in Section 7.01(h).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Security Agreement" shall mean the Security Agreement executed and
delivered by the Borrower in the form of Exhibit E hereto.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean each Pledge Agreement, the Security
Agreement, each Mortgage and, once executed, each Additional Mortgage, each
New Mortgage and the Subsidiary Security Agreement.
"Senior Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Senior Debt of the Borrower on such date to (y)
Adjusted EBITDA of the Borrower for the 12-month period (taken as one
accounting period) ending on such date.
"Shareholders' Agreements" shall mean the agreements entered into
by Holdings or any Subsidiary governing its capital stock and/or by
shareholders relating to any such entity or its capital stock that were made
available to the Agent pursuant to Section 5.06 of the Original Credit
Agreements.
"Smith Note" shall have the meaning provided in Section 8.04(g).
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Subordinated Debt" shall mean and include the Permitted
Subordinated Debt, the Additional Subordinated Debt and the Permitted
Holdings Debt, in each case once issued.
"Subordinated Debt Documents" shall mean and include the Permitted
Subordinated Debt Documents and the execution version of all indentures,
agreements,
-77-
<PAGE>
notes and instruments governing, or evidencing, Additional Subordinated Debt
and/or Permitted Holdings Debt.
"Subordinated Debt Indentures" shall mean the indentures governing
Permitted Subordinated Debt, Additional Subordinated Debt and/or Permitted
Holdings Debt.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the directors
of such corporation (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture or other entity in which such Person directly or
indirectly through Subsidiaries, has more than a 50% equity interest at the
time. Unless otherwise expressly provided, all references herein to
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary created
after the Consolidation Date that executes and delivers a counterpart of the
Subsidiary Guaranty, provided that at such time such Subsidiary also executes
and delivers a Subsidiary Pledge Agreement and a Subsidiary Security
Agreement, and takes such actions with respect thereto as the Administrative
Agent reasonably requests to perfect the Liens granted thereunder.
"Subsidiary Guaranty" shall mean a guaranty agreement in form and
substance satisfactory to the Agent guaranteeing the obligations.
"Subsidiary Pledge Agreement" shall mean a pledge agreement in form
substantially the same as the Borrower Pledge Agreement and otherwise
reasonably satisfactory to the Agent.
"Subsidiary Security Agreement" shall mean a security agreement in
form substantially the same as the Security Agreement and otherwise
reasonably satisfactory to the Agent.
"Super-Majority Banks" shall mean the Non-Defaulting Banks which
would constitute the Required Banks if the reference to "50%" in the
definition of Required Banks were to read "66 2/3%."
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Expiry Date.
-78-
<PAGE>
"Swingline Loan" shall have the meaning provided in Section
1.01(B)(a).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated
as of November 18, 1993 between the Borrower and Holdings in the form
delivered to the Banks prior to the Restatement Effective Date and as the
same may be modified with the consent of the Required Banks.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Tested Borrowing" shall mean any incurrence of AR Loans or
Revolving Loans after the Consolidation Date in which the aggregate amount of
AR Loans or Revolving Loans incurred, when added to the aggregate amount of
AR Loans and Revolving Loans incurred during the immediately preceding 30 day
period (to the extent (x) incurred after the Consolidation Date, (y) still
outstanding and (z) not included in establishing an earlier Tested
Borrowing), equal or exceed $1,000,000.
"Total AR Commitment" shall mean the sum of the AR Commitments of
each of the Banks.
"Total Commitment" shall mean the sum of the Total AR Commitment
and the Total Revolving Commitment.
"Total Revolving Commitment" shall mean the sum of the Revolving
Commitments of each of the Banks.
"Transaction" shall mean (i) the Acquisition and (ii) the entering
into and borrowing under the Restated Credit Agreements.
"Transaction Documents" shall mean the Acquisition Documents and
the Credit Documents.
"Transaction Expenses" shall mean all fees and expenses incurred in
connection with, and payable prior to or substantially concurrently with the
closing of, the Transaction and including all fees paid to any of the Banks
and the Agent hereunder, fees paid to Kelso or its Affiliates permitted
hereunder; attorney's fees, accountants' fees, placement agents' fees,
discounts and commissions and brokerage, and consultant fees. Transaction
Expenses shall include the amortization of any such fees and expenses that
are capitalized and not classified as an expense on the date incurred.
-79-
<PAGE>
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits
under the Plan as of the close of its most recent plan year determined in
accordance with Statement of Financial Accounting Standards No. 35, based
upon the actuarial assumptions used by the Plan's actuary in the most recent
annual valuation of the Plan, exceeds the fair market value of the assets
thereof, determined in accordance with Section 412 of the Code.
"Unpaid Drawings" shall have the meaning provided in Section 2.04(a).
"Unutilized Revolving Commitment" for any Bank at any time shall
mean the excess of (i) the Revolving Commitment of such Bank over (ii) the
sum of (x) the aggregate outstanding principal amount of Revolving Loans made
by such Bank plus (y) an amount equal to such Bank's Adjusted RC Percentage
of the Letter of Credit Outstandings at such time.
"Unutilized Total Revolving Commitment" shall mean, at any time,
(i) the Total Revolving Commitment at such time less (ii) the sum of the
aggregate principal amount of all Revolving Loans and Swingline Loans at such
time plus the Letter of Credit Outstandings at such time.
"Working Capital" shall mean the excess of Consolidated Current
Assets over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.
SECTION 11. THE AGENT.
11.01 APPOINTMENT. The Banks hereby designate Bankers Trust
Company as Agent (for purposes of this Section 11, the term "Agent" shall
include BTCo in its capacity as Collateral Agent pursuant to the Security
Documents) to act as specified herein and in the other Credit Documents.
Each Bank hereby irrevocably authorizes, and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to authorize, the Agent
to take such action on its behalf under the provisions of this Agreement, the
other Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and
-80-
<PAGE>
thereof and such other powers as are reasonably incidental thereto. The
Agent may perform any of its duties hereunder by or through its respective
officers, directors, agents, employees or affiliates. The Co-Agent shall
have no duties or liabilities in acting in such capacity hereunder.
11.02 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action
taken or omitted by it or them hereunder or under any other Credit Document
or in connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason
of this Agreement or any other Credit Document a fiduciary relationship in
respect of any Bank or the holder of any Note; and nothing in this Agreement
or any other Credit Document, expressed or implied, is intended to or shall
be so construed as to impose upon the Agent any obligations in respect of
this Agreement or any other Credit Document except as expressly set forth
herein or therein.
11.03 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent
it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of Holdings,
the Borrower and its Subsidiaries in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of
Holdings, the Borrower and its Subsidiaries and, except as expressly provided
in this Agreement, the Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Bank or the holder
of any Note with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans or at any
time or times thereafter. The Agent shall not be responsible to any Bank or
the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority
or sufficiency of this Agreement or any other Credit Document or the
financial condition of the Borrower and its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Holdings, the Borrower and its
Subsidiaries or the existence or possible existence of any Default or Event
of Default.
11.04 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks (or, where applicable, the
Super-Majority Banks) with respect to any act or action (including failure to
act) in connection with this Agreement or any other
-81-
<PAGE>
Credit Document, the Agent shall be entitled to refrain from such act or
taking such action unless and until the Agent shall have received
instructions from the Required Banks (or, where applicable, the
Super-Majority Banks); and the Agent shall not incur liability to any Person
by reason of so refraining. Without limiting the foregoing, neither any Bank
nor the holder of any Note shall have any right of action whatsoever against
the Agent as a result of the Agent acting or refraining from acting hereunder
or under any other Credit Document in accordance with the instructions of the
Required Banks (or, where applicable, the Super-Majority Banks).
11.05 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made
by any Person that the Agent believed to be the proper Person, and, with
respect to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon advice of
counsel selected by the Agent.
11.06 INDEMNIFICATION. To the extent the Agent is not reimbursed
and indemnified by the Borrower, the Banks will reimburse and indemnify the
Agent, in proportion to their respective Loans and Commitments as used in
determining the Required Banks, for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed
on, asserted against or incurred by the Agent in performing its respective
duties hereunder or under any other Credit Document, in any way relating to
or arising out of this Agreement or any other Credit Document; provided that
no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful
misconduct.
11.07 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the
rights and powers specified herein for a "Bank" and may exercise the same
rights and powers as though it were not performing the duties specified
herein; and the term "Banks," "Required Banks," "Letter of Credit Issuer",
"Super-Majority Banks," "holders of Notes" or any similar terms shall, unless
the context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Borrower or
any Affiliate of the Borrower as if it were not performing the duties
specified herein, and may accept fees and other consideration from the
Borrower for services in connection with this Agreement and otherwise without
having to account for the same to the Banks.
-82-
<PAGE>
11.08 HOLDERS. The Agent may deem and treat the payee of any Note
as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may
be, shall have been filed with the Agent. Any request, authority or consent
of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
11.09 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice
to the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Agent hereunder or thereunder who shall be the Co-Agent or such
other commercial bank or trust company as is reasonably acceptable to the
Borrower.
(c) If a successor Agent shall not have been so appointed within
such 15 Business Day period, the Agent, with the consent of the Borrower,
shall then appoint a successor Agent who shall serve as Agent hereunder or
thereunder until such time, if any, as the Banks appoint a successor Agent as
provided above.
(d) If no successor Agent has been appointed pursuant to clause
(b) or (c) above by the 20th Business Day after the date such notice of
resignation was given by the Agent, the Agent's resignation shall become
effective and the Required Banks shall thereafter perform all the duties of
the Agent hereunder and/or under any other Credit Document until such time,
if any, as the Banks appoint a successor Agent as provided above.
SECTION 12. MISCELLANEOUS.
12.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent and the Co-Agent in
connection with the negotiation, preparation, execution and delivery of the
Credit Documents and the documents and instruments referred to therein and
any amendment, waiver or consent relating thereto (including, without
limitation, the reasonable fees and disbursements of their respective
counsel) and of the Agent, the Co-Agent and each of the Banks in connection
with the enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation, the
reasonable fees and disbursements of counsel for the Agent, the Co-Agent and
for each of the Banks); (ii) pay and hold each of the Banks
-83-
<PAGE>
harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and save each of the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable
to such Bank) to pay such taxes; and (iii) indemnify each Bank (including in
its capacity as the Agent or Co-Agent), its officers, directors, employees,
representatives and agents from and hold each of them harmless against any
and all losses, liabilities, claims, damages or expenses incurred by any of
them as a result of, or arising out of, or in any way related to, or by
reason of, (a) any investigation, litigation or other proceeding (whether or
not any Bank is a party thereto) related to the entering into and/or
performance of any Transaction Document or the use of the proceeds of any
Loans hereunder or the Transaction or the consummation of any transactions
contemplated in any Credit Document, or (b) the actual or alleged presence of
Hazardous Materials in the air, surface water or groundwater or on the
surface or subsurface of any Real Property owned or at any time operated by
the Borrower or any of its Subsidiaries, the release, generation, storage,
transportation, handling or disposal of Hazardous Materials at any location,
whether or not owned or operated by the Borrower or any of its Subsidiaries,
the non-compliance of any Real Property with foreign, federal, state and
local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim
asserted against the Borrower, any of its Subsidiaries or any Real Property
owned or at any time operated by the Borrower or any of its Subsidiaries,
including, in each case, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
12.02 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of
any such rights, if an Event of Default then exists, each Bank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate
and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including without
limitation by branches and agencies of such Bank wherever located) to or for
the credit or the account of the Borrower against and on account of the
Obligations and liabilities of the Borrower to such Bank under this Agreement
or under any of the other Credit Documents, including, without limitation,
all interests in Obligations purchased by such Bank pursuant to Section
12.06(b), and all other claims of any nature or description arising out of or
connected with this Agreement or any other Credit Document, irrespective of
whether or not such Bank shall have made any demand hereunder and although
said Obligations, liabilities or claims, or any of them, shall be contingent
or unmatured.
-84-
<PAGE>
12.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address
as shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.
12.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided that the Borrower may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Banks. Each Bank may at any time grant
participations in any of its rights hereunder or under any of the Notes to
another financial institution, provided that in the case of any such
participation, the participant shall not have any rights under this Agreement
or any of the other Credit Documents (the participant's rights against such
Bank in respect of such participation to be those set forth in the agreement
executed by such Bank in favor of the participant relating thereto) and all
amounts payable by the Borrower hereunder shall be determined as if such Bank
had not sold such participation, except that the participant shall be
entitled to the benefits of Sections 1.10 and 4.04 of this Agreement to the
extent that such Bank would be entitled to such benefits if the participation
had not been entered into or sold, and, provided further that no Bank shall
transfer, grant or assign any participation under which the participant shall
have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would (i)
extend the final scheduled maturity of any Loan or Note in which such
participant is participating (it being understood that any waiver of the
application of any prepayment or the method of any application of any
prepayment to, the amortization of the Loans shall not constitute an
extension of the final maturity date), or reduce the rate or extend the time
of payment of interest or Fees thereon (except in connection with a waiver of
the applicability of any post-default increase in interest rates), or reduce
the principal amount thereof, or increase such participant's participating
interest in any Commitment over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment, or a mandatory prepayment, shall not
constitute a change in the terms of any Commitment), (ii) release all or
substantially all of the Collateral or (iii) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement or any other Credit Document.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or
a portion of its outstanding Loans, AR Commitment and/or Revolving Commitment
and its rights and obligations hereunder to another Bank, and (y) with the
consent of the Agent and the Borrower (which consents shall not be
unreasonably withheld), any Bank may assign all or
-85-
<PAGE>
a portion of its outstanding Loans, AR Commitment and/or Revolving Commitment
and its rights and obligations hereunder to one or more commercial banks or
other financial institutions (including one or more Banks), provided that all
assignments hereunder must be PRo RATA between the Revolving Commitments and
Revolving Loans, on one hand and the AR Commitments and AR Loans on the other
hand. No assignment pursuant to the immediately preceding sentence shall to
the extent such assignment represents an assignment to an institution other
than one or more Banks hereunder, be in an aggregate amount less than
$5,000,000 unless the entire Loans and Commitment of the assigning Bank are
so assigned. If any Bank so sells or assigns all or a part of its rights
hereunder or under the Notes, any reference in this Agreement or the Notes to
such assigning Bank shall thereafter refer to such Bank and to the respective
assignee to the extent of their respective interests and the respective
assignee shall have, to the extent of such assignment (unless otherwise
provided therein), the same rights and benefits as it would if it were such
assigning Bank. Each assignment pursuant to this Section 12.04(b) shall be
effected by the assigning Bank and the assignee Bank executing an Assignment
Agreement substantially in the form of Exhibit H (appropriately completed).
In the event of any such assignment (x) to a commercial bank or other
financial institution not previously a Bank hereunder, either the assigning
or the assignee Bank shall pay to the Agent a nonrefundable assignment fee of
$3,500 and (y) to a Bank, either the assigning or assignee Bank shall pay to
Agent a nonrefundable assignment fee of $2,000, and at the time of any
assignment pursuant to this Section 12.04(b), (i) Annex I shall be deemed to
be amended to reflect the Commitment of the respective assignee (which shall
result in a direct reduction to the Commitment of the assigning Bank) and of
the other Banks, and (ii) the Borrower will issue new Notes to the respective
assignee and to the assigning Bank in conformity with the requirements of
Section 1.05. Each Bank and the Borrower agree to execute such documents
(including without limitation amendments to this Agreement and the other
Credit Documents) as shall be necessary to effect the foregoing. Nothing in
this clause (b) shall prevent or prohibit any Bank from pledging its Notes or
Loans to a Federal Reserve Bank in support of borrowings made by such Bank
from such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of
any State.
(d) Each Bank initially party to this Agreement hereby represents,
and each Person that becomes a Bank pursuant to an assignment permitted by
this Section 12 will, upon its becoming party to this Agreement, represent
that it is a commercial lender, other financial institution or other
"accredited" investor (as defined in SEC Regulation D) which makes loans in
the ordinary course of its business and that it will make or acquire Loans
for its own account in the ordinary course of such business, provided that
subject to the
-86-
<PAGE>
preceding clauses (a) and (b), the disposition of any promissory notes or
other evidences of or interests in Indebtedness held by such Bank shall at
all times be within its exclusive control.
12.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrower and the Agent or any Bank shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided
are cumulative and not exclusive of any rights or remedies which the Agent or
any Bank would otherwise have. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Agent or the Banks to any other or further action in any circumstances
without notice or demand.
12.06 PAYMENTS PRO RATA. (a) The Agent agrees that promptly
after its receipt of each payment from or on behalf of the Borrower in
respect of any Obligations hereunder, it shall distribute such payment to the
Banks (other than any Bank that has expressly waived its right to receive its
PRO RATA share thereof) PRO RATA based upon their respective shares, if any,
of the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or
interest on, the Loans or Fees, of a sum which with respect to the related
sum or sums received by other Banks is in a greater proportion than the total
of such Obligation then owed and due to such Bank bears to the total of such
Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the
Obligations to such Banks in such amount as shall result in a proportional
participation by all of the Banks in such amount, provided that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
-87-
<PAGE>
12.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in
writing by the Borrower to the Banks), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1995 historical
financial statements of the Borrower delivered to the Banks pursuant to
Section 6.10(b) and (y) that if at any time the computations determining
compliance with Section 8 utilize accounting principles different from those
utilized in the financial statements furnished to the Banks, such financial
statements shall be accompanied by reconciliation work-sheets.
(b) All computations of interest and Fees hereunder
shall be made on the actual number of days elapsed over a year of
360 days.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) This Agreement and the other Credit Documents and the
rights and obligations of the parties hereunder and thereunder shall be
construed in accordance with and be governed by the law of the state of New
York. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of New York
or of the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, the Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the
Borrower located outside New York City and by hand delivery to the Borrower
located within New York City, at its address for notices pursuant to Section
12.03, such service to become effective 30 days after such mailing. The
Borrower hereby irrevocably designates appoints and empowers CT Corporation
System, with offices on the date hereof located at 1633 Broadway, New York,
New York 10019, as its agent for service of process in respect of any such
action or proceeding. Nothing herein shall affect the right of the Agent or
any Bank to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower in any other
jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any other Credit Document brought in the courts referred to in clause (a)
above and hereby further irrevocably waives and agrees not to plead or claim
in any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
-88-
<PAGE>
(c) Each of the parties to this agreement hereby irrevocably
waives all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the other Credit Documents or
the transactions contemplated hereby or thereby.
12.09 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Agent.
12.10 EXECUTION. This Agreement shall be deemed executed by all
parties when the Borrower and each of the Banks shall have signed a copy
hereof (whether the same or different copies) and shall have delivered the
same to the Agent at the Payment Office of the Agent or, in the case of the
Banks, shall have given to the Agent telephonic (confirmed in writing),
written telex or facsimile transmission notice (actually received) at such
office that the same has been signed and mailed to it.
12.11 HEADINGS DESCRIPTIVE. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
12.12 AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the Borrower and the Required Banks, provided that no
such change, waiver, discharge or termination shall, without the consent of
each Bank (other than a Defaulting Bank) affected thereby, (i) extend the AR
Maturity Date, the AR Termination Date or the Expiry Date, as the case may be
(it being understood that any waiver of the application of any prepayment of
or the method of application of any prepayment to the amortization of, the
Loans shall not constitute any such extension), or reduce the rate or extend
the time of payment of interest (other than as a result of waiving the
applicability of any post-default increase in interest rates) or Fees
thereon, or reduce the principal amount thereof, or increase the Commitment
of any Bank over the amount thereof then in effect (it being understood that
a waiver of any Default or Event of Default, or of a mandatory reduction in
the Total Commitment, shall not constitute a change in the terms of any
Commitment of any Bank), (ii) release or permit the release of all or
substantially all of the Collateral except as expressly provided in the
Credit Documents, (iii) amend, modify or waive any provision of this Section
12.12, (iv) reduce the percentage specified in, or otherwise modify, the
definition of Required Banks or (v) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement
provided further that no such change, waiver, discharge or termination shall
without the consent of the Super-Majority Banks change directly or indirectly
the definition of Permitted Acquisition or
-89-
<PAGE>
Super-Majority Banks, extend the date of payment of, or reduce the amount of,
any Scheduled Repayment, or release Holdings from the Holdings Guaranty
and/or release the Borrower's stock pledged under the Holdings Pledge
Agreement. No provision of Section 11 may be amended without the consent of
the Agent and to the extent any such amendment would affect the Co-Agent
solely in its capacity as such, the Co-Agent, no provision of Section 2 may
be amended without the consent of the Letter of Credit Issuer affected
thereby and no provision of Section 1.01(B)(a) or (b) or any other provision
applicable to Swingline Loans may be amended without the consent of BTCo.
12.13 SURVIVAL. All indemnities set forth herein including,
without limitation, in Section 1.10, 1.11, 2.06, 4.04, 11.06 or 12.01 shall
survive the execution and delivery of this Agreement and the making and
repayment of the Loans.
12.14 DOMICILE OF LOANS. Each Bank may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or affiliate
of such Bank, provided that the Borrower shall not be responsible for costs
arising under Section 1.10, 2.06 or 4.04 resulting from any such transfer
(other than a transfer pursuant to Section 1.12) to the extent not otherwise
applicable to such Bank prior to such transfer.
12.15 CONFIDENTIALITY. Subject to Section 12.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance
with its customary procedure for handling confidential information of this
nature and in accordance with safe and sound banking practices and in any
event may make disclosure reasonably required by any bona fide transferee or
participant in connection with the contemplated transfer of any Loans or
participation therein (so long as such transferee or participant agrees to
abide by the provisions of this Section 12.15) or as required or requested by
any governmental agency or representative thereof or pursuant to legal
process, provided that, unless specifically prohibited by applicable law or
court order, each Bank shall notify the Borrower of any request by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Bank by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information, and provided further that in no
event shall any Bank be obligated or required to return any materials
furnished by the Borrower or any Subsidiary.
-90-
<PAGE>
ANNEX I
-------
COMMITMENTS
-----------
AR Revolving
Bank Commitment Commitment
---- ---------- ----------
Bankers Trust $24,083,333 $1,416,667
Company
La Salle National 24,083,333 1,416,667
Bank
Bank of America 23,611,111 1,388,889
Illinois
First National 23,611,111 1,388,889
Bank of Boston
Union Bank of 23,611,111 1,388,889
California, N.A.
The Bank of New 10,388,889 611,111
York
Banque Paribas 10,388,889 611,111
Credit Lyonnais 10,388,889 611,111
The First National 10,388,889 611,111
Bank of Chicago
Fleet Bank, N.A. 10,388,889 611,111
Heller Financial, Inc. 10,388,889 611,111
State Street Bank and 10,388,889 611,111
Trust Company
<PAGE>
ANNEX I
Page 2
AR Revolving
Bank Commitment Commitment
---- ---------- ----------
Sun Trust Bank 10,388,889 611,111
Van Kampen American 10,388,889 611,111
Capital Prime Rate
------------ -----------
Total: $212,500,000 $12,500,000
------------ -----------
------------ -----------
<PAGE>
ANNEX II
--------
BANK ADDRESSES
--------------
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Attention: Dana Klein
Tel. No.: (212) 250-1724
Fax No.: (212) 250-7218
La Salle National Bank 120 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey D. Steele
Tel. No.: (312) 904-2721
Fax No.: (312) 904-4364
Bank of America Illinois 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Charles Gonzalez
Tel. No.: (312) 828-2710
Fax No.: (312) 828-1974
First National Bank of Boston Mail Stop 01-08-08
100 Federal Street
Boston, Massachusetts 02110
Attention: Julie Jalelian
Tel. No.: (617) 434-9974
Fax No.: (617) 434-3401
Union Bank 445 South Figuera Street
15th Floor
Los Angeles, California 90071
Attention: Kevin Sampson
Tel. No.: (213) 236-6585
Fax No.: (213) 236-5747
<PAGE>
The Bank of New York One Wall Street
New York, New York 10286
Attention: Jerome Kapellos
Tel. No.: (212) 635-8694
Fax No.: (212) 635-8593
Banque Paribas 787 Seventh Avenue
New York, New York 10019
Attention: Phillip Vuarchex
Tel. No.: (212) 841-2000
Fax No.: (212) 841-2146
Credit Lyonnais 1301 Avenue of the Americas
New York, New York 10019
Attention: Mr. Michael Regan
Tel. No.: (212) 261-7000
Fax No.: (212) 459-3170
The First National Bank of Chicago One First National Plaza
Chicago, Illinois 60670
Attention: Jeff Bakalar
Tel. No.: (312) 732-3179
Fax No.: (312) 732-8587
Fleet Bank, N.A. 175 Water Street
28th Floor
New York, New York 10038
Attention: Tanya Crossley
Tel. No.: (212) 602-2995
Fax No.: (212) 602-2663
Heller Financial, Inc. 500 West Monroe Street
Chicago, Illinois 60661
Attention: Joann Holmann
Tel. No.: (312) 441-7596
Fax No.: (312) 441-7357
<PAGE>
State Street Bank and Trust Company 225 Franklin Street
Boston, Massachusetts 02110
Attention: John Tyler
Tel. No.: (617) 664-4303
Sun Trust Bank Mail Code FL-Orlando-2047
Post Office Box 3833
Orlando, Floirda 32802
Attention: Chris Aguliar
Tel. No.: (407) 237-5210
Fax No.: (407) 237-4253
Van Kampen American Capital One Parkview Plaza
Prime Rate Income Trust Oakbrook Terrace, Illinois 60181
Attention: Jeff Maillet
Tel. No.: (708) 684-6438
Fax No.: (708) 684-6740
<PAGE>
ANNEX III
---------
GOVERNMENT APPROVALS
--------------------
<PAGE>
ANNEX IV
--------
SUBSIDIARIES
------------
<PAGE>
ANNEX V
-------
PROPERTIES
----------
<PAGE>
ANNEX VI
--------
EXISTING INDEBTEDNESS
---------------------
<PAGE>
ANNEX VII
---------
INSURANCE POLICIES
------------------
<PAGE>
ANNEX VIII
----------
EXISTING LIENS
--------------
<PAGE>
ANNEX IX
--------
MANAGEMENT FEES
---------------
None
<PAGE>
UNIVERSAL OUTDOOR, INC.
ISSUER,
AND
UNITED STATES TRUST COMPANY OF NEW YORK
-------------------------
INDENTURE
Dated as of October 16, 1996
----------------------------------
$225,000,000
9 3/4% Senior Subordinated Notes due 2006
-------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
310(a)(1). . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . 7.8;
. . . . . . . . . . . . . . . . . . . . . 7.10;
. . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . 12.3
313(a) . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1). . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2). . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . 12.2
(d) . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . 4.7;
. . . . . . . . . . . . . . . . . . . . . 4.6
(b) . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . . 2.2;
. . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . 12.4
(c)(2). . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . 12.4
(c)(3). . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . N.A.
i
<PAGE>
TIA INDENTURE
SECTION SECTION
(e) . . . . . . . . . . . . . . . . . . . . . 12.5
(f) . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . 7.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . 7.5;
. . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . 7.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . 6.11;
. . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . 6.14
316(a)(last sentence). . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . 6.11
(a)(1)(B) . . . . . . . . . . . . . . . . . . . 6.12
(a)(2). . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . 6.12;
. . . . . . . . . . . . . . . . . . . . . 6.8
317(a)(1). . . . . . . . . . . . . . . . . . . . . 6.3
(a)(2). . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . 12.1
- -------------------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Incorporation by Reference of TIA . . . . . . . . . . . . . . . 20
SECTION 1.3. Rules of Construction . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE II
THE SECURITIES
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.2. Execution and Authentication. . . . . . . . . . . . . . . . . . 22
SECTION 2.3. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . . 23
SECTION 2.4. Paying Agent to Hold Assets in Trust. . . . . . . . . . . . . . 24
SECTION 2.5. Securityholder Lists. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.7. Replacement Securities. . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.8. Outstanding Securities. . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.9. Treasury Securities . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.10.Temporary Securities. . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.11.Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12.Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.2. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.3. Selection of Securities to Be Redeemed. . . . . . . . . . . . . 32
SECTION 3.4. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.5. Effect of Notice of Redemption. . . . . . . . . . . . . . . . . 34
SECTION 3.6. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . 34
SECTION 3.7. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . 35
iii
<PAGE>
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . . 36
SECTION 4.3. Limitation on Restricted Payments.. . . . . . . . . . . . . . . 36
SECTION 4.4. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.5. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . 38
SECTION 4.6. Compliance Certificate; Notice of Default . . . . . . . . . . . 38
SECTION 4.7. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.8. Limitation on Status as Investment Company. . . . . . . . . . . 39
SECTION 4.9. Limitation on Transactions with Affiliates. . . . . . . . . . . 39
SECTION 4.10.Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock. . . . . . . . . . . . . . . . . . . 40
SECTION 4.11.Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries. . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.12.Limitation on Liens Securing Indebtedness . . . . . . . . . . . 42
SECTION 4.13.Limitation on Sale of Assets and Subsidiary Stock . . . . . . . 43
SECTION 4.14.Limitation on Layering Indebtedness. . . . . . . . . . . . . . 47
SECTION 4.15.Limitation on Lines of Business. . . . . . . . . . . . . . . . 47
SECTION 4.16.Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . 47
SECTION 4.17.Payment for Consent. . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. Limitation on Merger, Sale or Consolidation . . . . . . . . . . 48
SECTION 5.2. Successor Corporation Substituted . . . . . . . . . . . . . . . 49
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.2. Acceleration of Maturity Date; Rescission and Annulment . . . . 51
iv
<PAGE>
SECTION 6.3. Collection of Indebtedness and Suits for Enforcement by
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.4. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . 54
SECTION 6.5. Trustee May Enforce Claims Without Possession of Securities . . 55
SECTION 6.6. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.7. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.9. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . 57
SECTION 6.10.Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . 57
SECTION 6.11.Control by Holders. . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.12.Waiver of Past Default. . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.13.Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.14.Restoration of Rights and Remedies. . . . . . . . . . . . . . . 59
ARTICLE VII
TRUSTEE
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.3. Individual Rights of Trustee. . . . . . . . . . . . . . . . . . 62
SECTION 7.4. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . 63
SECTION 7.7. Compensation and Indemnity. . . . . . . . . . . . . . . . . . . 63
SECTION 7.8. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . 64
SECTION 7.9. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . 65
SECTION 7.10.Eligibility; Disqualification . . . . . . . . . . . . . . . . . 65
SECTION 7.11.Preferential Collection of Claims Against Company . . . . . . . 66
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. Option to Effect Legal Defeasance or Covenant Defeasance. . . . 66
SECTION 8.2. Legal Defeasance and Discharge. . . . . . . . . . . . . . . . . 66
v
<PAGE>
SECTION 8.3. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.4. Conditions to Legal or Covenant Defeasance. . . . . . . . . . . 67
SECTION 8.5. Deposited Cash and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions . . . . . . . . . . . . . 69
SECTION 8.6. Repayment to the Company. . . . . . . . . . . . . . . . . . . . 69
SECTION 8.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Supplemental Indentures Without Consent of Holders. . . . . . . 71
SECTION 9.2. Amendments, Supplemental Indentures and Waivers with Consent
of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.3. Compliance with TIA . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.4. Revocation and Effect of Consents . . . . . . . . . . . . . . . 73
SECTION 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . 74
SECTION 9.6. Trustee to Sign Amendments, Etc.. . . . . . . . . . . . . . . . 74
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 10.1.Repurchase of Securities at Option of the Holder Upon a
Change of Control . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE XI
SUBORDINATION
SECTION 11.1. Securities Subordinated to Senior Debt . . . . . . . . . 78
SECTION 11.2. No Payment on Securities in Certain Circumstances. . . . 78
SECTION 11.3. Securities Subordinated to Prior Payment of All Senior
Debt on Dissolution, Liquidation or Reorganization . . . 80
SECTION 11.4. Securityholders to Be Subrogated to Rights of Holders
of Senior Debt . . . . . . . . . . . . . . . . . . . . . 81
vi
<PAGE>
SECTION 11.5. Obligations of the Company Unconditional . . . . . . . . 81
SECTION 11.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice. . . . . . . . . . . . . . . . . . . . 82
SECTION 11.7. Application by Trustee of Assets Deposited with It . . . 82
SECTION 11.8. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Debt . . . . . . . . 83
SECTION 11.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities. . . . . . . . . . . . . . . 83
SECTION 11.10. Right of Trustee to Hold Senior Debt . . . . . . . . . . 84
SECTION 11.11. Article XI Not to Prevent Events of Default. . . . . . . 84
SECTION 11.12. No Fiduciary Duty of Trustee to Holders of Senior Debt . 84
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. TIA Controls . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 12.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 12.3. Communications by Holders with Other Holders . . . . . . 86
SECTION 12.4. Certificate and Opinion as to Conditions Precedent . . . 86
SECTION 12.5. Statements Required in Certificate or Opinion. . . . . . 87
SECTION 12.6. Rules by Trustee, Paying Agent, Registrar. . . . . . . . 87
SECTION 12.7. Non-Business Days. . . . . . . . . . . . . . . . . . . . 88
SECTION 12.8. Governing Law. . . . . . . . . . . . . . . . . . . . . . 88
SECTION 12.9. No Adverse Interpretation of Other Agreements. . . . . . 88
SECTION 12.10. No Recourse against Others . . . . . . . . . . . . . . . 89
SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 12.12. Duplicate Originals. . . . . . . . . . . . . . . . . . . 89
SECTION 12.13. Severability . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 12.14. Table of Contents, Headings, Etc.. . . . . . . . . . . . 89
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Exhibit A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
vii
<PAGE>
INDENTURE, dated as of October 16, 1996, by and among Universal
Outdoor, Inc., an Illinois corporation (the "Company"), and United States Trust
Company of New York (the "Trustee").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
9 3/4% Senior Subordinated Notes due 2006:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
"ACCELERATION NOTICE" shall have the meaning specified in Section 6.2.
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital
Stock of any person existing at the time such person becomes a Subsidiary of the
Company, including by designation, or is merged or consolidated into or with
the Company or one of its Subsidiaries.
"ACQUISITION" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, PROVIDED, THAT, with respect to ownership interest in the Company
and its Subsidiaries a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"AFFILIATE TRANSACTION" shall have the meaning specified in Section 4.9.
<PAGE>
"AGENT" means any authenticating agent, Registrar, Paying Agent or
transfer agent.
"ASSET SALE" shall have the meaning specified in Section 4.13.
"ASSET SALE OFFER" shall have the meaning specified in Section 4.13.
"ASSET SALE OFFER AMOUNT" shall have the meaning specified in Section 4.13.
"ASSET SALE OFFER PERIOD" shall have the meaning specified in Section 4.13.
"ASSET SALE OFFER PRICE" shall have the meaning specified in Section 4.13.
"AVERAGE LIFE" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of (a)
the product of the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"BENEFICIAL OWNER" or "BENEFICIAL OWNER" for purposes of the definition
of Change of Control has the meaning attributed to it in Rules l3d-3 and
l3d-5 under the Exchange Act (as in effect on the Issue Date), whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time.
"BOARD OF DIRECTORS" or "BOARD" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
2
<PAGE>
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CAPITALIZED LEASE OBLIGATION" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person, as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person.
"CASH" or "CASH" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"CASH EQUIVALENT" means (a)(i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit issued by any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million or (iii)
commercial paper issued by others rated at least A-1 or the equivalent thereof
by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing within one year after
the date of acquisition or (b) shares of money market mutual funds or similar
funds having assets in excess of $500,000,000.
"CHANGE OF CONTROL" means (i) any merger or consolidation of the
Company or the Parent with or into any person or any sale, transfer or other
conveyance,
3
<PAGE>
whether direct or indirect, of all or substantially all of the assets of the
Company or the Parent, on a consolidated basis, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes
of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable),
other than the Parent in the case of the Company or a Permitted Holder or
Holders, is or becomes the "beneficial owner," directly or indirectly, of
more than 50% of the total voting power in the aggregate normally entitled to
vote in the election of directors, managers, or trustees, as applicable, of
the transferee(s) or surviving entity or entities, (ii) any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of
the Exchange Act, whether or not applicable), other than the Parent in the
case of the Company or a Permitted Holder or Holders, is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the total
voting power in the aggregate of all classes of Capital Stock of the Company
or the Parent, as the case may be, then outstanding normally entitled to vote
in elections of directors, or (iii) during any period of 12 consecutive
months after the Issue Date, individuals who at the beginning of any such
12-month period constituted the Board of Directors of the Company or the
Parent (together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company or the Parent, as
the case may be, was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved), cease
for any reason to constitute a majority of the Board of Directors of the
Company or the Parent, as the case may be, then in office.
"CHANGE OF CONTROL OFFER" shall have the meaning specified in Section 10.1.
"CHANGE OF CONTROL OFFER PERIOD" shall have the meaning specified in
Section 10.1.
"CHANGE OF CONTROL PURCHASE DATE" shall have the meaning specified in
Section 10.1.
"CHANGE OF CONTROL PURCHASE PRICE" shall have the meaning specified in
Section 10.1.
"COMMISSION" means the SEC.
4
<PAGE>
"COMMON STOCK" means the common stock, $.01 par value, of Parent.
"COMPANY" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means such successor.
"CONSOLIDATED EBITDA" means, with respect to any person, for any period,
the Consolidated Net Income of such person for such period adjusted to add
thereto (to the extent deducted from net revenues in determining Consolidated
Net Income), without duplication, the sum of (i) consolidated income tax
expense, (ii) consolidated depreciation and amortization expense, PROVIDED
that consolidated depreciation and amortization of a Subsidiary that is a
less than wholly owned Subsidiary shall only be added to the extent of the
equity interest of the Company in such Subsidiary and only to the extent that
dividends in excess of such Person's PRO RATA share of net income are paid,
and (iii) Consolidated Fixed Charges, less the amount of all cash payments
made by such person or any of its Subsidiaries during such period to the
extent such payments relate to non-cash charges that were added back in
determining Consolidated EBITDA for such period or any prior period.
"CONSOLIDATED FIXED CHARGES" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued,
or scheduled to be paid or accrued (including, in accordance with the
following sentence, interest attributable to Capitalized Lease Obligations)
of such person and its Consolidated Subsidiaries during such period,
including (i) original issue discount and non-cash interest payments or
accruals on any Indebtedness, (ii) the interest portion of all deferred
payment obligations, and (iii) all commissions, discounts and other fees and
charges owed with respect to bankers' acceptances and letters of credit
financings and currency and Interest Swap and Hedging Obligations, in each
case to the extent attributable to such period, and (b) the amount of
dividends accrued or payable (or guaranteed) by such person or any of its
Consolidated Subsidiaries in respect of preferred stock (other than by
Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (y) interest
expense
5
<PAGE>
attributable to any Indebtedness represented by the guaranty by such person
or a Subsidiary of such person of an obligation of another person shall be
deemed to be the interest expense attributable to the Indebtedness guaranteed.
"CONSOLIDATED LEVERAGE RATIO" of any person on any date of
determination (the "Transaction Date") means the ratio, on a PRO FORMA basis
after giving effect to the application of any proceeds of Indebtedness, of (a)
Indebtedness as of the end of the Reference Period to (b) the aggregate amount
of Consolidated EBITDA of such person attributable to continuing operations and
businesses (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of) for the Reference Period; PROVIDED,
that for purposes of such calculation, (i) Acquisitions which occurred during
the Reference Period or subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the first day of the
Reference Period and (ii) the incurrence of any Indebtedness or issuance of any
Disqualified Capital Stock subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the last day of the
Reference Period.
"CONSOLIDATED NET INCOME" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains or losses which are
either extraordinary, unusual (as determined in accordance with GAAP) or are
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock or losses in connection with the Transactions), (b) the net
income, if positive, of any person, other than a wholly owned Consolidated
Subsidiary, in which such person or any of its Consolidated Subsidiaries has an
interest, except to the extent of the amount of any dividends or distributions
actually paid in cash to such person or a wholly owned Consolidated Subsidiary
of such person during such period, but in any case not in excess of such
person's PRO RATA share of such person's net income for such period and (c) the
net income, if positive, of any of such person's Consolidated Subsidiaries to
the extent that the declaration or payment of dividends or similar distributions
is not at the time permitted by operation of the terms of its charter or bylaws
or any other agreement, instrument, judgment, decree, order, or governmental
regulation applicable to such Consolidated Subsidiary.
6
<PAGE>
"CONSOLIDATED NET WORTH" of any person at any date means the aggregate
consolidated stockholders' equity of such person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such person or a Consolidated Subsidiary of such person
subsequent to the Issue Date, and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in persons that are not Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such person in accordance with GAAP.
"COVENANT DEFEASANCE" shall have the meaning specified in Section 8.3.
"CREDIT AGREEMENT" means the credit agreement dated October 8, 1996 by
and among the Company, certain of its subsidiaries, certain financial
institutions and Bankers Trust Company, as agent, providing for (A) an aggregate
$75 million term loan facility, and (B) an aggregate $225 million revolving
credit facility, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, as such credit
agreement and/or related documents may be amended, restated, supplemented,
renewed, replaced or otherwise modified from time to time whether or not with
the same agent, trustee, representative lenders or holders, and, subject to the
proviso to the next succeeding sentence, irrespective of any changes in the
terms and conditions thereof. Without limiting the generality of the foregoing,
the term "Credit Agreement" shall include agreements in respect of Interest Swap
and Hedging Obligations with lenders party to the Credit Agreement and shall
also include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any Credit Agreement and all
refundings, refinancings and replacements of any Credit Agreement, including any
agreement (i) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or more of the Company
and its Subsidiaries and their respective successors and assigns,
7
<PAGE>
(iii) increasing the amount of Indebtedness incurred thereunder or available
to be borrowed thereunder, PROVIDED that on the date such Indebtedness is
incurred it would not be prohibited by clause (f) of Section 4.10 or (iv)
otherwise altering the terms and conditions thereof in a manner not expressly
prohibited by the terms hereof.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEBT INCURRENCE RATIO" shall have the meaning specified in Section 4.10.
"DEFAULT" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"DEFAULTED INTEREST" shall have the meaning specified in Section 2.12.
"DEFINITIVE SECURITIES" means Securities that are in the form of the
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 2 thereof.
"DEPOSITARY" means, with respect to the Securities issuable or issued
in whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b),
with respect to any person, an Equity Interest of such person that, by its terms
or by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Securities and (b) with respect to any
Subsidiary of such person (including with respect to any Subsidiary of the
Company), any Equity Interest other than any common equity with no preference,
privileges, or redemption or repayment provisions
"DTC" shall have the meaning specified in Section 2.3.
8
<PAGE>
"EQUITY INTEREST" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership interests in, such Person. Convertible or exchangeable Indebtedness
shall not be deemed to be an Equity Interest for purposes of clause (b) of the
definition of Restricted Payments to the extent acquired at any time the
conversion or exchange feature is not "in-the-money".
"EQUITY PRIVATE PLACEMENT" means any sale by the Parent of its Capital
Stock (other than Disqualified Capital Stock) not requiring registration under
the Securities Act.
"EVENT OF DEFAULT" shall have the meaning specified in Section 6.1.
"EVENT OF LOSS" means, with respect to any property or asset, any (i)
loss, destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"EXCESS PROCEEDS" shall have the meaning specified in Section 4.13.
"EXCESS PROCEEDS DATE" shall have the meaning specified in Section 4.13.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"FAIR MARKET VALUE" or "FAIR MARKET VALUE" means, with respect to any
assets or properties, the amount at which such assets or properties would change
hands between a willing buyer and a willing seller, within a commercially
reasonable time, each having reasonable knowledge of the relevant facts, neither
being under a compulsion to sell or buy, as such amount is determined by (i) the
Board of Directors of the Company acting in good faith or (ii) an appraisal or
valuation firm of national or regional standing selected by the Company, with
experience in the appraisal or valuation of properties or assets of the type for
which Fair Market Value is being determined.
9
<PAGE>
"GAAP" means United States generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
"GLOBAL SECURITY" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
to the form of Security attached hereto as Exhibit A.
"HOLDER" or "SECURITYHOLDER" means the Person in whose name a Security
is registered on the Registrar's books.
"INCUR" or "INCURRENCE" shall have the meaning specified in Section 4.10.
"INCURRENCE DATE" shall have the meaning specified in Section 4.10.
"INDEBTEDNESS" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such any person, (i)
in respect of borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such person or only to a portion thereof), (ii)
evidenced by bonds, notes, debentures or similar instruments, (iii)
representing the balance deferred and unpaid of the purchase price of any
property or services, (except for balances incurred in the ordinary course of
its business that would constitute ordinarily a trade payable to trade
creditors and except for balances due and actually paid within six months of
the date property is delivered or services are rendered or, if not actually
paid within six months, being contested in good faith), (iv) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (v)
under any Capitalized Lease Obligation, or (vi) evidenced by a letter of
credit or a reimbursement obligation of such person with respect to any
letter of credit; (b) all net obligations of such person under Interest Swap
and Hedging Obligations; (c) all liabilities and obligations of others of the
kind described in the preceding clause (a) or (b) that such person has
guaranteed or that is otherwise its legal liability or which are secured by
any assets or property of such person; (d) any and all deferrals, renewals,
extensions, refinancing and refundings (whether direct or indirect) of, or
amendments, modifications or supplements to, any liability of the kind
described in any of the
10
<PAGE>
preceding clauses (a), (b) or (c), or this clause (d), whether or not
between or among the same parties, and (e) all Disqualified Capital Stock of
such Person (measured at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends). For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such
price is based upon, or measured by, the Fair Market Value of such
Disqualified Capital Stock, such Fair Market Value to be determined in good
faith by the board of directors of the issuer (or managing general partner of
the issuer) of such Disqualified Capital Stock. For purposes hereof, the
amount of any Indebtedness issued with original issue discount shall be the
original purchase price plus accreted interest, PROVIDED, HOWEVER, that such
accretion shall not be deemed an incurrence of Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof, including, without limitation, the
provisions of the TIA that are deemed to be a part of and govern this instrument
and any supplemental indenture, respectively.
"INTEREST PAYMENT DATE" means the stated due date of an installment of
interest on the Securities.
"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"INVESTMENT" by any person in any other person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such person (whether for cash, property, services, securities or
otherwise) of capital
11
<PAGE>
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities, including any options or warrants, of such other person or
any agreement obligating a person to make any such acquisition; (b) the
making by such person of any deposit (in excess of $5 million in any one
transaction) with, or advance, loan or other extension of credit to, such
other person (including the purchase of property from another person subject
to an understanding or agreement, contingent or otherwise, obligating such
Person to resell such property to such other person) or any commitment to
make any such advance, loan or extension (but excluding accounts receivable
or deposits arising in the ordinary course of business); (c) other than
guarantees of Indebtedness of the Company or any Subsidiary to the extent
permitted by Section 4.10, the entering into by such person of any guarantee
of, or other credit support or contingent obligation with respect to,
Indebtedness or other liability of such other person; (d) the making of any
capital contribution by such person to such other person, other than to the
Company or a Subsidiary of the Company; and (e) the designation by the Board
of Directors of the Company of any person to be an Unrestricted Subsidiary.
The Company shall be deemed to make an Investment in an amount equal to the
fair market value of the net assets of any subsidiary (or, if neither the
Company nor any of its Subsidiaries has theretofore made an Investment in
such subsidiary, in an amount equal to the Investments being made), at the
time that such subsidiary is designated an Unrestricted Subsidiary, and any
property transferred to an Unrestricted Subsidiary from the Company or a
Subsidiary shall be deemed an Investment valued at its fair market value at
the time of such transfer.
"ISSUE DATE" means the date of first issuance of the Securities under
the Indenture.
"JUNIOR SECURITY" means any Qualified Capital Stock and any
Indebtedness of the Company that is subordinated in right of payment to Senior
Debt at least to the same extent as the Securities, and has no scheduled
installment of principal due, by redemption, sinking fund payment or otherwise,
on or prior to the Stated Maturity of the Securities.
"LEGAL DEFEASANCE" shall have the meaning specified in Section 8.2.
"LIEN" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to
12
<PAGE>
any property of any kind, real or personal, movable or immovable, now owned
or hereafter acquired.
"MATURITY DATE" means, when used with respect to any Security, the
date specified on such Security as the fixed date on which the final installment
of principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of this Indenture regarding
acceleration of Indebtedness or any Change of Control Offer or Asset Sale
Offer).
"NET CASH PROCEEDS" means the aggregate amount of Cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and by the Parent in the case of a Public Equity Offering or an Equity
Private Placement and by the Company and its Subsidiaries in respect of an Asset
Sale plus, in the case of an issuance of Qualified Capital Stock upon any
exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of the Company that were issued for
cash on or after the Issue Date, the amount of cash originally received by the
Company (to the extent not previously included in the calculation of Net Cash
Proceeds) upon the issuance of such securities (including options, warrants,
rights and convertible or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and expenses (including, without limitation, the
fees and expenses of legal counsel and investment banking fees and expenses)
incurred in connection with such Asset Sale or sale of Qualified Capital Stock
or Public Equity Offering or Equity Private Placement, and, in the case of an
Asset Sale only, less (i) the amount (estimated in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its respective Subsidiaries in connection with such Asset
Sale, (ii) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (A) is secured by a Lien
on the property or assets sold or (B) is required to be paid as a result of such
sale, and (iii) appropriate amounts to be provided by the Company or any
Subsidiary of the Company as a reserve against any liabilities associated with
such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale, all as determined in conformity with GAAP.
"NOTICE OF DEFAULT" shall have the meaning specified in
Section 6.1(c).
13
<PAGE>
"OBLIGATION" means any principal, premium or interest payment, or
monetary penalty, or damages, due by the Company under the terms of the
Securities or the Indenture.
"OFFICER" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means, with respect to the Company, a
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company and otherwise complying with the requirements of Sections 12.4
and 12.5, and delivered to the Trustee or an Agent, as applicable.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee (which may include counsel to the Trustee
or the Company including an employee of the Company) or an Agent, as applicable,
complying with the requirements of Sections 12.4 and 12.5, and delivered to the
Trustee or an Agent, as applicable.
"PARENT" means Universal Outdoor Holdings, Inc., a Delaware
corporation.
"PAYING AGENT" shall have the meaning specified in Section 2.3.
"PAYMENT BLOCKAGE PERIOD" shall have the meaning specified in
Section 11.2.
"PAYMENT DEFAULT" shall have the meaning specified in Section 11.2.
"PAYMENT NOTICE" shall have the meaning specified in Section 11.2.
"PERMITTED HOLDER" means Daniel L. Simon, Brian T. Clingen or Kelso &
Company, L.P. or any of their respective affiliates (as such term is defined in
Rule 12b-2 under the Exchange Act).
14
<PAGE>
"PERMITTED INDEBTEDNESS" means the Indebtedness of the Company to any
wholly owned Subsidiary, and Indebtedness of any wholly owned Subsidiary to any
other wholly owned Subsidiary or to the Company; PROVIDED, that, in the case of
Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Company's obligations pursuant to the
Securities and the date of any event that causes such Subsidiary to no longer be
a wholly owned Subsidiary shall be an Incurrence Date.
"PERMITTED INVESTMENT" means (a) Investments in any of the Securities;
(b) Cash Equivalents; (c) Permitted Indebtedness; (d) Investments in Persons
who, after such Investments, will become Subsidiaries of the Company; (e) other
Investments not to exceed $25 million in aggregate at any time outstanding; and
(f) Investments in any property or assets to be used in a business in which the
Company was engaged on the date of the Indenture.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days, or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property is used by the Company or any of its Subsidiaries) or interfere with
the ordinary conduct of the business of the Company or any of its Subsidiaries;
(f) Liens arising by operation of law in connection with judgments, only to the
extent, for an amount and for a period not resulting in an Event of Default with
respect thereto; (g) pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security legislation; (h) Liens securing the Securities; (i) Liens
securing Indebtedness of a Person existing at the
15
<PAGE>
time such Person becomes a Subsidiary or is merged with or into the Company
or a Subsidiary or Liens securing Indebtedness incurred in connection with an
Acquisition, PROVIDED that such Liens were in existence prior to the date of
such acquisition, merger or consolidation, were not incurred in anticipation
thereof, and do not extend to any other assets; (j) Liens arising from
Purchase Money Indebtedness permitted to be incurred under clause (c) of
Section 4.10 provided such Liens relate to the property which is subject to
such Purchase Money Indebtedness; (k) leases or subleases granted to other
persons in the ordinary course of business not materially interfering with
the conduct of the business of the Company or any of its Subsidiaries or
materially detracting from the value of the relative assets of the Company or
any Subsidiary; (l) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into by the
Company or any of its Subsidiaries in the ordinary course of business; and
(m) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to
the Holders of the Securities than the terms of the Liens securing such
refinanced Indebtedness provided that the Indebtedness secured is not
increased and the lien is not extended to any additional assets or property.
"PERSON" or "PERSON" means any corporation, individual, partnership,
trust, unincorporated association, or a government or any agency or political
subdivision thereof.
"PRINCIPAL CORPORATE TRUST OFFICE OF THE TRUSTEE" means the office of
the Trustee as set forth in Section 12.2 and such other offices as the Trustee
may designate in writing from time to time.
"PROPERTY" or "PROPERTY" means any right or interest in or to property
or assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"PUBLIC EQUITY OFFERING" means an underwritten offering of Common
Stock of the Parent pursuant to an effective registration statement under the
Securities Act.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness of such person to
any seller or other person incurred to finance the acquisition (including in the
case of a
16
<PAGE>
Capitalized Lease Obligation, the lease) of any real or personal tangible
property which, in the reasonable good faith judgment of the Board of
Directors of the Company, is directly related to a Related Business of the
Company and which is incurred substantially concurrently with such
acquisition and is secured only by the assets so financed.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
"QUALIFIED EXCHANGE" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Indebtedness of
the Company issued on or after the Issue Date with the Net Cash Proceeds
received by the Company from the substantially concurrent sale of Qualified
Capital Stock or any exchange of Qualified Capital Stock for any Capital Stock
or Indebtedness issued on or after the Issue Date.
"RECORD DATE" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security attached hereto as
Exhibit A.
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in the form of Security attached hereto as Exhibit A, which shall include,
without duplication, in each case, accrued and unpaid interest to the Redemption
Date (subject to the provisions of Section 3.5).
"REFERENCE PERIOD" with regard to any person means the four full
fiscal quarters (or such lesser period during which such person has been in
existence) for which financial statements are available ended immediately
preceding any date upon which any determination is to be made pursuant to the
terms of the Securities or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or
17
<PAGE>
otherwise retire for value, in whole or in part, or (b) constituting an
amendment, modification or supplement to, or a deferral or renewal of ((a) and
(b) above are, collectively, a "Refinancing"), any Indebtedness or
Disqualified Capital Stock in a principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in
connection with the Refinancing) the lesser of (i) the principal amount or,
in the case of Disqualified Capital Stock, liquidation preference, of the
Indebtedness or Disqualified Capital Stock so Refinanced and (ii) if such
Indebtedness being Refinanced was issued with an original issue discount, the
accreted value thereof (as determined in accordance with GAAP) at the time of
such Refinancing, plus, in each case, premium and fees and expenses;
PROVIDED, that (A) such Refinancing Indebtedness of any Subsidiary of the
Company shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Subsidiary, (B) such Refinancing
Indebtedness shall (x) not have an Average Life shorter than the Indebtedness
or Disqualified Capital Stock to be so refinanced at the time of such
Refinancing and (y) in all respects, be no less subordinated or junior, if
applicable, to the rights of Holders of the Securities than was the
Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have a final stated maturity or redemption
date, as applicable, no earlier than the final stated maturity or redemption
date, as applicable, of the Indebtedness or Disqualified Capital Stock to be
so refinanced.
"REGISTRAR" shall have the meaning specified in Section 2.3.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
"RESTRICTED PAYMENT" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such person or any parent of such person, (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Equity Interests of such person or parent of such person, (c) other than with
the proceeds from the substantially concurrent sale of, or in exchange for,
Refinancing Indebtedness any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms of
or any defeasance of, any Subordinated Indebtedness, directly
18
<PAGE>
or indirectly, by such person or Subsidiary of such person prior to the
scheduled maturity, any scheduled or required repayment of principal, or
scheduled sinking fund payment, as the case may be, of such Indebtedness and
(d) any Investment by such person, other than a Permitted Investment;
PROVIDED, HOWEVER, that the term "Restricted Payment" does not include (i) any
dividend, distribution or other payment on or with respect to Capital Stock of
an issuer to the extent payable solely in shares of Qualified Capital Stock of
such issuer; or (ii) any dividend, distribution or other payment to the Company,
or to any of its wholly owned Subsidiaries, by the Company or any of its
Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means all series of the 9 3/4% Senior Subordinated Notes
due 2006, that are issued under and pursuant to the terms of the Indenture, as
amended or supplemented from time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SECURITIES CUSTODIAN" means the Registrar, as custodian with respect
to the Securities in global form, or any successor entity thereto.
"SECURITYHOLDER" or "HOLDER" means the Person in whose name a Security
is registered on the Registrar's books.
"SENIOR DEBT" of the Company means Indebtedness (including any
monetary obligation in respect of the Credit Agreement, and interest, whether or
not allowable, accruing on Indebtedness incurred pursuant to the Credit
Agreement after the filing of a petition initiating any proceeding under any
bankruptcy, insolvency or similar law) of the Company arising under the Credit
Agreement or that, by the terms of the instrument creating or evidencing such
Indebtedness, is expressly designated Senior Debt or made senior in right of
payment to the Securities; PROVIDED, that in no event shall Senior Debt include
(a) Indebtedness to any Subsidiary of the Company or any officer, director or
employee of the Company or any Subsidiary of the Company, (b) Indebtedness
incurred in violation of the terms of the Indenture, (c) Indebtedness consisting
of trade payables, (d) Disqualified Capital Stock and (e) Capitalized Lease
Obligations.
19
<PAGE>
"SENIOR DEBT REPRESENTATIVE" means the agent under the Credit
Agreement or the indenture trustee or other trustee, agent or representative for
the holders of an aggregate of at least $10 million principal amount outstanding
of any other Senior Debt.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any
Subsidiary of the Company that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries or (ii) as of the end
of such fiscal year, was the owner of more than 10% of the consolidated assets
of the Company and its Subsidiaries, all as set forth on the most recently
available consolidated financial statements of the Company for such fiscal year.
"SPECIAL RECORD DATE" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.
"STATED MATURITY," when used with respect to any Security, means
October 15, 2006.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company that is
expressly subordinated in right of payment to the Securities in any respect or,
for purposes of the definition of Restricted Payments only, has a stated
maturity on or after the Stated Maturity.
"SUBSIDIARY," with respect to any person, means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such person,
by such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person, (ii) any other person (other than a corporation or
partnership) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Company or of any Subsidiary of the
Company. Unless the context requires otherwise, Subsidiary means each direct
and indirect Subsidiary of the Company.
20
<PAGE>
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.
Code Sections 77aaa-77bbbb), as in effect on the date of the execution of
this Indenture; except as otherwise provided in Section 9.3.
"TRANSACTIONS" means the acquisition of Outdoor Advertising
Holdings, Inc. pursuant to an Agreement and Plan of Merger entered into on
August 27, 1996, the tender offer and consent solicitation by the Company to
purchase all of its outstanding 11% Series A Senior Notes due 2003, the
tender offer and consent solicitation by Parent to purchase all of its
outstanding 14% Senior Secured Notes due 2004, the execution of the Credit
Agreement, the purchase of certain assets of Tanner Peck, L.L.C., TOA
Enterprises, L.P., William B. Tanner, WBT Outdoor, Inc. and The Weatherley
Tanner Trust pursuant to an Option and Asset Purchase Agreement entered into
on September 12, 1996, the purchase of certain assets of Iowa Outdoor
Displays pursuant to an Asset Purchase Agreement entered into on September
12, 1996 and the purchase of certain assets of The Chase Company pursuant to
an Asset Purchase Agreement entered into on September 11, 1996.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture,
and thereafter means such successor.
"TRUST OFFICER" means any officer within the corporate trust
administration division (or any successor group) of the Trustee or any other
officer of the Trustee customarily performing functions similar to those
performed by the Persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer
of the Trustee to whom such trust matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"U.S. GOVERNMENT OBLIGATIONS" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America
for the payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged.
"UNRESTRICTED SUBSIDIARY" means any subsidiary of the Company that
does not own any Capital Stock of, or own or hold any Lien on any property
of, the Company
21
<PAGE>
or any other Subsidiary of the Company and that shall be designated an
Unrestricted Subsidiary by the Board of Directors of the Company; PROVIDED,
that (i) such subsidiary shall not engage, to any substantial extent, in any
line or lines of business activity other than a Related Business and (ii)
neither immediately prior thereto nor after giving pro forma effect to such
designation would there exist a Default or Event of Default. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Subsidiary, provided, that (i) no Default or Event of Default is existing or
will occur as a consequence thereof and (ii) immediately after giving effect
to such designation, on a PRO FORMA basis, the Company could incur at least
$1.00 of Indebtedness pursuant to the Debt Incurrence Ratio in paragraph (a)
of Section 4.10. Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation
and an Officers' Certificate certifying that such designation complied with
the foregoing conditions.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Equity
Interests of which are owned by the Company or one or more wholly owned
Subsidiaries of the Company.
SECTION I.2. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the SEC.
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITYHOLDER" means a Holder or a Securityholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the indenture securities means the Company and any
other obligor on the Securities.
22
<PAGE>
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them thereby.
SECTION I.3. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise.
23
<PAGE>
ARTICLE II
THE SECURITIES
SECTION II.1. FORM AND DATING.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto,
which Exhibit is part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage or the
terms hereof. The Company shall approve the form of the Securities and any
notation, legend or endorsement on them. Any such notations, legends or
endorsements not contained in the form of Security attached as Exhibit A
hereto shall be delivered in writing to the Trustee. Each Security shall be
dated the date of its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to
the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and
to be bound thereby.
SECTION II.2. EXECUTION AND AUTHENTICATION.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Security for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted or
reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at
the time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless
and the Company shall nevertheless be bound by the terms of the Securities
and this Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be
24
<PAGE>
conclusive evidence that the Security has been authenticated pursuant to the
terms of this Indenture.
The Trustee shall authenticate or cause to be authenticated the
Securities for original issue in the aggregate principal amount of up to
$225,000,000 upon a written order of the Company in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of Securities
to be authenticated and the date on which the Securities are to be
authenticated. The aggregate principal amount of Securities outstanding at
any time may not exceed $225,000,000, except as provided in Section 2.7.
Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
Each Security shall be dated the date of its authentication.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with the Company, any Affiliate of the
Company, or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
25
<PAGE>
SECTION II.3. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented or
surrendered for registration of transfer or exchange ("Registrar") and an
office or agency of the Company where Securities may be presented or
surrendered for payment ("Paying Agent") and where notices and demands to or
upon the Company in respect of the Securities may be served. The Company may
act as Registrar or Paying Agent, except that for the purposes of Articles
III, VIII, X and Section 4.13 and as otherwise specified in this Indenture,
neither the Company nor any Affiliate of the Company shall act as Paying
Agent. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more co-Registrars and
one or more additional Paying Agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional Paying
Agent. The Company hereby initially appoints the Trustee as Registrar and
Paying Agent, and by its signature hereto, the Trustee hereby agrees so to
act. The Company may at any time change any Paying Agent or Registrar
without notice to any Holder.
The Company shall enter into an appropriate written agency
agreement with any Agent (including the Paying Agent) not a party to this
Indenture, which agreement shall implement the provisions of this Indenture
that relate to such Agent, and shall furnish a copy of each such agreement to
the Trustee. The Company shall promptly notify the Trustee in writing of the
name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Securities.
The Company initially appoints the Registrar to act as Securities
Custodian with respect to the Global Securities.
Upon the occurrence of an Event of Default described in Section
6.1(d) or (f), the Trustee shall, or upon the occurrence of any other Event
of Default by notice to the Company, the Registrar and the Paying Agent, the
Trustee may, assume the duties and obligations of the Registrar and the
Paying Agent hereunder.
26
<PAGE>
The Trustee is authorized to enter into a letter of representation
with DTC in the form provided to the Trustee by the Company and to act in
accordance with such letter.
SECTION II.4. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that such Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, premium, if any, or interest on, the Securities
(whether such assets have been distributed to it by the Company or any other
obligor on the Securities), and shall notify the Trustee in writing of any
Default in making any such payment. If either of the Company or a Subsidiary
of the Company acts as Paying Agent, it shall segregate such assets and hold
them as a separate trust fund for the benefit of the Holders or the Trustee.
The Company at any time may require a Paying Agent to distribute all assets
held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any Payment Default or any
Event of Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for
any assets distributed. Upon distribution to the Trustee of all assets that
shall have been delivered by the Company to the Paying Agent, the Paying
Agent (if other than the Company) shall have no further liability for such
assets.
SECTION II.5. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall cause the Registrar to
furnish to the Trustee on or before the seventh Business Day preceding each
Interest Payment Date and at such other times as the Trustee or any such
Paying Agent may request in writing a list in such form and as of such date
as the Trustee reasonably may require of the names and addresses of Holders
and the Company shall otherwise comply with TIA Section 312(a).
27
<PAGE>
SECTION II.6. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When
Definitive Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive Securities;
or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; PROVIDED, HOWEVER,
that the Definitive Securities surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company, the Registrar and the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar, together with
written instructions of the Holder directing the Registrar to make, or to direct
the Securities Custodian to make, an endorsement on the Global Security to
reflect an increase in the aggregate principal amount of the Securities
represented by the Global Security, then the Registrar shall cancel such
Definitive Security and cause, or direct the Securities Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian, the aggregate principal amount of
Securities represented by the Global Security to be increased accordingly. If
no Global Securities are then outstanding, the Company shall issue and the
Trustee, upon receipt of an authentication order in the form of an Officers'
Certificate, shall authenticate and deliver a new Global Security in the
appropriate principal amount.
28
<PAGE>
(c) TRANSFER OF BENEFICIAL INTERESTS IN GLOBAL SECURITIES. The
transfer of beneficial interests in Global Securities shall be effected through
the Depositary, in accordance with the procedures of the Depositary and shall
not be governed by this Indenture.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR A
DEFINITIVE SECURITY.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Registrar of written instructions
or such other form of instructions as is customary for the Depositary from
the Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Security, the Registrar or the Securities Custodian,
at the direction of the Trustee, will cause, in accordance with the
standing instructions and procedures existing between the Depositary and
the Securities Custodian, the aggregate principal amount of the Global
Security to be reduced and, following such reduction, the Company will
execute and, upon receipt of an authentication order in the form of an
Officers' Certificate, the Trustee or the Trustee's authenticating agent
will authenticate and deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section 2.6(d)
shall be registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Registrar. The Registrar
shall deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
29
<PAGE>
(f) AUTHENTICATION OF DEFINITIVE SECURITIES IN ABSENCE OF
DEPOSITARY. If at any time:
(i) the Depositary for the Securities notifies the Company
that the Depositary is unwilling or unable to continue as Depositary for
the Global Securities and a successor Depositary for the Global Securities
is not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, in its sole discretion, notifies the
Trustee and the Registrar in writing that they elect to cause the issuance
of Definitive Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will, or its authenticating agent will, authenticate and deliver Definitive
Securities, in an aggregate principal amount equal to the principal amount of
the Global Securities, in exchange for such Global Securities.
(g) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECURITY. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or cancelled, such Global
Security shall be returned to or retained and cancelled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Security
is exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(h) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
DEFINITIVE SECURITIES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee or any authenticating agent of the
Trustee shall authenticate Definitive Securities and Global Securities at
the Registrar's request.
30
<PAGE>
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessment, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments, or similar governmental charge payable upon
exchanges or transfers pursuant to Section 2.2 (fourth paragraph), 2.10,
3.7, 4.13(8), 9.5, or 10.1 (final paragraph)).
(iii) The Registrar shall not be required to register the
transfer of or exchange (a) any Definitive Security selected for redemption
in whole or in part pursuant to Article III, except the unredeemed portion
of any Definitive Security being redeemed in part, or (b) any Security for
a period beginning 15 Business Days before the mailing of a notice of an
offer to repurchase pursuant to Article X or Section 4.13 hereof or a
notice of redemption of Securities pursuant to Article III hereof and
ending at the close of business on the day of such mailing.
31
<PAGE>
(iv) Prior to due presentment for registration or transfer
of any Security, the Trustee, any Agent and the Company may deem and treat
the Person in whose name the Security is registered as the absolute owner
of such Security, and none of the Trustee, Agent or the Company shall be
affected by notice to the contrary.
SECTION 2.7. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits evidence, satisfactory to the Trustee to the
effect that the Security has been lost, destroyed or wrongfully taken, in the
absence of notice to the Company and the Trustee that such Security has been
acquired by a bona-fide purchaser, the Company shall issue and the Trustee or
any authenticating agent of the Trustee shall authenticate and deliver a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may require the payment of a
sum sufficient to cover any transfer tax, assessment or similar governmental
charge that may be imposed in relation to the issuance of any new Security and
charge such Holder for its reasonable, out-of-pocket expenses (including the
fees and expenses of the Trustee) in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.8. OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee (including any Security represented by a
Global Security) except those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Security effected by
the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.9.
32
<PAGE>
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a BONA FIDE purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds Cash or U.S. Government
Obligations sufficient to pay all of the principal and interest and premium, if
any, due on the Securities payable on that date and payment of the Securities
called for redemption is not otherwise prohibited, then on and after that date
such Securities cease to be outstanding and interest on them ceases to accrue.
SECTION 2.9. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company or Affiliates of the Company shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, amendment, supplement,
waiver or consent, only Securities that a Trust Officer of the Trustee knows are
so owned shall be disregarded.
SECTION 2.10. TEMPORARY SECURITIES.
Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate and deliver temporary Securities.
Temporary Securities shall be substantially in the form of permanent Securities
but may have variations that the Company and the Trustee reasonably consider
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities in
exchange for temporary Securities. Until so exchanged, the temporary Securities
shall in all respects be entitled to the same rights, privileges and benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
33
<PAGE>
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to it or them (as applicable) for registration of
transfer, exchange or payment. The Trustee shall cancel and destroy all
Securities surrendered for transfer, exchange, payment or cancellation and shall
deliver a certificate of destruction to the Company. Subject to Section 2.7,
the Company may not issue new Securities to replace Securities that have been
paid or delivered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section 2.11, except as expressly permitted in the form of Securities
and as permitted by this Indenture.
34
<PAGE>
SECTION 2.12. DEFAULTED INTEREST.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of Cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such Cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Security register not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the
Securities (or their respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
35
<PAGE>
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
ARTICLE III
REDEMPTION
SECTION 3.1. RIGHT OF REDEMPTION.
Redemption of Securities, as permitted by any provision of this
Indenture, shall be made in accordance with such provision and this
Article III. The Company will not have the right to redeem any Securities
prior to October 15, 2001, except as provided in the immediately following
paragraph. On or after October 15, 2001, the Company will have the right to
redeem all or any part of the Securities at the Redemption Prices specified
in the form of Security attached as Exhibit A set forth therein in Paragraph
5 thereof, including accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on a Record Date to receive
interest due on an Interest Payment Date that is on or prior to such
Redemption Date, and subject to the provisions set forth in Section 3.5).
Notwithstanding the foregoing, prior to October 15, 1999, upon any
Public Equity Offering or Equity Private Placement, in each case resulting in
Net Cash Proceeds of $100 million or more which are then contributed in full to
the Company, up to $70 million aggregate principal amount of the Securities may
be redeemed at the option of the Company with cash from the Net Cash Proceeds of
such Public Equity Offering or Equity Private Placement, at 110% of principal,
PROVIDED, HOWEVER, that
36
<PAGE>
immediately following such redemption not less than $130 million aggregate
principal amount of the Securities are outstanding, PROVIDED, FURTHER,
that such redemption shall occur within 120 days of such Public Equity
Offering or Equity Private Placement.
SECTION 3.2. NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall furnish to the Trustee an Officer's Certificate setting
forth (i) the Section of this Indenture pursuant to which the redemption shall
occur, (ii) Redemption Date, (iii) the principal amount of Securities to be
redeemed, (iv) the Redemption Price, and (v) whether it wants the Trustee to
give notice of redemption to the Holders in accordance with Section 3.4.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Company shall give the Officers' Certificate to the Trustee
provided for in this Section 3.2 at least 45 days before the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee). Any such notice
to the Trustee may be cancelled at any time up to one Business Day prior to
notice of such redemption being mailed to any Holder and shall thereby be void
and of no effect.
SECTION 3.3. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities or portions thereof
for redemption on a PRO RATA basis, by lot or by such other method as the
Trustee shall determine to be fair and appropriate.
37
<PAGE>
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company,
the Registrar and the Paying Agent, if applicable, in writing of the Securities
selected for redemption and, in the case of any Security selected for partial
redemption, the principal amount thereof to be redeemed. Securities in
denominations of $1,000 may be redeemed only in whole. The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Securities that have denominations larger than $1,000.
Provisions of this Indenture that apply to Securities called for redemption
also apply to portions of Securities called for redemption.
SECTION 3.4. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed to
such Holder's last address as then shown on the registry books of the
Registrar. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice
for redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued
and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice to
collect the Redemption Price;
(5) that, unless the Company defaults in its obligation to
deposit Cash or U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with
their terms will provide Cash in an amount to fund the Redemption Price
with the Paying
38
<PAGE>
Agent in accordance with Section 3.6 hereof or such redemption
payment is otherwise prohibited, interest on Securities called
for redemption ceases to accrue on and after the Redemption Date and the
only remaining right of the Holders of such Securities is to receive
payment of the Redemption Price, including accrued and unpaid interest to
the Redemption Date, upon surrender to the Paying Agent of the Securities
called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the portion
of the principal amount equal to $1,000 or any integral multiple thereof,
of such Security to be redeemed and that, after the Redemption Date, and
upon surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section
3.4 and pursuant to the optional redemption provisions of Paragraph 5 of
the Securities.
SECTION 3.5. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued and unpaid interest to the
Redemption Date. Upon surrender to the Trustee or, if the Trustee is no longer
the paying agent, to the Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, including interest, if any, accrued and
unpaid to the Redemption Date; PROVIDED that if the Redemption Date is on or
after a regular Record Date and on or prior to the Interest Payment Date to
which such Record Date relates, the accrued interest shall be
39
<PAGE>
payable to the Holder of the redeemed Securities registered on the relevant
Record Date and no additional interest will be payable to Holders of the
redeemed Securities on the Redemption Date; and PROVIDED, FURTHER, that if a
Redemption Date is not a Business Day, payment shall be made on the next
succeeding Business Day and no interest shall accrue for the period from such
Redemption Date to such succeeding Business Day.
SECTION 3.6. DEPOSIT OF REDEMPTION PRICE.
At least one Business Day prior to the Redemption Date, the Company
shall deposit with the Trustee or with the Paying Agent (other than the Company
or an Affiliate of the Company) Cash or U.S. Government Obligations in
immediately available funds sufficient to pay the Redemption Price of, and
accrued and unpaid interest on, all Securities to be redeemed on such Redemption
Date (other than Securities or portions thereof called for redemption on that
date that have been delivered by the Company to the Trustee for cancellation).
The Trustee or the Paying Agent shall promptly return to the Company any Cash or
U.S. Government Obligations so deposited which is not required for that purpose
upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and the Security.
SECTION 3.7. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, without service charge to the Holder, a new Security or Securities equal
in principal amount to the unredeemed portion of the Security surrendered.
40
<PAGE>
ARTICLE IV
COVENANTS
SECTION 4.1. PAYMENT OF SECURITIES.
The Company shall pay the principal of and interest and premium, if
applicable, on the Securities on the dates and in the manner provided herein and
in the Securities. An installment of principal of or interest and premium, if
applicable, on the Securities shall be considered paid on the date it is due if
the Trustee or Paying Agent (other than the Company, a Subsidiary of the Company
or an Affiliate of the Company) holds for the benefit of the Holders, on or
before 10:00 a.m. New York City time on that date, Cash deposited and designated
for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION IV.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 12.2 (the
"Principal Corporate Trust Office of Trustee").
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER,
41
<PAGE>
that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The Company shall give
prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby initially designates the Principal Corporate Trust Office of
Trustee as such office.
SECTION IV.3. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, make any Restricted Payment if, after giving effect
to such Restricted Payment on a PRO FORMA basis, (1) a Default or an Event of
Default shall have occurred and be continuing, (2) the Company is not permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Debt
Incurrence Ratio in paragraph (a) of Section 4.10, or (3) the aggregate amount
of all Restricted Payments made by the Company and its Subsidiaries, including
after giving effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the sum of (a) Consolidated EBITDA of the Company and
its Consolidated Subsidiaries for the period (taken as one accounting period),
commencing on the first day of the first full fiscal quarter commencing after
the Issue Date, to and including the last day of the fiscal quarter ended
immediately prior to the date of each such calculation (or, in the event
Consolidated EBITDA for such period is a deficit, then minus 100% of such
deficit), minus (b) 1.5 times the Consolidated Fixed Charges over such period,
plus (c) the aggregate Net Cash Proceeds received by the Company from the sale
of its Qualified Capital Stock or Indebtedness to the extent subsequently
converted into Qualified Capital Stock (other than (i) to a Subsidiary of the
Company and (ii) to the extent applied in connection with a Qualified Exchange)
or the fair market value (as determined by the Board of Directors reasonably and
in good faith) of securities of the Parent issued in connection with an
acquisition by the Company or any of its Subsidiaries, in each case after the
Issue Date, plus (d) the net reductions in Investments (other than reductions in
Permitted Investments) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans or from designations of
Unrestricted Subsidiaries as Subsidiaries, valued in each case as provided in
the definition of "Investment," not to exceed the amount of Investments
previously made by the Company and its Subsidiaries in such Person, plus (e)
$15 million.
42
<PAGE>
The preceding paragraph, however, will not prohibit (w) payments in
accordance with "Use of Proceeds" section of the prospectus, dated October 10,
1996, which is part of the Company's Registration Statement on Form S-1, (x)
repurchases of Capital Stock out of the proceeds of any "key man" life insurance
policies on Daniel L. Simon existing on the Issue Date and described in the
Prospectus and additional repurchases of Capital Stock from employees of the
Company or its Subsidiaries upon the death, disability or termination of
employment in an aggregate amount to all employees not to exceed $1 million per
year or $2 million in the aggregate on and after the Issue Date, (y) a Qualified
Exchange, or (z) the payment of any dividend on Qualified Capital Stock within
60 days after the date of its declaration if such dividend could have been made
on the date of such declaration in compliance with the foregoing provisions.
The full amount of any Restricted Payment made pursuant to the foregoing clauses
(x) and (z) of the immediately preceding sentence, however, will be deducted in
the calculation of the aggregate amount of Restricted Payments available to be
made referred to in clause (3) of the immediately preceding paragraph of this
Section 4.3.
SECTION IV.4. CORPORATE EXISTENCE.
Except as otherwise provided or permitted in Article V or elsewhere in
this Indenture, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence in accordance
with its organizational documents (as the same may be amended from time to time)
and the rights (charter and statutory) and corporate franchises of the Company;
PROVIDED, HOWEVER, nothing in this Section will prohibit the Company from
engaging in any transaction permitted under Section 11.4 or Section 11.5 hereof
and PROVIDED, FURTHER, that the Company shall not be required to preserve any
right or franchise if the Board of Directors of the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of such entity.
SECTION IV.5. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except (i) as contested in good faith by appropriate proceedings and with
respect to which appropriate reserves have been taken to the extent required by
GAAP or (ii) where the failure to effect such payment is not adverse in any
material respect to the Holders.
43
<PAGE>
SECTION IV.6. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee within 120 days
after the end of its fiscal year an Officers' Certificate complying with
Section 314(a)(4) of the TIA and stating that a review of its activities and
the activities of its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers and stating, as to each such
Officer signing such certificate, to the best of his knowledge, based on such
review, whether or not the signer knows of any Event of Default or event which
with notice or the passage of time would become an Event of Default which has
occurred and is continuing (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Defaults of which such
signer may have knowledge and what action each is taking or proposed to take
with respect thereto) and that to the best of such signer's knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Securities are prohibited or if
such event has occurred, a description of the event and what action each is
taking or proposes to take with respect thereto. The Officers' Certificate
shall also notify the Trustee should the relevant fiscal year end on any date
other than the current fiscal year end date.
44
<PAGE>
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto. The Trustee shall not be deemed to have knowledge of any
Default or any Event of Default unless one of its Trust Officers receives
written notice thereof from the Company or any of the Holders.
SECTION IV.7. REPORTS.
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Commission, and deliver to the Trustee and to each Holder within 15 days after
it has filed such with the Commission (if the Commission will accept such
filing), annual, quarterly and other reports required by Section 13 or 15(d) of
the Exchange Act. Notwithstanding anything to the contrary herein, the Trustee
shall have no duty to review such documents for purposes of determining
compliance with any provisions of this Indenture.
SECTION IV.8. LIMITATION ON STATUS AS INVESTMENT COMPANY.
Neither the Company nor any Subsidiary shall be required to register
as an "investment company" (as that term is defined in the Investment Company
Act of 1940, as amended) or shall otherwise become subject to regulation under
the Investment Company Act.
45
<PAGE>
SECTION IV.9. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
Neither the Company nor any of its Subsidiaries will be permitted
after the Issue Date to enter into or suffer to exist any contract, agreement,
arrangement or transaction (other than guarantees of the Credit Agreement by the
Company's Subsidiaries) with any Affiliate (an "Affiliate Transaction"), or any
series of related Affiliate Transactions, (i) unless it is determined that the
terms of such Affiliate Transaction are fair and reasonable to the Company, and
no less favorable to the Company than could have been obtained in an arm's
length transaction with a non-Affiliate and, (ii) if involving consideration to
either party in excess of $1 million, unless such Affiliate Transaction(s) is
evidenced by an Officers' Certificate addressed and delivered to the Trustee
certifying that such Affiliate Transaction (or Affiliate Transactions) has been
approved by a majority of the members of the Board of Directors that are
disinterested in such transaction and (iii) if involving consideration to either
party in excess of $10 million, unless in addition the Company, prior to the
consummation thereof, obtains a written favorable opinion as to the fairness of
such transaction to the Company from a financial point of view from an
independent investment banking firm of national reputation.
This Section 4.9 shall not apply to (i) any transaction between the
Company and any of its Subsidiaries or between Subsidiaries, (ii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company and any employment agreement entered into by the
Company or any Subsidiary in the ordinary course of business and (iii) any tax
sharing arrangement between the Company and Parent.
46
<PAGE>
SECTION IV.10. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND
DISQUALIFIED CAPITAL STOCK.
Except as set forth in this Section 4.10, the Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, issue,
assume, guaranty, incur, become directly or indirectly liable with respect to
(including as a result of an Acquisition), or otherwise become responsible for,
contingently or otherwise (individually and collectively, to "incur" or, as
appropriate, an "incurrence"), any Indebtedness or any Disqualified Capital
Stock (including Acquired Indebtedness). Notwithstanding the foregoing:
(a) if (i) no Default or Event of Default shall have occurred
and be continuing at the time of, or would occur after giving effect on a PRO
forma basis to, such incurrence of Indebtedness or Disqualified Capital Stock
and (ii) on the date of such incurrence (the "Incurrence Date"), the
Consolidated Leverage Ratio of the Company as of the end of the Reference Period
immediately preceding the Incurrence Date, after giving effect on a PRO FORMA
basis to such incurrence of such Indebtedness or Disqualified Capital Stock and,
to the extent set forth in the definition of Consolidated Leverage Ratio, the
use of proceeds thereof, would not exceed 6.5 to 1 from the Issue Date to and
including the third anniversary of the Issue Date, 6.25 to 1 from the third
anniversary of the Issue Date to and including the fifth anniversary thereof,
and 6.0 to 1 thereafter (each, a "Debt Incurrence Ratio"), then the Company may
incur such Indebtedness or Disqualified Capital Stock;
(b) the Company and the Subsidiaries may incur Indebtedness
evidenced by the Securities and represented by the Indenture up to the amounts
specified therein as of the date thereof;
(c) the Company and the Subsidiaries may incur Purchase Money
Indebtedness (including any Indebtedness issued to refinance, replace or refund
such Indebtedness) on or after the Issue Date, PROVIDED, that (i) the aggregate
amount of such Indebtedness incurred on or after the Issue Date and outstanding
at any time pursuant to this paragraph (c) shall not exceed $10 million, and
(ii) in each case, such Indebtedness shall not constitute more than 100% of the
cost (determined in accordance with GAAP) to the Company or such Subsidiary, as
applicable, of the property so purchased or leased;
47
<PAGE>
(d) the Company and the Subsidiaries, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (a), (b) and (c) of this
Section 4.10 or which is outstanding on the Issue Date so long as, in the case
of Refinancing Indebtedness which is not Senior Debt, such Refinancing
Indebtedness is secured only by the assets that secured the Indebtedness so
refinanced;
(e) the Company and the Subsidiaries may incur Permitted
Indebtedness;
(f) Indebtedness incurred pursuant to the Credit Agreement up to
an aggregate amount outstanding (including any Indebtedness issued to refinance,
refund or replace such Indebtedness) at any time not to exceed $300 million
minus the amount of any such Indebtedness retired with Net Cash Proceeds from
any Asset Sale and plus any such Indebtedness constituting Interest Swap and
Hedging Obligations;
(g) other Indebtedness of the Company or its Subsidiaries not to
exceed $25 million at any time outstanding, of which only $10 million may be
incurred by Subsidiaries.
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with the Company or a Subsidiary of
the Company shall be deemed to have been Incurred at the time such Person
becomes such a Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Subsidiary of the Company, as applicable.
For purposes of determining amounts of Indebtedness under this Section 4.10, (i)
Indebtedness resulting from security interests granted with respect to
Indebtedness otherwise included in the determination of Indebtedness, and
guarantees (and security interests with respect thereof) of, or obligations with
respect to letters of credit supporting, Indebtedness otherwise included in the
determination of Indebtedness shall not be included in the determination of
Indebtedness, (ii) any Liens permitted hereunder supporting Indebtedness
otherwise included in the determination of Indebtedness shall not be included in
the determination of Indebtedness and (iii) Indebtedness permitted under this
Section 4.10 need not be permitted solely by reference to one
48
<PAGE>
provision permitting such Indebtedness but may be permitted in part by
reference to one such provision and in part by reference to one or more other
provisions of this Section 4.10. For purposes of determining compliance with
this Section 4.10, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described above, the
Company in its sole discretion shall classify such item of Indebtedness and
shall only be required to include the amount and type of Indebtedness in one
of such categories.
SECTION IV.11. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, assume or suffer to exist any consensual
restriction on the ability of any Subsidiary of the Company to pay dividends or
make other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, the Company or any Subsidiary
of the Company, except (a) restrictions imposed by the Securities or the
Indenture, (b) restrictions imposed by applicable law, (c) restrictions under
any Acquired Indebtedness not incurred in violation of this Indenture or any
agreement relating to any property, asset, or business acquired by the Company
or any of its Subsidiaries, which restrictions in each case existed at the time
of acquisition, were not put in place in connection with or in anticipation of
such acquisition and are not applicable to any person, other than the person
acquired, or to any property, asset or business, other than the property, assets
and business so acquired, (d) any such restriction or requirement imposed by
Indebtedness incurred under paragraph (f) of Section 4.10, (e) restrictions with
respect solely to a Subsidiary of the Company imposed pursuant to a binding
agreement which has been entered into for the sale or disposition of all or
substantially all of the Equity Interests or of any assets of such Subsidiary,
provided such restrictions apply solely to the Equity Interests or assets of
such Subsidiary, (f) restrictions on transfer contained in Purchase Money
Indebtedness incurred pursuant to paragraph (c) of Section 4.10, provided such
restrictions relate only to the transfer of the property acquired with the
proceeds of such Purchase Money Indebtedness, and (g) in connection with and
pursuant to permitted Refinancing Indebtedness, replacements of restrictions
imposed pursuant to clause (a) or (f) of this Section 4.11 that are not more
restrictive than those being replaced and do not apply to any other person or
assets than those that would have been covered by the restrictions in the
Indebtedness so refinanced.
49
<PAGE>
Notwithstanding the foregoing, neither (a) customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course of
business, consistent with industry practice, nor (b) Liens permitted under
the terms of this Indenture shall in and of themselves be considered a
restriction on the ability of the applicable Subsidiary to transfer such
agreement or assets, as the case may be.
SECTION IV.12. LIMITATION ON LIENS SECURING INDEBTEDNESS.
The Company shall not, and shall not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien of any kind, other than Permitted
Liens, upon any of their respective assets now owned or acquired on or after the
date of the Indenture or upon any income or profits therefrom securing any
Indebtedness of the Company other than Senior Debt of the Company, unless the
Company provides, and causes its Subsidiaries to provide, concurrently or
immediately thereafter, that the Securities are equally and ratably so secured
so long as such Lien exists, PROVIDED that, if such Indebtedness is Subordinated
Indebtedness, the Lien securing such Subordinated Indebtedness shall be
subordinate and junior to the Lien securing the Securities with the same
relative priority as such Subordinated Indebtedness shall have with respect to
the Securities.
SECTION IV.13. LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, in one or a series of related transactions, convey, sell, transfer, assign
or otherwise dispose of, directly or indirectly, any of its property, business
or assets, including by merger or consolidation (other than a merger or
consolidation of the Company), and including any sale or other transfer or
issuance of any Equity Interests of any Subsidiary of the Company, whether by
the Company or a Subsidiary of either or through the issuance, sale or transfer
of Equity Interests by a Subsidiary of the Company (an "Asset Sale"), unless
(l)(a) within 210 days after the date of such Asset Sale, the Net Cash Proceeds
therefrom (the "Asset Sale Offer Amount") are applied to the optional redemption
of the Securities in accordance with the terms hereof or to the repurchase of
Securities pursuant to a cash offer (the "Asset Sale Offer") to repurchase
Securities at a purchase price (the "Asset Sale Offer Price") of 100% of
principal amount, plus accrued interest to the date of payment, made within 180
days of such Asset Sale or (b) within 180 days following such Asset Sale, the
Asset Sale Offer Amount is (i) invested (or committed to be
50
<PAGE>
invested, and in fact is so invested, within an additional 90 days) in
assets and property other than notes, bonds, obligation and securities
(except in connection with the acquisition of a wholly owned Subsidiary)
which in the good faith reasonable judgment of the Board will immediately
constitute or be a part of a Related Business of the Company or such
Subsidiary immediately following such transaction or (ii) used to permanently
reduce Senior Debt (PROVIDED that in the case of a revolver or similar
arrangement that makes credit available, such commitment is also permanently
reduced by such amount), (2) at least 75% of the consideration for such Asset
Sale or series of related Asset Sales consists of Cash, Cash Equivalents or
Permitted Investments, (3) no Default or Event of Default shall have occurred
and be continuing at the time of, or would occur after giving effect, on a
PRO FORMA basis, to, such Asset Sale, and (4) the Board of Directors of the
Company determines in good faith that the Company or such Subsidiary, as
applicable, receives fair market value for such Asset Sale.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Subsidiaries may, in the ordinary
course of business, convey, sell, transfer, assign or otherwise dispose of
inventory acquired and held for resale in the ordinary course of business;
(ii) the Company and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with the limitation on mergers, sales or consolidations
provisions in this Indenture;
(iii) the Company and its Subsidiaries may sell or dispose
of damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Subsidiary, as applicable;
(iv) the Subsidiaries may convey, sell, transfer, assign or
otherwise dispose of assets to the Company or any of its wholly owned
Subsidiaries; and
(v) the Company and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets (in addition to those
transactions
51
<PAGE>
described in clause (i) through (iv) of this Section 4.13)
with an aggregate fair market value of $5 million in any fiscal year.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds from Asset Sales not applied to the uses set forth in clause (l) of the
first paragraph of this Section 4.10 (the "Excess Proceeds") exceeds $15 million
and that each Asset Sale Offer shall remain open for 20 Business Days following
its commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset
Sale Offer Period, the Company shall apply the Asset Sale Offer Amount plus an
amount equal to accrued interest to the purchase of all Securities properly
tendered (on a PRO RATA basis if the Asset Sale Offer Amount is insufficient to
purchase all Securities so tendered) at the Asset Sale Offer Price (together
with accrued interest). To the extent that the aggregate amount of Securities
tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer
Amount, the Company may use any remaining Net Cash Proceeds for general
corporate purposes as otherwise permitted by this Indenture and following each
Asset Sale Offer the Excess Proceeds amount shall be reset to zero. For
purposes of clause (2) of the first paragraph of this Section 4.13 total
consideration received means the total consideration received for such Asset
Sales minus the amount of (a) Senior Debt assumed by a transferee and (b)
property that within 30 days of such Asset Sale is converted into Cash or Cash
Equivalents.
All Net Cash Proceeds from an Event of Loss shall be invested, used
for prepayment of Senior Debt, or used to repurchase Securities, all within the
period and as otherwise provided above in clause 1(a) or 1(b) of the first
paragraph of this Section 4.13.
Notice of an Asset Sale Offer will be sent 20 Business Days prior to
the close of business on the third Business Day prior to the date set by the
Company to repurchase Securities pursuant to this Section 4.13 (the "Purchase
Date"), by first-class mail, by the Company to each Holder at its registered
address, with a copy to the Trustee. The notice to the Holders will contain all
information, instructions and materials required by applicable law. The notice,
which (to the extent consistent with this Indenture) shall govern the terms of
the Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being made pursuant to
such notice and this Section 4.13;
52
<PAGE>
(2) the Asset Sale Offer, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), and the Purchase
Date, which Purchase Date shall be on or prior to 45 Business Days
following the Excess Proceeds Date;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing Cash
with the Paying Agent in accordance with the provisions of this Section
4.13, any Security, or portion thereof, accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest after the Purchase
Date;
(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Asset Sale Offer will be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 4.13, notwithstanding anything
in this Indenture to the contrary, be the Company or any Affiliate of the
Company) at the address specified in the notice prior to the close of
business on the third Business Day prior to the Purchase Date;
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent receives, up to the
close of business on the third Business Day prior to the Purchase Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Securities the Holder is
withholding and a statement that such Holder is withdrawing his election to
have such principal amount of Securities purchased;
(7) that if Securities in a principal amount in excess of
the principal amount of Securities to be acquired pursuant to the Asset
Sale Offer are tendered and not withdrawn, the Company shall purchase
Securities on a PRO RATA basis (with such adjustments as may be deemed
appropriate by the Company so
53
<PAGE>
that only Securities in denominations of $1,000 or integral multiples of
$1,000 shall be acquired);
(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(9) a brief description of the circumstances and relevant
facts regarding such Asset Sales.
On or before the Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the Asset
Sale Offer on or before the third Business Day prior to the Purchase Date (on a
PRO RATA basis if required pursuant to paragraph (7) hereof) and (ii) deposit
with the Paying Agent Cash sufficient to pay the Asset Sale Offer Price for all
Securities or portions thereof so tendered and accepted plus accrued and unpaid
interest thereon to the Purchase Date. On the Purchase Date, the Company shall
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall on the Purchase Date mail or deliver to Holders
of Securities so accepted payment in an amount equal to the Asset Sale Offer
Price for such Securities (together with accrued and unpaid interest), and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered. Any Security not so accepted shall be promptly mailed or delivered
by the Company to the Holder thereof. The Company agrees that any Asset Sale
Offer shall be made in compliance with all applicable laws, rules, and
regulations, including, if applicable, Regulation 14E of the Exchange Act and
the rules and regulations thereunder and all other applicable Federal and state
securities laws, and any provisions of this Indenture which conflict with such
laws shall be deemed to be superseded by the provisions of such laws.
SECTION IV.14. LIMITATION ON LAYERING INDEBTEDNESS.
The Company shall not, directly or indirectly, incur, or suffer to
exist any Indebtedness that is expressly subordinate in right of payment to any
other Indebtedness of the Company unless, by its terms, such Indebtedness is
subordinate in right of payment to, or ranks PARI PASSU with, the Securities.
54
<PAGE>
SECTION IV.15. LIMITATION ON LINES OF BUSINESS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, engage to any substantial extent in any line or
lines of business activity other than that which, in the reasonable good faith
judgment of the Board of Directors of the Company, is a Related Business.
SECTION IV.16. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time voluntarily insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the principal of, premium of, or interest on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee relating to any such law, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION IV.17. PAYMENT FOR CONSENT.
Neither the Company nor any of its Subsidiaries or Unrestricted
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Securities for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of this Indenture or the Securities unless such
consideration is offered to be paid or agreed to be paid to all holders of the
Securities which so consent, waive or agree to amend in the time frame set forth
in solicitation documents relating to such consent, waiver or agreement.
55
<PAGE>
ARTICLE V
SUCCESSOR CORPORATION
SECTION V.1. LIMITATION ON MERGER, SALE OR CONSOLIDATION.
The Company shall not, directly or indirectly, consolidate with or
merge with or into another person or sell, lease, convey or transfer all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons, unless (i) either (a) the Company is the continuing
entity or (b) the resulting, surviving or transferee entity is a corporation
organized under the laws of the United States, any state thereof or the District
of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Securities and this Indenture;
(ii) no Default or Event of Default shall exist or shall occur immediately after
giving effect on a PRO FORMA basis to such transaction; (iii) immediately after
giving effect to such transaction on a PRO FORMA basis, the Consolidated Net
Worth of the consolidated resulting, surviving or transferee entity is at least
equal to the Consolidated Net Worth of the Company immediately prior to such
transaction; and (iv) immediately after giving effect to such transaction on a
PRO FORMA basis, the consolidated resulting, surviving or transferee entity
would immediately thereafter be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Debt Incurrence Ratio set forth in paragraph (a) of
Section 4.10.
On or prior to the consummation of the proposed transaction, the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that (a) such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture executed in connection therewith comply with this Indenture and (b)
this transaction shall not impair the rights and powers of the Trustee and
Holders of the Securities thereunder. The Trustee shall be entitled to
conclusively rely upon such Officer's Certificate and Opinion of Counsel.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of all or substantially all of the properties and assets of
one or more
56
<PAGE>
Subsidiaries, the Company's interest in which constitutes all or
substantially all of the properties and assets of the Company shall be deemed
to be the transfer of all or substantially all of the properties and assets
of the Company.
SECTION V.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or consummation of a plan of
liquidation in accordance with Section 5.1, the successor Person formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named herein as the Company, and the Company shall be
released from all obligations under the Securities and this Indenture except
with respect to any obligations that arise from, or are related to, such
transaction.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION VI.1. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) the failure by the Company to pay any installment of
interest on the Securities as and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Company to pay all or any part of the
principal, or premium, if any, on the Securities when and as the same becomes
due and payable at maturity, redemption, by acceleration or otherwise,
including, without
57
<PAGE>
limitation, payment of the Change of Control Purchase Price or the Asset Sale
Offer Price, or otherwise;
(c) the failure by the Company or any Subsidiary to observe or
perform any other covenant or agreement contained in the Securities or this
Indenture (other than a default in the performance of any covenant or agreement
which is specifically dealt with elsewhere in this Section 6.1) and the
continuance of such failure for a period of 30 days after written notice is
given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Securities
outstanding specifying such Default and requiring that it be remedied (PROVIDED,
HOWEVER, that the grace period after notice for an Event of Default arising as a
result of the Company's inability to repay Senior Debt in full, or to obtain
requisite consents from holders of Senior Debt to repurchase Securities,
following a Change of Control, or to make the Change of Control Offer as
described in Section 10.1 shall be five days);
(d) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of its
Significant Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order shall
have continued undischarged and unstayed for a period of 60 consecutive days; or
a decree or order of a court of competent jurisdiction, judgment appointing a
receiver, liquidator, trustee, or assignee in bankruptcy or insolvency for the
Company, any of its Significant Subsidiaries, or any substantial part of the
property of any such Person, or for the winding up or liquidation of the affairs
of any such Person, shall have been entered, and such decree, judgment, or order
shall have remained in force undischarged and unstayed for a period of 60 days;
(e) a default in the payment of principal on any issue of
Indebtedness of the Company or any of its Subsidiaries at final stated maturity
or any acceleration for any other reason of the stated maturity of any
Indebtedness of the Company or any of its Subsidiaries in each case with an
aggregate principal amount in excess of $10 million; and
(f) the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a
58
<PAGE>
bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization under any bankruptcy or similar law or similar
statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a Custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any substantial part of its
assets or property, or shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or take any corporate action in furtherance of or to facilitate,
conditionally or otherwise, any of the foregoing; and
(g) final unsatisfied judgments not covered by insurance
aggregating in excess of $10 million, at any one time rendered against the
Company or any of its Subsidiaries and either (i) the commencement by any
creditor of any enforcement proceeding upon any such judgment or order or (ii)
such judgment or order is not stayed, bonded or discharged within 60 days.
Notwithstanding the period and notice requirement contained in Section
6.1(c) above, (i) with respect to a default under Article X, the five day period
referred to in Section 6.1(c) shall be deemed to have begun as of the date
notice of a Change of Control Offer is required to be sent to the Holders in the
event that the Company has not complied with the provisions of Section 10.1, and
the Trustee or Holders of at least 25% in principal amount of the outstanding
Securities thereafter give the Notice of Default referred to in Section 6.1(c)
in respect of such compliance to the Company and, if applicable, the Trustee;
PROVIDED, HOWEVER, that if the breach or default is a result of a default in the
payment when due of the Change of Control Purchase Price on the Change of
Control Payment Date, such default shall be deemed, for purposes of this Section
6.1, to arise on the Change of Control Payment Date; and (ii) with respect to a
default under Section 4.13 requiring the giving of such notice, the 30-day
period referred to in Section 6.1(c) shall be deemed to have begun as of the
date the notice of an Asset Sale Offer is required to be sent in the event that
the Company has not complied with the provisions of Section 4.13, and the
Trustee or Holders of at least 25% in principal amount of the outstanding
Securities thereafter give the Notice of Default referred to in Section 6.1(c)
in respect of such compliance to the Company and, if applicable, the Trustee;
PROVIDED, HOWEVER, that if the breach or default is a result of a default in the
payment when due of the Asset Sale Offer Price on the Purchase Date, such
default shall be deemed, for purposes of this Section 6.1, to arise no later
than on the Purchase Date.
59
<PAGE>
SECTION VI.2. ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clauses (d) and (f) of Section 6.1, relating to the
Company only) then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of the Securities then outstanding,
by notice in writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all principal, determined as set forth
below, and accrued interest thereon to be due and payable immediately; PROVIDED,
HOWEVER, that if any Senior Debt is outstanding pursuant to the Credit
Agreement, upon a declaration of such acceleration, such principal and interest
shall be due and payable upon the earlier of (x) the third Business Day after
the sending to the Company and the Senior Debt Representatives of such written
notice, unless such Event of Default is cured or waived prior to such date and
(y) the date of acceleration of any Senior Debt under the Credit Agreement. If
an Event of Default specified in clauses (d) and (f) of Section 6.1, relating to
the Company only occurs, all principal and accrued interest thereon will be
immediately due and payable on all outstanding Securities without any
declaration or other act on the part of Trustee or the Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of not less
than a majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee Cash
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, applicable to)
any Securities which would become due other than by reason of such
declaration of acceleration, and interest thereon at the rate borne by the
Securities,
60
<PAGE>
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
(D) all sums paid or advanced by the Trustee hereunder and
the compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel (provided, however, that nothing contained in this
Indenture shall be deemed to imply that the Trustee is required to pay or
advance any funds), and any other amounts due the Trustee under Section
7.7, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on Securities which have become
due solely by such declaration of acceleration, have been cured or waived
as provided in Section 6.12, including, if applicable, any Event of Default
relating to the covenants contained in Section 10.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to (i) any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent default or impair any
right consequent thereon.
The Trustee shall provide to each Senior Debt Representative a copy of
each Acceleration Notice that it sends, and of each Acceleration Notice and
notice of rescission of a declaration of acceleration that it receives, under
this Section 6.2, on the date that the Trustee sends any such notice, and as
promptly as possible following the date that the Trustee receives any such
notice.
61
<PAGE>
SECTION VI.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clause (a) or (b) of Section 6.1
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses, disbursements and advances
of the Trustee and its agents and counsel and all other amounts due the Trustee
under Section 7.7.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
62
<PAGE>
SECTION VI.4. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal and premium, if any, or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in respect of
the Securities and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel and all
other amounts due the Trustee under Section 7.7) and of the Holders allowed
in such judicial proceeding, and
(2) to collect and receive any moneys or securities or
other property payable or deliverable upon conversion or exchange of the
Securities or upon any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 7.7. To the extent that the payment
of any such compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.7
out of the estate in any such proceeding shall be denied for any reason, payment
of the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be
63
<PAGE>
entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION VI.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel and
all other amounts due the Trustee under Section 7.7, be for the ratable benefit
of the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION VI.6. PRIORITIES.
Any money collected by the Trustee pursuant to this Article VI shall,
subject to Article XI, be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal, premium (if any) or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference
64
<PAGE>
or priority of any kind, according to the amounts due and payable on such
Securities for principal, premium (if any) and interest, respectively; and
THIRD: To the Company or such other Person as a court of competent
jurisdiction shall direct, the remainder, if any.
The Trustee may, but shall not be obligated to, fix a record date and
payment date for any payment to the Holders under this Section 6.6.
SECTION VI.7. LIMITATION ON SUITS.
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in aggregate principal
amount of then outstanding Securities shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities to be incurred or reasonably probable to be incurred in
compliance with such request;
(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to
65
<PAGE>
affect, disturb or prejudice the rights of any other Holders, or to obtain or
to seek to obtain priority or preference over any other Holders or to enforce
any right under this Indenture, except in the manner herein provided and for
the equal and ratable benefit of all the Holders.
SECTION VI.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and interest on, such
Security on the respective dates such payments are due as expressed in such
Security (in the case of redemption, the Redemption Price on the applicable
Redemption Date, in the case of an Asset Sale Offer, the Asset Sale Offer Price,
on the date of payment thereof and in the case of a Change of Control, the
Change of Control Offer Price, on the date of payment thereof) and to institute
suit for the enforcement of any such payment after such respective dates, and
such rights shall not be impaired without the consent of such Holder.
SECTION VI.9. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
66
<PAGE>
SECTION VI.10. DELAY OR OMISSION NOT WAIVER.
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VI or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION VI.11. CONTROL BY HOLDERS.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, PROVIDED, that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture or involve the Trustee in personal liability,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction or that may involve the Trustee in personal liability, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION VI.12. WAIVER OF PAST DEFAULT.
Subject to Section 6.8, prior to the declaration of acceleration of
the maturity of the Securities, the Holder or Holders of not less than a
majority in aggregate principal amount of the Securities then outstanding may,
on behalf of all Holders, waive any past default hereunder and its consequences,
except a default
67
<PAGE>
(A) in the payment of the principal of, premium, if any, or
interest on, any Security as specified in clauses (a) and (b) of Section
6.1 and not yet cured; or
(B) in respect of a covenant or provision hereof which,
under Article IX, cannot be modified or amended without the consent of the
Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair the exercise of any right arising
therefrom.
In the case of any such waiver, the Company, the Trustee and the
Holders of all the Securities shall be restored to their former positions and
rights hereunder, respectively.
SECTION VI.13. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted to be taken by it
as Trustee, any court may in its discretion require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 6.13 shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% in aggregate principal amount of the
outstanding Securities, or to any suit instituted by any Holder for enforcement
of the payment of principal of, or premium (if any) or interest on, any Security
on or after the respective due dates expressed in such Security (including, in
the case of redemption, on or after the Redemption Date).
68
<PAGE>
SECTION VI.14. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed, subject to
the terms hereof.
SECTION VII.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no covenants or
obligations shall be implied in or read into this Indenture which are
adverse to the Trustee, and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and
69
<PAGE>
conforming to the requirements of this Indenture. However, in the case of
any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1,
(2) The Trustee shall not be liable for any error of judgment
made in good faith by it, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts, and
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(4) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take
any action under this Indenture or at the request, order or direction of
the Holders or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
(d) Whether or not therein expressly provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.1.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may otherwise agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
70
<PAGE>
SECTION 7.2. RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 13.4 and 13.5. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture, nor for any action
permitted to be taken or omitted hereunder by any Agent.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
71
<PAGE>
(g) Unless otherwise specifically provided for in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the
performance of the Company's covenants in Article IV hereof or as to the
performance by any Agent of its duties hereunder. In addition, the Trustee
shall not be deemed to have knowledge of any Default or Event of Default except
any Default or Event of Default of which the Trustee shall have received written
notification or with respect to which a Trust Officer shall have actual
knowledge.
(i) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any of
its Subsidiaries, or its Affiliates with the same rights the Trustee would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication (if executed by the Trustee), or the use or
application of any funds received by a Paying Agent other than the Trustee.
72
<PAGE>
SECTION 7.5. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder and the
Senior Debt Representatives notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs. Except in the
case of a Default or an Event of Default in payment of principal (or premium, if
any) of, or interest on, any Security (including the payment of the Change of
Control Purchase Price on the Change of Control Purchase Date, the payment of
the Redemption Price on the Redemption Date and the payment of the Asset Sale
Price on the date of payment thereof), the Trustee may withhold the notice if
and so long as the Board of Directors, the executive committee or a trust
committee of the directors and/or Trust Officers in good faith determines that
withholding the notice is in the interest of the Securityholders.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each January 31, beginning with January 31, 1997,
the Trustee shall mail to each Securityholder a brief report dated as of such
January 31 that complies with TIA Section 313(a); but if no event described in
TIA Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted. If applicable, Trustee also shall comply
with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
73
<PAGE>
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Company agrees to pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances, if any, incurred or made by it in accordance with this Indenture.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it and each of them harmless against, any claim, demand, expense
(including but not limited to reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel), loss or liability incurred by it
without negligence or bad faith on the part of the Trustee, arising out of or in
connection with the administration of this trust and its rights or duties
hereunder including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Trustee agrees to notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. The Company need not reimburse any expense or indemnify against any
loss or liability to the extent incurred by the Trustee through its negligence,
bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(d) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any Lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the
74
<PAGE>
Company's obligations pursuant to Article VIII of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company in writing, to
become effective upon the appointment of a successor trustee. The Holder or
Holders of a majority in aggregate principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee and the Holder of any Securities who has been a
beneficial Holder of a Security for at least six months may, on behalf of such
Holder and all Holders similarly situated, petition any court of competent
competition for the removal of the Trustee and the appointment of a successor
trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes charge
of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company or the court of competent
jurisdiction, as the case may be, shall promptly appoint a successor Trustee.
If, within one year after such resignation or removal no successor Trustee has
been appointed, the Holder or Holders of a majority in aggregate principal
amount of the Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in Section
7.7 have been paid, the retiring Trustee shall transfer all property held by it
as trustee to the successor Trustee, subject to the lien provided in Section
7.7, the resignation or removal of the retiring
75
<PAGE>
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in aggregate principal amount of the
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee (together with its corporate parent) shall
have a combined capital and surplus of at least $25,000,000 as set forth in its
most recent published annual report of condition. The Trustee is subject to TIA
Section 310(b).
76
<PAGE>
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
77
<PAGE>
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The Company may, at its option and at any time, elect to have Section
8.2 or Section 8.3 applied to all outstanding Securities upon compliance with
the conditions set forth below in this Article VIII.
SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.2, the Company shall be deemed to have been discharged from
its obligations with respect to all outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of the Sections of this Indenture referred to in (a) through (d)
below, and to have satisfied all its other obligations under such Securities and
this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due from the trust funds described below; (b) the Company's
obligations with respect to such Securities concerning issuing temporary
Securities, registration of Securities, mutilated, destroyed, lost or stolen
Securities, and the maintenance of an office or agency for payment and money for
security payments held in trust; (c) the rights, powers, trust, duties, and
immunities of the Trustee, and the Company's obligations in connection
therewith; and (d) this Article VIII. Subject to compliance with this Article
VIII, the Company may exercise its option under this Section 8.2 notwithstanding
the prior exercise of its option under Section 8.3 with respect to the
Securities.
78
<PAGE>
SECTION 8.3. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.3, the Company shall be released from its obligations under
the covenants contained in Sections 4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11,
4.12, 4.13, 4.14, and 4.15, Article V and Article X with respect to the
outstanding Securities on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities, the Company
need not comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document (and Section 6.1(c) shall not apply to any such covenant),
but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.1 of the option applicable to this Section 8.3,
Sections 6.1(d) through 6.1(g) shall not constitute Events of Default.
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfactory to the Trustee
satisfying the requirements of Section 7.10 who shall agree to comply with the
provisions of this Article VIII applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Securities, (a)
Cash in an amount, or (b) U.S. Government Obligations (not subject to prepayment
or redemption prior to maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, Cash in an
amount,
79
<PAGE>
or (c) a combination thereof, in such amounts, as in each case will be
sufficient without the need to reinvest, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge and which
shall be applied by the Paying Agent (or other qualifying trustee) to pay and
discharge the principal of, premium, if any, and interest on the outstanding
Securities on the stated maturity or on the applicable redemption date, as the
case may be, of such principal or installment of principal, premium, if any, or
interest on the Securities; PROVIDED that the Paying Agent shall have been
irrevocably instructed to apply such Cash and the proceeds of such U.S.
Government Obligations to said payments with respect to the Securities. The
Paying Agent shall promptly advise the Trustee in writing of any Cash or
Securities deposited pursuant to this Section 8.4;
(b) In the case of an election under Section 8.2, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.3, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to Federal income tax in the same amount, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such deposit or,
insofar as Section 6.1(d) or Section 6.1(f) is concerned, at any time in the
period ending on the 91st day after the date of such deposit (it being
understood that this condition is a condition subsequent which shall not be
deemed satisfied until the expiration of such period, but in the
80
<PAGE>
case of Covenant Defeasance, the covenants which are defeased under Section
8.3 will cease to be in effect unless an Event of Default under Section
6.1(d) or Section 6.1(f) occurs during such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) In the case of an election under either Section 8.2 or 8.3,
the Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.2
or 8.3 was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the conditions
precedent provided for in, in the case of the Officer's Certificate, clauses (a)
through (f), and, in the case of the Opinion of Counsel, clauses (a) (with
respect to the validity and perfection of the security interest), (b), (c) and
(e) of this Section 8.4 have been complied with.
SECTION 8.5. DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6, all Cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Paying Agent (or other
qualifying trustee, collectively for purposes of this Section 8.5, the "Paying
Agent") pursuant to Section 8.4 in respect of the outstanding Securities shall
be held in trust and applied by the Paying Agent, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any other Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.6. REPAYMENT TO THE COMPANY.
81
<PAGE>
Anything in this Article VIII to the contrary notwithstanding, the
Trustee or the Paying Agent, as applicable, shall deliver or pay to the Company
from time to time upon the request of the Company any Cash or U.S. Government
Obligations held by it as provided in Section 8.4 hereof which in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4(a) hereof), are in excess of the amount thereof that
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.
Any Cash and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall,
subject to the requirements of applicable law, be paid to the Company on its
request; and the Holder of such Security shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in the
NEW YORK TIMES and THE WALL STREET JOURNAL (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
82
<PAGE>
SECTION 8.7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any Cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3
until such time as the Trustee or Paying Agent is permitted to apply such money
in accordance with Section 8.2 and 8.3, as the case may be; PROVIDED, HOWEVER,
that, if the Company makes any payment of principal of, premium, if any, or
interest on any Security following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the Cash and U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture,
PROVIDED such action pursuant to this clause shall not adversely affect the
interests of the Holders;
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon the
Company;
83
<PAGE>
(3) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the obligations of the Company,
herein and in the Securities in accordance with Article V;
(4) to comply with the TIA;
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities; or
(6) to secure the Securities in accordance with the provisions
of Section 4.12.
SECTION 9.2. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH
CONSENT OF HOLDERS.
Subject to Section 6.8, with the consent of the Holders of not less
than a majority in aggregate principal amount of then outstanding Securities, by
written act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture or the Securities or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Securities or of modifying in any manner the rights of the Holders under
this Indenture or the Securities. Subject to Section 6.8, the Holder or Holders
of not less than a majority in aggregate principal amount of then outstanding
Securities may waive compliance by the Company with any provision of this
Indenture or the Securities. Notwithstanding any of the above, however, no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holder of each outstanding Security affected thereby:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any provision of
this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on any
Security;
84
<PAGE>
(3) reduce the principal or premium amount of any Security, or reduce
the Change of Control Purchase Price, the Asset Sale Offer Price or the
Redemption Price, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
(4) change the Stated Maturity;
(5) alter the redemption provisions of Article III (including the
defined terms therein) in a manner adverse to any Holder;
(6) make any changes in the provisions concerning waivers of Defaults
or Events of Default by Holders of the Securities or the rights of Holders to
recover the principal or premium of, interest on, or redemption payment with
respect to, any Security, including without limitation any changes in Section
6.8, 6.12 or this third sentence of this Section 9.2, except to increase any
required percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
outstanding Security affected thereby;
(7) make the principal of, or the interest or premium on, any
Security payable with anything or in any manner other than as provided for in
this Indenture (including changing the place of payment where, or the coin or
currency in which, any Security or any premium or the interest thereon is
payable) and the Securities as in effect on the date hereof; or
(8) make the Securities further subordinated in right of payment to
any extent or under any circumstances to any other Indebtedness (it being
understood that amendments to Section 4.10 hereof which may have the effect of
increasing the amount of Senior Debt that the Company may Incur shall not, for
purposes of this clause (8), be deemed to make the Securities further
subordinated in right of payment to any extent or under any circumstances to any
other Indebtedness).
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
85
<PAGE>
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.3. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by written notice to the
Company or the Person designated by the Company as the Person to whom consents
should be sent if such revocation is received by the Company or such Person
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the
86
<PAGE>
provisions of the TIA. If a record date is fixed, then notwithstanding the
last sentence of the immediately preceding paragraph, those Persons who were
Holders at such record date, and only those Persons (or their duly designated
proxies), shall be entitled to revoke any consent previously given, whether
or not such Persons continue to be Holders after such record date. No such
consent shall be valid or effective for more than 90 days after such record
date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; PROVIDED, that any such
waiver shall not impair or affect the right of any other Holder to receive
payment of principal and premium of and interest on a Security, on or after the
respective dates set for such amounts to become due and payable expressed in
such Security, or to bring suit for the enforcement of any such payment on or
after such respective dates.
SECTION 9.5. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms. Any
failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment, supplement or waiver.
87
<PAGE>
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; PROVIDED, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in conclusively relying upon, an Officers' Certificate and an Opinion
of Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article IX is authorized or permitted by this
Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 10.1. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A
CHANGE OF CONTROL.
(a) In the event that a Change of Control occurs, each Holder
shall have the right, at such Holder's option, pursuant to an irrevocable and
unconditional offer by the Company (the "Change of Control Offer") subject to
the terms and conditions of this Indenture, to require the Company to repurchase
all or any part of such Holder's Securities (PROVIDED, that the principal amount
of such Securities at maturity must be $1,000 or an integral multiple thereof)
on a date selected by the Company that is no later than 35 Business Days after
the occurrence of such Change of Control (the "Change of Control Purchase
Date"), at a cash price (the "Change of Control Purchase Price") equal to 101%
of the principal amount thereof, plus (subject to the right of Holders of record
on a Record Date to receive interest due on an Interest Payment Date that is on
or prior to such repurchase date and subject to clause (b)(4) below) accrued and
unpaid interest, if any, to the Change of Control Purchase Date.
If the terms of any outstanding Senior Debt prohibit the Company from
repurchasing Securities in accordance with the terms of paragraph (a) of this
Section 10.1, then prior to the making of the offer, but in any event within 10
Business Days following any Change of Control, the Company covenants to
(i) repay in full such Senior Debt or offer to repay in full such Senior
88
<PAGE>
Debt and repay such Senior Debt of each holder thereof who has accepted such
offer or (ii) obtain the requisite consent under such Senior Debt to permit
the repurchase of Securities in accordance with the terms of this Section
10.1. The Company shall first comply with the preceding sentence before it
shall be required to repurchase Securities pursuant to this Section 10.1.
(b) In the event of a Change of Control, the Company shall be
required to commence an offer to purchase Securities (a "Change of Control
Offer") as follows:
(1) the Change of Control Offer shall commence within 10
Business Days following the occurrence of the Change of Control;
(2) the Change of Control Offer shall remain open for not less
than 20 Business Days following its commencement (the "Change of Control
Offer Period");
(3) upon the expiration of the Change of Control Offer Period,
the Company shall purchase all of the properly tendered Securities at the
Change of Control Purchase Price, plus accrued and unpaid interest thereon;
(4) if the Change of Control Purchase Date is on or after a
Record Date and on or before the related interest payment date, any accrued
interest will be paid to the Person in whose name a Security is registered
at the close of business on such Record Date, and no additional interest
will be payable to Securityholders who tender Securities pursuant to the
Change of Control Offer;
(5) the Company shall provide the Trustee and the Paying Agent
with written notice of the Change of Control Offer at least three Business
Days before the commencement of any Change of Control Offer; and
(6) on or before the commencement of any Change of Control
Offer, the Company or the Registrar (upon the request and at the expense of
the Company) shall send, by first-class mail, a notice to each of the
Securityholders, which (to the extent consistent with this Indenture) shall
govern the terms of the Change of Control Offer and shall state:
89
<PAGE>
(i) that the Change of Control Offer is being made pursuant
to such notice and this Section 10.1 and that all Securities, or portions
thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the
amount of accrued and unpaid interest, subject to clause (b)(4) above) and
the Change of Control Purchase Date;
(iii) that any Security, or portion thereof, not tendered
or accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing Cash
with the Paying Agent in accordance with the last paragraph of this Article
X or such payment is prevented, any Security, or portion thereof, accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be required
to surrender the Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security completed, to the Paying
Agent (which may not for purposes of this Section 10.1, notwithstanding
anything in this Indenture to the contrary, be the Company or any Affiliate
of the Company) at the address specified in the notice prior to the
expiration of the Change of Control Offer;
(vi) that Holders will be entitled to withdraw their
election, in whole or in part, if the Paying Agent (which may not for
purposes of this Section 10.1, notwithstanding anything in this Indenture
to the contrary, be the Company or any Affiliate of the Company) receives,
prior to the expiration of the Change of Control Offer, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have such
principal amount of Securities purchased; and
90
<PAGE>
(vii) a brief description of the events resulting in such
Change of Control.
Any such Change of Control Offer shall be made in compliance with
all applicable Federal and state laws, rules and regulations, including, if
applicable, Regulation 14E under the Exchange Act and the rules thereunder
and all other applicable Federal and state securities laws, and any
provisions of this Indenture which conflict with such laws shall be deemed to
be superseded by the provisions of such laws.
On or before the Change of Control Purchase Date, the Company shall
(i) accept for payment Securities or portions thereof properly tendered
pursuant to the Change of Control Offer prior to the expiration of the Change
of Control Offer, (ii) deposit with the Paying Agent Cash sufficient to pay
the Change of Control Purchase Price (together with accrued and unpaid
interest, subject to clause (b)(4) above) for all Securities or portions
thereof so tendered and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate listing the Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail
to Holders of Securities so accepted payment in an amount equal to the Change
of Control Purchase Price (together with accrued and unpaid interest, subject
to clause (b)(4) above), for such Securities (subject to clause (b)(4)
above), and the Trustee or its authenticating agent shall promptly
authenticate and mail or deliver (or cause to be transferred by book entry)
to such Holders a new Security equal in principal amount to any unpurchased
portion of the Security surrendered; PROVIDED, HOWEVER, that each such new
Security will be in a principal amount of $1,000 or an integral multiple
thereof. Any Securities not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.
ARTICLE XI
SUBORDINATION
SECTION 11.1. SECURITIES SUBORDINATED TO SENIOR DEBT.
91
<PAGE>
The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of and interest on the Securities and
(b) any other payment in respect of the Securities, including on account of
the acquisition or redemption of the Securities by the Company (including,
without limitation, pursuant to Section 4.13 or 10.1) is subordinated, to the
extent and in the manner provided in this Article XI, to the prior payment in
full in Cash or Cash Equivalents of all Senior Debt of the Company and that
these subordination provisions are for the benefit of the holders of Senior
Debt.
This Article XI shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to
hold, Senior Debt, and such provisions are made for the benefit of the
holders of Senior Debt, and such holders are made obligees hereunder and any
one or more of them may enforce such provisions.
SECTION 11.2. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) No payment (by set-off or otherwise) shall be made by or
on behalf of the Company on account of the principal of, premium, if any, or
interest on the Securities (including any repurchases of Securities), or on
account of the redemption provisions of the Securities or any Obligation in
respect of the Securities, for cash or property (other than Junior
Securities), (i) upon the maturity of any Senior Debt of the Company by lapse
of time, acceleration (unless waived) or otherwise, unless and until all
principal of, premium, if any, and interest on such Senior Debt are first
paid in full in cash or Cash Equivalents (or such payment is duly provided
for) or otherwise to the extent holders accept satisfaction of amounts due by
settlement in other than cash or Cash Equivalents, or (ii) in the event of
default in the payment of any principal of, premium, if any, or interest on
Senior Debt of the Company when it becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise (a
"Payment Default"), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than
a Payment Default) that permits the holders of Senior Debt to declare such
Senior Debt to be due and payable and (ii) written notice of such event of
default given to the Company and the Trustee by the Senior Debt
Representatives (a "Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment
(by set-off or otherwise) may be made by or on behalf of the Company which
92
<PAGE>
is an obligor on such Senior Debt on account of the principal of, premium, if
any, or interest on the Securities (including any repurchases of any of the
Securities), or on account of the redemption provisions of the Securities or
any Obligation in respect of the Securities, in any such case, other than
payments made with Junior Securities. Notwithstanding the foregoing, unless
the Senior Debt in respect of which such event of default exists has been
declared due and payable in its entirety within 179 days after the Payment
Notice is delivered as set forth above (the "Payment Blockage Period") (and
such declaration has not been rescinded or waived), at the end of the Payment
Blockage Period, the Company shall, unless a Payment Default exists, be
required to pay all sums not paid to the Holders of the Securities during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Securities. Any number of Payment
Notices may be given; PROVIDED, HOWEVER, that (i) not more than one Payment
Notice shall be given within a period of any 360 consecutive days, and (ii)
no default that existed upon the date of such Payment Notice or the
commencement of such Payment Blockage Period (whether or not such event of
default is on the same issue of Senior Debt) shall be made the basis for the
commencement of any other Payment Blockage Period.
(c) In furtherance of the provisions of Section 11.1, in the
event that, notwithstanding the foregoing provisions of this Section 11.2,
any payment or distribution of assets of the Company (other than Junior
Securities) shall be received by the Trustee at a time when such payment or
distribution is prohibited by the provisions of this Section 11.2, such
payment or distribution shall be held in trust for the benefit of the holders
of such Senior Debt, and shall be paid or delivered by the Trustee, to the
holders of such Senior Debt remaining unpaid or unprovided for or to their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Debt may have been issued, ratably according to the aggregate principal
amounts remaining unpaid on account of such Senior Debt held or represented
by each, for application to the payment of all such Senior Debt remaining
unpaid, to the extent necessary to pay of provide for the payment of all such
Senior Debt in full in cash or Cash Equivalents after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
93
<PAGE>
SECTION 11.3. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
DEBT ON DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of the Company upon any
dissolution, winding up, total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshalling of assets or liabilities:
(a) the holders of all Senior Debt of the Company will first
be entitled to receive payment in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment on account of the principal of,
premium, if any, and interest on the Securities or any Obligation in respect
of the Securities (other than Junior Securities);
(b) any payment or distribution of assets of the Company of
any kind or character from any source, whether in cash, property or
securities (other than Junior Securities) to which the Holders or the Trustee
on behalf of the Holders would be entitled (by set-off or otherwise), except
for the provisions of this Article XI, shall be paid by the liquidating
trustee or agent or other person making such a payment or distribution
directly to the holders of such Senior Debt or their representative to the
extent necessary to make payment in full (or have such payment duly provided
for) on all such Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company (other than Junior
Securities) shall be received by the Trustee at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the holders of such
Senior Debt, and shall be paid or delivered by the Trustee to the holders of
such Senior Debt remaining unpaid to their representative or representatives,
or to the trustee or trustees under any indenture pursuant to which any
instruments evidencing any of such Senior Debt may have been issued, ratably
according to the aggregate principal amounts remaining unpaid on account of
such Senior Debt held or represented by each, for application to the payment
of all such Senior Debt remaining unpaid, to the extent
94
<PAGE>
necessary to pay all such Senior Debt in full in cash or Cash Equivalents
after giving effect to any concurrent payment or distribution to the holders
of such Senior Debt.
SECTION 11.4. SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS
OF SENIOR DEBT.
Subject to the payment in full in Cash or Cash Equivalents of all
Senior Debt of the Company as provided herein, the Holders of Securities
shall be subrogated to the rights of the holders of such Senior Debt to
receive payments or distributions of assets of the Company applicable to the
Senior Debt until all amounts owing on the Securities shall be paid in full,
and for the purpose of such subrogation no such payments or distributions to
the holders of such Senior Debt by or on behalf of the Company, or by or on
behalf of the Holders by virtue of this Article XI, which otherwise would
have been made to the Holders shall, as between the Company and the Holders,
be deemed to be payment by the Company or on account of such Senior Debt, it
being understood that the provisions of this Article XI are and are intended
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of such Senior Debt, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XI shall have been
applied, pursuant to the provisions of this Article XI, to the payment of
amounts payable under Senior Debt of the Company, then the Holders shall be
entitled to receive from the holders of such Senior Debt any payments or
distributions received by such holders of Senior Debt in excess of the amount
sufficient to pay all amounts payable under or in respect of such Senior Debt
in full in Cash or Cash Equivalents.
95
<PAGE>
SECTION 11.5. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article XI or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Company
and the Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Company other than the
holders of the Senior Debt, nor shall anything herein or therein prevent the
Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article XI, of the holders of Senior Debt in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy. Notwithstanding anything to the contrary in this Article XI or
elsewhere in this Indenture or in the Securities, upon any distribution of
assets of the Company referred to in this Article XI, the Trustee, subject to
the provisions of Sections 7.1 and 7.2, and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding up, liquidation or reorganization proceedings
are pending, or a certificate of the liquidating Trustee or agent or other
Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
XI so long as such court has been apprised of the provisions of, or the
order, decree or certificate makes reference to, the provisions of this
Article XI. Nothing in this Section 11.5 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.7.
96
<PAGE>
SECTION 11.6. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or
by the Trustee unless and until a Trust Officer of the Trustee or any Paying
Agent shall have received, no later than two Business Days prior to such
payment, written notice thereof from the Company or from one or more holders
of Senior Debt or from any representative therefor and, prior to the receipt
of any such written notice, the Trustee, subject to the provisions of
Sections 7.1 and 7.2, shall be entitled in all respects conclusively to
assume that no such fact exists.
SECTION 11.7. APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Securityholders
and, to the extent allocated for the payment of Securities, shall not be
subject to the subordination provisions of this Article XI. Otherwise, any
deposit of assets with the Trustee or the Agent (whether or not in trust) for
the payment of principal of or interest on any Securities shall be subject to
the provisions of Sections 11.1, 11.2, 11.3 and 11.4; PROVIDED that, if prior
to two Business Days preceding the date on which by the terms of this
Indenture any such assets may become distributable for any purpose (including
without limitation, the payment of either principal of or interest on any
Security) the Trustee or such Paying Agent shall not have received with
respect to such assets the written notice provided for in Section 11.6, then
the Trustee or such Paying Agent shall have full power and authority to
receive such assets and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may
be received by it on or after such date.
97
<PAGE>
SECTION 11.8. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF THE COMPANY OR HOLDERS OF SENIOR DEBT.
No right of any present or future holders of any Senior Debt to
enforce subordination provisions contained in this Article XI shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have
or be otherwise charged with. The holders of Senior Debt may extend, renew,
modify or amend the terms of the Senior Debt or any security therefor and
release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties
to this Indenture or the Holders.
98
<PAGE>
SECTION 11.9. SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES.
Each Holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained
in this Article XI and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors
or any other marshalling of assets and liabilities of the Company), the
immediate filing of a claim for the unpaid balance of his Securities in the
form required in said proceedings and cause said claim to be approved. If
the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or
their representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on
behalf of the Holders of said Securities. Nothing herein contained shall be
deemed to authorize the Trustee or the holders of Senior Debt or their
representative to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee or the holders of Senior Debt or their
representative to vote in respect of the claim of any Securityholder in any
such proceeding.
SECTION 11.10. RIGHT OF TRUSTEE TO HOLD SENIOR DEBT.
The Trustee shall be entitled to all of the rights set forth in
this Article XI in respect of any Senior Debt at any time held by it to the
same extent as any other holder of Senior Debt, and nothing in this Indenture
shall be construed to deprive the Trustee of any of its rights as such holder.
99
<PAGE>
SECTION 11.11. ARTICLE XI NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of, premium,
if any, or interest on the Securities by reason of any provision of this
Article XI shall not be construed as preventing the occurrence of a Default
or an Event of Default under Section 6.1 or in any way limit the rights of
the Trustee or any Holder to pursue any other rights or remedies with respect
to the Securities.
SECTION 11.12. NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR
DEBT.
Notwithstanding anything to the contrary herein, the Trustee shall
not be deemed to owe any fiduciary duty to any present or future holders of
Senior Debt, and shall not be liable to any such holders (other than for its
willful misconduct or gross negligence) if it shall in good faith mistakenly
pay over or distribute to the Holders of Securities or the Company or any
other Person, cash, property or securities to which any holders of Senior
Debt shall be entitled by virtue of this Article XI or otherwise. The
Trustee undertakes to perform or to observe only such of the covenants and
obligations as are specifically set forth in this Article XI, and no implied
covenants or obligations with respect to such holders of Senior Debt shall be
implied in this Indenture against the Trustee. Nothing in this Section 11.12
shall affect the obligation of any other such Person to hold such payment for
the benefit of, and to pay such payment over to, the holders of Senior Debt
or their representative. In the event of any conflict between the fiduciary
duty of the Trustee to the Holders of Securities and to the holders of Senior
Debt, the Trustee is expressly authorized to resolve such conflict in favor
of the Holders.
100
<PAGE>
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
SECTION 12.2. NOTICES.
Any notices or other communications to the Company, Paying Agent,
Registrar, Securities Custodian, transfer agent or the Trustee required or
permitted hereunder shall be in writing, and shall be sufficiently given if
made by hand delivery, by telex, by telecopier, nationally recognized
overnight courier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, Il 60610
Attention: Daniel L. Simon
Telephone: (312) 644-8673
Telecopy: (312) 644-8071
if to the Trustee:
United States Trust Company
of New York
114 West 47th Street
New York, NY 10036-15
Attention: Corporate Trust and
101
<PAGE>
Agency Division
Telephone: (212) 852-1000
Telecopy: (212) 852-1626
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any
notice or communication to any party shall be deemed to have been given or
made as of the date so delivered, if personally delivered; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and five
Business Days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to
have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him or her by first-class mail or other equivalent means at his or
her address as it appears on the registration books of the Registrar and
shall be sufficiently given to him or her if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee at the same time.
SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and any other Person
shall have the protection of TIA Section 312(c).
102
<PAGE>
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, such Person shall furnish to the
Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been met; and
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
such counsel, all such conditions precedent have been met;
PROVIDED, HOWEVER, that in the case of any such request or application as to
which the furnishing of particular documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished under this Section 13.4.
SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been met; and
103
<PAGE>
(4) a statement as to whether or not, in the opinion of
each such Person, such condition or covenant has been met; PROVIDED,
HOWEVER, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting
of Securityholders. The Paying Agent or Registrar may make reasonable rules
for its functions.
SECTION 12.7. NON-BUSINESS DAYS.
If a payment date is not a Business Day at such place, payment may
be made at such place on the next succeeding day that is a Business Day, and
no interest shall accrue for the intervening period.
104
<PAGE>
SECTION 12.8. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
105
<PAGE>
SECTION 12.10. NO RECOURSE AGAINST OTHERS.
No direct or indirect stockholder, employee, officer or director,
as such, past, present or future of the Company or any successor entity,
shall have any personal liability in respect of the obligations of the
Company under the Securities or this Indenture by reason of his, her or its
status as such stockholder, employee, officer or director. Each
Securityholder by accepting a Security waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
SECTION 12.11. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities
shall bind its successors and assigns. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 12.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 12.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in
the Securities shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents and headings of the Articles and the Sections
of this Indenture have been inserted for convenience of reference only, are
not to be considered a part hereof and shall in no way modify or restrict any
of the terms or provisions hereof.
106
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
UNIVERSAL OUTDOOR, INC.
By: /s/ Brian T. Clingen
----------------------------------------
Name: Brian T. Clingen
Title: Vice President
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ John Guiliano
----------------------------------------
Name: John Guiliano
Title: Vice President
107
<PAGE>
Exhibit A
UNIVERSAL OUTDOOR, INC.
9 3/4% SENIOR SUBORDINATED NOTE
DUE 2006
CUSIP: 913777AF5
No. $_________
Universal Outdoor, Inc., an Illinois corporation (hereinafter
called the "Company," which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
________________________________, or registered assigns, the principal sum of
______________ Dollars, on October 15, 2006.
Interest Payment Dates: April 15 and October 15 commencing April
15, 1997.
Record Dates: April 1 and October 1
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be
duly executed under its corporate seal.
Dated:
UNIVERSAL OUTDOOR, INC., an
Illinois corporation
[Seal]
By:
------------------------------------
Name:
A-1
<PAGE>
Title:
Attest:
-------------------------------
Secretary
A-2
<PAGE>
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned
Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee and
Authenticating Agent
By:
-----------------------------------
Authorized Signatory
Dated:
--------------------------------
A-3
<PAGE>
UNIVERSAL OUTDOOR INC.
9 3/4% SENIOR SUBORDINATED NOTE
DUE 2006
Unless and until it is exchanged in whole or in part for Securities
in definitive form, this Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) ("DTC"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein. (1)
1. INTEREST.
Universal Outdoor, Inc., an Illinois corporation (hereinafter
called the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of 9 3/4% per annum from October 16, 1996 until
maturity. To the extent it is lawful, the Company promises to pay interest
on any interest payment due but unpaid on such principal amount at a rate of
9 3/4% per annum compounded semi-annually.
The Company will pay interest semi-annually on April 15 and October
15 of each year or, if any such day is not a Business Day, on the next
succeeding Business Day (each, an "Interest Payment Date"), commencing April
15, 1997. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no
- --------------------------
(1) This paragraph should only be added if the Security is issued in global
form.
A-4
<PAGE>
interest has been paid on the Securities, from the date of issuance.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of
business on the April 1 or October 1 immediately preceding the Interest
Payment Date. Holders must surrender Securities to a Paying Agent to collect
principal payments. Except as provided below, the Company shall pay
principal and interest in such coin or currency of the United States of
America as at the time of payment shall be legal tender for payment of public
and private debts ("Cash"). The Securities will be payable as to principal,
premium, if any, and interest, and the Securities may be presented for
registration of transfer or exchange, at the office or agency of the Company
maintained for such purpose within or without the Borough of Manhattan, the
City and State of New York or, at the option of the Company, payment of
interest may be made by check mailed to the Holders at their addresses set
forth in the register of Holders, and PROVIDED that payment by wire transfer
of immediately available funds will be required with respect to principal of
and interest and premium on all Global Securities and all other Securities
the Holders of which shall have provided wire transfer instructions to an
account within the United States to the Company or the Paying Agent. Until
otherwise designated by the Company, the Company's office or agency will be
the corporate trust office of the Trustee presently located at the Trustee's
agency at 114 West 47th Street, New York, New York 10036-15.
3. PAYING AGENT AND REGISTRAR.
Initially, the United States Trust Company of New York (the
"Trustee," which term includes any successor Trustee under the Indenture)
will act as Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders. The Company
or any of its Subsidiaries may, subject to certain exceptions, act as Paying
Agent, Registrar or co-Registrar.
A-5
<PAGE>
4. INDENTURE.
The Company issued the Securities under an Indenture, dated as of
October 16, 1996 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act, as in effect on the date of the Indenture. The
Securities are subject to all such terms, and Holders of Securities are
referred to the Indenture and said Act for a statement of them. The
Securities are senior subordinated, unsecured general obligations of the
Company limited in aggregate principal amount to $225,000,000. The
Securities are subordinated in right of payment to certain other debt
obligations of the Company.
5. REDEMPTION.
The Securities may be redeemed, at the option of the Company, in
whole or in part, at any time on or after October 15, 2001, at the Redemption
Price (expressed as a percentage of principal amount) set forth below with
respect to the indicated Redemption Date, together with any accrued but
unpaid interest to the Redemption Date (subject to the right of Holders of
record on a Record Date to receive interest due on the Interest Payment Date
that is on or prior to such Redemption Date). The Securities may not be so
redeemed prior to October 15, 2001, except as provided in the immediately
following paragraph.
If redeemed during
the 12-month period
commencing October 15 Redemption Price
--------------------- ----------------
2001 . . . . . . . . . . 104.875%
2002 . . . . . . . . . . 103.250%
2003 . . . . . . . . . 101.625%
2004 and thereafter. . . 100.000%
Notwithstanding the foregoing, prior to October 15, 1999, upon any
Public Equity Offering or Equity Private Placement, in each case resulting in
Net Cash Proceeds
A-6
<PAGE>
of $100 million or more which are then contributed in full to the Company, up
to $70 million aggregate principal amount of the Securities may be redeemed
at the option of the Company with cash from the Net Cash Proceeds of such
Public Equity Offering or Equity Private Placement, at 110% of principal,
PROVIDED, HOWEVER, that immediately following such redemption not less than
$130 million aggregate principal amount of the Securities are outstanding,
PROVIDED, FURTHER, that such redemption shall occur within 120 days of such
Public Equity Offering or Equity Private Placement.
Any such redemption will comply with Article III of the Indenture.
6. NOTICE OF REDEMPTION.
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to the Redemption Date to the Holder of
each Security to be redeemed at such Holder's last address as then shown upon
the registry books of the Registrar. Securities may be redeemed in part in
multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption
shall have been deposited with the Paying Agent on such Redemption Date and
payment of the Securities called for redemption is not otherwise prohibited,
the Securities called for redemption will cease to bear interest and the only
right of the Holders of such Securities will be to receive payment of the
Redemption Price.
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may
register the transfer of Securities in accordance with the Indenture. No
service charge will be made for any registration of transfer or exchange of
the Securities, but the Company may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
or other governmental charge payable in connection therewith. The Registrar
need not register the transfer of or exchange any Securities selected for
redemption.
A-7
<PAGE>
8. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the owner of
it for all purposes.
9. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee
and any such Paying Agent(s) with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, Cash,
U.S. Government Obligations or a combination thereof, in such amounts as will
be sufficient in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest on
the Securities to redemption or maturity and comply with the other provisions
of the Indenture relating thereto, the Company will be discharged from
certain provisions of the Indenture and the Securities (including the
restrictive covenants described in paragraph 12 below, but excluding their
obligation to pay the principal of and interest on the Securities).
11. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding, and any existing Default or Event of Default or compliance with
any provision may be waived with the consent of the Holders of a majority in
aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may under certain
circumstances amend or supplement the Indenture or the Securities to, among
other things, cure any ambiguity, defect or inconsistency, or make any other
change that does not adversely affect the rights of any Holder of a Security.
A-8
<PAGE>
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the
Company to, among other things, incur additional Indebtedness and
Disqualified Capital Stock, pay dividends or make certain other restricted
payments, enter into certain transactions with Affiliates, incur Liens, sell
assets, merge or consolidate with any other Person or transfer (by lease,
assignment or otherwise) substantially all of the properties and assets of
the Company. The limitations are subject to a number of important
qualifications and exceptions. The Company must periodically report to the
Trustee on compliance with such limitations.
13. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required
to offer to purchase on the Change of Control Purchase Date all outstanding
Securities at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Purchase
Date. Holders of Securities will receive a Change of Control Offer from the
Company prior to any related Change of Control Purchase Date and may elect to
have such Securities purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability of
the Company to sell assets. In the event the proceeds from a permitted
Asset Sale exceed certain amounts, as specified in the Indenture, the Company
generally will be required either to reinvest the proceeds of such Asset Sale
in its business, use such proceeds to retire debt, or to make an asset sale
offer to purchase a certain amount of each Holder's Securities at 100% of the
principal amount thereof, plus accrued interest, if any, to the purchase
date, as more fully set forth in the Indenture
14. RANKING.
Payment of principal, premium, if any, and interest on the
Securities is subordinated, in the manner and to the extent set forth in the
Indenture, to the prior payment in full of all Senior Debt.
A-9
<PAGE>
15. SUCCESSORS.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
16. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing (other than an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or
the Holders of 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable in the
manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of Securities notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest), if it determines that withholding notice is in their interest.
17. TRUSTEE OR AGENT DEALINGS WITH COMPANY.
The Trustee and each Agent under the Indenture, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates as if it were not the Trustee and such Agent.
18. NO RECOURSE AGAINST OTHERS.
No direct or indirect stockholder, employee, officer or director,
as such, past, present or future, of the Company or any successor entity
shall have any personal liability in respect of the obligations of the
Company under the Securities or the Indenture by reason of his or its status
as such stockholder, employee, officer or director. Each Holder of a
Security by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities.
A-10
<PAGE>
19. AUTHENTICATION.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other
side of this Security.
20. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
21. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP
numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers
as printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
22. ADDITIONAL RIGHTS OF HOLDERS OF SECURITIES.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, IL 60610
Attention: Corporate Secretary
A-11
<PAGE>
ASSIGNMENT
I or we assign this Security to
__________________________________________________________
__________________________________________________________
__________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
_________________________
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Dated: __________ Signed: ______________________________
__________________________________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee**
- ----------
**NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.13 or Article X of the Indenture, check the appropriate
box:
/ / Section 4.13
/ / Article X
If you want to elect to have only part of this Security purchased
by the Company pursuant to Section 4.13 or Article X of the Indenture, as the
case may be, state the amount you want to be purchased: $________
Date: ________________ Signature: ________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee**
- ----------
**NOTICE: The Signature must be guaranteed by an Institutio n which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-13
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES2
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized
Date of Principal Principal Security following officer of
Exchange Amount of Amount of such decrease Trustee or
this Global this Global (or increase) Securities
Security Security Custodian
- ------------------------------------------------------------------------------
- ----------
2 This schedule should only be added if the Security is issued in global form.
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12.1
UNIVERSAL OUTDOOR, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- ------ -------
<C> <C> <C> <C> <C> <C> <C>
Pre-tax income (loss)
from continuing operations......... $(4,500) $(6,349) $(5,727) $(1,671) $ 969 $ 3,660
-------- -------- -------- -------- ------ -------
Fixed charges:
Interest expense and amortization
of debt discount on all
indebtedness..................... 6,599 9,591 8,965 8,314 8,627 15,730
-------- -------- -------- -------- ------ -------
Earnings before income taxes
and fixed charges................. 2,099 3,242 3,238 6,643 9,596 19,390
-------- -------- -------- -------- ------ -------
-------- -------- -------- -------- ------ -------
Ratio of earnings to fixed charges (A) (A) (A) (A) 1.1 1.2
-------- -------- -------- -------- ------ -------
-------- -------- -------- -------- ------ -------
- -------------
(A) As a result of the loss incurred, the Company was unable to fully cover the indicated fixed charges.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 21.1
Subsidiaries of the Company
---------------------------
State of
Subsidiary Incorporation Doing Business As
---------- ------------- ------------------
<S> <C> <C>
HCA, Inc. Illinois HCA, Inc.
Mall Media Acquisition Corp. Delaware Mall Media Acquisition Corp.
Matthew Acquisition Corp. Delaware Matthew Acquisition Corp.
Quantum Structures & Design, Inc. Illinois Quantum Structures & Design, Inc.
Revere Acquisition Corp. Delaware Revere Acquisition Corp.
Revere Billboard, Inc. Delaware Revere Billboard, Inc.
Revere Holding Corp. Delaware Revere Holding Corp.
Revere National Corporation Delaware Revere National Corporation
Revere National Corporation of Delaware Revere National Corporation of
Pennsylvania Pennsylvania
Revere National Corporation of Delaware Revere National Corporation of
Philadelphia Philadelphia
Revere National Corporation of Delaware Revere National Corporation of
Wilmington Wilmington
Superior Outdoor Structures, Inc. Illinois Superior Outdoor Structures, Inc.
Tanner Acquisition Corp. Delaware Tanner Acquisition Corp.
Universal Outdoor Management Delaware Universal Outdoor Management
Company, Inc. Company, Inc.
Vision Digital Communications, LLC California Vision Digital Communications, LLC
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated February 23, 1996
relating to the financial statements of Universal Outdoor, Inc., and our report
dated June 14, 1996 relating to the statement of revenue and expenses of Ad-Sign
for the year ended December 31, 1995, which appear in such Prospectus. We also
consent to the references to us under the headings "Experts" and "Selected
Consolidated Financial and Operating Data" in such Prospectus. However, it
should be noted that Price Waterhouse LLP has not prepared or certified such
"Selected Consolidated Financial and Operating Data."
Price Waterhouse LLP
Chicago, Illinois
February 12, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
inclusion in this Registration Statement of Universal Outdoor, Inc. for the
exchange of $100,000,000 of 9 3/4% Series B Senior Subordinated Notes due 2006
for $100,000,000 of 9 3/4% Series B Senior Subordinated Exchange Notes due 2006,
of our report dated July 21, 1995, with respect to the consolidated financial
statements of NOA Holding Company.
Ernst & Young LLP
Minneapolis, Minnesota
February 12, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated April 1, 1996, except for Note 16 as to which the
date is August 27, 1996, with respect to the financial statements of POA
Acquisition Corporation included in the Registration Statement (Form S-1 No.
___) and the related Prospectus of Universal Outdoor, Inc. for the registration
of $100,000,000 of 9 3/4% Series B Senior Subordinated Exchange Notes due 2006.
Ernst & Young LLP
February 10, 1997
Orlando, Florida
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registation statement.
Arthur Andersen LLP
Baltimore, Maryland,
February 11, 1997
<PAGE>
FORM T-1
----------------------------------------------
----------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
-------
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Universal Outdoor, Inc.
(Exact name of obligor as specified in its charter)
Illinois 36-2827496
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
321 North Clark Street, Suite 1010
Chicago, IL 60610
(Address of principal executive offices) (Zip Code)
------------------
9-3/4% Series B Senior Subordinated Notes
Due 2006
(Title of the indenture securities)
----------------------------------------------
----------------------------------------------
<PAGE>
- 2 -
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Universal Outdoor, Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No. 33-
97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. LIST OF EXHIBITS
(CONT'D)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of January 8, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 8th day
of January, 1997.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By:
-------------------------
<PAGE>
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /S/Gerard F. Ganey
-------------------------
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1996
(IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 38,257
Short-Term Investments 82,377
Securities, Available for Sale 861,975
Loans 1,404,930
Less: Allowance for Credit Losses 13,048
----------
Net Loans 1,391,882
Premises and Equipment 60,012
Other Assets 133,673
----------
TOTAL ASSETS $2,568,176
----------
----------
LIABILITIES
Deposits:
Non-Interest Bearing $ 466,849
Interest Bearing 1,433,894
----------
Total Deposits 1,900,743
Short-Term Credit Facilities 369,045
Accounts Payable and Accrued Liabilities 143,604
----------
TOTAL LIABILITIES $2,413,392
----------
----------
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,402
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (1,007)
----------
TOTAL STOCKHOLDER'S EQUITY 154,784
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,568,176
----------
----------
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkman, SVP & Controller
October 24, 1996
<PAGE>
LETTER OF TRANSMITTAL
UNIVERSAL OUTDOOR, INC.
OFFER FOR ALL OUTSTANDING
9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
IN EXCHANGE FOR
9 3/4% SERIES B SENIOR SUBORDINATED EXCHANGE NOTES DUE 2006,
PURSUANT TO THE PROSPECTUS, DATED FEBRUARY , 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
MARCH , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
DELIVERY TO: United States Trust Company of New York, EXCHANGE AGENT
BY MAIL:
United States Trust Company of New York
PO Box 844
Cooper Station
New York, New York 10276-0844
BY OVERNIGHT COURIER:
United States Trust Company of New York
770 Broadway Street, 7th Floor
New York, New York 10003
Attention: Corporate Trust and Agency Services
BY HAND:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, New York 10006
BY FACSIMILE IN NEW YORK:
(212) 420-6152
Attention: Corporate Trust and Agency Services
Confirm by Telephone:
(800) 548-6565
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated February , 1997 (the "Prospectus"), of Universal Outdoor,
Inc., an Illinois corporation (the "Company"), and this Letter of Transmittal
(the "Letter"), which together constitute the Company's offer (the "Exchange
Offer") to exchange an aggregate principal amount of up to $100,000,000 of its
9 3/4% Series B Senior Subordinated Exchange Notes Due 2006, which have been
registered under the Securities Act of 1933, as amended (the "New Notes"), of
the Company for a like principal amount of the issued and outstanding 9 3/4%
Series B Senior Subordinated Notes Due 2006 (the "Old Notes") of the Company
from the holders thereof.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on the
<PAGE>
Old Notes, from December 16, 1996. Accordingly, if the relevant record date for
interest payment occurs after the consummation of the Exchange Offer registered
holders of New Notes on such record date will receive interest accruing from the
most recent date to which interest has been paid or, if no interest has been
paid, from December 16, 1996. If however, the relevant record date for interest
payment occurs prior to the consummation of the Exchange Offer registered
holders of Old Notes on such record date will receive interest from the most
recent date to which interest has been paid or, if no interest has been paid,
from December 16, 1996. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer, except
as set forth in the immediately preceding sentence. Holders of Old Notes whose
Old Notes are accepted for exchange will not receive any payment in respect of
interest on such Old Notes otherwise payable on any interest payment date the
record date for which occurs on or after consummation of the Exchange Offer.
This Letter is to be completed by a holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for Old
Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Holders of Old
Notes whose certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry tender of their Old
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer-- Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Notes to which this Letter relates. If the space provided
below is inadequate, the certificate numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF OLD NOTES 1 2 3
AGGREGATE
NAME(S) AND ADDRESS(ES) OF REGISTERED PRINCIPAL PRINCIPAL
HOLDER(S) CERTIFICATE AMOUNT OF AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* OLD NOTE(S) TENDERED**
TOTAL
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL
of the Old Notes represented by the Old Notes indicated in column 2. See Instruction 2.
Old Notes tendered hereby must be in denominations of principal amount of $1,000 and
any integral multiple thereof.See Instruction 1.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE
ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
----------------------------------------------------------
Account Number ------------------- Transaction Code Number -------------------
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
---------------------------------------------------------
Window Ticket Number (if any)
----------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
---------------------------------------
Name of Institution which guaranteed delivery
---------------------------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number ------------------- Transaction Code Number -------------------
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ------------------------------------------------------------------------------------
Address: ----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
</TABLE>
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes, it represents that the Old Notes to be
exchanged for New Notes were acquired by it as a result of market-making or
other trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act of 1933, as
amended.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of Old Notes tendered hereby, the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Old Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the holder of such Old Notes nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes and
<PAGE>
that neither the holder of such Old Notes nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act of 1933, as amended
(the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that New Notes issued in exchange for Old Notes pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement with any person
to participate in the distribution of such New Notes. However, the Company does
not intend to request the SEC to consider, and the SEC has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in other circumstances. If the undersigned is
not a broker-dealer, the undersigned represents that it is not engaged in, and
does not intend to engage in, a distribution of New Notes and has no arrangement
or understanding to participate in a distribution of New Notes. If any holder is
an affiliate of the Company, is engaged in or intends to engage in or has any
arrangement or understanding with respect to the distribution of New Notes to be
acquired pursuant to the Exchange Offer, such holder (i) could not rely on the
applicable interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive New Notes for its own account in exchange for Old Notes, it
represents that the Old Notes to be exchanged for the New Notes were acquired by
it as a result of market-making or other trading activities and acknowledges
that it will deliver a prospectus in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section
of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
<PAGE>
<TABLE>
<S> <C>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4) (SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates To be completed ONLY if certificates
for Old Notes not exchanged and/or New for Old Notes not exchanged and/or New
Notes are to be issued in the name of Notes are to be sent to someone other
and sent to someone other than the than the person or persons whose
person or persons whose signature(s) signature(s) appear(s) on this Letter
appear(s) on this Letter above, or if above or to such person or persons at
Old Notes delivered by book-entry any address other than shown in the box
transfer which are not accepted for entitled Description of Old Notes on
exchange are to be returned by credit this Letter above.
to an account maintained at the
Book-Entry Transfer Facility other than
the account indicated above.
Issue: New Notes and/or Old Notes to: Mail: New Notes and/or Old Notes to:
Name(s) Name(s)
- ----------------------------------- -----------------------------------
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
- --------------------------------------- ---------------------------------------
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
Address: Address:
- ---------------------------------- ----------------------------------
- --------------------------------------- ---------------------------------------
(ZIP CODE) (ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
/ / Credit unexchanged Old Notes
delivered by book-entry transfer to
the Book-Entry Transfer Facility
account set forth below.
- ---------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
</TABLE>
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR
OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE
NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE>
<TABLE>
<S> <C>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Date: ------------------------------------------------------------------,
1997
x -------------------------------- --------------------------------, 1997
x -------------------------------- --------------------------------, 1997
SIGNATURE(S) OF OWNER DATE
Area Code and Telephone Number ---------------------------------------------
If a holder is tendering any Old Notes, this Letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Old Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith.If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a
fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s): -------------------------------------------------------------------
- ----------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity: -------------------------------------------------------------------
Address: --------------------------------------------------------------------
- ----------------------------------------------------------------------------
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:
- --------------------------------------------------------
(AUTHORIZED SIGNATURE)
- -----------------------------------------------------------------------------
(TITLE)
- -----------------------------------------------------------------------------
(NAME AND FIRM)
Dated: -----------------------------------------------------------------,
1997
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2006 IN EXCHANGE FOR THE
9 3/4% SERIES B SENIOR SUBORDINATED EXCHANGE NOTES DUE 2006 OF UNIVERSAL
OUTDOOR, INC.
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This letter is to be completed by noteholders either if certificates are to
be forwarded herewith or if tenders are to be made pursuant to the proceedings
for delivery by book-entry transfer set forth in "The Exchange Offer--Book-Entry
Transfer" section of the Prospectus. Certificates for all physically tendered
Old Notes, or Book-Entry Confirmation, as the case may be, as well as a properly
completed and duly executed Letter (or manually signed facsimile hereof) and any
other documents required by this Letter, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date, or the
tendering holder must comply with the guaranteed delivery procedures set forth
below. Old Notes tendered hereby must be in denominations of principal amount of
$1,000 and any integral multiple thereof.
Noteholders whose certificates for Old Notes are not immediately available
or who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution
(as defined herein), (ii) prior to the Expiration Date, the Exchange Agent must
receive from such Eligible Institution a properly completed and duly executed
Letter (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially
in the form provided by the Company (by telegram, telex, facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of Old
Notes and the amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that within five New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Old Notes, or a Book-Entry
Confirmation, and any other documents required by the Letter will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Notes, in proper form of transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are received by the Exchange Agent within five NYSE trading days after
the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of Old
Notes--Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Old Notes will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this Letter, promptly after the
Expiration Date. ALL OF THE OLD NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE
DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Old Notes tendered
hereby, the signature must correspond exactly with the name as written on the
face of the Certificates without any change whatsoever.
<PAGE>
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Notes are to be issued,
or any untendered Old Notes are to be reissued, to a person other than the
registered holder, then endorsements of any certificates transmitted hereby or
separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF
A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST COMPANY
HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE INSTITUTION,
PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A REGISTERED HOLDER OF OLD NOTES
(WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES ANY PARTICIPANT IN THE
BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON A SECURITY POSITION
LISTING AS THE HOLDER OF SUCH OLD NOTES) WHO HAS NOT COMPLETED THE BOX ENTITLED
"SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" ON THIS
LETTER, OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Holders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such noteholder may designate hereon. If no such instructions are
given, such New Notes and Old Notes not exchanged will be returned to the name
or address of the person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering holder who is an individual, is his or
her social security number. If the Company is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering holder of New Notes may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment of taxes, a refund may be obtained.
<PAGE>
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Old Notes are in more than one name or are not in the name of the actual owner,
such holder should consult the W-9 Guidelines for information on which TIN to
report. If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter, or if a
transfer tax is imposed for any reason other than the transfer of Old Notes to
the Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN THIS LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter, shall
waive any right to receive notice of the acceptance of their Old Notes for
exchange.
Neither the Company, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
<PAGE>
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: UNIVERSAL OUTDOOR, INC.
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN TIN:
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY ---------------------------
DEPARTMENT OF THE BY SIGNING AND DATING BELOW. Social Security Number or
TREASURY Employer Identification
INTERNAL REVENUE SERVICE Number
PAYOR'S REQUEST FOR PART 2--TIN APPLIED FOR / /
TAXPAYER IDENTIFICATION CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
NUMBER (TIN) AND (1) the number shown on this form is my correct Taxpayer
CERTIFICATION Identification Number (or I am waiting for a number to be issued
to me).
(2) I am not subject to backup withholding either because: (a) I
am exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding, and
(3) any other information provided on this form is true and
correct.
SIGNATURE ..................... DATE .....................
You must cross out item (2) of the above certification if you have been notified by the IRS
that you are subject to backup withholding because of underreporting of interest or
dividends on your tax return and you have not been notified by the IRS that you are no
longer subject to backup withholding.
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
<TABLE>
<S> <C>
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been
issued to me, and either (a) I have mailed or delivered an application to receive a
taxpayer identification number to the appropriate Internal Revenue Service Center or
Social Security Administration Office or (b) I intend to mail or deliver an application
in the near future. I understand that if I do not provide a taxpayer identification
number by the time of the exchange, thirty-one (31%) percent of all reportable payments
made to me thereafter will be withheld until I provide a number.
------------------------------------------- ------------------------------------------
SIGNATURE DATE
</TABLE>
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR
UNIVERSAL OUTDOOR, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Universal Outdoor, Inc. (the "Company") made pursuant to the
Prospectus, dated February , 1997 (the "Prospectus"), if certificates for the
outstanding 9 3/4% Series B Senior Subordinated Notes Due 2006 of the Company
(the "Old Notes") are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Company prior to 5:00 p.m., New York
City time, on the Expiration Date of the Exchange Offer. Such form may be
delivered or transmitted by telegram, telex, facsimile transmission, mail or
hand delivery to United States Trust Company of New York (the "Exchange Agent")
as set forth below. In addition, in order to utilize the guaranteed delivery
procedure to tender Old Notes pursuant to the Exchange Offer, a completed,
signed and dated Letter of Transmittal (or facsimile thereof) must also be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date. Capitalized terms not defined herein are defined in the
Prospectus.
DELIVERY TO: United States Trust Company of New York, EXCHANGE AGENT
BY MAIL:
United States Trust Company of New York
Post Office Box 844 Cooper Station
New York, New York 10276-0844
BY OVERNIGHT COURIER:
United States Trust Company of New York
770 Broadway Street, 7th Floor
New York, New York 10003
Attention: Corporate Trust and Agency Services
BY HAND:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, New York 10006
BY FACSIMILE:
(212) 420-6152
Attention: Corporate Trust and Agency Services
Confirm by Telephone:
(800) 548-6565
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Old Notes Tendered:*
$
- ------------------------------------------------
Certificate Nos. (if available):
<TABLE>
<S> <C>
- -------------------------------------------------- If Old Notes will be delivered by book-entry
transfer to The Depository Trust Company,
provide account number.
</TABLE>
Total Principal Amount Represented by
- --------------------------
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
Old Notes Certificate(s):
<TABLE>
<S> <C>
$ ------------------------------------------ Account Number --------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
<TABLE>
<S> <C>
X ---------------------------------
---------
X ---------------------------------
---------
Signature(s) of Owner(s) Date
or Authorized Signatory
</TABLE>
Area Code and Telephone Number:
- -------------------
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
<TABLE>
<CAPTION>
PLEASE PRINT NAME(S) AND ADDRESS(ES)
<S> <C>
Name(s):
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Capacity:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Address(es):
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
GUARANTEE
The undersigned, a member of a registered national securities exchange, or a
member of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United States,
hereby guarantees that the certificates representing the principal amount of Old
Notes tendered hereby in proper form for transfer, or timely confirmation of the
book-entry transfer of such Old Notes into the Exchange Agent's account at The
Depository Trust Company pursuant to the procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus, together with
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) with any required signature guarantee and any other
documents
<PAGE>
required by the Letter of Transmittal, will be received by the Exchange Agent at
the address set forth above, no later than five New York Stock Exchange trading
days after the date of execution hereof.
<TABLE>
<S> <C>
- ------------------------------------------- -------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------- -------------------------------------------
Address Title
Name: -------------------------------------
- -------------------------------------------
Zip Code (Please Type or Print)
Area Code and Tel. No. Dated: -------------------------------------
- ----------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99.3
UNIVERSAL OUTDOOR, INC.
OFFER FOR ALL OUTSTANDING
9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
IN EXCHANGE FOR
9 3/4% SERIES B SENIOR SUBORDINATED EXCHANGE NOTES DUE 2006
To: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Universal Outdoor, Inc. (the "Company") is offering, upon and subject to the
terms and conditions set forth in the Prospectus, dated February , 1997 (the
"Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") its 9 3/4% Series B Senior
Subordinated Exchange Notes Due 2006, which have been registered under the
Securities Act of 1933, as amended, for its outstanding 9 3/4% Series B Senior
Subordinated Notes Due 2006 (the "Old Notes"). The Exchange Offer is being made
in order to satisfy certain obligations of the Company contained in the
Registration Rights Agreement dated December 16, 1996, by and among the Company
and the initial purchasers referred to therein.
We are requesting that you contact your clients for whom you hold Old Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated February , 1997;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if certificates for Old Notes are not immediately available or time will not
permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below) or if the procedure for book-entry transfer
cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account you
hold Old Notes registered in your name or the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Exchange
Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to United States Trust Company of New York,
the Exchange Agent for the Old Notes.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , MARCH , 1997, UNLESS EXTENDED BY THE
COMPANY (THE "EXPIRATION DATE"). OLD NOTES TENDERED PURSUANT TO THE EXCHANGE
OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly completed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, should be sent to the Exchange
Agent and certificates representing the Old Notes should be delivered to the
Exchange Agent, all in accordance with the instructions set forth in the Letter
of Transmittal and the Prospectus.
If holders of the Old Notes wish to tender, but it is impracticable for them
to forward their certificates for Old Notes prior to the expiration of the
Exchange Offer or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
described in the Prospectus under "The Exchange Offer--Guaranteed Delivery
Procedures."
<PAGE>
The Company will, upon request, reimburse brokers, dealers, commercial banks
and trust companies for reasonable and necessary costs and expenses incurred by
them in forwarding the Prospectus and the related documents to the beneficial
owners of Old Notes held by them as nominee or in a fiduciary capacity. The
Company will pay or cause to be paid all stock transfer taxes applicable to the
exchange of Old Notes pursuant to the Exchange Offer, except as set forth in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to United
States Trust Company of New York, the Exchange Agent for the Old Notes, at its
address and telephone number set forth on the front of the Letter of
Transmittal.
Very truly yours,
UNIVERSAL OUTDOOR, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
<PAGE>
EXHIBIT 99.4
UNIVERSAL OUTDOOR, INC.
OFFER FOR ALL OUTSTANDING
9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
IN EXCHANGE FOR
9 3/4% SERIES B SENIOR SUBORDINATED EXCHANGE NOTES DUE 2006
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated February , 1997
(the "Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Universal
Outdoor, Inc. (the "Company") to exchange its 9 3/4% Series B Senior
Subordinated Exchange Notes Due 2006, which have been registered under the
Securities Act of 1933, as amended (the "New Notes"), for its outstanding 9 3/4%
Series B Senior Subordinated Notes Due 2006 (the "Old Notes"), upon the terms
and subject to the conditions described in the Prospectus and the Letter of
Transmittal. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
December 16, 1996, by and among the Company and the initial purchasers referred
to therein.
This material is being forwarded to you as the beneficial owner of the Old
Notes carried by us in your account but not registered in your name. A TENDER OF
SUCH OLD NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Notes held by us for your account, pursuant to the terms and
conditions set forth in the enclosed Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in order
to permit us to tender the Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , March , 1997, unless extended by the Company.
Any Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer Certain Conditions to
the Exchange Offer."
3. Any transfer taxes incident to the transfer of Old Notes from the holder
to the Company will be paid by the Company, except as otherwise provided in the
Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on ,
March , 1997, unless extended by the Company.
If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OLD NOTES.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Universal
Outdoor, Inc. with respect to its Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES
--------------------------------------------------------
<S> <C>
9 3/4% Series B Senior Subordinated Notes --------------------------------------------
Due 2006...............................................
/ / Please do not tender any Old Notes held by
you for my account.
Date: ---------------------, 1997 --------------------------------------------
--------------------------------------------
Signature(s)
--------------------------------------------
--------------------------------------------
--------------------------------------------
Please print name(s) here
--------------------------------------------
--------------------------------------------
Address(es)
--------------------------------------------
Area Code and Telephone Number
--------------------------------------------
Tax Identification or Social Security No(s).
</TABLE>
None of the Old Notes held by us for your account will be tendered unless we
receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for your
account.
