<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1996
REGISTRATION NO. 333-5351
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
UNIVERSAL OUTDOOR HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7312 36-3766705
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification
No.)
</TABLE>
321 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 CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
WITH COPIES TO:
<TABLE>
<S> <C>
Leland E. Hutchinson Stacy J. Kanter
Winston & Strawn Skadden, Arps, Slate, Meagher & Flom
35 West Wacker Drive 919 Third Avenue
Chicago, Illinois 60601 New York, New York 10022
(312) 558-5600 (212) 735-3000
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Section 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING PROSPECTUS CAPTION OR PAGE
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus...................... Registration Statement Cover; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page; Available Information;
Outside Back Cover Page
3. Summary Information and Risk Factors and Ratio of
Earnings to Fixed Charges........................... Prospectus Summary; Risk Factors; Business
4. Use of Proceeds...................................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price...................... Underwriting
6. Dilution............................................. Dilution
7. Selling Security Holders............................. Principal and Selling Stockholders
8. Plan of Distribution................................. Outside Front Cover Page of Prospectus; Underwriting
9. Description of Securities to Be Registered........... Description of Capital Stock
10. Interests of Named Experts and Counsel............... Not Applicable
11. Information with Respect to the Registrant........... Prospectus Summary; Risk Factors; Use of Proceeds;
Dividend Policy; Dilution; Capitalization; Selected
Consolidated Financial and Operating Data;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business;
Management; Certain Transactions; Principal and
Selling Stockholders; Description of Capital Stock;
Shares Eligible for Future Sale; Description of
Indebtedness and Other Commitments; Experts;
Available Information; Consolidated Financial
Statements
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO
BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
SUBJECT TO COMPLETION
JULY 22, 1996
6,200,000 SHARES
UNIVERSAL OUTDOOR HOLDINGS, INC.
COMMON STOCK
---------
Of the shares of Common Stock ("Common Stock") offered hereby, 3,700,000
shares are being sold by Universal Outdoor Holdings, Inc. ("Universal Outdoor"
or the "Company") and 2,500,000 shares are being sold by certain selling
stockholders named herein (the "Selling Stockholders"). See "Principal and
Selling Stockholders." The Company will not receive any of the proceeds from the
sale of Common Stock by the Selling Stockholders. Prior to this offering (the
"Offering") there has been no public market for the Common Stock of the Company.
It is currently estimated that the initial public offering price will be between
$12.50 and $14.50 per share. See "Underwriting" for the factors to be considered
in determining the initial offering price.
The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "UOUT."
--------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 HEREOF.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO DISCOUNTS AND TO SELLING
PUBLIC COMMISSIONS COMPANY (1) STOCKHOLDERS
<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
Total (2)............... $ $ $ $
</TABLE>
(1) Before deducting expenses of the Offering payable by the Company estimated
at $750,000.
(2) The Company and certain existing management stockholders have granted the
Underwriters a 30-day option to purchase up to 730,000 and 200,000,
respectively, additional shares of Common Stock solely to cover
over-allotments, if any. To the extent that the option is exercised, the
Underwriters will offer the additional shares at the Price to Public shown
above. If the option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions, Proceeds to Company and Proceeds to
Selling Stockholders to Company will be $ , $ ,
$ and $ , respectively. In addition, certain existing
management stockholders shall receive $ in the event of such
exercise. See "Underwriting" and "Selling Stockholders."
--------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about
, 1996.
ALEX. BROWN & SONS
INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
The inside front cover consists of a map of the United States indicating the
existing markets in which the Company owns and operates outdoor advertising
display faces.
The inside back cover consists of photographs of certain outdoor advertising
display faces owned and operated by the Company in the markets indicated
therein.
--------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED HEREIN, THE "COMPANY" MEANS
UNIVERSAL OUTDOOR HOLDINGS, INC., TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES,
UNLESS THE CONTEXT OTHERWISE REQUIRES. "UOI" REFERS TO UNIVERSAL OUTDOOR, INC.
AND ITS CONSOLIDATED SUBSIDIARIES, WHICH CONSTITUTE THE OPERATING SUBSIDIARIES
OF THE COMPANY. UNLESS OTHERWISE SPECIFIED, THE PROSPECTUS ASSUMES (I) A 16 FOR
1 SPLIT OF COMMON STOCK OF THE COMPANY WHICH WILL BE EFFECTIVE IMMEDIATELY PRIOR
TO THE CLOSING OF THE OFFERING OF COMMON STOCK CONTEMPLATED HEREBY, (II) THE
RECLASSIFICATION OF THE COMPANY'S CLASS B COMMON STOCK AND CLASS C COMMON STOCK
INTO COMMON STOCK AND THE AMENDMENT OF CERTAIN PROVISIONS OF CERTAIN OUTSTANDING
WARRANTS TO PURCHASE COMMON STOCK AND THE PLAN RELATED THERETO, BOTH OF WHICH
WILL OCCUR IMMEDIATELY PRIOR TO THE CLOSING OF THE OFFERING AND (IV) NO EXERCISE
OF THE UNDERWRITER'S OVER-ALLOTMENT OPTION. THE TERM "MARKET" REFERS TO THE
GEOGRAPHIC AREA CONSTITUTING A METROPOLITAN STATISTICAL AREA DELINEATED BY THE
U.S. CENSUS BUREAU. "OPERATING CASH FLOW" HAS THE MEANING SET FORTH IN FOOTNOTE
(3) ON PAGE 5 HEREOF AND "OPERATING CASH FLOW MARGIN" HAS THE MEANING SET FORTH
IN FOOTNOTE (4) ON PAGE 5 HEREOF.
THE COMPANY
The Company is a leading outdoor advertising company operating approximately
12,700 advertising display faces in eight markets, including Chicago,
Minneapolis/St. Paul, Indianapolis, Jacksonville (Florida), Milwaukee, Des
Moines, Evansville (Indiana) and Dallas. The Company believes that it owns and
operates the largest number of outdoor advertising display faces in the Chicago,
Minneapolis/St. Paul, Indianapolis, Jacksonville, Des Moines, and Evansville
markets. The Company increased its annual net revenues from $18.8 million in
fiscal 1991 to $34.1 million in fiscal 1995, or $62.4 million on a pro forma
basis after giving effect to acquisitions by the Company in the first half of
1996. During the same period, the Company increased its annual Operating Cash
Flow from $7.7 million to $16.6 million, or $30.0 million on a pro forma basis.
The Company believes that its 1995 Operating Cash Flow Margin of 48.7%, or 48.1%
on a pro forma basis, is among the highest in the industry. For the first
quarter ended March 31, 1996, on a pro forma basis the Company had net revenues
and Operating Cash Flow of $15.1 million and $6.5 million, respectively, which
compare favorably to the pro forma results for the same period in 1995 of $13.6
million and $5.7 million, respectively.
Since beginning operations with a single outdoor advertising structure in
Chicago in 1973, the Company has achieved its leading position in the outdoor
advertising industry through its aggressive acquisition and development efforts.
Since 1989, the Company has acquired approximately 12,000 display faces in eight
markets, including more than 4,000 additional display faces in Chicago. During
the same time period, the Company has built in excess of 315 new display faces
in its markets, a number which the Company believes is among the largest built
by any outdoor advertising company during such period.
According to recent estimates by the Outdoor Advertising Association of
America (the "OAAA"), the trade association for the outdoor advertising
industry, 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. This represents growth of approximately 8.2% over estimated
total 1994 revenues and compares favorably to the growth of total U.S.
advertising expenditures of approximately 7.7% during the same period. Outdoor
advertising offers the benefits of repetitive impact and a low cost
per-thousand-impressions compared to competitive media, including television,
radio, newspapers, magazines and direct mail marketing. As a result, outdoor
advertising is attractive both to national advertisers seeking mass market
exposure and to local businesses targeting a specific geographic area or set of
demographic characteristics.
3
<PAGE>
The Company's strategy is to improve upon its position as, or to become, the
leading provider of outdoor advertising services in each of its markets by: (i)
developing programs to maximize advertising rates and occupancy levels in
existing markets; (ii) continuing to build new display faces in its existing
markets; (iii) aggressively seeking acquisitions in existing and new
strategically attractive markets; (iv) implementing technological advances that
enhance the Company's operating efficiency and the attractiveness of outdoor
advertising to advertisers; (v) improving Operating Cash Flow Margins through
continued adherence to strict cost controls and centralization of administrative
functions; and (vi) developing 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 focuses its marketing efforts on developing and maintaining a
diverse base of local advertisers which accounted for approximately 77% of the
Company's net revenues in 1995. This local market focus has been critical to the
Company's ability to consistently increase its net revenues while diversifying
the account base, promoting rate integrity and adding stability to revenues.
The Company believes that its senior management team is among the most
experienced in the industry. 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.
This management team has successfully completed and integrated 16 acquisitions
since 1989.
The Company was incorporated in Delaware in 1991 and its principal executive
office is located at 321 North Clark Street, Chicago, Illinois 60610, and its
telephone number is (312) 644-8673.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company......... 3,700,000 shares
Common Stock offered by the Selling
Stockholders............................... 2,500,000 shares
Common Stock to be outstanding after the
Offering................................... 16,700,000 shares(1)
For retirement of a portion of senior
indebtedness. See "Use of Proceeds." The
Company will not receive any proceeds from the
sale of shares by the Selling Stockholders.
See "Principal and Selling Stockholders."
Use of Proceeds to the Company..............
Nasdaq National Market Symbol............... UOUT
</TABLE>
- ------------------------
(1) Excludes 2,470,608 shares of Common Stock issuable pursuant to the 1996
Warrant Plan. See "Management -- The 1996 Warrant Plan." Also excludes
1,000,000 shares of Common Stock issuable pursuant to the outstanding
Noteholder Warrants. See "Description of Capital Stock -- The Noteholder
Warrants."
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
PRO
FORMA (6)
1991 1992 1993 1994 1995 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues......................... $21,435 $27,896 $28,710 $33,180 $38,101 $70,081
Net revenues (1)....................... 18,835 24,681 25,847 29,766 34,148 62,363
Direct advertising expenses............ 7,638 10,383 10,901 11,806 12,864 24,435
General and administrative expenses.... 3,515 3,530 3,357 3,873 4,645 7,925
Operating income....................... 2,152 2,951 3,589 6,777 9,237 14,360
Interest expense....................... 6,599 9,591 9,299 11,809 12,894
Income (loss) before extraordinary item
(2)................................... (4,500) (6,349) (6,061) (5,166) (3,703)
Net income (loss)...................... (4,500) (6,349) (9,321) (5,166) (3,703)
Net loss per share..................... (0.60) (0.84) (1.24) (0.69) (0.49)
Weighted average common and equivalent
shares outstanding.................... 7,520 7,520 7,520 7,520 7,520
OTHER DATA:
Operating Cash Flow (3)................ $ 7,682 $10,768 $11,589 $14,087 $16,639 $30,003
Operating Cash Flow Margin (4)......... 40.8% 43.6% 44.8% 47.3% 48.7% 48.1 %
Capital expenditures................... $ 2,047 $ 2,352 $ 2,004 $ 4,668 $ 5,620
Depreciation and amortization.......... 5,530 7,817 8,000 7,310 7,402 15,643
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------------
PRO PRO
FORMA (6) FORMA (6)
1995 1995 1996 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues......................... $ 8,025 $15,212 $ 9,332 $16,869
Net revenues (1)....................... 7,236 13,571 8,427 15,101
Direct advertising expenses............ 3,108 5,949 3,571 6,509
General and administrative expenses.... 1,072 1,923 1,227 2,110
Operating income....................... 1,319 1,978 1,597 2,422
Interest expense....................... 3,087 3,594
Income (loss) before extraordinary item
(2)................................... (1,778) (2,007)
Net income (loss)...................... (1,778) (2,007)
Net loss per share..................... (0.24) (0.27)
Weighted average common and equivalent
shares outstanding.................... 7,520 7,520
OTHER DATA:
Operating Cash Flow (3)................ $ 3,056 $5,699 $ 3,629 $6,482
Operating Cash Flow Margin (4)......... 42.2% 42.0 % 43.1% 42.9 %
Capital expenditures................... $ 576 $ 1,966
Depreciation and amortization.......... 1,737 3,721 2,032 4,060
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------------------
PRO
ACTUAL FORMA (7) AS ADJUSTED (8)
--------- ----------- ---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................ $ 2,592 $ 6,670 $ 6,670
Total assets........................................................... 84,747 177,963 177,963
Total long-term debt (5)............................................... 120,248 180,248 135,672
Common stockholders' equity (deficit).................................. (40,533) (10,532) 34,044
</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. 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) Long-term debt does not include current maturities.
(6) Represents actual amounts adjusted to give effect to the acquisitions of NOA
Holding Company, Ad-Sign, Inc. and Image Media, Inc. See Pro Forma Combined
Statement of Operations.
(7) Represents actual amounts adjusted to give effect to the acquisition of NOA
Holding Company. See Pro Forma Combined Balance Sheet.
(8) Represents actual amounts adjusted to give effect to the acquisition of NOA
Holding Company and the application of the estimated net proceeds of $45.7
million to the Company of this Offering based upon an assumed public
offering price of $13.50 per share and the application of the net proceeds
therefrom. See "Use of Proceeds" and Pro Forma Combined Balance Sheet.
5
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SHARES
OF COMMON STOCK OFFERED BY THIS PROSPECTUS.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS. The Company has
substantial indebtedness. On a pro forma basis after giving effect to the
acquisitions by the Company and indebtedness incurred as a result of such
acquisitions and the application of the net proceeds of this Offering, as of
March 31, 1996, the Company's total long-term debt was approximately $135.7
million, and on a pro forma basis for the three months ended March 31, 1996
interest expense was approximately $3.9 million, or 25.7% of net revenues. The
Company's level of consolidated indebtedness could have important consequences
to the holders of Common Stock, including the following: (i) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of the principal of and interest on its indebtedness and will not be
available for other purposes; (ii) the ability of the Company to obtain
financing in the future for working capital needs, capital expenditures,
acquisitions, investments, general corporate purposes or other purposes may be
materially limited or impaired; and (iii) the Company's level of indebtedness
may reduce the Company's flexibility to respond to changing business and
economic conditions. Subject to certain limitations contained in its outstanding
debt instruments, 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." 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."
STOCKHOLDERS' DEFICIT; PRIOR PERIOD LOSSES. On a pro forma basis after
giving effect to the acquisitions by the Company and indebtedness incurred as a
result of such acquisitions, at March 31, 1996, the Company had a stockholders'
deficit of $10.5 million. 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
Revolving Credit Facility and the Acquisition Credit Facility (each as defined
in "Description of Indebtedness and Other Commitments") have a lien on
substantially all of the assets of UOI and its subsidiaries, including the
capital stock of its subsidiaries, to secure the indebtedness of UOI under such
credit facilities, and the noteholders under the Secured Notes (as defined in
"Description of Indebtedness and Other Commitments") have a pledge of the
capital stock of UOI to secure the indebtedness of the Company under the Secured
Notes. In addition, the Common Stock owned by management may be pledged to the
banks under the Revolving Credit Facility and the Acquisition Credit Facility in
certain limited circumstances. 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
Revolving Credit Agreement and Acquisition Credit Agreement (collectively, the
"Credit Agreements") contain 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 UOI
with the financial ratios and tests contained in the Credit Agreements. 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
6
<PAGE>
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 Secured Notes or UOI Notes (as defined in "Description of
Indebtedness and Other Commitments"). If such indebtedness were not so repaid,
refinanced or restructured, the lenders or noteholders 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."
HOLDING COMPANY STRUCTURE. Universal Outdoor is a holding company with no
business operations of its own. Universal Outdoor's only material asset is all
of the outstanding capital stock of UOI, through which Universal Outdoor
conducts its business operations. Accordingly, Universal Outdoor will be
dependent on the earnings and cash flow, and dividends and distributions from
UOI to pay its expenses and to pay any cash dividends or distributions on the
Common Stock that may be authorized by the Board of Directors of Universal
Outdoor. UOI has substantial cash interest expense due on the UOI Notes. There
can be no assurance that UOI will generate sufficient cash flow to pay dividends
or distribute funds to Universal Outdoor or that applicable state law and
contractual restrictions, including negative covenants contained in the debt
instruments of UOI, will permit such dividends or distributions. The terms of
the Credit Agreements and the UOI Notes currently restrict UOI from paying
dividends or making distributions except in very limited circumstances,
including paying certain expenses of Universal Outdoor and repurchasing its
Secured Notes. See "-- Substantial Leverage; Ability to Service Indebtedness"
and "Description of Indebtedness and Other Commitments."
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 markets in which it currently competes as well as in new
markets. While the Company believes that the outdoor advertising industry is
highly fragmented and that significant acquisition opportunities are available,
there can be no assurance that suitable acquisition candidates can be found. 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, that acquisitions can be completed
on terms acceptable to the Company, or that any acquisitions that are completed
can be successfully integrated into 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 is
currently engaged in a number of separate and unrelated discussions concerning
possible acquisitions, some of which may be material to the Company in size. As
of the date of this Prospectus, the Company has not entered into any binding
agreement in principle with respect to any of these possible acquisitions. The
purchase price of these possible acquisitions could require additional debt
financing on the part of the Company, and the largest of such acquisitions may
possibly require additional equity financing. The Company cannot predict if any
such acquisition will be consummated.
REGULATION OF OUTDOOR ADVERTISING. Outdoor advertising displays are subject
to governmental regulation at the federal, state and local levels. These
regulations, in some cases, limit the height, size, location and operation of
billboards and, in limited circumstances, regulate the content of the
advertising copy displayed on the billboards. Some governmental regulations
prohibit the construction of new billboards or the replacement, relocation,
enlargement or upgrading of existing structures. Some cities have adopted
amortization ordinances under which, after the expiration of a specified period
of time, billboards must be removed at the owner's expense and without the
payment of compensation. Ordinances requiring the removal of a billboard without
compensation, whether through amortization or otherwise, are being challenged in
various state and federal courts with conflicting results. Other than in the
Company's newly acquired Jacksonville market, amortization ordinances have not
materially affected
7
<PAGE>
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. Recently, the Food and
Drug Administration has proposed legislation which would prohibit the use of
pictures and color in tobacco advertising and has also proposed the elimination
of all tobacco advertising on outdoor displays located within 1,000 feet of any
school. Additionally, one major tobacco manufacturer has recently proposed
federal legislation be enacted banning 8-sheet billboard advertising and transit
advertising of tobacco products in addition to banning tobacco advertising near
schools and playgrounds. While such legislation has not been enacted by
Congress, the restrictions currently proposed, if enacted, may have a material
adverse effect on the Company's results of operations. 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 "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.
Historically, manufacturers of cigarettes have been major outdoor
advertisers. Beginning in 1993, the leading tobacco companies substantially
reduced their domestic advertising expenditures in response to a declining
population of smokers in the United States, societal pressures to reduce
advertising, consolidation in the tobacco industry and increasing price
competition from generic products. In 1995, tobacco advertising accounted for
13.3% of the Company's net revenues, a reduction from 27.6% in 1991. There can
be no assurance that the tobacco industry will not further reduce advertising
expenditures in the future or that such reductions will not have a material
adverse effect on the Company's revenues. See "-- Regulation of Outdoor
Advertising," "Business -- Sales and Service," and "Business -- Government
Regulation."
COMPETITION. The Company faces competition for advertising revenues from
other outdoor advertising companies, as well as from other media such as radio,
television, print media and direct mail marketing. The Company also competes
with a wide variety of other out-of-home advertising media, the range and
diversity of which has increased substantially over the past several years,
including advertising displays in shopping centers and malls, airports,
stadiums, movie theaters and supermarkets, and on taxis, trains, buses and
subways. Some of the Company's competitors are substantially larger, better
capitalized and have access to greater resources than the Company. There can be
no assurance that outdoor advertising media will be able to compete with other
types of media, or that the Company will be able to compete either within the
outdoor advertising industry or with other media. See "Business -- Competition."
RELIANCE ON KEY EXECUTIVES. The Company's success depends to a significant
extent upon the continued services of its executive officers and other key
management and sales personnel, in particular its President and Chief Executive
Officer, Daniel L. Simon. Although the Company believes it has incentive and
compensation programs designed to retain key employees, including a warrant plan
to purchase shares of the Company's Common Stock upon the market value of the
Common Stock reaching certain levels, 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."
8
<PAGE>
CONTROL BY EXECUTIVE OFFICERS AND DIRECTORS. Upon consummation of the
Offering, the Company's officers and directors will beneficially own (including
for this purpose options exercisable within 60 days, the Common Stock issuable
upon exercise of the Warrants exercisable upon consummation of this Offering
pursuant to the 1996 Warrant Plan (as defined in "Description of Capital Stock
- -- The 1996 Warrant Plan") and shares over which such persons have voting
control) approximately 46.95% of the outstanding shares of the Company's Common
Stock. See "Principal and Selling Stockholders." Such persons, if acting
together, would have sufficient voting power to control the outcome of corporate
actions submitted to the stockholders for approval and to control the management
and affairs of the Company, including the election of the Board of Directors of
the Company. As a result of such control, certain transactions may not be
possible without the approval of such stockholders, including proxy contests,
mergers involving the Company and tender offers or other purchases of Common
Stock that could give stockholders of the Company the opportunity to realize a
premium over the then-prevailing market price for their shares of Common Stock.
See "Principal and Selling Stockholders" and "Description of Capital Stock --
Special Provisions of the Certificate of Incorporation, Bylaws and Delaware
Law."
ANTI-TAKEOVER PROVISIONS. The level of stock ownership of the management of
the Company and KIA V and KEP V (each as hereinafter defined), as well as the
provisions of Delaware corporation law and the Certificate of Incorporation and
Bylaws (each as defined in "Description of Capital Stock"), may have the effect
of deterring hostile takeovers, delaying or preventing changes in control or
changes in management, or limiting the ability of stockholders to approve
transactions that they may deem to be in their best interests. In addition,
under the Company's Certificate of Incorporation, the Board of Directors has the
authority to issue shares of Preferred Stock and establish the rights and
preferences thereof without obtaining stockholder approval. The Company has no
present plans to issue any shares of Preferred Stock. See "Description of
Capital Stock."
ABSENCE OF PUBLIC MARKET. Prior to this Offering, there has been no public
market for the Common Stock of the Company. There can be no assurance that,
following this Offering, an active trading market for the Common Stock will
develop or be sustained or that the market price of the Common Stock will not
decline below the initial public offering price. The initial public offering
price will be determined by negotiations among the Company and the
Representatives of the Underwriters and will not necessarily be indicative of
the market price of the Common Stock after this Offering. See "Underwriting" for
a discussion of the factors to be considered in determining the initial public
offering price.
IMMEDIATE AND SUBSTANTIAL DILUTION. Purchasers of Common Stock offered
hereby will suffer an immediate and substantial dilution in the net tangible
book value of the Common Stock from the initial public offering price. See
"Dilution."
SHARES ELIGIBLE FOR FUTURE SALE. Beginning 180 days after the date of this
Prospectus (upon expiration of lockup agreements with the Underwriters),
10,500,000 shares of Common Stock outstanding as of the date of this Prospectus,
will become eligible for sale immediately in reliance on Rule 144A and at
prescribed times, subject to volume and manner of sale restrictions, in reliance
on Rule 144, each promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). Sales of substantial amounts of Common Stock (including
shares issued upon exercise of stock options), or the perception that such sales
could occur, could adversely affect prevailing market prices for the Common
Stock. See "Shares Eligible for Future Sale." An additional 2,470,608 shares are
subject to issuance under the 1996 Warrant Plan and upon issuance will be
eligible for sale under Rule 144. Moreover, KIA V and KEP V and their respective
partners and certain officers of the Company, who in the aggregate will
beneficially own 10,500,000 shares of Common Stock upon the consummation of the
Offering, will have certain registration rights with respect thereto. See
"Management -- The 1996 Warrant Plan" and "Description of Capital Stock -- The
Noteholder Warrants."
NOTEHOLDER WARRANTS. Upon consummation of the Offering, the Noteholder
Warrants (as defined in "Description of Capital Stock -- The Noteholder
Warrants") will be exercisable for additional shares of Common Stock. The
Warrant Shares (as defined in "Description of Capital Stock -- The Noteholder
Warrants") entitled to be purchased upon exercise of the Noteholder Warrants
have been registered
9
<PAGE>
pursuant to the Securities Act. As a result, such Warrant Shares shall become
freely transferable upon consummation of the Offering. Sales of substantial
amounts of Warrant Shares, or the perception that such sales could occur, could
adversely affect prevailing market prices for the Common Stock. See "Description
of Capital Stock -- The Noteholder Warrants."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,700,000 shares of
Common Stock offered hereby by the Company are estimated to be approximately
$45.7 million (or approximately $54.9 million if the Underwriters'
over-allotment option is exercised in full), after deducting estimated
underwriting discounts and commissions and offering expenses and assuming an
initial offering price of $13.50 per share.
The Company intends to use approximately $9.6 million of such proceeds to
retire a portion of the Secured Notes (as defined in "Management Discussion and
Analysis of Financial Condition and Results of Operation -- Liquidity and
Capital Resources") and the remaining $36.1 million to repay a portion of the
amounts outstanding under the Acquisition Credit Facility (the "Acquisition
Indebtedness"). The Acquisition Indebtedness was incurred on April 5, 1996 in an
aggregate principal amount of $84.5 million bearing interest at 8.25% per annum
to finance a certain acquisition and refinance other indebtedness incurred by
the Company to finance its prior acquisitions. The Secured Notes were issued on
June 23, 1994 in an aggregate principal amount of $50 million and were offered
at a substantial discount from their principal amount. No interest will accrue
on the Secured Notes prior to July 1, 1999 and the Secured Notes mature on July
1, 2004. Commencing July 1, 1999, interest on the Secured Notes will accrue at
the rate of 14% per annum and will be payable semiannually. See "Description of
Indebtedness and Other Commitments."
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders.
DIVIDEND POLICY
The Company has not paid dividends on its Common Stock and does not
anticipate paying dividends in the foreseeable future. The Company intends to
retain any future earnings for reinvestment in the Company. In addition, the
Company's Credit Agreements, Secured Notes and the UOI Notes that will remain
outstanding following this Offering place limitations on the Company's ability
to pay dividends or make any other distributions on Common Stock. See
"Description of Capital Stock" and "Description of Indebtedness and Other
Commitments." Any future determination as to the payment of dividends will be
subject to such prohibitions and limitations, will be at the discretion of the
Company's Board of Directors and will depend on the Company's results of
operations, financial condition, capital requirements and other factors deemed
relevant by the Board of Directors.
10
<PAGE>
DILUTION
The pro forma deficit in net tangible book value of the Company's Common
Stock as of March 31, 1996 was approximately $39.7 million, or $3.05 per share.
The pro forma deficit in net tangible book value per share of Common Stock
represents the amount of the Company's common stockholders' deficit on a pro
forma basis, less intangible assets, divided by 13,000,000 shares of Common
Stock outstanding as of March 31, 1996.
Net tangible book value dilution per share of Common Stock represents the
difference between the amount per share paid by purchasers of shares of Common
Stock in this Offering and the pro forma deficit in net tangible book value per
share of Common Stock immediately after completion of the Offering. After giving
effect to the sale of 3,700,000 shares of Common Stock in this Offering at an
assumed offering price of $13.50 per share and the application of the estimated
net proceeds therefrom, the pro forma net tangible book value of the Common
Stock as of March 31, 1996 would have been $6.0 million, or $0.36 per share of
Common Stock. This represents an immediate decrease in the deficit in the net
tangible book value of $3.41 per share of Common Stock to existing common
stockholders and an immediate dilution in net tangible book value of $13.14 per
share of Common Stock to purchasers of Common Stock in this Offering. The
following table illustrates the dilution in the net tangible book value per
share to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of Common Stock............ $ 13.50
Pro forma deficit in net tangible book value per share of Common Stock at
March 31, 1996.......................................................... $ (3.05)
Decrease in deficit per share of Common Stock attributable to new
investors............................................................... 3.41
---------
Pro forma net tangible book value per share of Common Stock after the
Offering (1).............................................................. 0.36
---------
Dilution per share to new investors........................................ $ 13.14
---------
---------
</TABLE>
- ------------------------
(1) If the Underwriters' over-allotment option is exercised in full, the pro
forma deficit in net tangible book value would be approximately $0.91 per
share, resulting in dilution to new investors in this Offering of $12.59 per
share.
The following table sets forth, as of the close of this Offering, the number
of shares of Common Stock issued by the Company, the total consideration paid
and the average price per share paid by both existing stockholders and by new
investors purchasing shares of Common Stock in this Offering:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
ACQUIRED (1) TOTAL CONSIDERATION
-------------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------------- ---------- -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders (1)................. 13,000,000 77.8% $ 31,451,000 38.6% $ 2.42
New investors (2)......................... 3,700,000 22.2 49,950,000 61.4 13.50
-------------- ---------- -------------- -----
Total................................... 16,700,000 100.0% $ 81,401,000 100.0%
-------------- ---------- -------------- -----
-------------- ---------- -------------- -----
</TABLE>
- ------------------------
(1) Excludes 2,470,608 shares of Common Stock issuable pursuant to the 1996
Warrant Plan. Also excludes 1,000,000 shares of Common Stock issuable
pursuant to the outstanding Noteholder Warrants. See "Management -- The 1996
Warrant Plan" and "Description of Capital Stock -- The Noteholder Warrants".
(2) Sales by the Selling Stockholders in this Offering will reduce the number of
shares of Common Stock held by existing stockholders to 10,500,000, or 63%
(10,300,000 or 58% if the Underwriters over-allotment is exercised in full)
of the total number of shares of Common Stock to be outstanding after this
Offering, and will increase the number of shares of Common Stock to be
purchased by new investors to 6,200,000, or 37% (7,130,000 or 40% if the
Underwriters over-allotment is exercised in full) of the total number of
shares of Common Stock to be outstanding after this Offering. See Note 1
above and "Principal and Selling Stockholders."
11
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
at March 31, 1996, and as adjusted to give effect to the Offering at an assumed
offering price of $13.50. The table should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------
PRO AS
ACTUAL FORMA (1) ADJUSTED (2)
------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Short term debt:
Current maturities of long term debt and other
obligations.............................................. $ 58 $ -- $ --
------- -------- --------
Long term debt:
Revolving Credit Facility................................. 3,692 -- --
Acquisition Credit Facility............................... 18,778 8,552 --
Acquisition Term Loan..................................... -- 75,000 47,033
14% Series A Senior Secured Discount Notes due 2004....... 30,175 30,175 22,118
11% Series A Senior Notes due 2003........................ 64,179 64,179 64,179
Other obligations......................................... 3,424 2,342 2,342
------- -------- --------
Total long term debt and other obligations.............. 120,248 180,248 135,672
Common stockholders' equity (deficit)....................... (40,533) (10,532 ) 34,044
------- -------- --------
Total capitalization.................................... $79,773 $169,716 $169,716
------- -------- --------
------- -------- --------
</TABLE>
- ------------------------
(1) Reflects the Naegele Acquisition consummated as of April 5, 1996 and
issuance of Class B Common Stock and Class C Common Stock. See "Business --
Acquisitions" and "Certain Transactions."
(2) Reflects the application of the net proceeds of the Offering.
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected financial data presented below as of and for the year ended
December 31, 1995 and the three months ended March 31, 1996 and 1995 are derived
from the Consolidated Financial Statements of the Company. The selected
financial data as of and for the years ended December 31, 1992, 1993, 1994 and
1995 are derived from the financial statements of the Company. Certain of such
financial statements were unaudited. The financial statements of the Company for
the three years in the period ended December 31, 1995 were audited by Price
Waterhouse LLP, independent accountants, as indicated in their report included
elsewhere in this Prospectus. The selected financial data as of and for the
three months ended March 31, 1995 and 1996 are derived from the combined
financial statements included herein and include all normal and recurring
adjustments necessary for a fair presentation of such data. The data set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements, including the Notes thereto, appearing elsewhere in this Prospectus.
Due to the significant development and acquisition of additional structures, the
data set forth below is not necessarily comparable on a year-to-year basis and
data set forth for certain periods is not indicative of results for the full
year.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
PRO
FORMA (6)
1991 1992 1993 1994 1995 1995
------- ------- ------- ------- ------- ---------
(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 $70,081
Net revenues (1).................. 18,835 24,681 25,847 29,766 34,148 62,363
Direct advertising expenses....... 7,638 10,383 10,901 11,806 12,864 24,435
General and administrative
expenses......................... 3,515 3,530 3,357 3,873 4,645 7,925
Depreciation and amortization..... 5,530 7,817 8,000 7,310 7,402 15,643
Operating income.................. 2,152 2,951 3,589 6,777 9,237 14,360
Interest expense.................. 6,599 9,591 9,299 11,809 12,894
Other (expense) income, net....... (53) 291 (351) (134) (46)
Net income (loss) before extra-
ordinary item (2)................ (4,500) (6,349) (6,061) (5,166) (3,703)
Net loss.......................... (4,500) (6,349) (9,321) (5,166) (3,703)
Net loss per share................ (0.60) (0.84) (1.24) (0.69) (0.49)
Weighted average common and
equivalent shares outstanding.... 7,520 7,520 7,520 7,520 7,520
OTHER DATA:
Operating Cash Flow (3)........... $ 7,682 $10,768 $11,589 $14,087 $16,639 $30,003
Operating Cash Flow Margin (4).... 40.8% 43.6% 44.8% 47.3% 48.7% 48.1%
Capital expenditures.............. 2,047 2,352 2,004 4,668 5,620
Depreciation and amortization..... 5,530 7,817 8,000 7,310 7,402 15,643
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------
PRO PRO
FORMA (6) FORMA (6)
1995 1995 1996 1996
------- --------- ------ ---------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue..................... $ 8,025 $15,212 $9,332 $16,869
Net revenues (1).................. 7,236 13,571 8,427 15,101
Direct advertising expenses....... 3,108 5,949 3,571 6,509
General and administrative
expenses......................... 1,072 1,923 1,227 2,110
Depreciation and amortization..... 1,737 3,721 2,032 4,060
Operating income.................. 1,319 1,978 1,597 2,422
Interest expense.................. 3,087 3,594
Other (expense) income, net....... (10) (10)
Net income (loss) before extra-
ordinary item (2)................ (1,778) (2,007)
Net loss.......................... (1,778) (2,007)
Net loss per share................ (0.24) (0.27)
Weighted average common and
equivalent shares outstanding.... 7,520 7,520
OTHER DATA:
Operating Cash Flow (3)........... $ 3,056 $5,699 $3,629 $6,482
Operating Cash Flow Margin (4).... 42.2% 42.0% 43.1% 42.9%
Capital expenditures.............. 576 1,966
Depreciation and amortization..... 1,737 3,721 2,032 4,060
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
YEAR ENDED DECEMBER 31, -------------------------
----------------------------------------------------- PRO FORMA AS ADJUSTED
1991 1992 1993 1994 1995 (7) (8)
--------- --------- --------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital(5)............................. $ 2,365 $ 1,326 $ 1,730 $ 2,845 $ 4,195 $ 6,670 $ 6,670
Total assets................................... 71,682 65,754 61,816 68,253 71,050 177,963 177,963
Total long-term debt and other obligations..... 65,076 59,363 69,254 99,669 106,362 180,248 135,672
Redeemable preferred stock..................... 13,442 15,055 21,505
Common stockholders' equity (deficit).......... (11,450) (17,799) (32,157) (34,823) (38,526) (10,532) 34,044
</TABLE>
13
<PAGE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary loss represents loss on early extinguishment of debt.
(3) "Operating Cash Flow" is operating income before depreciation and
amortization. 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) 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.
(6) Represents actual amounts adjusted to give effect to the acquisitions of
NOA Holding Company, Ad-Sign, Inc. and Image Media, Inc. See Pro Forma
Combined Statement of Operations.
(7) Represents actual amounts adjusted to give effect to the acquisition of NOA
Holding Company. See Pro Forma Combined Balance Sheet.
(8) Represents actual amounts adjusted to give effect to the acquisition of NOA
Holding Company and the application of the estimated net proceeds of $45.7
million to the Company of this Offering based upon an assumed public
offering price of $13.50 per share and the application of the net proceeds
therefrom. See "Use of Proceeds" and Pro Forma Combined Balance Sheet.
14
<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.
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 April 30, 1996,
the Company spent in excess of $160 million to acquire additional display faces,
increasing the number of its display faces from approximately 600 in 1989 to
approximately 12,700 at April 30, 1996. During this period, the Company's net
revenues increased from $10.3 million in 1989 to $34.1 million in 1995. The
following table lists the Company's acquisitions since January 1, 1989:
<TABLE>
<CAPTION>
APPROXIMATE NUMBER AND TYPE OF
DISPLAY FACES ACQUIRED
----------------------------------------------
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 1,022 2,550 -- 3,572
----------- ----------- --------- ---------
Total............................................................. 1,754 5,030 5,418 12,202
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
The Company's acquisitions have been financed through bank borrowings and
the issuance of long-term debt and redeemable preferred stock (all of which has
been redeemed), as well as with internally-generated funds. All 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.
The Company will recognize a one-time non-cash compensation charge of
approximately $9 million in the quarter to be ended June 30, 1996 relating to
the issuance of the Warrants under the 1996 Warrant Plan. See "Management -- The
1996 Warrant Plan."
15
<PAGE>
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>
THREE YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
MARCH 31,
---------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net revenues............................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Direct advertising expenses.............................. 42.2 39.7 37.7 43.0 42.4
General and administrative expenses...................... 13.0 13.0 13.6 14.8 14.5
----- ----- ----- ----- -----
Operating Cash Flow (1).................................... 44.8 47.3 48.7 42.2 43.1
Depreciation and amortization.............................. 30.9 24.5 21.6 24.0 24.1
----- ----- ----- ----- -----
Operating income........................................... 13.9 22.8 27.1 18.2 19.0
Other expense, primarily interest.......................... 37.3 40.2 37.9 42.8 42.8
----- ----- ----- ----- -----
Net loss before extraordinary item......................... (23.4) (17.4) (10.8) (24.6) (23.8)
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
- ------------------------------
(1) "Operating Cash Flow" is operating income before depreciation and
amortization. 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.
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.
Historically, manufacturers of cigarettes have been major outdoor
advertisers. In the early 1990's, tobacco manufacturers began substantially
reducing their advertising expenditures. By diversifying its customer base and
increasing sales to local advertisers, the Company's tobacco revenues as a
percentage of total revenues declined from 19.9% in 1992 to 13.3% in 1995, while
the Company's total net revenues increased 38.4% during the same period.
Net revenues represent gross revenues less commissions paid to advertising
agencies that contract for the use of advertising displays on behalf of
advertisers. Approximately 35% 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 catagories: 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%.
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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 $15.5 million as of December 31, 1995, which will expire over a
period of years beginning in 2005. Use of these NOLs is subject to an annual
limit of approximately $2.4 million under Section 382 of the Internal Revenue
Code of 1986, as amended, and may be subject to further restriction under the
rules applicable to corporations filing consolidated federal income tax returns.
Management believes that sufficient taxable income will be generated to use the
$15.5 million of NOLs prior to their expiration between 2005 and 2010. However,
there can be no assurance that sufficient taxable income will be generated in
the future.
COMPARISON OF THREE MONTH PERIODS ENDED MARCH 31, 1996 AND MARCH 31, 1995
Net revenues increased 16.5% to $8.4 million during the first three months
of 1996 from $7.2 million in the corresponding 1995 period, reflecting higher
advertising rates and occupancy levels experienced primarily in the
Indianapolis, Des Moines and Evansville markets and the inclusion of the 1996
partial period of revenues from the acquisition of Ad-Sign, Inc.
Direct advertising expenses increased to $3.6 million in the first three
months of 1996 from $3.1 million in the 1995 period as a result of the higher
net revenues. As a percentage of net revenues, direct advertising expenses
decreased slightly to 42.4% in the first three months of 1996 compared to 43.0%
in the 1995 period as a result of economies of scale associated with increased
revenues.
General and administrative expenses increased to $1.2 million in the first
three months of 1996 from $1.1 million in the 1995 period primarily as a result
of increased payroll costs. As a percentage of net revenues, general and
administrative expenses decreased to 14.6% in the first three months of 1996
from 14.8% in the 1995 period as a result of economies of scale associated with
increased revenues.
As a result of the above factors, Operating Cash Flow increased by 18.8% to
$3.6 million in 1996 from $3.1 million in 1995.
Depreciation and amortization expense for the first three months of 1996
increased to $2.0 million from $1.7 million in 1995 due to large increases in
the fixed assets offset by reduced depreciation of certain older fixed assets.
Total interest expense in the first three months of 1996 increased to $3.6
million from $3.1 million in the 1995 period primarily as a result of larger
borrowings under the Acquisition Credit Facility following the acquisition of
Ad-Sign, Inc.
The foregoing factors contributed to the Company's $2.0 million net loss in
the first three months of 1996 from a $1.8 million net loss 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 and inclusion of approximately $500,000
in revenues attributable to the acquisitions in the Dallas market.
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.
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General and administrative expenses in 1995 increased to $4.6 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 increased to 13.6% from 13.0%
in the prior year. This increase was due primarily to the incremental payroll
costs associated with additional employees and expenses related to acquisitions.
As a result of the above factors, Operating Cash Flows increased by 18.1% to
$16.6 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 $12.9 million in 1995 from $11.8 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 $3.7 million net loss in
1995 compared to a net loss of $5.2 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 (24.6% of
net revenues) in 1994 from $8.0 million (31.0% of the net revenues) in 1993 due
to scheduled depreciation of the fixed assets.
Total interest expense increased to $11.8 million in 1994 from $9.3 million
in 1993 as a result of the incremental interest associated with the Secured Note
Offering (as defined in "Liquidity and Capital Resources") and the additional
borrowings in 1994, which were partially offset by less accretion of dividends
on the redeemable preferred stock because such stock was redeemed in June 1994.
The foregoing factors contributed to the Company's $5.2 million net loss in
1994 compared to a net loss of $9.3 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.
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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 quarter of 1996.
The information has been derived from the quarterly financial statements of the
Company which are unaudited but which, in the opinion of management, have been
prepared on the same basis as the financial statements included herein and
include all adjustments (consisting only of normal recurring items) necessary
for a fair presentation of the financial result for such periods. This
information should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto and the other financial information appearing
elsewhere in this Prospectus. The operating results for any quarter are not
necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1994 1994 1994 1994 1995 1995 1995 1995
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <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 $ 8,797
Operating income....... 924 2,333 2,002 1,518 1,319 3,055 2,458 2,405
Net income (loss)...... (2,053) (498) (1,099) (1,516) (1,778) (215) (811) (899)
PERCENTAGE OF NET
REVENUES:
Operating income....... 15.1% 29.9% 25.1% 19.2% 18.2% 33.3% 27.5% 27.3%
Net income (loss)...... (33.6) (6.4) (13.8) (19.2) (24.6) (2.3) (9.1) (10.2)
OTHER DATA:
Operating Cash Flow
(1)................... $ 2,709 $ 3,998 $ 3,885 $ 3,495 $ 3,056 $ 4,856 $ 4,308 $ 4,419
Operating Cash Flow
Margin (2)............ 44.4% 51.2 % 48.7 % 44.3 % 42.2 % 52.9 % 48.2 % 50.2%
<CAPTION>
MARCH 31,
1996
-----------
<S> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ 8,427
Operating income....... 1,597
Net income (loss)...... (2,007)
PERCENTAGE OF NET
REVENUES:
Operating income....... 19.0%
Net income (loss)...... (23.8)
OTHER DATA:
Operating Cash Flow
(1)................... $ 3,629
Operating Cash Flow
Margin (2)............ 43.1 %
</TABLE>
- ----------------------------------
(1) "Operating Cash Flow" is operating income before depreciation and
amortization. Operating Cash Flow is not intended to represent net cash
provided by operating activities as defined by generally accepted accounting
principles and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to net cash
provided by operating activities as a measure of liquidity. The Company
believes Operating Cash Flow is a measure commonly reported and widely used
by analysts, investors and other interested parties in the media industry.
Accordingly, this information has been disclosed herein to permit a more
complete comparative analysis of the Company's operating performance
relative to other companies in the media industry.
(2) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds and, to a lesser extent, with preferred
stock.
In April 1996, the Company consummated the Naegele Acquisition (as defined
hereafter) pursuant to which 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 purchase price of the Naegele Acquisition, including
fees and expenses associated with the transaction, was approximately $90
million. In connection therewith, UOI, its current lender, LaSalle National Bank
("LaSalle"), and an additional bank, Bankers Trust Company ("Bankers Trust";
together with LaSalle, the "Lenders"), agreed to (i) refinance the Company's
existing credit facility with a revolving credit facility (the "Revolving Credit
Facility") and (ii) provide an additional extension of credit for purposes of
acquisition financing (the "Acquisition Credit Facility") and, specifically, the
financing, in part, of the Naegele Acquisition. The Lenders extended an
acquisition term loan in the amount of $75 million and an acquisition revolving
credit line in the amount of $12.5 million for a total commitment of $87.5
million, of which $84.5 million was drawn at the closing of the Naegele
Acquisition. In addition, the Lenders extended a working capital revolving
credit line in the amount of $12.5 million, of which no amount has been drawn.
Each of the Revolving Credit Facility and the Acquisition Credit Facility are
secured by a lien on the assets of UOI and, upon the existence of certain
conditions, a pledge of the Common Stock of the Company held by certain
management shareholders, as well as a pledge of the stock of any wholly-owned
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subsidiary of UOI. In addition to the amounts drawn under the Acquisition Credit
Facility, the Company 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.
The Company expects to use the net proceeds of the Offering of $45.7 million
after deducting expenses to repay approximately $9.6 million of the Secured
Notes and to repay approximately $36.1 million outstanding under the Acquisition
Credit Facility. At April 30, 1996, there were no amounts outstanding under the
Revolving Credit Facility and approximately $84.5 million outstanding under the
Acquisition Credit Facility. Upon consummation of the Offering and application
of the net proceeds therefrom, approximately $12.5 million and $40.0 million are
expected to be available for borrowing under the Revolving Credit Facility and
the Acquisition Credit Facility, respectively.
Net cash provided by operating activities increased to $2.9 million for the
three months ended March 31, 1996 from $2.0 million for the 1995 period. Net
cash provided by operating activities increased to $7.0 million in 1995 from
$4.9 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 $15.7 million for the
three months ended March 31, 1996 includes cash used for acquisitions of $13.6
million and other capital expenditures of $2.0 million, including the
expenditure of $320,000 for the acquisition of a building in Milwaukee. 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 Acquisition 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
Revolving Credit Facility and the Acquisition 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 Revolving Credit Facility
and the Acquisition 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 three months ended March 31, 1996, $12.8 million was used in
financing activities primarily due to acquisitions. For the three months ended
March 31, 1995, net cash of $0.1 million was used in financing activities,
primarily due to expenses associated with the establishment of an acquisition
credit facility. For the years ended December 31, 1995 and 1994, $2.1 million
and $3.3 million, respectively, was provided by financing activities, primarily
as a result of additional borrowings under the prior credit facility.
In June 1994, the Company completed an offering (the "Secured Note
Offering") of $50 million of Senior Secured Discount Notes due 2004 (the
"Secured Notes"), the proceeds from which were used to redeem all of the
Company's outstanding preferred stock and a portion of the Company's outstanding
common stock and for working capital purposes. The Secured Notes accrue interest
at a rate of 14% per annum with cash payments thereon beginning on January 1,
2000. The Secured Notes are secured by all of the outstanding capital stock of
UOI. Universal Outdoor is a holding company with no business operations other
than those of UOI, and its sole source of income is its ability, as the sole
stockholder of UOI, to cause UOI to make distributions on its capital stock.
However, UOI currently expects that it will retain its cash flows from operating
activities for use in its business and the servicing of its outstanding debt.
Furthermore, the terms of the indenture (the "UOI Indenture") governing the UOI
Notes and the Revolving Credit Facility effectively preclude UOI from paying
dividends or making other payments to the Company (except for limited payments
for certain expenses of the Company and the purchase of the Secured Notes).
20
<PAGE>
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 Revolving Credit Facility,
the Acquisition Credit Facility, the UOI Indenture and the indenture governing
the Company's Secured Notes may limit the Company's use of cash from operations
for these purposes.
IMPACT OF RETIREMENT OF DEBT ON NET INCOME
The Company intends to utilize a portion of the proceeds from this Offering
to redeem 25% of the aggregate principal amount of the Secured Notes. The
Secured Notes will be redeemed at 114% of their accreted value at the time of
the Offering. The Company will also use the remaining proceeds to repay a
portion of the Acquisition Credit Facility. In connection with the early
retirement of the Secured Notes, the Company expects to incur an extraordinary
loss approximating $1.2 million representing the difference between the
redemption amount and the accreted value of the Secured Notes.
INFLATION
Inflation has not had a significant impact on the Company over the past
three years. The floating rate on the Revolving Credit Facility and Acquisition
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.
The Financial Accounting Standards Board issued SFAS No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION, which allows a Company to record stock-based
compensation on the basis of fair value. The Company adopted the fair value
method for recording stock-based compensation upon issuance of warrants in April
1996. The Company will recognize a one-time non-cash compensation charge of
approximately $9 million in the quarter to be ended June 30, 1996 relating to
the issuance of the Warrants under the 1996 Warrant Plan. See "Management -- The
1996 Warrant Plan."
21
<PAGE>
BUSINESS
GENERAL
The Company is a leading outdoor advertising company operating approximately
12,700 advertising display faces in eight markets, including Chicago,
Minneapolis/St. Paul, Indianapolis, Jacksonville, Milwaukee, Des Moines,
Evansville and Dallas. The Company believes that it owns and operates the
largest number of outdoor advertising display faces in the Chicago,
Minneapolis/St. Paul, Indianapolis, Jacksonville, Des Moines, and Evansville
markets. The Company increased its annual net revenues from $18.8 million in
fiscal 1991 to $34.1 million in fiscal 1995, or $62.4 million on a pro forma
basis after giving effect to acquisitions by the Company in the first half of
1996. During the same period, the Company increased its Operating Cash Flow from
$7.7 million to $16.6 million, or $30.0 million on a pro forma basis. The
Company believes that its 1995 Operating Cash Flow Margin of 48.7%, or 48.1% on
a pro forma basis, is among the highest in the industry. For the first quarter
ended March 31, 1996, on a pro forma basis the Company had net revenues and
Operating Cash Flow of $15.1 million and $6.5 million, respectively, which
compare favorably to the pro forma results for the same period in 1995 of $13.6
million and $5.7 million, respectively.
Since beginning operations with a single outdoor advertising structure in
Chicago in 1973, the Company has achieved its leading position in the outdoor
advertising industry through its aggressive acquisition and development efforts.
Since 1989, the Company has acquired approximately 12,000 display faces in eight
markets including more than 4,000 additional display faces in Chicago. During
the same time period, the Company has built in excess of 315 new display faces
in its markets, a number which the Company believes is among the largest built
by any outdoor advertising company during such period.
The Company's strategy is to improve upon its position as, or to become, the
leading provider of outdoor advertising services in each of its markets by: (i)
developing programs to maximize advertising rates and occupancy levels in
existing markets; (ii) continuing to build new display faces in its existing
markets; (iii) aggressively seeking acquisitions in existing and new
strategically attractive markets; (iv) implementing technological advances that
enhance the Company's operating efficiency and the attractiveness of outdoor
advertising to advertisers; (v) improving Operating Cash Flow Margins through
continued adherence to strict cost controls and centralization of administrative
functions; and (vi) developing 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 focuses its marketing efforts on developing and maintaining a
diverse base of local advertisers which accounted for approximately 77% of the
Company's net revenues in 1995. This local market focus has been critical to the
Company's ability to consistently increase its net revenues while diversifying
the account base, promoting rate integrity and adding stability to revenues.
The Company believes that its senior management team is among the most
experienced in the industry. 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.
This management team has successfully completed and integrated 16 acquisitions
since 1989.
INDUSTRY OVERVIEW
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
22
<PAGE>
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.
Outdoor advertising dates back to the late 19th century when companies began
renting space on fences for advertising placards or "bills" which were pasted or
"posted," accounting for the current "billboards" and "posters" terminology. The
outdoor advertising industry grew dramatically from the 1920s to the 1960s, with
the significant increase in automobile travel and highway and freeway
construction and improvement. As roadside advertising became more popular with
advertisers, the displays used by the industry evolved from posters to more
permanent billboards in standard sizes located in highly visible, high-traffic
locations.
The outdoor advertising industry's operating environment changed with the
passage of the Highway Beautification Act of 1965 which encouraged states to
implement legislation to control billboards located in non-commercial and
non-industrial areas within a certain distance of federally funded highways.
Since that time, various types of state and municipal laws governing outdoor
advertising have been adopted. While these regulations have, in some
jurisdictions, restricted the construction of new billboards and placed
limitations on the expansion and improvement of existing displays, they
typically have not significantly hindered the continued use of existing
structures. In the Company's newly acquired Jacksonville market, however, as a
result of a settlement of litigation by Naegele, the Company is required to
remove a significant number of outdoor advertising structures. See "--
Government Regulation."
The outdoor advertising industry has experienced significant change in
recent periods due to a number of factors. First, the entire "out-of-home"
advertising category has expanded to include, in addition to traditional
billboards and roadside displays, displays in shopping centers and malls,
airports, stadiums, movie theaters and supermarkets, as well as on taxis,
trains, buses, blimps and subways. Second, while the outdoor advertising
industry has experienced a decline in the use of outdoor advertising by tobacco
companies, it has increased its visibility with and attractiveness to local
advertisers as well as national retail and consumer product-oriented companies.
Third, the industry has benefitted significantly from improvements in production
technology, including the use of computer printing, vinyl advertising copy and
improved lighting techniques, which have facilitated a more dynamic, colorful
and creative use of the medium. This technological advance has permitted the
outdoor advertising industry to respond more promptly and cost effectively to
the changing needs of its advertising customers and make greater use of
advertising copy used in other media. Lastly, the outdoor advertising industry
has benefitted from the growth in automobile travel time for business and
leisure due to increased highway congestion and continued demographic shifts of
residences and businesses from the cities to outlying suburbs.
As a result of these factors, the outdoor advertising industry has been
experiencing increased advertiser interest and revenue growth in recent years, a
trend which the Company believes will continue in the future. Outdoor
advertising generated total revenues of approximately $1.8 billion in 1995, or
approximately 1.1% of the total advertising expenditures in the United States,
according to recent estimates by the OAAA. This represents growth of
approximately 8.2% over estimated total revenues for 1994, and compares
favorably to the growth of total U.S. advertising expenditures of approximately
7.7% during the same period. According to OAAA estimates, the out-of-home
advertising market also grew by approximately 10.0% in 1995 from the prior year
to approximately $3.5 billion in revenues.
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
23
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consolidation within the past few years, the OAAA estimates that there are still
approximately 1,000 companies in the outdoor advertising industry operating
approximately 396,000 billboard displays. The Company expects the trend of
consolidation in the outdoor advertising industry to continue.
BUSINESS STRATEGY
The Company's strategy is to improve upon its position as, or to become, the
leading provider of outdoor advertising services in each of its markets and to
expand its presence in attractive new markets.
The following are the primary components of the Company's 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 its 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. 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 new markets. Such new markets allow the Company to
capitalize on the efficiencies and cross-market sales opportunities
associated with operating in multiple markets. In addition, new markets
provide the added benefit of diversification.
-CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its
ability to effectively respond to its customer's needs. The Company's
continued investment in equipment and technology provide 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 its centralized administration provides opportunities for
significant operating leverage from further expansion in existing markets
and from future acquisitions.
-DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other forms
of out-of-home media such as bus shelter or transit advertising in order to
enhance revenues in existing markets or provide access to new markets.
Through implementation of this business strategy, the Company has increased
its outdoor advertising presence from 500 display faces in a single market in
1988 to approximately 12,700 in its eight markets at April 30, 1996.
ACQUISITIONS
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 Company believes that the Naegele Acquisition will enhance its existing
operations in its primary markets and will provide opportunities for increased
revenues and operating cash flow. The
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<PAGE>
Company also believes that its presence in the Jacksonville market will provide
cross-selling opportunities for regional and national advertisers. In addition,
the Company believes that these acquisitions will result in greater efficiencies
and economies of scale in its existing operations while strengthening its
competitive position in its primary markets.
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.
The Company believes that the newly acquired advertising faces have enhanced
its existing operations in the Chicago market and have provided opportunities
for increased revenues and operating income. The Company also believes that its
increased presence in the Chicago area has enhanced cross-selling and other
marketing opportunities associated with its closely proximate geographic
markets. In addition, the Company believes that these acquisitions have resulted
in greater efficiencies and economies of scale in its existing operations while
strengthening its competitive position in the Chicago market.
In March 1995, the Company completed two acquisitions in the Dallas market.
In a stock purchase transaction with Harrington Associates, Inc., the Company
acquired approximately 740 junior (8-sheet) poster faces located in the Dallas
market. In a stock purchase transaction with Best Outdoor, the Company acquired
approximately 387 junior (8-sheet) poster faces in the Dallas market.
MARKETS
Each of the Company's eight markets has 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 is a review of each of the Company's markets.
Information provided below with respect to Operating Cash Flow in each of the
Company's markets excludes $1.4 million of total corporate expenses.
-CHICAGO is the country's 3rd largest market with a population of 7.7
million residents that is projected to grow 5% by the year 2000. Chicago is
home to 32 Fortune 500 companies and has one of the most extensive and
heavily traveled freeway systems in the nation. The Company's business
started with the building of a single outdoor advertising structure in
suburban Chicago in 1973 and has grown to approximately 4,260 advertising
display faces. For the twelve months ended March 31, 1996, the Company's
Chicago operations had net revenues of $13.8 million and Operating Cash
Flow of $8.1 million.
-MINNEAPOLIS/ST. PAUL is the country's 12th largest market with a population
of 2.6 million residents that is projected to grow 10% by the year 2000.
Naegele acquired this market in 1991 and the Company currently owns
approximately 1,897 advertising display faces. The Twin Cities is home to
31 Fortune 500 and Fortune Services 500 companies. The various industries
represented in the area include medical research and development, computer
technology, manufacturing and retail. The Twin Cities area contains
one-half of Minnesota's population and three of the state's largest cities:
Minneapolis, St. Paul and Bloomington. The Twin Cities is also home to the
largest shopping mall in the country, the Mall of America, which draws
traffic from neighboring markets. For the twelve months ended March 31,
1996, the Company's Minneapolis/St. Paul operations had net revenues of
$16.7 million and Operating Cash Flow of $6.4 million.
-INDIANAPOLIS is the country's 35th largest market with a population of 1.5
million residents that is projected to grow 6% by the year 2000.
Indianapolis is the state capital of Indiana, a leading
25
<PAGE>
finance and service center, a major regional trade and distribution center,
and has developed a niche in the sports market. It is also the home of 3
Fortune 500 companies. The Company expanded inventory in this market
through construction of 22 new bulletin faces and 6 new poster faces over
the last 3 years, and currently owns approximately 1,926 advertising
display faces. For the twelve months ended March 31, 1996, the Company's
Indianapolis operations had net revenues of $10.1 million and Operating
Cash Flow of $5.8 million.
-JACKSONVILLE is the country's 46th largest market with a population of 1.0
million residents that is projected to grow 2.6% by the year 2000.
Jacksonville is considered the gateway to the state of Florida, as nearly
50% of all traffic entering Florida enters through Jacksonville on
Interstate 95. Jacksonville is also gaining recognition as a popular
tourist destination. The Company currently owns appoximately 1,493
advertising display faces. For the twelve months ended March 31, 1996, the
Company's Jacksonville operations had net revenues of $8.5 million and
Operating Cash Flow of $4.2 million.
-MILWAUKEE is the country's 34th largest market with a population of 1.7
million residents. The Company entered the Milwaukee market in 1989 by
acquiring 266 display faces and currently owns approximately 580
advertising display faces. Milwaukee is home to 9 Fortune 500 companies.
For the twelve months ended March 31, 1996, the Company's Milwaukee
operations had net revenues of $4.7 million and Operating Cash Flow of $2.2
million.
-DES MOINES is the country's 114th largest market with a population of 0.5
million residents that is projected to grow 5% by the year 2000. Des Moines
is home to 3 Fortune 500 companies, and is at the center of the Great
Plains farm economy. The Company currently owns approximately 506
advertising display faces. For the twelve months ended March 31, 1996, the
Company's Des Moines operations had net revenues of $2.9 million and
Operating Cash Flow of $1.4 million.
-EVANSVILLE is the country's 152nd largest market with a population of 0.3
million residents. Evansville's economy is dominated by manufacturing with
two new plants expected to open in the near future. Additionally, the city
expects to benefit from the recent addition of riverboat casino gambling.
The Company entered the Evansville market in 1991 through an acquisition
and currently owns approximately 845 advertising display faces. For the
twelve months ended March 31, 1996, the Company's Evansville operations had
net revenues of $3.1 million and Operating Cash Flow of $1.4 million.
-DALLAS is the country's 11th largest market with a population of 2.9
million residents that is projected to grow 10% by the year 2000. Dallas is
home to 18 Fortune 500 companies. The Company currently owns approximately
1,171 advertising display faces. For the twelve months ended March 31,
1996, the Company's Dallas operations had net revenues of $0.6 million and
Operating Cash Flow of $0.1 million.
26
<PAGE>
The following tables include data relating to structures that were acquired
or developed during certain years and were not owned during all of the years for
which data has been presented. The following tables set forth the net revenues
and Operating Cash Flow Margins for each of the Company's markets:
NET REVENUES (1)
(dollars in thousands)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31, TWELVE MONTHS
----------------------------------------------------- ENDED MARCH 31,
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Chicago.............................. $ 8,056 $ 8,114 $ 8,402 $ 11,235 $ 13,211 $ 13,814
Minneapolis/St. Paul................. 14,707 14,967 15,069 14,999 16,320 16,677
Indianapolis......................... 2,919 6,322 6,793 8,513 9,897 10,149
Jacksonville......................... 5,784 5,103 5,640 7,349 8,525 8,510
Milwaukee............................ 4,338 4,205 4,394 4,353 4,686 4,706
Des Moines........................... 1,229 2,629 2,553 2,792 2,747 2,883
Evansville........................... 1,134 2,369 2,354 2,873 3,028 3,147
Dallas............................... -- -- -- -- 579 640
Other................................ 1,159 1,042 1,351 -- -- --
--------- --------- --------- --------- --------- ---------------
Total.............................. $ 39,326 $ 44,751 $ 46,556 $ 52,114 $ 58,993 $ 60,526
--------- --------- --------- --------- --------- ---------------
--------- --------- --------- --------- --------- ---------------
</TABLE>
OPERATING CASH FLOW MARGIN (1)(2)
(before allocation of corporate general and administrative expenses)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31, TWELVE MONTHS
----------------------------------------------------- ENDED MARCH 31,
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Chicago.............................. 52.7% 51.8% 53.9% 58.2% 59.3% 58.5%
Minneapolis/St. Paul................. 32.7 35.6 33.2 34.8 37.8 38.6
Indianapolis......................... 49.5 50.0 48.7 53.9 56.7 57.2
Jacksonville......................... 24.3 21.8 24.9 42.0 48.4 49.8
Milwaukee............................ 46.3 44.1 47.3 46.7 46.3 46.9
Des Moines........................... 53.5 49.7 46.7 41.3 47.3 48.3
Evansville........................... 46.1 42.2 33.8 40.8 42.9 44.0
Dallas............................... -- -- -- -- 34.4 18.3
</TABLE>
- ------------------------
(1) The Company completed acquisitions in several of its markets during the
periods referenced above, which affects the comparability of results from
year to year to those markets.
(2) Operating Cash Flow Margin is Operating Cash Flow stated as a percentage of
net revenues.
27
<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.
The following summarizes the Company's approximate display inventory as of
April 30, 1996:
<TABLE>
<CAPTION>
30-SHEET 8-SHEET TRANSIT
BULLETINS POSTERS POSTERS ADVERTISING TOTAL
----------- ----------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Chicago.................................................. 651 -- 3,609 -- 4,260
Minneapolis/St. Paul..................................... 440 1,457 -- -- 1,897
Indianapolis............................................. 256 1,385 142 143 1,926
Jacksonville............................................. 399 1,094 -- -- 1,493
Milwaukee................................................ 259 -- 321 -- 580
Des Moines............................................... 78 418 10 -- 506
Evansville............................................... 167 678 -- -- 845
Dallas................................................... -- -- 1,171 -- 1,171
----- ----- ----- --- ---------
Total.................................................. 2,250 5,032 5,253 143 12,678
----- ----- ----- --- ---------
----- ----- ----- --- ---------
</TABLE>
LOCAL MARKET OPERATIONS
In each of its principal markets except Dallas, 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
28
<PAGE>
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 is currently incorporating the Minneapolis/St. Paul and
Jacksonville operations into this operational structure with local offices
handling the day-to-day operations and centralized accounting and financial
controls.
Although site leases (for land underlying an advertising structure) are
administered from the Company's headquarters in Chicago, each local office is
responsible for locating and ultimately procuring leases for appropriate sites
in its market. Site lease contracts vary in term but typically run from 10 to 20
years with various termination and renewal provisions. Each office maintains a
leasing department, with an extensive database containing information on local
property ownership, lease contract terms, zoning ordinances and permit
requirements. The Company has been very successful in developing new advertising
display face inventory in each of its markets based on utilizing these databases
and developing an experienced staff of lease teams. Each such team's sole
responsibility is the procurement of sites for new locations in each of the
Company's markets.
SALES AND SERVICE
The Company's sales strategy is to maximize revenues from local advertisers.
Accordingly, it maintains a team of sales representatives headed by a sales
manager in each of its markets. The Company devotes considerable time and
resources to recruiting, training and coordinating the activities of its sales
force. A sales representative's compensation is heavily weighted to individual
performance, and the local sales manager's compensation is tied to the
performance of his or her sales team. One sales representative, based in
Chicago, manages sales to national advertisers. In total, 61 of the Company's
employees are significantly involved in sales and marketing activities.
In addition to the sales staff, the Company has established fully staffed
and equipped creative departments in each of its markets except Dallas.
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
29
<PAGE>
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 77% of
the Company's net revenues in 1995 were generated from local advertisers. Local
advertisers tend to have smaller advertising budgets and require greater
assistance from the Company's production and creative personnel to design and
produce advertising copy. In local sales, the Company often expends more sales
efforts on educating customers regarding the benefits of outdoor media and
helping potential customers develop an advertising strategy using outdoor
advertising. While price and availability are important competitive factors,
service and customer relationships are also critical components of local sales.
Tobacco revenues have historically accounted for a significant portion of
outdoor advertising revenues. Beginning in 1993, the leading tobacco companies
substantially reduced their expenditures for outdoor advertising due to a
declining population of smokers, societal pressures, consolidation in the
tobacco industry and price competition from generic brands. Since tobacco
advertisers often utilized some of the industry's prime inventory, the decline
in tobacco-related advertising expenditures made this space available for other
advertisers, including those that had not traditionally utilized outdoor
advertising. As a result of this decline in tobacco-related advertising revenues
and the increased use of outdoor advertising by other advertisers, the range of
the Company's advertisers has become quite diverse. The following table
illustrates the diversity of the Company's advertising base:
1995 NET REVENUES BY CATEGORY
<TABLE>
<CAPTION>
PERCENTAGE OF
NET REVENUES
---------------
<S> <C>
Retail/Consumer Products.......................................................................... 14.4%
Tobacco........................................................................................... 13.3
Automotive & Related.............................................................................. 9.5
Travel/Entertainment.............................................................................. 9.5
Restaurant........................................................................................ 7.4
Alcohol........................................................................................... 6.4
Advertising/Media................................................................................. 5.3
Food.............................................................................................. 4.3
Home Developer/Real Estate........................................................................ 4.3
Other............................................................................................. 25.6
-----
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
30
<PAGE>
for labor-intensive production work since vinyl and pre-printed copy can be
installed quickly. The vinyl sheets are reusable, thereby reducing the Company's
production costs, and are easily transportable. Due to the geographic proximity
of the Company's principal markets and the transportability of vinyl sheets, the
Company can shift materials among markets to promote efficiency. The Company
believes that this trend over time will reduce operating expenses associated
with production activities.
COMPETITION
The Company competes in each of its markets with other outdoor advertisers
as well as other media, including broadcast and cable television, radio, print
media and direct mail marketers. In addition, the Company also competes with a
wide variety of "out-of-home" media, including advertising in shopping centers
and malls, airports, stadiums, movie theaters and supermarkets, as well as on
taxis, trains, buses and subways. Advertisers compare relative costs of
available media and cost-per-thousand impressions, particularly when delivering
a message to customers with distinct demographic characteristics. In competing
with other media, outdoor advertising relies on its low
cost-per-thousand-impressions and its ability to repetitively reach a broad
segment of the population in a specific market or to target a particular
geographic area or population with a particular set of demographic
characteristics within that market.
The outdoor advertising industry is highly fragmented, consisting of several
large outdoor advertising and media companies with operations in multiple
markets as well as smaller and local companies operating a limited number of
structures in single or a few local markets. Although some consolidation has
occurred over the past few years, according to the OAAA there are approximately
1,000 companies in the outdoor advertising industry operating approximately
396,000 billboard displays. In several of its markets, the Company encounters
direct competition from other major outdoor media companies, including Gannett
Outdoor (a division of Gannett Co. Inc.), Eller Media, Inc. (formerly Patrick
Media Group) and 3M National Advertising Co. (a division of Minnesota Mining and
Manufacturing Company), each of which has a larger national network and greater
total resources than the Company. The Company believes that its emphasis on
local advertisers and its position as a major provider of advertising services
in each of its markets and in the midwest enable it to compete effectively with
the other outdoor media operators, as well as other media, both within those
markets and in the midwest region. The Company also competes with other outdoor
advertising companies for sites on which to build new structures. See "Risk
Factors -- Competition."
GOVERNMENT REGULATION
The outdoor advertising industry is subject to governmental regulation at
the federal, state and local level. Federal law, principally the Highway
Beautification Act of 1965, encourages states, by the threat of withholding
federal appropriations for the construction and improvement of highways within
such states, to implement legislation to restrict billboards located within 660
feet of, or visible from, interstate and primary highways except in commercial
or industrial areas. All of the states have implemented regulations 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
31
<PAGE>
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. Its is uncertain whether
additional legislation of this type will be enacted on the national level or in
any of the Company's markets.
Recently, the Food and Drug Administration has proposed legislation which
would prohibit the use of pictures and color in tobacco advertising and has also
proposed the elimination of all tobacco advertising on outdoor displays located
within 1,000 feet of any school. Additionally, one major tobacco manufacturer
has recently proposed federal legislation be enacted banning 8-sheet billboard
advertising and transit advertising of tobacco products. In addition to a ban on
tobacco advertising near schools and playgrounds, the tobacco manufacturer has
proposed a ban on tobacco advertising on all 8-sheet posters and in or on
trains, buses, subways, taxis and bus shelters. Tobacco advertising represents
13.3% of the Company's net revenues and 1.8% of the Company's revenues
attributed to tobacco advertising is derived from 8-sheet posters. While such
legislation has not been enacted by Congress, the restrictions currently
proposed, if enacted, may have a material adverse effect on the Company's
results of operations.
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.
32
<PAGE>
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. The Company owns or has permanent easements on
approximately 252 parcels of real property that serve as the sites for its
outdoor displays. The Company's remaining approximately 6,739 advertising
display sites are leased or licensed.
The Company's leases are for varying terms ranging from month-to-month or
year-to-year to terms of ten years or longer, and many provide for renewal
options. There is no significant concentration of displays under any one lease
or subject to negotiation with any one landlord. The Company believes that an
important part of its management activity is to manage its lease portfolio and
negotiate suitable lease renewals and extensions.
OFFICE AND PRODUCTION FACILITIES. The Company's principal executive and
administration offices are located in Chicago, Illinois in a 6,956-square foot
space leased by the Company. In addition, the Company has an office and complete
production and maintenance facility in each of Addison, Illinois (40,000 square
feet); Milwaukee (18,367 square feet); Indianapolis (23,648 square feet); Des
Moines (15,320 square feet); Minneapolis/St. Paul (82,547 square feet);
Jacksonville (16,000 square feet); and Evansville (16,000 square feet) and a
sales, real estate and administration office in Dallas (2,000 square feet). The
Indianapolis, Addison, Milwaukee, Jacksonville and Evansville facilities are
owned and all other facilities are leased. The Company considers its facilities
to be well maintained and adequate for its current and reasonably anticipated
future needs.
EMPLOYEES
At January 1, 1996, the Company employed approximately 337 people, of whom
approximately 61 were primarily engaged in sales and marketing, 190 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 14 employees who belong to a union and the Minneapolis/St.
Paul market has 28 employees who belong to unions. The Company considers its
relations with the unions and with its employees to be good.
33
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The table below sets forth certain information with respect to the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
YEARS WITH
NAME AGE POSITION COMPANY
- ------------------------- --- ----------------------------------------------------------- ---------------
<S> <C> <C> <C>
Daniel L. Simon* 45 Chief Executive Officer, President and Director 23
Brian T. Clingen 36 Vice President, Chief Financial Officer and Director 8
Paul G. Simon* 43 Vice President, Secretary and General Counsel 6
Michael J. Roche 45 Director 2
Michael B. Goldberg 49 Director --
Frank K. Bynum, Jr.** 33 Director --
</TABLE>
- ------------------------
* Daniel L. and Paul G. Simon are brothers.
** To be elected director upon consummation of the Offering.
DANIEL L. 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.
BRIAN T. 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.
PAUL G. 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.
MICHAEL J. 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.
MICHAEL B. 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. and United Refrigerated
Services, Inc.
FRANK K. BYNUM, JR. will be elected a director of the Company immediately
upon consummation of the Offering. 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 Ellis Communications, Inc.,
Hosiery Corporation of America, Inc., IXL Holdings, Inc. and United Refrigerated
Services, Inc.
For their services as directors, the members of the Board of Directors who
are not employees of the Company, UOI, 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.
34
<PAGE>
The Company will institute a classified Board of Directors immediately upon
consummation of this Offering. Upon the completion of their initial terms, which
vary from one to three years, all directors of the Company will hold office for
three-year terms until the next annual meeting of stockholders of the Company or
until their successors are duly elected and qualified. See "Description of
Capital Stock -- Special Provisions of Certificate of Incorporation, Bylaws and
Delaware Law." 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 Securities and Exchange Commission (the "Commission")
relating to the 1990 acquisition of a portfolio company by an affiliate of Kelso
& Companies, Inc. The order found that the tender offer filing by Kelso &
Companies, Inc. in connection with the acquisition did not comply fully with the
Commission's tender offer reporting requirements, and required Kelso &
Companies, Inc. and its chief executive officer to comply with these
requirements in the future.
The Company has an agreement with Kelso & Company, L.P. that permits Kelso &
Company, L.P. upon the consummation of the Offering to nominate two persons for
the Board of Directors to be voted upon by the shareholders. Messrs. Goldberg
will be retained as a director and Messrs. Bynum will be elected to the Board of
Directors 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 the Board's compensation committee. See "Certain Transactions."
OTHER SIGNIFICANT MANAGEMENT PERSONNEL
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE IN
OUTDOOR ADVERTISING
NAME AGE POSITION INDUSTRY
- ----------------------- --- ------------------------------------------------------------ -------------------------
<S> <C> <C> <C>
Bruce Davies 37 General Manager -- Jacksonville 9
Leon Howell 56 General Manager -- Evansville 35
Dennis O'Brien 62 President -- 8-Sheet Division 35
Cynthia V. Ogle 41 Regional Manager 15
David L. Quas 38 General Manager and Sales Manager -- Chicago 11
Gary Riley 34 Market Manager -- Indianapolis 11
Jay Sauber 36 General Manager and Sales Manager -- Milwaukee 11
Mike Scheid 39 National Sales Manager 18
Roy Schroeder 35 Market Manager -- Minneapolis 10
Teri Wood 39 General Manager -- Des Moines 9
David Zimmermann 40 General Manager -- 8-Sheet Division 18
</TABLE>
BRUCE DAVIES has continued to serve as General Manager of the Company's
Jacksonville operation since its acquisition in early 1996. From 1992 to 1995,
he was employed by Naegele Outdoor (Youngstown, OH) as General Manager and Sales
Manager. For 5 years prior, Mr. Davies was employed by various outdoor companies
including Pony Panels (8-Sheets) and Ackerley Outdoor (Airport Division), both
in Albuquerque, NM.
LEON HOWELL has served as General Manager of the Company's Evansville
operation since its acquisition in 1991. Mr. Howell has 35 years of experience
in the outdoor advertising industry, including 15 years in the Evansville
market. From 1961 to 1991, Mr. Howell was employed by Naegele Outdoor
Advertising, Inc. (and predecessor companies) in Louisville, Palm Springs and
Evansville in various sales, operations and management positions, including
General Manager of the Evansville operation from 1986 to 1991.
DENNIS O'BRIEN has served as the President of the 8-Sheet Division since
1994. In 1987 he founded Target Media, Inc. which he operated until its
acquisition by the Company in 1994. From 1961 to 1987 Mr. O'Brien was employed
by various outdoor companies including Gannett, Media Comm, 3M and Foster &
Kleiser.
35
<PAGE>
CYNTHIA OGLE has served as Regional Manager of the Company since 1995. Ms.
Ogle has 15 years of experience in the outdoor advertising industry, all of it
in Indianapolis. From 1991 to 1996 she served as General Manager. From 1987 to
1991, she served as the Indianapolis Sales Manager for Naegele, continuing in
that capacity with the Company for 10 months after it acquired Naegele's
Indianapolis operations. From 1982 to 1986, Ms. Ogle was an account executive
for Naegele.
DAVID QUAS has served as General Manager for the Company's Chicago market
since 1993. From 1989 to his appointment to General Manager, he served as Sales
Manager for the Chicago market. Mr. Quas has 11 years of experience in the
outdoor advertising business, all of it in the Chicago market. From 1985 to
1989, he served as an account executive for 3M National Advertising.
GARY RILEY has served as Market Manager for the Company's Indianapolis
market since 1995. Prior to his appointment to Market Manager, he served as
Sales Manager in Indianapolis since 1991. From 1985 to 1991, he was an account
executive in Indianapolis for Naegele and continued in that capacity with the
Company after it acquired Naegele's Indianapolis operations.
JAY SAUBER has served as General Manager of the Company's Milwaukee
operations since 1991. From 1989 to 1991, he served as Sales Manager for the
Milwaukee market. Mr. Sauber founded Action Outdoor, Inc., a Chicago outdoor
advertising company acquired by the Company in 1988. From 1985 to 1987, he
served as an account executive for 3M National Advertising in the Chicago
market.
MIKE SCHEID has served as National Sales Manager since the Company's
acquisition of Image Media, Inc. in 1996. In 1988, he founded Image Media, Inc.
which he operated until the acquisition. For 10 years prior, Mr. Scheid was
employed by Patrick Media/Foster & Kleiser in various sales, real estate and
management positions, including National Sales.
ROY SCHROEDER has served as Market Manager for the Company's Minneapolis
market since its acquisition in early 1996. Mr. Schroeder has over 10 years of
experience in the outdoor advertising industry, all of it in Minneapolis. From
1989 to 1996 he served as General Sales Manager for Naegele's Minneapolis
operations. From 1986 to 1989, Mr. Schroeder was an account executive for
Naegele.
TERI WOOD has served as General Manager for the Company's Des Moines market
since 1996. Prior to her appointment to General Manager, she served as Market
Manager since 1993. From 1991 to 1993, she served as the Des Moines Sales
Manager for Naegele, continuing in that capacity with the Company after it
acquired Naegele's Des Moines operation. From 1987 to 1991, Ms. Wood was account
executive with Naegele. Prior to her employment with Naegele, Ms. Wood was an
outdoor media buyer and a client of Naegele.
DAVID ZIMMERMANN has served as General Manager of the 8-Sheet Division since
1995. From 1990 to 1996 he served as the Company's National Sales Manager. From
1985 to 1990, Mr. Zimmermann was employed by Gateway Outdoor Advertising in
Chicago as Sales Manager from 1985 to 1987, Vice President of National Sales
from 1987 to 1990, and Vice President and General Manager of the Chicago market
from 1989 to 1990. From 1977 to 1985, Mr. Zimmermann was employed by Asch
Advertising, as an outdoor media buyer, and by Brown-Forman, as a planner and
buyer of outdoor advertising.
36
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation paid during 1993, 1994 and 1995 to the Company's Chief Executive
Officer and each other executive officer whose total annual salary and bonus
that year exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (2)
- ----------------------------------------------------------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
Daniel L. Simon (1)........................................ 1995 $ 244,379 $ 0 $ 1,000
President and 1994 249,250 0 500
Chief Executive Officer 1993 187,439 0 0
Brian T. Clingen (1)....................................... 1995 $ 145,128 $ 0 $ 1,000
Chief Financial 1994 145,852 0 500
Officer and Vice 1993 122,742 0 0
President
Paul G. Simon (1).......................................... 1995 $ 158,176 $ 0 $ 1,000
Vice President, Secretary and 1994 158,968 0 500
General Counsel 1993 167,125 0 0
</TABLE>
- ------------------------
(1) Does not include value of warrants granted in April 1996 pursuant to the
1996 Warrant Plan to Daniel L. Simon, Brian T. Clingen and Paul G. Simon.
(2) Represents contributions made by the Company on behalf of the named
executive officers to a 401(k) plan.
The Company currently maintains two life insurance policies covering Daniel
L. Simon, each in the amount of $2.5 million. The Company is the sole
beneficiary under each policy. Pursuant to a buy-sell agreement between the
Company and Mr. Simon, the Company has agreed to use up to $3.5 million of the
proceeds from these policies to purchase a portion of Mr. Simon's shares of
Common Stock of the Company from his estate.
THE 1996 WARRANT PLAN
The 1996 Warrant Plan (the "1996 Warrant Plan") was adopted by the Board of
Directors of the Company in April 1996 in order to advance the interests of the
Company by affording certain key executives and employees an opportunity to
acquire a proprietary interest in the Company and thus to stimulate increased
personal interest in such persons in the success and future growth of the
Company. Upon consummation of the Offering, the 1996 Warrant Plan shall be
administered by the Compensation Committee of the Company. Pursuant to the 1996
Warrant Plan, Daniel L. Simon and Brian T. Clingen were awarded warrants in
April 1996 which have been divided into three series (the "Series I Warrants,"
the "Series II Warrants" and the "Series III Warrants," and collectively, the
"Warrants"). In July 1996, the 1996 Warrant Plan was amended to, among other
things (i) adjust the warrant exercise price for the Series II Warrants and the
Series III Warrants from $5.00 per share (as adjusted to reflect the 16 for 1
stock split) to (X) in the case of the Series II Warrants, the closing sale
price of a share of Common Stock as reported on the Nasdaq (the "Closing Price")
for the day immediately preceding any such exercise minus $.01, PROVIDED,
HOWEVER, that if at any time the average of the Closing Prices for any 30
consecutive trading days is equal to or greater than $16.25 AND the Closing
Price for the last day of such thirty day trading period is equal to or greater
than $16.25, then the warrant exercise price shall thereafter be $5.00, and (Y)
in the case of the Series III Warrants, the Closing Price for the day
immediately preceding any such exercise minus $.01, PROVIDED, HOWEVER, that if
at any time the average of the Closing Price for any 30 consecutive trading days
is equal to or greater than $20.00 AND the Closing Prices for the last day of
such thirty day trading period is equal to or greater than $20.00, then the
warrant exercise price shall thereafter be $5.00; and (ii) make each class of
Warrants fully exercisable following consummation of the
37
<PAGE>
Offering. Upon consummation of the Offering, the Series I Warrants will be fully
exercisable at a warrant exercise price of $5.00 per share. The Warrants may not
be sold, assigned, transferred, exchanged or otherwise disposed of except under
certain limited circumstances including by will or the laws of descent and
distribution. The Company consented to an assignment by Daniel L. Simon and
Brian T. Clingen to Paul G. Simon of 123,536 Series I Warrants. A total of
2,470,608 shares of Common Stock have been reserved for issuance pursuant to the
Warrants issued under the 1996 Warrant Plan. Upon consummation of the Offering
and the transaction contemplated in connection therewith, Daniel L. Simon will
hold 595,000 Series I Warrants, 700,000 Series II Warrants and 700,000 Series
III Warrants; Brian T. Clingen will hold 105,006 Series I Warrants, 123,536
Series II Warrants and 123,536 Series I Warrants; and Paul G. Simon will hold
123,530 Series I Warrants. The Company will recognize a one-time non-cash
compensation charge of approximately $9 million in the quarter to be ended June
30, 1996 relating to the issuance of the Warrants under the 1996 Warrant Plan.
AUDIT COMMITTEE; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Upon consummation of the Offering contemplated hereby, the Board of
Directors shall form an Audit Committee which will be responsible for reviewing
the Company's accounting controls and recommending to the Board of Directors the
engagement of the Company's outside auditors. Upon consummation of the Offering
contemplated hereby, the members of the Company's Audit Committee shall be
Daniel L. Simon, Michael J. Roche and Frank K. Bynum.
The Company did not have a compensation committee in 1995. Instead,
compensation decisions were made by the Board of Directors of the Company.
Daniel L. Simon, Lawrence J. Simon, (brother of Daniel L. Simon and Paul G.
Simon) and Brian T. Clingen served as a members of the Board of Directors of the
Company and as executive officers of the Company during 1995. Lawrence J. Simon
resigned as an officer and director of the Company in October, 1995. No other
individual who was a director of the Company during 1995 was also an officer or
employee of the Company during 1995. Upon consummation of the Offering
contemplated hereby, the Board of Directors shall form a Compensation Committee
which will be responsible for reviewing and approving the amount and type of
consideration to be paid to senior management and for administering the 1996
Warrant Plan. See "Management -- The 1996 Warrant Plan." Upon consummation of
the Offering contemplated hereby, the members of the Company's Compensation
Committee shall be Daniel L. Simon, Brian T. Clingen and Michael B. Goldberg.
The Company 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.
CERTAIN TRANSACTIONS
On April 5, 1996, the Company 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 in exchange for
$30,000,000. As an inducement to KIA V's and KEP V's purchase of the Class B
Common Stock and Class C Common Stock, Daniel L. Simon and Brian T. Clingen
agreed to assume, pro rata, the dilution to the holders of Common Stock
following the exercise of the option held by William H. Smith described below in
"Description of Capital Stock." At such time, the Company 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 the Company. 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, the Company entered into agreements with KIA V, KEP V and
certain individual shareholders relating to certain rights of KIA V, KEP V and
certain individual shareholders as holders of Class B Common Stock and Class C
Common Stock of the Company. Pursuant to such agreements, subject to and
conditioned upon the closing of the Offering, the Company 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, a portion of which shares are included in the
Offering. See "Principal and Selling Shareholders."
38
<PAGE>
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 Offering, 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 certain individual shareholders will have the
same rights as holders of Common Stock and will no longer be entitled to the
rights granted to the holders of Class B Common Stock and Class C Common Stock
under the Second Amended and Restated Certificate of Incorporation and Amended
and Restated By-laws of the Company including the right to (i) elect a majority
of the Board of Directors of the Company subsequent to a sale of the Class C
Common Stock to certain purchasers, (ii) appoint, remove and replace the chief
executive officer of the Company subsequent to certain financial events and
(iii) approve or disapprove of the enactment of certain material events by the
Company. The reclassification of Class B Common Stock and Class C Common Stock
will occur prior to the closing of the Offering. In connection with the
reclassification, KIA V, KEP V and certain individual shareholders were granted
four demand registration rights, were granted "piggy-back" registration rights,
and KIA V was granted the right to nominate two persons for seats on the Board
of Directors to be voted upon by the stockholders, with one of such directors,
if elected, to be a member of the Compensation Committee. Pursuant to such
agreements, Daniel L. Simon, Brian T. Clingen and Paul G. Simon were provided
with four demand registration rights and "piggy-back" registration rights.
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 UOI
Indenture and Secured Note Indenture impose limitations on the Company's ability
to engage in such transactions. See "Description of Indebtedness and Other
Commitments."
39
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The table below sets forth the number and percentage of outstanding shares
of 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, (iv) each person known by the Company to own beneficially more than 5% of
the Common Stock and (v) Selling Stockholders. The Company believes that each
individual or entity named has sole investment and voting power with respect to
shares of Common Stock indicated as beneficially owned by them, except as
otherwise noted.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF
COMMON STOCK PRIOR TO THE COMMON STOCK AFTER THE
OFFERING OFFERING
----------------------------- SHARES -----------------------------
NUMBER OF PERCENT OF BEING NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS OFFERED SHARES CLASS
- --------------------------------------------- --------------- ------------ ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Daniel L. Simon ............................. 7,000,000(1) 53.8% -- 9,470,608(2) 49.4%(2)
321 North Clark Street
Chicago, Illinois 60610
Brian T. Clingen ............................ --(3) -- -- --(4) --
321 North Clark Street
Chicago, Illinois 60610
Paul G. Simon ............................... -- -- -- --(5) --
321 North Clark Street
Chicago, Illinois 60610
Michael J. Roche ............................ -- -- -- -- --
333 Beverly Road, E5-312A
Hoffman Estates, Illinois 60179
Michael B. Goldberg (6) ..................... -- -- -- -- --
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Frank K. Bynum, Jr. (6) ..................... -- -- -- -- --
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Kelso Investment Associates V, L.P. (7)(8)... 5,579,840 42.9 2,481,169 3,098,671 18.6
Kelso Equity Partners V, L.P. (7)(8)......... 326,160 2.5 18,831 307,329 1.8
Joseph S. Schuchert (7)(9)................... 5,906,000 45.4 2,500,000 3,406,000 20.4
Frank T. Nickell (7)(9)...................... 5,906,000 45.4 2,500,000 3,406,000 20.4
George E. Matelich (7)(9).................... 5,906,000 45.4 2,500,000 3,406,000 20.4
Thomas R. Wall, IV (7)(9).................... 5,906,000 45.4 2,500,000 3,406,000 20.4
All directors and executive officers as a
group (6 persons) .......................... 7,000,000 53.8 -- 9,470,608 49.4
</TABLE>
- ------------------------------
(1) Daniel L. Simon's beneficial ownership includes 5,800,000 shares that he
owns directly and 1,200,000 shares over which he has voting rights pursuant
to voting trust agreements with Brian T. Clingen, Lawrence J. Simon, William
H. Smith and Paul G. Simon.
(2) Daniel L. Simon's beneficial ownership includes 5,800,000 shares that he
owns directly, 1,995,000 shares issuable to him upon exercise of certain
Warrants exercisable upon consummation of the Offering, 1,200,000 shares
over which he has voting control pursuant to certain voting trust agreements
and 475,608 shares issuable to Brian T. Clingen and Paul G. Simon upon
exercise of certain Warrants exercisable upon consummation of the Offering
over which Daniel L. Simon has voting control pursuant to certain voting
trust agreements.
40
<PAGE>
(3) Brian T. Clingen owns 1,177,860 shares which represent 9.1% of the Common
Stock, the voting rights of which have been granted to Daniel L. Simon
pursuant to a voting trust agreement.
(4) Brian T. Clingen owns 1,177,860 shares and 352,078 shares issuable to him
upon exercise of certain Warrants exercisable upon consummation of the
Offering which represent 9.1% of the Common Stock, the voting rights of
which have been granted to Daniel L. Simon pursuant to a voting trust
agreement.
(5) Paul G. Simon owns 123,530 shares issuable to him upon exercise of certain
Warrants exercisable upon consummation of the Offering which represent less
than 1% of the Common Stock, the voting rights of which have been granted to
Daniel L. Simon pursuant to a voting trust agreement.
(6) Excludes certain shares to be distributed to Messrs. Goldberg and Bynum in
lieu of cash in conjunction with the Offering (see note (8)). 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 is a director of the Company and Mr. Bynum will be a director
of the Company upon consummation of the Offering.
(7) The business address for such person(s) is c/o Kelso & Company, 320 Park
Avenue, 24th Floor, New York, New York 10022.
(8) Total beneficial ownership of Common Stock after the Offering reflects
shares proposed to be sold in the Offering and does not reflect and
additional shares expected to be distributed to certain partners of KIA
V and KEP V, respectively, including Messrs. Goldberg and Bynum, in lieu of
cash in conjunction with the Offering. The allocation of the shares to be
sold in the Offering as between KIA V and KEP V may be adjusted in
connection with such distribution. Any such reallocation will not result in
any change in the aggregate number of shares to be sold by, or the total
post-offering beneficial ownership of, KIA V and KEP V, and any such
reallocation is not expected to be material. KIA V and KEP V, due to their
common control, could be deemed to beneficially own each others shares, but
each disclaims such beneficial ownership.
(9) 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.
41
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon consummation of the Offering, the Company's authorized capital stock
shall consist of 75,000,000 shares of Common Stock, $.01 par value per share,
and 10,000,000 shares of preferred stock, $.01 par value per share (the
"Preferred Stock"). The following summary of the Company's capital stock is
qualified in its entirety by reference to the Company's Third Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation") and
Second Amended and Restated Bylaws (the "Bylaws"), each of which is filed as an
exhibit to the registration statement of which this Prospectus is a part.
COMMON STOCK
Upon consummation of the Offering, the Company will be authorized to issue
75,000,000 shares of Common Stock, $.01 par value per share. Following this
Offering, 16,700,000 shares of Common Stock will be issued and outstanding
(assuming no exercise of the over-allotment option and excluding 3,470,608
shares of Common Stock issuable upon the exercise of warrants.) See
"Capitalization."
Holders of Common Stock are entitled to one vote per share on all matters on
which the holders of Common Stock are entitled to vote. Because holders of
Common Stock do not have cumulative voting rights and the Company has a
classified Board of Directors, the holders of a majority of the shares of Common
Stock voting for the election of directors can elect all of the members of the
Board of Directors standing for election at any particular meeting. The Common
Stock is not redeemable and has no conversion or preemptive rights. All of the
outstanding shares of Common Stock are, and all of the shares of Common Stock
sold in this Offering will be, when issued and paid for, fully paid and
nonassessable. In the event of the liquidation or dissolution of the Company,
the holders of Common Stock are entitled to share pro rata in any of the
corporate assets available for distribution to them. The Company may pay
dividends if, when and as declared by the Board of Directors from funds legally
available therefor, subject to the restrictions set forth in the Secured Note
Indenture (as defined in "Description of Indebtedness and Other Commitments --
The Secured Notes"), the Revolving Credit Facility, the Acquisition Credit
Facility and the UOI Indenture. See "Dividend Policy."
PREFERRED STOCK
The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of the Certificate of Incorporation and limitations prescribed by law, the Board
of Directors is expressly authorized to adopt resolutions to issue the shares,
to fix the number of shares and to change the number of shares constituting any
series, and to provide for or change the voting powers, designations,
preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions thereof, including dividend rights
(including whether dividends are cumulative), dividend rates, terms of
redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any class or
series of the Preferred Stock, in each case without any further action or vote
by the stockholders. The Company has no current plans to issue any additional
shares of Preferred Stock of any class or series.
One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Common Stock. For example, Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into shares
of Common Stock. Accordingly, the issuance of shares of Preferred Stock may
discourage bids for the Common Stock or may otherwise adversely affect the
market price of the Common Stock.
THE NOTEHOLDER WARRANTS
GENERAL. In connection with the Company's sale of the Secured Notes,
certain warrants (the "Noteholder Warrants") were issued pursuant to a Warrant
Agreement, dated as of June 30, 1994, between the Company and United States
Trust Company of New York, as warrant agent. The Noteholder
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Warrants expire on July 1, 2004. The Noteholder Warrants entitle the holders
thereof to purchase, at an exercise price of $.000625 per share, an aggregate of
1,000,000 shares of Common Stock (the "Warrant Shares").
EXERCISE OF NOTEHOLDER WARRANTS. Upon consummation of the Offering, the
Noteholder Warrants will be exercisable.
CASH DIVIDENDS. If the Company pays any cash dividend on, or any other cash
distribution in respect of, its Common Stock, it shall pay each Warrantholder an
amount in cash equal to the amount such Warrantholder would have received if
such Warrantholder had been the record holder of the Warrant Shares issuable
upon exercise of his warrants immediately prior to the record date for such
dividend or distribution.
ANTI-DILUTION ADJUSTMENTS. The number of Warrant Shares issuable upon
exercise of a Noteholder Warrant will be adjusted upon the occurrence of certain
events, including, without limitation (i) the payment of a dividend on, or the
making of any distribution in respect of, Common Stock of the Company in (a)
shares of the Company's capital stock (including Common Stock), (b) options,
warrants or rights to purchase, or securities convertible into or exchangeable
or exercisable for, shares of Common Stock or other securities of the Company or
any other person, or (c) certain evidences of indebtedness of the Company or any
assets of the Company or (ii) the issuance of Common Stock or securities
convertible into or exercisable or exchangeable for shares of Common Stock at a
price below fair market value. An adjustment will also be made in the event of a
combination, subdivision or reclassification of the Common Stock. Adjustments
will be made whenever and as often as any specified event requires an adjustment
to occur.
THE 1996 WARRANT PLAN
The 1996 Warrant Plan was adopted by the Board of Directors of the Company
in April 1996 in order to advance the interests of the Company by affording
certain key executives and employees an opportunity to acquire a proprietary
interest in the Company and thus to stimulate increased personal interest in
such persons in the success and future growth of the Company. Upon consummation
of the Offering, the 1996 Warrant Plan shall be administered by the Compensation
Committee of the Company. For a description of the 1996 Warrant Plan, see
"Management -- The 1996 Warrant Plan."
CERTAIN OUTSTANDING RIGHTS
On November 18, 1993, the Company entered into the Capital Appreciation
Right Agreement with Connecticut General Life Insurance Company, Cigna Property
and Casualty Insurance Company, Life Insurance Company of North America and
Aetna Life Insurance Company, pursuant to which the Company granted such parties
limited capital appreciation rights in the capital stock of the Company in
exchange for a waiver of the prepayment penalty in connection with the 1993
refinancing. Such capital appreciation rights are triggered by the occurrence of
any of the following: (i) liquidation or dissolution of the Company or UOI, (ii)
sale of all or substantially all of the issued and outstanding shares of common
stock or assets of the Company, (iii) the merger or consolidation of the Company
or UOI, subject to certain exceptions or (iv) an initial public offering of
common stock of the Company or UOI prior to June 30, 1996. The maximum amount
payable pursuant to the agreement is $3.8 million and is required to be paid no
later than one year following the triggering event. The agreement expires June
30, 1998.
On November 18, 1993, the Company entered into the Option Exchange Agreement
with UOI and William H. Smith ("WHS"), pursuant to which the Company granted to
WHS an option to purchase 0.52% of the issued and outstanding capital stock of
the Company at a purchase price of $130,000. The option is exercisable by WHS
upon the Company entering into a definitive agreement to issue shares of capital
stock through an underwritten public offering. Subsequent to the execution of
the Underwriting Agreement, the Company expects WHS shall exercise his option in
full and receive 67,600 shares of Common Stock of the Company. The shares of
Common Stock to be purchased by WHS are to be contributed by Daniel L. Simon and
Brian T. Clingen.
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In July 1995, Daniel L. Simon and Brian T. Clingen entered into a Capital
Appreciation Plan with Lawrence J. Simon pursuant to which Lawrence J. Simon was
granted an option to purchase one percent (1%) of the common stock of the
Company owned by Daniel L. Simon and Brian T. Clingen for a purchase price equal
to $165,000. The option is exercisable upon receipt of notice that the Company
has finalized arrangements for a public offering of its capital stock.
Subsequent to the execution of the Underwriting Agreement, the Company expects
Lawrence J. Simon shall exercise his option in full and purchase 70,000 shares
of Common Stock.
SPECIAL PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW
Certain provisions of the Certificate of Incorporation and Bylaws as well as
certain provisions of Delaware law may be deemed to have an anti-takeover effect
or may delay, defer or prevent a tender offer or takeover attempt that a
stockholder might consider in such stockholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by a stockholder.
The Certificate of Incorporation provides that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. The effect of these provisions is
to eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of fiduciary duty as a director (including
breaches resulting from grossly negligent behavior), except in the situations
described above.
The Bylaws provide that the Company will indemnify its directors and
officers to the fullest extent permissible under Delaware General Corporation
Law. These indemnification provisions require the Company to indemnify such
persons against certain liabilities and expenses to which they may become
subject by reason of their service as a director or officer of the Company. The
provisions also set forth certain procedures, including the advancement of
expenses, that apply in the event of a claim for indemnification.
DELAWARE ANTI-TAKEOVER LAW. Section 203 of the Delaware General Corporation
Law ("Section 203") generally provides that a person who, together with
affiliates and associates owns, or within three years did own, 15% or more of
the outstanding voting stock of a corporation (an "Interested Stockholder") but
less than 85% of such stock may not engage in certain business combinations with
the corporation for a period of three years after the date on which the person
became an Interested Stockholder unless (i) prior to such date, the
corporation's board of directors approved either the business combination or the
transaction in which the stockholder became an Interested Stockholder or (ii)
subsequent to such date, the business combination is approved by the
corporation's board of directors and authorized at a stockholders' meeting by a
vote of at least two-thirds of the corporation's outstanding voting stock not
owned by the Interested Stockholder. Section 203 defines the term "business
combination" to encompass a wide variety of transactions with or caused by an
Interested Stockholder, including mergers, asset sales, and other transactions
in which the Interested Stockholder receives or could receive a benefit on other
than a pro rata basis with other stockholders.
The provisions of Section 203, coupled with the Board's authority to issue
Preferred Stock without further stockholder action, could delay or frustrate the
removal of incumbent directors or a change in control of the Company. The
provisions also could discourage, impede or prevent a merger, tender offer or
proxy contest, even if such event would be favorable to the interests of
stockholders. The Company's stockholders, by adopting an amendment to the
Certificate of Incorporation, may elect not to be governed by Section 203 which
election would be effective 12 months after such adoption. Neither the
Certificate of Incorporation nor the Bylaws exclude the Company from the
restrictions imposed by Section 203.
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CLASSIFIED BOARD OF DIRECTORS. The Certificate of Incorporation classifies
the Board of Directors into three classes. The first class consists of one
director whose initial term expires in 1997. The second class consists of two
directors whose initial term expires in 1998. The third class consists of two
directors whose initial term expires in 1999. At each annual meeting, the number
of directors equal to the number of directors in the class whose terms expire at
the time of such meeting shall be elected to hold office until the third
succeeding annual meeting. As a result of this classification of directors, no
shareholder or group of shareholders would be able to elect a majority of the
Board of Directors at any single meeting for the election of directors. In
addition, the Delaware General Corporation Law prohibits the removal of a
director of a classified board without cause. This could discourage a proxy
contest for control of the Board of Directors.
NOTICE PROVISIONS. The Bylaws provide that only business or proposals,
including director nominations, properly brought before an annual meeting of
shareholders may be conducted at such meeting. In order to bring business or a
proposal before an annual meeting, a shareholder is required to provide written
notice to the Company at least 45 days prior to the annual meeting which
describes the business or proposal to be brought before the annual meeting, the
name and address of the stockholder proposing the business, the class and number
of shares of stock held by such stockholder, and any material interest of the
stockholder in the business to be brought before the meeting. These procedures
may operate to limit the ability of stockholders to bring business before the
annual meeting, including with respect to the nominee of directors or
considering any transaction that could result in a change of control of the
Company.
TRANSFER AGENT
The Company's transfer agent and registrar for the Common Stock is LaSalle
National Trust, N.A.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no public market for the Common Stock
of the Company. No prediction can be made as to the effect, if any, that market
sales of shares of Common Stock or the availability of shares of Common Stock
for sale will have on the market price prevailing from time to time.
Nevertheless, sales of substantial amounts of Common Stock of the Company in the
public market after the restrictions described below lapse could adversely
affect the prevailing market price of the Common Stock and the ability of the
Company to raise equity capital in the future.
Upon completion of this Offering, the Company will have outstanding
16,700,000 shares of Common Stock (excluding 730,000 shares of Common Stock
issuable upon the exercise of the Underwriters' over-allotment option and
3,470,608 shares of Common Stock issuable pursuant to the 1996 Warrant Plan and
Noteholder Warrants). See "Capitalization" and "Description of Capital Stock."
Of these shares, the 6,200,000 shares (7,130,000 shares if the Underwriters'
over-allotment option is exercised in full) of Common Stock sold in this
Offering will be freely tradable without restriction under the Securities Act
except for any shares purchased by "affiliates," as that term is defined in the
Securities Act, of the Company. The remaining 10,500,000 shares are "restricted
securities" within the meaning of Rule 144 adopted under the Securities Act (the
"Restricted Shares"). The Restricted Shares generally may not be sold unless
they are registered under the Securities Act or are sold pursuant to an
exemption from registration, such as the exemption provided by Rule 144 or Rule
144A under the Securities Act.
Certain of the Company's security holders and all of its executive officers
and directors, with the power to dispose of a total of 10,500,000 shares, have
agreed not to offer, sell or otherwise dispose of any shares of Common Stock for
a period of 180 days after the date of this Prospectus (the "Lock-up Period")
without the prior written consent of Alex. Brown & Sons Incorporated on behalf
of the Underwriters. See "Underwriting." Following the Lock-up Period, these
shares will not be eligible for sale in the public market without registration
unless such sales meet the conditions and restrictions of Rule 144 as described
below. KIA V and KEP V expect to distribute shares of Common Stock to their
respective partners, and may in the future sell or otherwise dispose of Common
Stock, including additional distribution to their respective partners.
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KIA V and KEP V expect to distribute not more than shares of Common
Stock to certain of its partners in lieu of cash in conjunction with the
Offering. The recipients of such distributions have agreed with KIA V, KEP V and
the Underwriters not to offer, sell, or otherwise dispose of such shares of
Common Stock prior to March 31, 1997 without the prior written consent of KIA V
and Alex. Brown & Sons Incorporated. KIA V, KEP V their partners, Daniel L.
Simon, Brian T. Clingen, Paul G. Simon and certain other individual shareholders
are entitled to four demand and certain "piggyback" registration rights.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
shares for a period of at least two years (as computed under Rule 144) is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of (i) 1% of the then-outstanding shares of Common Stock
(approximately 201,706 shares after giving effect to this Offering) and (ii) the
average weekly trading volume in the Company's Common Stock during the four
calendar weeks immediately preceding the date on which the notice of such sale
on Form 144 is filed with the Commission. Sales under Rule 144 are also subject
to certain provisions relating to notice and manner of sale and the availability
of current public information about the Company. In addition, a person (or
persons whose shares are aggregated) who has not been an affiliate of the
Company at any time during the 90 days immediately preceding a sale, and who has
beneficially owned the shares of at least three years (as computed under Rule
144), would be entitled to sell such shares under Rule 144(k) without regard to
the volume limitation and other conditions described above. The foregoing
summary of Rule 144 is not intended to be a complete description thereof.
Upon consummation of the Offering, the Noteholder Warrants will be
exercisable for 1,000,000 additional shares of Common Stock. The Warrant Shares
entitled to be purchased upon exercise of the Noteholder Warrants have been
registered pursuant to the Securities Act. As a result, such Warrant Shares
shall become freely transferable immediately upon consummation of the Offering
(except for 200,000 shares owned by Bear, Stearns & Co. Inc., which has agreed
not to offer, sell or otherwise dispose of such shares for a period of 90 days
after the date of this Prospectus).
DESCRIPTION OF INDEBTEDNESS AND OTHER COMMITMENTS
The following is a description of the principal agreements governing the
indebtedness of the Company and UOI as of April 30, 1996. The following
summaries of certain provisions of the Secured Note Indenture, the Revolving
Credit Facility, the Acquisition Credit Facility and the UOI Indenture (as such
terms are defined below) are qualified in their entirety by reference to the
agreement to which each summary relates, a copy of which is an exhibit to the
registration statement of which this Prospectus is a part. See "Available
Information." Defined terms used below and not defined have the meanings set
forth in the respective agreements.
THE SECURED NOTES
On June 23, 1994, the Company issued $50 million aggregate principal amount
of 14% Series A Senior Secured Discount Notes due 2004 (the "Secured Notes") and
50,000 Warrants to purchase 1,000,000 shares of Common Stock (after the
consummation of the Offering and the stock split contemplated immediately prior
thereto) pursuant to an indenture (the "Secured Note Indenture") between the
Company and the United States Trust Company of New York, as trustee. The Secured
Notes mature on July 1, 2004 and are senior secured obligations of the Company
secured by a pledge of all of the common stock of UOI issued to the Company. The
Secured Notes rank on a parity in right of payment with all existing and future
indebtedness of the Company that is not expressly subordinated to the Secured
Notes.
INTEREST. The Secured Notes were offered at a substantial discount from
their principal amount. No interest will accrue on the Secured Notes prior to
July 1, 1999. Commencing July 1, 1999, interest on the Secured Notes will accrue
at the rate of 14% per annum and will be payable semiannually on each January 1
and July 1, to holders of record on the immediately preceding December 15 and
June 15,
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respectively. Interest on the Secured Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from July
1, 1999, and the first interest payment date will be January 1, 2000. Interest
will be computed on the basis of a 360-day per year consisting of twelve 30-day
months.
SECURITY. The obligations under the Secured Notes are secured by a pledge
of all of the issued and outstanding shares of common stock of UOI.
REDEMPTION. The Secured Notes may be redeemed at the option of the Company,
in whole or in part, at any time and from time to time, upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed as a
percentage of principal amount) set forth below plus accrued and unpaid interest
to the redemption date, if redeemed during the twelve-month period beginning on
July 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ----------------------------------------------------------------------------------------------------- ------------
<S> <C>
1999................................................................................................. 107.00%
2000................................................................................................. 104.67%
2001................................................................................................. 102.33%
2002 and thereafter.................................................................................. 100.00%
</TABLE>
Notwithstanding the foregoing, if the Company consummates an initial public
offering of its Common Stock on or prior to July 1, 1997, the Company, at its
option, within 60 days of the consummation of such offering, may use all or any
portion of the net proceeds of that offering to redeem up to 25% of the
aggregate principal amount at maturity of the Secured Notes at a redemption
price equal to 114% of their accreted value, provided that immediately following
the redemption at least 75% of the aggregate principal amount at maturity of the
Secured Notes remains outstanding. The Company intends to use a portion of the
net proceeds of the Offering to redeem 25% of the aggregate principal amount of
the Secured Notes. See "Use of Proceeds."
COVENANTS. The Indenture restricts the Company and its subsidiaries from,
among other things: (i) incurring indebtedness and allowing subsidiaries to
issue preferred stock; (ii) incurring liens or guaranteeing obligations except
for certain permitted liens with certain exceptions; (iii) entering into mergers
or consolidations; (iv) selling or otherwise disposing of property, business or
assets; (v) with certain exceptions, making loans or investments; (vi) making
optional payments or prepayments of indebtedness; (vii) entering into
transactions with affiliates; (viii) with certain exceptions, entering into
agreements prohibiting or limiting the ability of the Company to create liens
upon its property, assets or revenues in favor of the Secured Notes or pay
dividends or indebtedness to the Company; and (ix) engaging in any businesses
other than ownership of the capital stock of UOI and, with respect to UOI and
its subsidiaries, the business of outdoor advertising.
CHANGE IN CONTROL. Upon a change of control, each holder of Secured Notes
may require the Company to repurchase all or a portion of such holder's Secured
Notes at a purchase price equal to 101% of their accreted value on the date of
purchase. A "change in control" occurs upon (i) a failure of Daniel L. Simon (or
his trusts or family members) to own at least 40% of the capital stock of the
Company entitled to vote in an election of directors, (ii) acquisition by any
Person or group other than Daniel L. Simon of in excess of 30% of the capital
stock or the Company's assets, (iii) the merger or consolidation of the Company
with, or the sale, lease or transfer of all or substantially all of the
Company's assets to, any person or group, (iv) approval of a plan of liquidation
or dissolution, or (v) the members of the Board of Directors as of the date of
the Secured Note Indenture or their duly elected replacements, failing to
constitute a majority of the Board of Directors.
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
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loans or announced base rate loans as determined by the Company. UOI 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 the earlier of the Acquisition Credit Facility termination date
(April 5, 1999, unless extended) or March 31, 2003 or upon the occurrence of a
Change of Control (as defined below). On each of these dates, UOI 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. UOI'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 UOI. In addition, if an Event of Default
exists or if the Company exceeds certain leverage ratios, management of the
Company will pledge its Common Stock to the banks as security for UOI's
obligations until such time as the banks receive a pledge of the stock of UOI
after the Secured Notes are repaid in full.
COVENANTS. The Revolving Credit Facility restricts UOI 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 UOI 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 UOI or declaring or paying dividends on the capital
stock of UOI; and (ix) except as to certain transactions that comply with the
terms of the Revolving Credit Agreement, entering into transactions with
affiliates. In addition, the Revolving Credit Facility also requires UOI to
maintain certain levels of Operating Cash Flow and interest expense coverage,
and limits UOI's capital expenditures to $8 million in fiscal year 1996 (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 of UOI constitutes an event of
default permitting the lenders to accelerate indebtedness under and terminate
the Revolving Credit Facility. "Change of Control" means (i) the Company shall
cease to own legally and beneficially 100% of the outstanding capital stock of
UOI, (ii) prior to the Company's initial public offering of common stock,
certain permitted holders cease to be the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
66 2/3% in the aggregate of the total voting and economic ownership interests of
the Company, whether as a result of the issuance of securities of the Company,
any merger, consolidation, liquidation or dissolution of the Company, any direct
or indirect transfer of securities or otherwise, (iii) management of the Company
ceases to own 30% of the Company, (iv) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more such
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 the Company; PROVIDED, HOWEVER, that such 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 the Company 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 the Company, or (v) during any
period of two consecutive years individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Company was approved by either (i) such
permitted holders or (ii) a vote of the majority of the directors of the Company
then still in office who were either
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directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
The terms set forth above incorporate proposed terms of an amendment to be
entered into concurrently with the consummation of the Offering.
ACQUISITION CREDIT FACILITY
COMMITMENT; INTEREST. The Acquisition Credit Facility consists of an
acquisition revolving credit line in the amount of $87.5 million. The
Acquisition Credit Facility was drawn in the amount of $84.5 million in full to
finance the Company's recent acquisition of the operations of Naegele and may be
reborrowed to finance acquisitions. 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. The commitment of $87.5 million under the
acquisition revolving credit line is reduced on annual basis after a given date
and terminates on March 31, 2003 or upon the occurrence of a Change of Control
(as defined below). On each of these dates, UOI is required to repay borrowings
(together with fees and interest accrued thereon and any additional amounts
owing under the Acquisition Credit Facility) in excess of the commitment as
reduced.
SECURITY. UOI'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 UOI. In addition, if an Event of Default
exists or if the Company exceeds certain leverage ratios, management of the
Company will pledge its Common Stock of the Company to the banks as security for
UOI's obligations until such time as the banks receive a pledge of the stock of
UOI after the Secured Notes are repaid in full.
COVENANTS. Except to the extent any of such covenants conflict with the
terms of the Secured Notes or UOI's Notes, the Acquisition Credit Facility
restricts UOI 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 UOI or
assigning any right to receive income; (iv) with certain exceptions, creating,
incurring, assuming or suffering to exist any indebtedness; (v) making
investments or loans in any other person or entity or acquiring or establishing
any subsidiaries except for investments and subsidiaries permitted under the
Acquisition Credit Facility; (vi) selling, assigning or otherwise encumbering or
disposing of the capital stock or other securities of any subsidiary; (vii)
making any optional or voluntary prepayments on indebtedness; (viii) with
certain exceptions, redeeming, retiring or purchasing capital stock of UOI or
declaring or paying dividends on the capital stock of UOI; and (ix) except as to
certain transactions that comply with the terms of the Acquisition Credit
Agreement, entering into transactions with affiliates. In addition, the
Acquisition Credit Facility also requires UOI to maintain certain levels of
Operating Cash Flow and interest expense coverage, and limits UOI's capital
expenditures to $8 million in fiscal year 1996 (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 of UOI constitutes an event of
default permitting the lenders to accelerate indebtedness under and terminate
the Acquisition Credit Facility. "Change of Control" means (i) the Company shall
cease to own legally and beneficially 100% of the outstanding capital stock of
UOI, (ii) prior to the Company's initial public offering of common stock,
certain permitted holders cease to be the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
66 2/3% in the aggregate of the total voting and economic ownership interests of
the Company, whether as a result of the issuance of securities of the Company,
any merger, consolidation, liquidation or dissolution of the Company, any direct
or indirect transfer of securities or otherwise, (iii) management of the Company
ceases to own 30% of the Company, (iv) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or certain
permitted holders, is or becomes the beneficial owner (as defined in clause (ii)
above, except that
49
<PAGE>
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 the Company;
PROVIDED, HOWEVER, that such 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 the Company 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 the Company, or (v) during any period of two consecutive years
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of the
Company was approved by either (i) such permitted holders or (ii) a vote of the
majority of the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
The terms set forth above incorporate proposed terms of an amendment to be
entered into concurrently with the consummation of the Offering.
THE UOI NOTES
On March 2, 1994, UOI issued $65 million aggregate principal amount of 11%
Series A Senior Notes due 2003 (the "UOI Notes") pursuant to an indenture (the
"UOI Indenture") between UOI and the United States Trust Company of New York, as
trustee. The UOI Notes mature on November 15, 2003 and are senior unsecured
obligations of UOI with all existing and future indebtedness of the Company that
is not expressly subordinated to the UOI Notes.
INTEREST. The UOI Notes bear interest at the rate of 11% per annum and will
be payable semiannually on each November 15 and May 15, to holders of record on
the immediately preceding November 1 and May 1, respectively. Interest on the
UOI Notes will accrue from the most recent date to which interest has been paid
and will be computed on the basis of a 360-day per year consisting of twelve
30-day per year consisting of twelve 30-day months.
SECURITY. The obligations under the UOI Notes are not secured.
REDEMPTION. The UOI Notes may be redeemed at the option of UOI commencing
November 15, 1998 in whole or in part, at any time and from time to time, upon
not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as a percentage of principal amount) set forth below plus accrued and
unpaid interest to the redemption date, if redeemed during the twelve-month
period beginning on November 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ----------------------------------------------------------------------------------------------------- ------------
<S> <C>
1998................................................................................................. 105.50%
1999................................................................................................. 103.67%
2000................................................................................................. 101.83%
2001 and thereafter.................................................................................. 100.00%
</TABLE>
Notwithstanding the foregoing, if UOI or the Company consummates an initial
public offering of its Common Stock on or prior to November 15, 1996, UOI, at
its option, within 60 days of the consummation of such offering, may use all or
any portion of the net proceeds of that offering to redeem up to $20 million of
the aggregate principal amount of UOI Notes at a redemption price equal to 110%
of their principal amount plus accrued and unpaid interest to the date of
redemption, provided that immediately following the redemption at least $30
million of the aggregate principal amount at maturity of UOI Notes remains
outstanding.
COVENANTS. The UOI Indenture restricts UOI and its subsidiaries from, among
other things: (i) incurring indebtedness and allowing subsidiaries to issue
preferred stock; (ii) incurring liens or guaranteeing obligations except for
certain permitted liens with certain exceptions; (iii) entering into
50
<PAGE>
mergers or consolidations; (iv) selling or otherwise disposing of property,
business or assets; (v) with certain exceptions, making loans or investments;
(vi) making optional payments or prepayments of indebtedness; (vii) entering
into transactions with affiliates; (viii) with certain exceptions, entering into
agreements prohibiting or limiting the ability of UOI or its subsidiaries to
create liens upon its property, assets or revenues in favor of the holders of
UOI Notes or pay dividends or indebtedness to UOI or its subsidiaries; and (ix)
engaging in any businesses other than the business of outdoor advertising.
CHANGE IN CONTROL AND ASSET SALES. Upon a change of control, each holder of
UOI Notes may require UOI to repurchase all or a portion of such holder's UOI
Notes at a purchase price equal to 101% of their accreted value on the date of
purchase. A "change in control" occurs upon (i) a failure of Daniel L. Simon (or
his trusts or family members) to own at least 40% of the capital stock of the
Company entitled to vote in an election of directors, (ii) acquisition by any
Person or group other than Daniel L. Simon of in excess of 30% of the capital
stock or the Company's assets, (iii) the sale, lease or transfer of all or
substantially all of the Company's assets to any person or group, (iv) Universal
Outdoor shall cease to beneficially own all of the outstanding voting stock of
UOI, (v) approval of a plan of liquidation or dissolution, or (vi) the members
of the Board of Directors as of the date of the UOI Indenture or their duly
elected replacements, fail to constitute a majority of the Board of Directors.
In addition, in the event of certain sales or transfers of assets of the
Company, the Company is obligated to invest the proceeds in assets related to
the outdoor advertising business or apply excess proceeds from such sale to
repay UOI Notes.
51
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among the
Company, the Selling Stockholders and the Underwriters named below (the
"Underwriting Agreement"), the Underwriters named below (the "Underwriters"),
through their representatives, Alex. Brown & Sons Incorporated, Bear, Stearns &
Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation, have severally
agreed to purchase from the Company and the Selling Stockholders, the following
respective number of shares of Common Stock at the initial public offering price
less the underwriting discounts and commissions set forth on the cover page of
the Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------------------------------------------------------------------------------------------------- -----------
<S> <C>
Alex. Brown & Sons Incorporated......................................................................
Bear, Stearns & Co. Inc..............................................................................
Donaldson, Lufkin & Jenrette Securities Corporation..................................................
-----------
Total.............................................................................................. 6,200,000
-----------
-----------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all shares of the Common Stock offered hereby if any of such shares are
purchased.
The Company has been advised by the representatives of the Underwriters that
the Underwriters propose to offer the shares of Common Stock to the public at
the initial public offering price set forth on the coverage page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After the
initial public offering, the offering price and other selling terms may be
changed by the representatives of the Underwriters.
The Company, Daniel L. Simon and Brian T. Clingen have granted to the
Underwriters an option, exercisable not later than 30 days after the date of
this Prospectus, to purchase up to 930,000 additional shares of Common Stock at
the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof that the number of shares of
Common Stock to be purchased by it shown in the above table bears to 6,200,000,
and the Company, Daniel L. Simon and Brian T. Clingen will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 6,200,000 shares are being offered.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
Stockholders of the Company, holding in the aggregate 10,500,000 shares of
Common Stock have agreed not to offer, sell or otherwise dispose of any of such
Common Stock for a period of 180 days after the date of this Prospectus without
the prior consent of the representatives of the Underwriters. Although KIA V and
KEP V are stockholders of the Company, KIA V and KEP V expect to distribute not
more than shares of Common Stock to certain of their respective partners
in lieu of cash. The recipients of such distributions have agreed with KIA V and
the representatives of the Underwriters not to offer, sell or
52
<PAGE>
otherwise dispose of such shares of Common Stock prior to March 31, 1997 without
the prior written consent of KIA V and Alex. Brown & Sons Incorporated. Consent
to sales within the 180-day period referred to in this paragraph may be provided
without prior notice to holders of the Common Stock or to the markets where such
securities are traded. See "Shares Eligible for Future Sale."
The representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.
The representatives of the Underwriters have in the past provided and may
continue to provide investment banking services to the Company and Kelso &
Company, L.P. and its affiliates.
Prior to this Offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial public offering price for the Common
Stock will be determined by negotiation among the Company and the
representatives of the Underwriters. Among the factors considered in such
negotiations were prevailing market conditions, the results of operations of the
Company in recent periods, the market capitalizations and stages of development
of other companies which the Company and the representatives of the Underwriters
believed to be comparable to the Company, estimates of the business potential of
the Company, the present state of the Company's development and other factors
deemed relevant.
At the Company's request, the Underwriters have agreed to make available
shares of Common Stock for sale at the initial public offering price to
officers, directors, employees and certain other persons associated with the
Company or Kelso & Company, L.P. The number of shares of Common Stock available
for sale to the general public will be reduced to the extent that these persons
purchase such shares. Any such shares not purchased will be offered by the
Underwriters to the general public on the same basis as the other shares offered
hereby.
CERTAIN LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Winston & Strawn, Chicago, Illinois.
Skadden, Arps, Slate, Meagher & Flom, New York, New York will pass on certain
legal matters for the Underwriters in connection with this Offering. Skadden,
Arps, Slate, Meagher & Flom, New York, New York has from time to time
represented Kelso & Company, L.P. and the Selling Stockholders, KIA V and KEP V,
including with respect to the purchase by KIA V and KEP V from the Company of
Class B Common Stock and Class C Common Stock of the Company in April 1996, and
may continue to represent Kelso & Company, L.P., KIA V and KEP V.
EXPERTS
The Consolidated Financial Statements of the Company as of December 31, 1994
and 1995 and for each of the three years in the period ended December 31, 1995
in this Prospectus have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The Consolidated Financial Statements of NOA Holding Company at May 31, 1995
and 1994, and for each of the three years in the period ended May 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company files reports and other information with the Commission.
The Company has filed with the Commission a Registration Statement (which
term shall include all amendments thereto) on Form S-1 under the Securities Act,
with respect to the Common Stock offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
53
<PAGE>
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract,
agreement or other document referred to herein are not necessarily complete.
With respect to each report or other information filed with the Commission
pursuant to the Exchange Act, and such contract, agreement or document filed as
an exhibit to the Registration Statement, reference is made to such exhibit for
a more complete description, and each such statement is deemed to be qualified
in all respects by such reference. The Registration Statement and reports and
other information filed by the Company may be inspected, without charge, at the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at its regional offices at Seven World Trade Center, New York, New York 10048,
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained from the public reference section of the Commission at
its Washington address upon payment of the prescribed fee.
The Company intends to distribute to the holders of its shares of Common
Stock annual reports containing consolidated financial statements audited by an
independent accountant and quarterly reports containing unaudited condensed
consolidated financial information for the first three quarters of each year.
54
<PAGE>
INDEX TO FINANCIAL STATEMENTS
UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
<TABLE>
<S> <C>
Report of Independent Accountants of Price Waterhouse LLP............................. F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Operations................................................. F-4
Consolidated Statements of Cash Flow.................................................. F-5
Consolidated Statements of Changes in Common Stockholders' Deficit.................... F-6
Notes to Consolidated Financial Statements............................................ F-7
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Combined Statements of Operations................................. F-16
Notes to Unaudited Pro Forma Combined Statements of Operations........................ F-18
Unaudited Pro Forma Combined Balance Sheet............................................ F-19
Note to Unaudited Pro Forma Combined Balance Sheet.................................... F-20
NOA HOLDING COMPANY
Report of Independent Auditors of Ernst & Young LLP................................... F-21
Consolidated Balance Sheets........................................................... F-22
Consolidated Statements of Operations................................................. F-23
Consolidated Statements of Stockholders' Equity....................................... F-24
Consolidated Statements of Cash Flows................................................. F-25
Notes to Consolidated Financial Statements............................................ F-26
AD-SIGN
Report of Independent Accountants of Price Waterhouse LLP............................. F-32
Statement of Revenues and Direct Expenses............................................. F-33
Notes to the Statement of Revenues and Direct Expenses................................ F-34
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Universal Outdoor Holdings, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in common stockholders'
deficit and of cash flows present fairly, in all material respects, the
financial position of Universal Outdoor Holdings, Inc. and its subsidiary at
December 31, 1994 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of Universal's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 23, 1996
F-2
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995
-------------- -------------- MARCH 31,
1996
------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash............................................................. $ 15 $ 19 $ 11
Accounts receivable, less allowance for doubtful accounts of $106
in 1994 and 1995................................................ 4,313 5,059 4,608
Other receivables................................................ 185 201 539
Prepaid land rents............................................... 822 1,043 1,144
Prepaid insurance and other...................................... 859 1,029 1,264
-------------- -------------- ------------
Total current assets......................................... 6,194 7,351 7,566
-------------- -------------- ------------
Property and equipment, net........................................ 53,651 55,346 69,266
-------------- -------------- ------------
Other assets:
Noncompete agreements, net of accumulated amortization of $4,711
and $4,505...................................................... 1,615 1,995 1,670
Finance costs, net of accumulated amortization of $511 and
$1,171.......................................................... 5,437 5,113 4,948
Excess of cost over fair value assets acquired, net of
accumulated amortization of $184 and $230....................... 746 700 689
Other costs associated with acquisitions, net of accumulated
amortization of $569 and $686................................... 584 525 587
Deposits......................................................... 26 20 21
-------------- -------------- ------------
Total other assets........................................... 8,408 8,353 7,915
-------------- -------------- ------------
$ 68,253 $ 71,050 $ 84,747
-------------- -------------- ------------
-------------- -------------- ------------
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-term debt............................. $ 58 $ 58 $ 58
Accounts payable................................................. 1,469 1,225 1,180
Accrued interest................................................. 998 1,054 2,946
Deferred revenue................................................. 400 468 268
Accrued expenses................................................. 482 409 580
-------------- -------------- ------------
Total current liabilities.................................... 3,407 3,214 5,032
-------------- -------------- ------------
Long-term debt, less current maturities............................ 99,669 106,362 120,248
-------------- -------------- ------------
Common stockholders' deficit:
Common stock, $.01 par value, 1,500,000 shares authorized;
437,500 shares issued and outstanding........................... -- -- --
Additional paid in capital....................................... 1,451 1,451 1,451
Common stock warrants............................................ 2,500 2,500 2,500
Accumulated deficit.............................................. (38,774) (42,477) (44,484)
-------------- -------------- ------------
Total common stockholders' deficit........................... (34,823) (38,526) (40,533)
-------------- -------------- ------------
Commitment and contingencies (Notes 5 and 9)....................... -- -- --
-------------- -------------- ------------
$ 68,253 $ 71,050 $ 84,747
-------------- -------------- ------------
-------------- -------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED DECEMBER
31, ENDED MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross revenues......................................... $ 28,710 $ 33,180 $ 38,101 $ 8,025 $ 9,332
Less agency commissions................................ 2,863 3,414 3,953 789 905
--------- --------- --------- --------- ---------
Net revenues....................................... 25,847 29,766 34,148 7,236 8,427
--------- --------- --------- --------- ---------
Operating expenses:
Direct advertising expenses.......................... 10,901 11,806 12,864 3,108 3,571
General and administrative expenses.................. 3,357 3,873 4,645 1,072 1,227
Depreciation and amortization........................ 8,000 7,310 7,402 1,737 2,032
--------- --------- --------- --------- ---------
22,258 22,989 24,911 5,917 6,830
--------- --------- --------- --------- ---------
Operating income....................................... 3,589 6,777 9,237 1,319 1,597
--------- --------- --------- --------- ---------
Other (income) expense:
Interest expense, including amortization of bond
discount of $162, $1,818 and $3,982................. 6,625 9,836 12,234 2,938 3,430
Interest expense -- amortization of deferred
financing costs..................................... 511 464 660 149 164
Interest expense -- accretion of dividends on
redeemable preferred stock.......................... 2,163 1,509 -- -- --
(Gain) loss on disposal of assets and other
expenses............................................ 351 134 46 10 10
--------- --------- --------- --------- ---------
Total other expense................................ 9,650 11,943 12,940 3,097 3,604
--------- --------- --------- --------- ---------
Net loss before extraordinary item..................... (6,061) (5,166) (3,703) (1,778) (2,007)
Extraordinary loss on early extinguishment of debt..... (3,260) -- -- -- --
--------- --------- --------- --------- ---------
Net loss............................................... $ (9,321) $ (5,166) $ (3,703) $ (1,778) $ (2,007)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Loss per common and equivalent share................... $ (21.31) $ (11.81) $ (8.46) $ (4.06) $ (4.59)
Weighted average number of shares...................... 437,500 437,500 437,500 437,500 437,500
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED DECEMBER 31,
ENDED MARCH 31,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
---------- ---------- --------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................... $ (9,321) $ (5,166) $ (3,703) $ (1,778) $ (2,007)
Depreciation and amortization...................... 8,673 9,592 12,044 2,815 3,305
Extraordinary loss................................. 3,260 -- -- -- --
(Gain) loss on sale of property and equipment...... 69 90 -- -- --
Accretion of preferred stock dividends............. 2,163 1,509 -- -- --
Changes in assets and liabilities:
Accounts receivable and other receivables........ (728) (1,278) (762) (244) 113
Prepaid land rents, insurance and other.......... (262) (223) (391) (154) (336)
Accounts payable and accrued expenses............ 741 (156) (317) (339) 126
Accrued interest................................. (253) 140 56 1,736 1,892
Deferred revenue................................. -- 400 68 -- (200)
Other............................................ (220) -- 5 9 (4)
---------- ---------- --------- --------- ----------
Net cash from operating activities............. 4,122 4,908 7,000 2,045 2,889
---------- ---------- --------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gross capital expenditures......................... (2,862) (5,671) (5,620) (576) (1,966)
Payments for acquisitions.......................... -- (3,355) (1,925) (1,341) (13,621)
Proceeds from sale of property and equipment....... 858 1,003 -- -- --
Payment for consulting agreement................... -- -- (1,400) -- --
Other payments..................................... (32) (160) (124) -- (86)
---------- ---------- --------- --------- ----------
Net cash used in investing activities.......... (2,036) (8,183) (9,069) (1,917) (15,673)
---------- ---------- --------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt........... 64,037 25,408 -- -- --
Principal payments of long-term debt............... (64,505) (272) (262) (33) (33)
Deferred financing costs........................... (3,560) (1,888) (336) (138)
Net borrowings under credit agreements............. 3,950 3,040 2,671 42 12,809
Payment of prepayment fees......................... (1,272) -- -- -- --
Payment for redemption of preferred stock.......... -- (23,015) -- -- --
Payment for cancellation of outstanding warrants... (750) -- -- -- --
---------- ---------- --------- --------- ----------
Net cash from (used in) financing activities....... (2,100) 3,273 2,073 (129) 12,776
---------- ---------- --------- --------- ----------
NET INCREASE (DECREASE) IN CASH...................... (14) (2) 4 (1) (8)
CASH, at beginning of period......................... 31 17 15 15 19
---------- ---------- --------- --------- ----------
CASH, at end of period............................... $ 17 $ 15 $ 19 $ 14 $ 11
---------- ---------- --------- --------- ----------
---------- ---------- --------- --------- ----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid during the period.................... $ 7,701 $ 7,885 $ 8,196 $ 276 $ 401
---------- ---------- --------- --------- ----------
---------- ---------- --------- --------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' DEFICIT
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON
STOCK AND
ADDITIONAL COMMON COMMON
SHARES OF PAID IN STOCK ACCUMULATED STOCKHOLDERS'
COMMON STOCK CAPITAL WARRANTS DEFICIT DEFICIT
--------------- ----------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993............ 7,649 $ 1,051 -- ($ 33,608) ($ 32,557)
Effect of stock split................... 429,851 -- -- -- --
Debt proceeds attributable to warrants
issued................................. -- -- $ 2,500 -- 2,500
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
Net loss................................ -- -- -- (5,166) (5,166)
--------------- ----------- ----------- ------------- --------------
Balance at December 31, 1994............ 437,500 1,451 2,500 (38,774) (34,823)
Net loss................................ -- -- -- (3,703) (3,703)
--------------- ----------- ----------- ------------- --------------
Balance at December 31, 1995............ 437,500 1,451 2,500 (42,477) (38,526)
Net loss (unaudited).................... -- -- -- (2,007) (2,007)
--------------- ----------- ----------- ------------- --------------
Balance at March 31, 1996 (unaudited)... 437,500 $ 1,451 $ 2,500 ($ 44,484) ($ 40,533)
--------------- ----------- ----------- ------------- --------------
--------------- ----------- ----------- ------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
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 HOLDINGS, INC. AND SUBSIDIARY
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.
PRINCIPLES OF CONSOLIDATION
The Holding Company's subsidiary is wholly-owned and is consolidated in the
accompanying financial statements. All material intercompany balances,
transactions and profits have been eliminated.
REVENUE RECOGNITION
Universal's revenues are generated from contracts with advertisers generally
covering periods of one to twelve months. Universal recognizes revenues ratably
over the contract term and defers customer prepayment of rental fees. Costs
incurred for the production of outdoor advertising displays are recognized in
the initial month of the contract or as incurred during the contract period.
PREPAID LAND RENTS
Most of Universal's outdoor advertising structures are located on leased
land. Land rents are typically paid in advance for periods ranging from one to
twelve months. Prepaid land rents are expensed ratably over the related rental
term.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets. Expenditures for maintenance and repairs are charged to operations as
incurred; major improvements are capitalized.
INTANGIBLE ASSETS
Non-compete agreements, deferred financing and acquisition costs are
amortized over their estimated economic lives, ranging from three to ten years.
The excess of cost over fair value of assets acquired is amortized over twenty
years on a straight-line basis. Universal reviews the carrying value of
intangibles and other long-lived assets for impairment when events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. This review is performed by comparing estimated undiscounted future
cash flows from use of the asset to the recorded value of the asset.
INCOME TAXES
Income tax expense is based on pre-tax income for financial reporting
purposes, adjusted for the effects of permanent differences between such income
and that reported for tax return purposes. Deferred tax assets and liabilities
are recognized for expected future tax consequences of temporary differences
between the carrying amounts and tax bases of the underlying assets and
liabilities (Note 8).
PER SHARE INFORMATION
Loss per common and equivalent share are based on the weighted average
number of common stock and common stock equivalents outstanding during periods,
computed using the treasury stock method. Common stock equivalents represent the
potential dilutive impact of common stock warrants. For the three years ended
December 31, 1995, stock warrants issued did not have a dilutive impact on
earnings per share.
F-8
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
The Company is contemplating a 16-for-1 stock split in connection with its
initial public offering discussed in the forepart of this Prospectus. The stock
split has not been reflected in the financial statements as there has been no
approval by the Board of Directors.
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 March 31, 1996 and 1995 and for the
three months then ended has been prepared from the unaudited financial records
of the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
NOTE 3 -- PROPERTY AND EQUIPMENT:
Major classes of property and equipment consist of the following at December
31, 1994 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Outdoor advertising structures............................................................. $ 70,869 $ 76,340
Land and capitalized land lease costs...................................................... 2,167 2,232
Vehicles and equipment..................................................................... 3,751 4,712
Building and leasehold improvements........................................................ 3,019 3,150
Display faces under construction........................................................... 125 1,344
--------- ---------
79,931 87,778
Less accumulated depreciation.............................................................. 26,280 32,432
--------- ---------
Net property and equipment................................................................. $ 53,651 $ 55,346
--------- ---------
--------- ---------
</TABLE>
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS:
Long-term debt consists of the following at December 31, 1994 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
--------- -----------
<S> <C> <C>
11% Senior Notes due 2003, net of discount of $902 and $839 (a)................ $ 64,098 $ 64,161
14% Senior Secured Discount Notes due 2004, net of discount of $24,835 and
$20,917 (b)................................................................... 25,165 29,083
Credit facility (c)............................................................ 6,990 3,286
Acquisition line (c)........................................................... -- 6,375
Unsecured promissory note (d).................................................. 1,200 1,200
Other obligations (e).......................................................... 2,274 2,315
--------- -----------
99,727 106,420
Less current maturities of long-term debt and other obligations................ 58 58
--------- -----------
$ 99,669 $ 106,362
--------- -----------
--------- -----------
</TABLE>
- ------------------------
(a) The $65.0 million Senior Notes due 2003 have interest payable semi-annually
and are subject to redemption at the option of Universal beginning in 1998.
The $65.0 million Senior Notes due 2003
F-9
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
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) The $50.0 million Senior Secured Discount Notes due 2004 do not pay any
interest prior to July 1, 1999. Commencing July 1, 1999, interest on the
Notes will accrue at the per annum rate of 14% of the principal amount at
maturity and will be payable in cash semi-annually on each January 1 and
July 1, commencing on January 1, 2000. These notes are secured by a pledge
of all the outstanding common shares of Universal and rank pari passu in
right of payment with existing senior indebtedness of the Holding Company.
The indenture governing these notes contains certain restrictive covenants
including, among others, limitations on Universal and the Holding Company on
additional debt incurrence, restrictions on distributions to shareholders,
the creation of liens, the making of certain investments and engaging in
transactions with affiliates.
The Holding Company will be dependent 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 of 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 period 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.
(c) 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.
F-10
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
(d) The unsecured term loan of the Holding Company, which is due no later than
60 days following November 15, 2003, bears interest at 10% and is payable
monthly. This loan is guaranteed by a stockholder of the Holding Company.
(e) 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>
Aggregate maturities of long-term debt obligations for each of the five
years subsequent to 1995 are $58, $54, $95, $2,712 and $4,500.
NOTE 5 -- PURCHASE OF PREFERRED AND COMMON STOCK:
The Holding Company sold 50,000 Units consisting of $50.0 million of 14%
Senior Secured Discount Notes due 2004 and 50,000 warrants to purchase shares of
common stock. The gross proceeds from the sale of the Units were $25,400 which
were used by the Holding Company (i) to purchase, for approximately $18,400, all
of the outstanding shares of its Series A preferred stock (including accrued
dividends) together with approximately 23.1% of its outstanding common stock
held by the holder of the Series A preferred stock, (ii) to purchase, for
approximately $4.7 million, all of the outstanding shares of its Series B
preferred stock (including accrued dividends), (iii) to pay related transaction
fees and expenses and, (iv) for working capital purposes. In addition, 12,500
warrants to purchase shares of common stock were issued as compensation for
services rendered in connection with the sale of the Units. The warrants, which
are exercisable at a price of $.01 per share, were assigned, based on market
conditions at the time of the sale of the Units, a value of $40 per warrant, or
$2,500 in total.
NOTE 6 -- REDEEMABLE PREFERRED STOCK:
In connection with the 1993 Refinancing, the Holding Company amended its
Certificate of Incorporation and authorized and issued 48,000 shares of no-par
Series B preferred stock in exchange for the 1,556 outstanding shares of Class B
common stock of Universal. This preferred stock was initially valued at fair
market value, or $4,287. As described in Note 5, the Series B preferred stock
and the Series A preferred stock (as described below), including accrued
dividends, were purchased by the Holding Company in June 1994.
F-11
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 7 -- 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>
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 8 -- INCOME TAXES:
Universal and the Holding Company entered into a tax sharing agreement that
became effective upon completion of the Refinancing Plan. Under the tax sharing
agreement, the Holding Company filed a consolidated federal income tax return
with Universal for the taxable year of Universal ended on December 31, 1993 and
will continue to file consolidated returns for each taxable year thereafter for
which the Holding Company and Universal are eligible to file consolidated
federal income tax returns. Under the tax sharing agreement, for each taxable
year of Universal with respect to which Universal is included in a consolidated
federal income tax return with the Holding Company, Universal will pay to the
Holding Company an amount equal to the lesser of (i) the consolidated federal
income tax liability of the consolidated group of which the Holding Company is
the common parent or (ii) the federal income tax liability of Universal,
computed as if Universal had filed a separate federal income tax return.
Accordingly, Universal has included the tax benefits of the Holding Company's
net operating loss carryforwards generated prior to consummation of the
Refinancing Plan in its deferred tax computation. Tax benefits from losses
generated by the Holding Company subsequent to the consummation of the
Refinancing Plan are not available to Universal; however, such benefits may be
transferred through either an intercompany transfer or a capital transaction.
Since the Holding Company incurred a net operating loss in 1994 and 1995, 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
Non-deductible interest............................................................ 558 1,803
Loss carryforwards................................................................. 6,575 6,202
--------- ---------
7,392 8,623
--------- ---------
Valuation reserve.................................................................. (7,392) (8,623)
--------- ---------
Net deferred tax asset............................................................. $ -- $ --
--------- ---------
--------- ---------
</TABLE>
F-12
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 8 -- INCOME TAXES: (CONTINUED)
For tax return purposes, the following companies have net operating loss
carryforwards at December 31, 1994 which expire between 2005-2009:
<TABLE>
<S> <C> <C>
PRIOR TO REFINANCING PLAN:
Universal....................................................... $ 5,808
Holding Company................................................. 7,172
---------
$ 12,980
---------
---------
SUBSEQUENT TO REFINANCING PLAN:
Holding Company................................................. $ 2,524
---------
---------
</TABLE>
Certain restrictions on the Holding Company's utilization of the net
operating losses will apply if there has been an "ownership change" of either
the Holding Company, Universal, or both within the meaning of section 382 of the
Internal Revenue Code. Upon completion of the debt offering and stock purchases
as described in Note 5, 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.
In accordance with the Internal Revenue Code regulations, the deductibility
of interest for the $50.0 million Senior Secured Discount Notes due 2004 is
limited. Net operating losses exclude any interest which is not currently
deductible.
NOTE 9 -- SUPPLEMENTAL CASH FLOW INFORMATION:
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.
In addition, in 1994, 12,500 warrants to purchase shares of common stock
were issued as compensation for services rendered in connection with the sale of
the Units (Note 5). Accordingly, the Statement of Cash Flows does not reflect
the $500 value assigned to the warrants as a cash outflow for deferred financing
costs.
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.
NOTE 10 -- FINANCIAL INSTRUMENTS:
The Holding Company 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
F-13
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 10 -- FINANCIAL INSTRUMENTS: (CONTINUED)
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
the Holding Company's 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................................................................ $ 106,420 $ 109,145
</TABLE>
NOTE 11 -- COMMITMENT AND CONTINGENCIES:
The Holding Company 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 Company's
counsel, the final outcome of such litigation will not have a material adverse
effect on the Holding Company's consolidated financial position.
Pursuant to the Refinancing Plan, the Holding Company entered into a Limited
Capital Appreciation Rights Agreement with certain institutions that were
previously debt holders of Universal (the "Holders"). Pursuant to the agreement,
upon the occurrence of a "Triggering Event," the Holding Company will be
obligated to pay to the Holders consideration based on the valuation of the
common equity of the Holding Company, but in no event in excess of $3,800. As
defined by the agreement, a Triggering Event includes an initial public offering
of common stock and a plan of complete liquidation or dissolution. The
expiration date of the agreement is June 30, 1998, except that, with respect to
an initial public offering of common stock, the expiration date is June 30,
1996. As the likelihood of a triggering event occurring prior to the agreement's
expiration date is not probable, no accrual, or charge to operations, were
recorded at December 31, 1995.
NOTE 12 -- SUBSEQUENT EVENTS:
In February 1996, the Company entered into an agreement to purchase all
outstanding stock of NOA Holding Company for approximately $85 million ("Naegele
Acquisition"). The Company expects fees and expenses associated with the deal to
be $5 million. As a result of the proposed stock purchase, Universal will
acquire signboards in the Minneapolis/St. Paul, Minnesota and Jacksonville,
Florida markets. The Company expects to finance this acquisition with $60
million in bank borrowings and $30 million in cash proceeds from the purchase of
equity of the Holding Company by an investor group. The transaction is expected
to close in April 1996.
In the first quarter of 1996, the Company also entered into an asset
purchase agreement with Adsign, 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.
NOTE 13 -- NAEGELE AND PARAMOUNT ACQUISITIONS (UNAUDITED):
On April 5, 1996, the Company refinanced its existing credit facility with
(i) a revolving credit line in the amount of $12.5 million ("Revolving Credit
Facility") and (ii) an acquisition term loan and an acquisition revolving credit
line in the amount of $75.0 million and $12.5 million, respectively
("Acquisition Credit Facility"). No amounts were drawn under the Revolving
Credit Facility to finance the Naegele Acquisition; the Revolving Credit
Facility is available to Universal Outdoor, Inc. for working capital needs.
Approximately $84.5 million was drawn and used to finance the Naegele
Acquisition and refinance other
F-14
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 13 -- NAEGELE AND PARAMOUNT ACQUISITIONS (UNAUDITED): (CONTINUED)
indebtedness under the Acquisition Credit Faciliy. Both the Revolving Credit
Facility and the Acquisition Credit Facility are secured by a lien on the assets
of Universal Outdoor, Inc., a pledge of the stock of the Company, and a pledge
of the stock of any wholly-owned subsidiary of Universal Outdoor, Inc.
In addition, the Company sold 186,500 shares of Class B common stock and
188,500 shares of Class C common stock for approximately $30 million. The
proceeds were used to assist in the financing of the Naegele Acquisition.
In April 1996, the Company acquired four painted bulletin faces in the
Chicago market from Paramount Outdoor, Inc. in an asset purchase transaction for
approximately $600,000.
F-15
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL PRO FORMA AS ADJUSTED
OUTDOOR AD-SIGN, NOA ---------------------- ----------------------
HOLDINGS, INC. AND HOLDING ACQUISITION OFFERING
INC. IMAGE MEDIA COMPANY ADJUSTMENTS COMBINED ADJUSTMENTS COMBINED
--------- ------------ ------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues...................................... $38,101 $3,616 $28,364 $ -- $70,081 $-- $70,081
Less -- commissions and discounts............. 3,953 249 3,516 -- 7,718 -- 7,718
--------- ------------ ------- ----------- -------- ----------- --------
34,148 3,367 24,848 -- 62,363 -- 62,363
--------- ------------ ------- ----------- -------- ----------- --------
Operating expenses:
Direct cost of revenue...................... 12,864 1,286 10,285 -- 24,435 -- 24,435
General and administrative.................. 4,645 402 5,378 (2,500)(c) 7,925 -- 7,925
Depreciation and amortization............... 7,402 640 4,341 3,260(a) 15,643 -- 15,643
--------- ------------ ------- ----------- -------- ----------- --------
24,911 2,328 20,004 760 48,003 -- 48,003
--------- ------------ ------- ----------- -------- ----------- --------
Operating income (loss)....................... 9,237 1,039 4,844 (760) 14,360 -- 14,360
--------- ------------ ------- ----------- -------- ----------- --------
Other expense:................................
Interest.................................... 12,894 -- 2,503 3,569(b) 18,966 (4,183) 14,783
Other....................................... 46 -- -- -- 46 -- 46
--------- ------------ ------- ----------- -------- ----------- --------
12,940 -- 2,503 3,569 19,012 (4,183) 14,829
--------- ------------ ------- ----------- -------- ----------- --------
Net income (loss)............................. $(3,703) $1,039 $2,341 $(4,329) $(4,652) $4,183 $ (469)
--------- ------------ ------- ----------- -------- ----------- --------
--------- ------------ ------- ----------- -------- ----------- --------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
F-16
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL PRO FORMA AS ADJUSTED
OUTDOOR AD-SIGN, NOA ---------------------- ----------------------
HOLDINGS, INC. AND HOLDING ACQUISITION OFFERING
INC. IMAGE MEDIA COMPANY ADJUSTMENTS COMBINED ADJUSTMENTS COMBINED
--------- ------------ ------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues...................................... $ 9,332 $ 904 $6,633 $ -- $16,869 $-- $16,869
Less -- commissions and discounts............. 905 62 801 -- 1,768 -- 1,768
--------- ----- ------- ----------- -------- ----------- --------
8,427 842 5,832 -- 15,101 -- 15,101
--------- ----- ------- ----------- -------- ----------- --------
Operating expenses:
Direct cost of revenue...................... 3,571 322 2,616 -- 6,509 -- 6,509
General and administrative.................. 1,227 100 1,459 (676)(c) 2,110 -- 2,110
Depreciation and amortization............... 2,032 160 1,053 815(a) 4,060 -- 4,060
--------- ----- ------- ----------- -------- ----------- --------
6,830 582 5,128 139 12,679 -- 12,679
--------- ----- ------- ----------- -------- ----------- --------
Operating income (loss)....................... 1,597 260 704 (139) 2,422 -- 2,422
--------- ----- ------- ----------- -------- ----------- --------
Other expense:................................
Interest.................................... 3,594 -- 468 863(b) 4,925 (1,051) 3,874
Other....................................... 10 -- -- -- 10 -- 10
--------- ----- ------- ----------- -------- ----------- --------
3,604 -- 468 863 4,935 (1,051) 3,884
--------- ----- ------- ----------- -------- ----------- --------
Net income (loss)............................. $(2,007) $ 260 $ 236 $(1,002) $(2,513) $1,051 $(1,462)
--------- ----- ------- ----------- -------- ----------- --------
--------- ----- ------- ----------- -------- ----------- --------
</TABLE>
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL PRO FORMA AS ADJUSTED
OUTDOOR AD-SIGN, NOA ---------------------- ----------------------
HOLDINGS, INC. AND HOLDING ACQUISITION OFFERING
INC. IMAGE MEDIA COMPANY ADJUSTMENTS COMBINED ADJUSTMENTS COMBINED
--------- ------------ ------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues...................................... $ 8,025 $ 904 $6,283 $ -- $15,212 $-- $15,212
Less -- commissions and discounts............. 789 62 790 -- 1,641 -- 1,641
--------- ----- ------- ----------- -------- ----------- --------
7,236 842 5,493 -- 13,571 -- 13,571
--------- ----- ------- ----------- -------- ----------- --------
Operating expenses:
Direct cost of revenue...................... 3,108 321 2,520 -- 5,949 -- 5,949
General and administrative.................. 1,072 101 1,375 (625)(c) 1,923 -- 1,923
Depreciation and amortization............... 1,737 160 1,009 815(a) 3,721 -- 3,721
--------- ----- ------- ----------- -------- ----------- --------
5,917 582 4,904 190 11,593 -- 11,593
--------- ----- ------- ----------- -------- ----------- --------
Operating income (loss)....................... 1,319 260 589 (190) 1,978 -- 1,978
--------- ----- ------- ----------- -------- ----------- --------
Other expense:................................
Interest.................................... 3,087 -- 707 811(b) 4,605 (1,036) 3,569
Other....................................... 10 -- -- -- 10 -- 10
--------- ----- ------- ----------- -------- ----------- --------
3,097 -- 707 811 4,615 (1,036) 3,579
--------- ----- ------- ----------- -------- ----------- --------
Net income (loss)............................. $(1,778) $ 260 $ (118 ) $(1,001) $(2,637) $1,036 $(1,601)
--------- ----- ------- ----------- -------- ----------- --------
--------- ----- ------- ----------- -------- ----------- --------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
F-17
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS
NOTE 1 -- BASIS OF PRESENTATION
The unaudited pro forma combined statements of operations give effect to the
acquisition by Universal Outdoor Holdings, Inc. of the capital stock of NOA
Holding Company in a transaction to be accounted for as a purchase. These
statements are based on the individual statements of operations of Universal
Outdoor Holdings, Inc., NOA Holding Company, Ad-Sign, Inc. and Image Media and
combine their results of operations for the year ended December 31, 1995 and the
three months ended March 31, 1996 and 1995 as if the acquisitions occurred as of
the beginning of the periods presented. The historical statement of operations
of NOA Holding Company excludes the results of operations of the Memphis and
Youngstown markets which were sold in November of 1995, as well as the gain on
the sale of those operations.
No income taxes have been reflected in the statements of operations because
(a) available net operating loss carryforwards of Universal Outdoor Holdings,
Inc. previously have been fully offset with a valuation allowance, and (b) the
income taxes recorded by NOA Holding Company have been eliminated as they relate
principally to the gain from the sale of the Memphis and Youngstown operations.
NOTE 2 -- PRO FORMA ADJUSTMENTS
The pro forma combined statements of operations have been prepared to
reflect (a) the acquisition of NOA Holding Company by Universal Outdoor
Holdings, Inc. for an aggregate purchase price of $85 million plus related
acquisition fees of $5 million, (b) the financing of such acquisition by bank
borrowings of $60 million and the issuance of $30 million of common shares to an
investor group, and (c) the utilization of the proceeds to the Company of the
public equity offering to redeem $8.1 million in accreted value of 14% Senior
Secured Discount Notes due 2004 and repay $35 million of 8.25% bank borrowings.
Pro Forma adjustments have been made to reflect:
(a) Additional annual depreciation of $3.9 million resulting from the
increased basis of $45 million and $13.6 million in property and
equipment acquired, based on estimated useful lives of 15 years from NOA
Holding Company and Ad-Sign, Inc. and Image Media, respectively.
(b) Annual interest charges of $4,950,000 on $60 million of 8.25% bank
borrowings issued in connection with the acquisition, less interest
eliminated on NOA Holding Company debt not assumed in the acquisition and
annual interest charges of $1,122,000 on $13.6 million of 8.25% bank
borrowings issued in connection with the acquisition of Ad-Sign, Inc. and
Image Media.
(c) Elimination of certain duplicate corporate expenses of NOA Holding
Company, principally relating to employee costs and costs relating to
other corporate activities. Such expenses were eliminated by the company
upon completion of the acquisition.
F-18
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL PRO FORMA AS ADJUSTED
OUTDOOR ---------------------------- ----------------------------
HOLDINGS, NOA HOLDING ACQUISITION OFFERING
INC. COMPANY ADJUSTMENTS COMBINED ADJUSTMENTS COMBINED
----------- ----------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current assets................. $ 7,566 $ 6,830 $ -- $ 14,396 $ -- $ 14,396
Property and equipment......... 69,266 14,421 45,000 (c) 128,687 -- 128,687
Other assets................... 7,915 5,715 21,250 (c) 34,880 -- 34,880
----------- ----------- --------------- ----------- --------------- -----------
Total assets............... $ 84,747 $ 26,966 $ 66,250 $ 177,963 $ 177,963
----------- ----------- --------------- ----------- --------------- -----------
----------- ----------- --------------- ----------- --------------- -----------
Current liabilities............ $ 5,032 $ 2,694 $ $ 7,726 $ $ 7,726
Long-term debt................. 120,248 5,163 60,000 (a) 180,248 (44,576)(d) 135,672
(5,163 (b)
Other noncurrent liabilities... -- 521 -- 521 -- 521
----------- ----------- --------------- ----------- --------------- -----------
Total liabilities.......... 125,280 8,378 54,837 188,495 (44,576 ) 143,919
Stockholders' equity
(deficit)..................... (40,533 ) 18,588 30,000(a) (10,532) 44,576(d) 34,044
(18,587 (b)
----------- ----------- --------------- ----------- --------------- -----------
Total liabilities and
stockholders' equity.......... $ 84,747 $ 26,966 $ 66,250 $ 177,963 $ -- $ 177,963
----------- ----------- --------------- ----------- --------------- -----------
----------- ----------- --------------- ----------- --------------- -----------
</TABLE>
See accompanying note to pro forma combined balance sheet.
F-19
<PAGE>
NOTE TO PRO FORMA COMBINED BALANCE SHEET
The pro forma combined balance sheet has been prepared to reflect (a) the
acquisition of NOA Holding Company by Universal Outdoor Holdings, Inc. for an
aggregate purchase price of $85 million plus related acquisition fees and
expenses of $5 million and (b) the repayment of debt related to the financing of
the acquisition from the proceeds of sale of common shares. Pro forma
adjustments have been made to reflect:
(a) Bank borrowings of $60 million at 8.25% and issuance of $30 million of
common stock,
(b) The elimination of the stockholders' equity accounts and debt of NOA
Holding Company,
(c) The recording of the net assets of NOA Holding Company at estimated fair
value at the acquisition date, and
(d) The $45.7 million estimated proceeds to Universal Outdoor Holdings, Inc.
for common shares being sold in this Offering which is to be used to
repay indebtedness.
F-20
<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-21
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 31,
--------------------
1994 1995
--------- --------- MARCH 31,
1996
------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash...................................................................... $ 1,619 $ 1,630 $ 906
Accounts receivable, net of allowance for doubtful accounts of $346,000 in
1994 and $338,000 in 1995................................................ 4,384 4,517 3,639
Other receivables......................................................... 256 262 126
Inventories............................................................... 267 282 153
Current portion of prepaid leases......................................... 1,183 1,098 1,059
Prepaid expenses.......................................................... 390 274 191
Other assets.............................................................. 150 35 210
--------- --------- ------------
Total current assets.................................................. 8,249 8,098 6,284
--------- --------- ------------
Long-term portion of prepaid leases......................................... 312 509 545
Property and equipment, net (Note 3)........................................ 23,562 22,357 14,422
Intangibles, net (Note 4)................................................... 17,505 12,374 5,714
--------- --------- ------------
Total assets.......................................................... $ 49,628 $ 43,338 $ 26,965
--------- --------- ------------
--------- --------- ------------
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 66 137
Current portion of long-term debt......................................... 6,000 608 90
--------- --------- ------------
Total current liabilities............................................. 9,129 3,315 2,785
--------- --------- ------------
Long-term debt (Note 5)..................................................... 29,657 30,324 4,552
Other long-term liabilities................................................. 577 480 932
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) (162)
--------- --------- ------------
Total stockholders' equity............................................ 10,265 9,219 18,696
--------- --------- ------------
Total liabilities and stockholders' equity............................ $ 49,628 $ 43,338 $ 26,965
--------- --------- ------------
--------- --------- ------------
</TABLE>
See notes to consolidated financial statements.
F-22
<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) -- -- -- (587)
--------- --------- --------- --------- ---------
Net income (loss) applicable to common shares.......... $ (2,778) $ (2,269) $ 277 $ (678) $ 9,477
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-23
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED STOCK CLASS A COMMON CLASS B COMMON
STOCK STOCK ADDITIONAL
--------------- ---------------- ------------------ PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------ --------- ----- ---------- ------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1992................. 1,000 $-- 81,693.70 $ 1 13,199.82 $-- $19,228 $ (3,612)
Dividends declared.................... -- -- -- -- -- -- -- (594)
Net loss.............................. -- -- -- -- -- -- -- (2,184)
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1993................. 1,000 -- 81,693.70 1 13,199.82 -- 19,228 (6,390)
Dividends declared.................... -- -- -- -- -- -- -- (305)
Dividends in-kind..................... -- -- -- -- -- -- 296 (296)
Net loss.............................. -- -- -- -- -- -- -- (2,269)
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1994................. 1,000 -- 81,693.70 1 13,199.82 -- 19,524 (9,260)
Dividends in-kind..................... -- -- -- -- -- -- 961 (656)
Proceeds from issuance of stock....... -- -- -- -- 3,852.63 -- -- --
Stock redemptions relative to the sale
of Pony Panels....................... -- -- (7,599.32) -- (9,754.26) -- (1,372) --
Repurchases of stock.................. -- -- (1,174.44) -- (1,126.03) -- (270) --
Compensation expense on stock
issuances............................ -- -- -- -- -- -- 14 --
Net income............................ -- -- -- -- -- -- -- 277
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1995................. 1,000 $-- 72,919.94 $ 1 6,172.16 $ -- $18,857 $ (9,639)
Net income (unaudited)................ -- -- -- -- -- -- -- 9,477
------ ------ --------- ----- ---------- ------ --------- --------
Balance at March 31, 1996 (unaudited)... 1,000 $ 72,919.94 $ 1 6,172.16 $-- $18,857 $ (162)
------ ------ --------- ----- ---------- ------ --------- --------
------ ------ --------- ----- ---------- ------ --------- --------
</TABLE>
See notes to consolidated financial statements.
F-24
<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) $ 9,477
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) (452)
--------- --------- --------- --------- ---------
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-25
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements consolidate the accounts of NOA
Holding Company (formerly McCarty Holding Company, Inc.) and its wholly-owned
subsidiary, Naegele Outdoor Advertising Company. All intercompany transactions
have been eliminated in consolidation.
REVENUE RECOGNITION
Advertising revenue is recognized monthly over the period in which
advertisement displays are posted on the advertising structures. A full month's
revenue is recognized in the first month of posting. The direct costs incurred
to produce the related advertisements are expensed as incurred. Payments
received in advance of billings are recorded as deferred revenue.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Maintenance, repairs and
renewals, which neither materially add to the value of the property, nor
appreciably prolong its life, are charged to expense as incurred.
Depreciation of property and equipment is provided on declining balance and
straight-line methods over useful lives of 3 to 25 years.
INTANGIBLE ASSETS
Intangibles assets are carried and are amortized on the straight-line method
over useful lives of 5 to 40 years. Goodwill represents the cost of acquired
businesses in excess of amounts assigned to tangible and intangible assets at
the date of acquisition.
INVENTORIES
Inventories consist principally of supplies and are stated at lower of cost
or market as determined on a first-in, first-out basis.
INCOME TAXES
Income taxes are computed in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
BARTER TRANSACTIONS
The Company occasionally enters into agreements to trade advertising space
for goods or services. Prior to December 8, 1992, the Company did not record
such arrangements as revenue unless the items bartered for were capital items.
The impact on revenues and expense of barter transactions not recorded in fiscal
1993 was $164,000.
RECLASSIFICATION
Certain amounts previously reported in 1993 and 1994 have been reclassified
to conform to the 1995 presentation.
INTERIM FINANCIAL INFORMATION
The interim financial information as of March 31, 1996 and 1995 and for the
ten months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
F-26
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
2. ACQUISITIONS
Effective January 19, 1994, the Company purchased Atlantic Outdoor
Advertising, Inc. for $1 million. The acquisition was recorded using the
purchase method of accounting for business combinations.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED
1994 1995 USEFUL LIFE
--------- --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Land............................................................. $ 1,235 $ 1,294 --
Advertising structures........................................... 24,825 25,256 20 years
Buildings........................................................ 491 491 10-25 years
Machinery and equipment.......................................... 1,180 1,201 6 years
Office furniture and equipment................................... 1,896 1,865 5-10 years
Automobiles and trucks........................................... 1,045 1,124 5 years
Other............................................................ 384 370 3-10 years
--------- ---------
31,056 31,601
Less accumulated depreciation.................................... 7,494 9,244
--------- ---------
$ 23,562 $ 22,357
--------- ---------
--------- ---------
</TABLE>
4. INTANGIBLES
The intangibles consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED
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. The loan costs represent
fees paid to obtain a bank term loan and line of credit in 1991 and to refinance
the term loan and line of credit in August 1994. In connection with the loan
refinancing, the Company wrote-off approximately $1 million of unamortized loan
costs. The organization costs are management's estimate of the portion of
various fees paid which are allocable to this asset.
F-27
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
5. DEBT
Long-term debt consists of the following at May 31:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Revolving Credit Commitment under the Amended and Restated Credit
Agreement dated August 31, 1994....................................... $ -- $ 30,700
Term loans under the Credit Agreement dated as of May 22, 1991......... 35,657 --
Revolving Credit Loan under the Credit Agreement dated as of May 22,
1991.................................................................. 200 --
Subordinated note payable, annual installments of $52 through July
1997, plus quarterly interest payments at prime....................... -- 157
Subordinated notes payable, annual installments of $38 through March
1997, plus quarterly interest payments at prime....................... -- 75
--------- ---------
35,857 30,932
Less current portion................................................... 6,200 608
--------- ---------
$ 29,657 $ 30,324
--------- ---------
--------- ---------
</TABLE>
The Company amended and restated its bank Credit Agreement on August 31,
1994 and established a Revolving Credit Commitment of up to $38,000,000 and an
Acquisition Loan Commitment of up to $5,000,000. Both commitments decrease
quarterly each fiscal year and terminate on February 28, 2001. The available
Revolving Credit Commitment at May 31, 1995 was $32,800,000. At year end there
were no borrowings against the $5,000,000 Acquisition Loan Commitment. As part
of the Agreement, interest on the first $20,000,000 of debt is payable under an
Interest Rate Protect Plan ("IPP"). The IPP provides for a fixed rate of 6.28%
plus applicable margin (2.5% at May 31, 1995) for a period of three years and
began August 5, 1994. The Amended and Restated Credit Agreement also enables the
Company to borrow the remainder of the debt at a rate equal to either the Loan
Interbank Offered Rate (LIBOR) plus 3.0% or at the Lending Agent's base rate
plus 1.75%. In addition, the Company can realize lower borrowing rates if
certain financial results are achieved. At May 31, 1995, the interest rate in
effect was LIBOR plus 2.5%.
The Company is obligated to pay loan commitment fees to the banks equal to
one-half of 1% of the average daily unused portion of the commitments.
The bank has issued a letter of credit to the Company's insurance carrier
totaling $323,000 at the end of fiscal 1994 and 1995.
All common shares of the Company are pledged as collateral for the Credit
Agreement; accordingly, substantially all of the Company's assets are
effectively pledged as collateral.
The Credit Agreement contains certain restrictive covenants which the
Company must comply with on a continuing basis. The Company is restricted as to
borrowings, dividend payments, acquisitions, stock repurchases, sales of assets
and capital expenditures.
During fiscal 1995, the Company entered into certain stock redemption
agreements to repurchase 1,174.44 shares of Class A Common Stock and 1,126.03
shares of Class B Common Stock. As part of the agreements, the Company issued
subordinated promissory notes totaling approximately $270,000.
Total interest paid on all debt was $3,849,000, $3,528,000 and $3,468,000
for fiscal 1993, 1994 and 1995, respectively.
F-28
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
5. DEBT (CONTINUED)
Aggregate annual maturities of long-term debt during the five-year period
ending May 31, 2000 are (in thousands):
<TABLE>
<S> <C>
Year ending May 31:
1996............................................................. $ 608
1997............................................................. 4,365
1998............................................................. 6,227
1999............................................................. 7,600
2000............................................................. 7,600
</TABLE>
6. INCOME TAXES
At May 31, 1995, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $8.0 million. These carryforwards
expire between May 31, 2006 and 2010. During the current fiscal year, the
Company utilized approximately $625,000 of net operating loss carryforwards to
offset current year taxable income.
Components of deferred tax assets and liabilities are (in thousands):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Loss carryforward...................................................... $ 3,403 $ 3,145
Accrued expenses....................................................... 249 207
Loan cost amortization................................................. -- 343
--------- ---------
3,652 3,695
Deferred tax liabilities:
Depreciation........................................................... 857 1,090
Bad debt allowance..................................................... 33 36
--------- ---------
890 1,126
--------- ---------
Net deferred tax assets before valuation allowance....................... 2,762 2,569
Less valuation allowance................................................. 2,762 2,569
--------- ---------
Net deferred tax assets.................................................. $ -- $ --
--------- ---------
--------- ---------
</TABLE>
7. EMPLOYEE BENEFIT PLAN
The Company has a voluntary defined contribution 401(k) savings and
retirement plan for the benefit of its nonunion employees who may contribute
from 3% to 10% of their compensation. The Company has no obligation to
contribute to the plan and made no contribution for fiscal 1993, 1994 and 1995.
8. REDEEMABLE PREFERRED STOCK
The preferred stock is redeemable, subject to certain restrictions, by the
Company at a price equal to its value as carried on the financial statements.
The Company also has the right to convert the preferred stock to debt at a rate
of $1,000 principal of debt to $1,000 liquidation value of the preferred stock.
The liquidation value of each of share of preferred stock is $7,699 and $8,660
at May 31, 1994 and 1995, respectively. After May 22, 2001, the preferred
shareholders have the right to control the Board of Directors for the purpose of
selling the Company.
F-29
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
8. REDEEMABLE PREFERRED STOCK (CONTINUED)
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.
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.
F-30
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
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>
<S> <C>
Year ending May 31:
1996............................................................. $ 552
1997............................................................. 552
1998............................................................. 552
1999............................................................. 557
2000............................................................. 557
Thereafter....................................................... 704
---------
$ 3,474
---------
---------
</TABLE>
Rent expense for operating leases for the years ended May 31, 1993, 1994 and
1995 totaled $6,950,000, $6,837,000 and $7,268,000, respectively.
F-31
<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-32
<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-33
<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-34
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY 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 OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, 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>
Prospectus Summary............................. 3
Risk Factors................................... 6
Use of Proceeds................................ 10
Dividend Policy................................ 10
Dilution....................................... 11
Capitalization................................. 12
Selected Consolidated Financial and Operating
Data.......................................... 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 15
Business....................................... 22
Management..................................... 34
Certain Transactions........................... 38
Principal and Selling Stockholders............. 40
Description of Capital Stock................... 42
Shares Eligible for Future Sale................ 45
Description of Indebtedness and Other
Commitments................................... 46
Underwriting................................... 52
Certain Legal Matters.......................... 53
Experts........................................ 53
Available Information.......................... 53
Index to Consolidated Financial Statements..... F-1
</TABLE>
--------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
6,200,000 SHARES
[LOGO]
UNIVERSAL OUTDOOR
HOLDINGS, INC.
COMMON STOCK
------------
PROSPECTUS
------------
ALEX. BROWN & SONS
INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of estimated expenses incurred in connection
with the shares of Common Stock being registered hereby, other than underwriting
discounts and commissions:
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 36,771.17
NASD Filing Fee............................................... 11,164.00
Nasdaq Stock Market Listing Fee............................... 49,000.00
Printing and Engraving Expenses............................... 200,000.00
Legal Fees and Expenses....................................... 250,000.00
Accounting Fees and Expenses.................................. 100,000.00
Transfer Agent and Registrar Fees and Expenses................ 25,000.00
Blue Sky Fees and Expenses (including legal fees)............. 20,000.00
Miscellaneous................................................. 58,064.83
-----------
Total....................................................... $750,000.00
-----------
-----------
<FN>
- ------------------------
* To be filed by amendment.
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Delaware Law") and
Article XI of the Registrant's Bylaws provide for indemnification of the
Registrant's directors and officers to the maximum extent provided by Delaware
Law, which may include liabilities under the Securities Act.
Section 8 of the Underwriting Agreement provides for indemnification by the
Underwriters of directors, officers and controlling persons of the Company
against certain liabilities, including liabilities under the Securities Act,
under certain limited circumstances.
As permitted by Section 102(b) of the Delaware Law, the Certificate of
Incorporation provides that directors of the Company shall have no personal
liability to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of a director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violations of law,
(iii) under Section 174 of the Delaware Law, or (iv) for any transaction from
which a director derived an improper personal benefit.
The Company does not maintain directors' and officers' liability insurance.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1993, the Company has issued the following securities which
were not registered under the Securities Act:
The 1996 Warrant Plan was adopted by the Board of Directors of the Company
in April 1996 in order to advance the interests of the Company by affording
certain key executives and employees an opportunity to acquire a proprietary
interest in the Company and thus to stimulate increased personal interest in
such persons in the success and future growth of the Company. Upon consummation
of the Offering, the 1996 Warrant Plan shall be administered by the Compensation
Committee of the Company. Pursuant to the 1996 Warrant Plan, Daniel L. Simon and
Brian T. Clingen were awarded warrants in April 1996 which have been divided
into three series: the Series I Warrants, the Series II Warrants and the Series
III Warrants. In July 1996, the 1996 Warrant Plan was amended to, among other
things (i) adjust the warrant exercise price for the Series II Warrants and the
Series III Warrants from $5.00 per share (as adjusted to reflect the 16 for 1
stock split) to (X) in the case of the Series II Warrants, the Closing Price for
the day immediately preceding any such exercise minus $.01, PROVIDED, HOWEVER,
that if at any time the average of the Closing Price for any 30 consecutive
trading days is equal to or greater than $16.25 AND the Closing Price for the
last day of such thirty day trading period is equal to or greater than $16.25,
then the warrant
II-1
<PAGE>
exercise price shall thereafter be $5.00, and (Y) in the case of Series III
Warrants, the Closing Price for the day immediately preceding any such exercise
minus $.01, PROVIDED, HOWEVER, that if at any time the average of the Closing
Price for any 30 consecutive trading days is equal to or greater than $20.00 AND
the Closing Price for the last day of such thirty day trading period is equal to
or greater than $20.00, then the warrant exercise price shall thereafter be
$5.00; and (ii) making each class of Warrants fully exercisable. Upon
consummation of the Offering, the Series I Warrants will be fully exercisable at
a warrant exercise price of $5.00 per share. The Warrants may not be sold,
assigned, transferred, exchanged or otherwise disposed of except to spouses and
beneficiaries of the holders of such Warrants. The Company consented to an
assignment by Daniel L. Simon and Brian T. Clingen to Paul G. Simon of 123,536
Series I Warrants. A total of 2,470,608 shares of Common Stock have been
reserved for issuance pursuant to the Warrants issued under the 1996 Warrant
Plan. Upon consummation of the Offering and the transaction contemplated in
connection therewith, Daniel L. Simon will hold 595,000 Series I Warrants,
700,000 Series II Warrants and 700,000 Series III Warrants; Brian L. Clingen
will hold 105,006 Series I Warrants, 123,536 Series II Warrants and 123,536
Series III Warrants; and Paul G. Simon will hold 123,530 Series I Warrants. The
Company will recognize a one-time non-cash compensation charge of approximately
$9 million in the quarter to be ended June 30, 1996 relating to the issuance of
the Warrants under the 1996 Warrant Plan. See "Management -- The 1996 Warrant
Plan and "Executive Compensation."
On April 5, 1996, the Company issued to KIA V and KEP V and certain
individuals designated by KIA V and KEP V 186,500 shares of Class B Common Stock
and 188,500 shares of Class C Common Stock in exchange for $30 million. Such
Class B Common Stock and Class C Common Stock was reclassified into 6,000,000
shares of Common Stock and 2,500,000 is now being sold in the Offering.
On June 30, 1994, the Company issued and sold to Bear, Stearns & Co. Inc. as
the Initial Purchaser (the "Initial Purchaser") 50,000 Units consisting of
$50,000,000 principal amount at maturity of 14% Series A Senior Secured Discount
Notes due 2004 (the "Old Notes") and 50,000 Noteholder Warrants (sold with a 4%
discount to the Initial Purchaser, along with compensation to Bear, Stearns &
Co. Inc., in its individual capacity and not as Initial Purchaser, of 12,500
Noteholder Warrants) for an aggregate offering price of approximately $25.4
million. Each Unit consisted of $1,000 principal amount at maturity of the Old
Notes and one Noteholder Warrant, and the Old Notes and Noteholder Warrants were
immediately detachable and separately transferable, subject to compliance with
applicable federal and state securities laws. This sale to the Initial Purchaser
was exempt from registration as an exempt private placement under Section 4(2)
of the Securities Act. On December 9, 1994, in a transaction registered under
the Securities Act, the Company issued $50,000,000 principal amount at maturity
of its Secured Notes in exchange for all of the issued and outstanding Old
Notes.
On November 18, 1993, pursuant to a Contribution Agreement between the
Company and all of the then shareholders of UOI, (i) the holders of all of the
common shares of UOI exchanged such shares on a one-for-one basis for shares of
Common Stock of the Company and (ii) the holders of all of the Class B common
shares of UOI exchanged such shares for an aggregate of 48,000 shares of Series
B Preferred Stock, no par value, of the Company. These exchanges were exempt
from registration as either not involving any "sale" or as exempt private
placements under Section 4(2) of the Securities Act.
On November 18, 1993, the Company entered into the Option Exchange Agreement
with UOI and WHS, pursuant to which the Company granted to WHS an option to
purchase 0.52% of the issued and outstanding capital stock of the Company at a
purchase price of $130,000. The option is exercisable by WHS upon the Company
entering into a definitive agreement to issue shares of capital stock through an
underwritten public offering. Subsequent to the execution of the underwriting
agreement, the Company expects WHS shall exercise his option in full and receive
67,600 shares of Common Stock of the Company.
On November 18, 1993, the Company entered into the Capital Appreciation
Right Agreement with Connecticut General Life Insurance Company, Cigna Property
and Casualty Insurance Company, Life Insurance Company of North America and
Aetna Life Insurance Company, pursuant to which the Company granted such parties
limited capital appreciation rights in the capital stock of the Company in
II-2
<PAGE>
exchange for a waiver of the prepayment penalty in connection with the 1993
refinancing. Such capital appreciation rights are triggered by the occurrence of
any of the following: (i) liquidation or dissolution of the Company or UOI, (ii)
sale of all or substantially all of the issued and outstanding shares of common
stock or assets of the Company, (iii) the merger or consolidation of the Company
or UOI, subject to certain exceptions or (iv) an initial public offering of
common stock of the Company or UOI prior to June 30, 1996. The maximum amount
payable pursuant to the agreement is $3.8 million and is required to be paid no
later than one year following the triggering event. The agreement expires June
30, 1998.
In each case, exemption from registration was claimed on the grounds that
the issuance of such securities did not involve any public offering within the
meaning of Section 4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
2.1 Stock Purchase Agreement ("Stock Purchase Agreement") between Wind Point
Partners II, L.P., Marquette Venture Partners, L.P., Chemical Equity
Associates, a California Limited Partnership, Banc One Venture Corporation and
Management Shareholders and UOI relating to the capital stock of NOA Holding
Company dated February 27, 1996 (filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K dated April 5, 1996 (File No. 33-82582) (the "Company 8-K")
and incorporated herein by reference)
2.2 Amendment No. 1 to Stock Purchase Agreement (filed as Exhibit 2.2 to the Company
8-K and incorporated herein by reference)
2.3 Plan and Agreement of Merger, dated November 18, 1993, between the Company and
UOI (filed as Exhibit 2 to UOI's Registration Statement on Form S-1 (Commission
File No. 33-72710) and incorporated herein by reference)
2.4 Form of Agreement and Plan of Recapitalization between the Company, KIA V, KEP V
and certain stockholders of the Company
3.1 Form of Third Amended and Restated Certificate of Incorporation
3.2 Form of Second Amended and Restated Bylaws
4.1 Specimen Common Stock Certificate of the Company
4.2 Indenture (filed as Exhibit 4.2 to the Company's Form S-1 Registration Statement
(File No. 33-82582) and incorporated herein by reference.)
4.3 Indenture of Trust between United States Trust Company of New York, as trustee,
and UOI dated as of November 15, 1993 relating to the UOI Notes (filed as
Exhibit 4(b) to UOI's Registration Statement on Form S-1 (File No. 33-72710)
and incorporated herein by reference)
4.4 Purchase Agreement, dated as of June 23, 1994, between the Company and Bear,
Stearns & Co. Inc. relating to the Company's Secured Notes and Noteholder
Warrants (filed as Exhibit 4(a) to the Registration Statement on Form S-1 (File
No. 33-82582)
4.5 Exchange and Registration Rights Agreement, dated as of June 23, 1994, between
the Company and Bear, Stearns & Co. Inc. (filed as Exhibit 4(d) to the
Registration Statement on Form S-1 (File No. 33-82582) and incorporated herein
by reference)
5.1 Opinion of Winston & Strawn
9.1 Voting Trust Agreement dated December 20, 1995 among the Company, Daniel L.
Simon and Brian T. Clingen
9.2 Form of Voting Trust Agreement among the Company, Daniel L. Simon and Paul G.
Simon
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
9.3 Form of Voting Trust Agreement among the Company, Daniel L. Simon and Lawrence
Simon
9.4 Form of Voting Trust Agreement among the Company, Daniel L. Simon and WHS
10.1 Revolving Credit Agreement ("Revolving Credit Agreement") entered into among the
Registrant, the various lending institutions from time to time parties thereto,
LaSalle National Bank, as Co-Agent and Bankers Trust Company, as Agent (filed
as Exhibit 10.1 to the Company 8-K and incorporated herein by reference.)
10.2 Acquisition Credit Agreement ("Acquisition Credit Agreement") entered into among
the Registrant, the various lending institutions from time to time parties
thereto, LaSalle National Bank, as Co-Agent and Bankers Trust Company, as Agent
(filed as Exhibit 10.2 to the Company 8-K and incorporated herein by
reference).
10.3 Amended and Restated 1996 Warrant Plan of the Company
10.4 Warrant Agreement between the Registrant and United States Trust Company of New
York, as warrant agent, dated June 30, 1994 relating to the Noteholder Warrants
(filed as Exhibit 4(i) to Amendment No. 1 to the Company's Form S-1
Registration Statement (File No. 33-93852) and incorporated herein by
reference)
10.5 Agreement Regarding Tax Liabilities and Payments dated as of November 18, 1993
by and between UOI and the Company (filed as Exhibit 10(f) to UOI's Form S-1
Registration Statement (File No. 33-72710) and incorporated herein by
reference)
10.6 Capital Appreciation Right Agreement among the Company, Connecticut General Life
Insurance Company, Cigna Property and Casualty Insurance Company, Life
Insurance Company of North America and Aetna Life Insurance Company dated
November 18, 1993
10.7 Option Exchange Agreement among the Company, UOI and WHS dated November 18, 1993
10.8 Form of Amendment to Option Exchange Agreement among the Company, UOI, Daniel L.
Simon, Brian T. Clingen and WHS
10.9 Form of Amendment to Revolving Credit Agreement
10.10 Form of Amendment to Acquisition Credit Agreement
10.11 Form of Fee Letter between the Company and Kelso & Company, L.P.
10.12 Form of Registration Rights Agreement among the Company, KIA V, KEP V, Daniel L.
Simon, Brian T. Clingen and Paul G. Simon
11.1 Computation of earnings per share
21.1 Subsidiaries of the Registrant
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Winston & Strawn (contained in Exhibit 5.1)
24 ** Powers of Attorney (included on Signature Page)
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
II-4
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that:
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to Item 14 above, or otherwise, the Company has been
advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on the 18th day of July, 1996.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By: /s/ PAUL G. SIMON
-----------------------------------
Paul G. Simon*
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ---------------------------------- -----------------------
<C> <S> <C> <C>
** President and Chief Executive
------------------------ Officer (Principal Executive July 18, 1996
Daniel L. Simon Officer) and Director
** Vice President and Chief Financial /s/ Paul G. Simon
------------------------ Officer (Principal Financial and July 18, 1996 ---------------
Brian T. Clingen Accounting Officer) and Director Paul G. Simon
**
------------------------ Director July 18, 1996
Michael J. Roche
**
------------------------ Director July 18, 1996
Michael B. Goldberg
* Paul Simon was appointed Attorney-in-Fact pursuant to a Power of Attorney filed with the Commission with this
Registration Statement.
** /s/ Paul G. Simon, Attorney-in-Fact
</TABLE>
II-6
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
1.1 Form of Underwriting Agreement
2.1 Stock Purchase Agreement ("Stock Purchase Agreement") between Wind Point Partners II, L.P.,
Marquette Venture Partners, L.P., Chemical Equity Associates, a California Limited Partnership,
Banc One Venture Corporation and Management Shareholders and UOI relating to the capital stock
of NOA Holding Company dated February 27, 1996 (filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K dated April 5, 1996 (File No. 33-82582) (the "Company 8-K") and incorporated
herein by reference)
2.2 Amendment No. 1 to Stock Purchase Agreement (filed as Exhibit 2.2 to the Company 8-K and
incorporated herein by reference)
2.3 Plan and Agreement of Merger, dated November 18, 1993, between the Company and UOI (filed as
Exhibit 2 to UOI's Registration Statement on Form S-1 (Commission File No. 33-72710) and
incorporated herein by reference)
2.4 Form of Agreement and Plan of Recapitalization between the Company, KIA V, KEP V and certain
stockholders of the Company
3.1 Form of Third Amended and Restated Certificate of Incorporation
3.2 Form of Second Amended and Restated Bylaws
4.1 Specimen Common Stock Certificate of the Company
4.2 Indenture (filed as Exhibit 4.2 to the Company's Form S-1 Registration Statement (File No.
33-82582) and incorporated herein by reference.)
4.3 Indenture of Trust between United States Trust Company of New York, as trustee, and UOI dated as
of November 15, 1993 relating to the UOI Notes (filed as Exhibit 4(b) to UOI's Registration
Statement on Form S-1 (File No. 33-72710) and incorporated herein by reference)
4.4 Purchase Agreement, dated as of June 23, 1994, between the Company and Bear, Stearns & Co. Inc.
relating to the Company's Secured Notes and Noteholder Warrants (filed as Exhibit 4(a) to the
Registration Statement on Form S-1 (File No. 33-82582)
4.5 Exchange and Registration Rights Agreement, dated as of June 23, 1994, between the Company and
Bear, Stearns & Co. Inc. (filed as Exhibit 4(d) to the Registration Statement on Form S-1 (File
No. 33-82582) and incorporated herein by reference)
5.1 Opinion of Winston & Strawn
9.1 Voting Trust Agreement dated December 20, 1995 among the Company, Daniel L. Simon and Brian T.
Clingen
9.2 Form of Voting Trust Agreement among the Company, Daniel L. Simon and Paul G. Simon
9.3 Form of Voting Trust Agreement among the Company, Daniel L. Simon and Lawrence Simon
9.4 Form of Voting Trust Agreement among the Company, Daniel L. Simon and WHS
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
10.1 Revolving Credit Agreement ("Revolving Credit Agreement") entered into among the Registrant, the
various lending institutions from time to time parties thereto, LaSalle National Bank, as
Co-Agent and Bankers Trust Company, as Agent (filed as Exhibit 10.1 to the Company 8-K and
incorporated herein by reference.)
10.2 Acquisition Credit Agreement ("Acquisition Credit Agreement") entered into among the Registrant,
the various lending institutions from time to time parties thereto, LaSalle National Bank, as
Co-Agent and Bankers Trust Company, as Agent (filed as Exhibit 10.2 to the Company 8-K and
incorporated herein by reference).
10.3 Amended and Restated 1996 Warrant Plan of the Company
10.4 Warrant Agreement between the Registrant and United States Trust Company of New York, as warrant
agent, dated June 30, 1994 relating to the Noteholder Warrants (filed as Exhibit 4(i) to
Amendment No. 1 to the Company's Form S-1 Registration Statement (File No. 33-93852) and
incorporated herein by reference)
10.5 Agreement Regarding Tax Liabilities and Payments dated as of November 18, 1993 by and between
UOI and the Company (filed as Exhibit 10(f) to UOI's Form S-1 Registration Statement (File No.
33-72710) and incorporated herein by reference)
10.6 Capital Appreciation Right Agreement among the Company, Connecticut General Life Insurance
Company, Cigna Property and Casualty Insurance Company, Life Insurance Company of North America
and Aetna Life Insurance Company dated November 18, 1993
10.7 Option Exchange Agreement among the Company, UOI and WHS dated November 18, 1993
10.8 Form of Amendment to Option Exchange Agreement among the Company, UOI, Daniel L. Simon, Brian T.
Clingen and WHS
10.9 Form of Amendment to Revolving Credit Agreement
10.10 Form of Amendment to Acquisition Credit Agreement
10.11 Form of Fee Letter between the Company and Kelso & Company, L.P.
10.12 Form of Registration Rights Agreement among the Company, KIA V, KEP V, Daniel L. Simon, Brian T.
Clingen and Paul G. Simon
11.1 Computation of earnings per share
21.1 Subsidiaries of the Registrant
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Winston & Strawn (contained in Exhibit 5.1)
24 ** Powers of Attorney (included on Signature Page)
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
<PAGE>
6,200,000 Shares
Universal Outdoor Holdings, Inc.
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
_______________, 1996
Alex. Brown & Sons Incorporated
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
Universal Outdoor Holdings, Inc., a Delaware corporation (the "Company"),
Kelso Investment Associates V, L.P. ("KIA V") and Kelso Equity Partners V, L.P.
("KEP V", and collectively with KIA V, the "Investor Selling Shareholders")
propose to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 6,200,000 shares of the Company's Common
Stock, $.01 par value (the "Firm Shares"), of which 3,700,000 shares will be
sold by the Company and 2,500,000 shares will be sold by the Investor Selling
Shareholders. The respective amounts of the Firm Shares to be so purchased by
the several Underwriters are set forth opposite their names in Schedule I
hereto, and the respective amounts to be sold by the Investor Selling
Shareholders are set forth
<PAGE>
opposite their names in Schedule II hereto. The Company and Daniel L. Simon and
Brian T. Clingen (the "Management Selling Shareholders", and, together with the
Investor Selling Shareholders, the "Selling Shareholders") also propose to sell
at the Underwriters' option an aggregate of up to 730,000 and 200,000 additional
shares, respectively, of the Company's Common Stock (the "Option Shares") as set
forth below. The Company and the Selling Shareholders are sometimes referred to
herein collectively as the "Sellers."
As the Representatives, you have advised the Company and the Selling
Shareholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and
the Option Shares (to the extent the aforementioned option is exercised) are
herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
(a) The Company represents and warrants to each of the Underwriters
as follows:
(i) A registration statement on Form S-1 (File No. 333-5351) with
respect to the Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and
the Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder and has been filed
with the Commission. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements
of the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore
been delivered by the Company to you. Such registration statement,
together with any registration statement filed by the Company pursuant to
Rule 462 (b) of the Act, herein referred to as the
2
<PAGE>
"Registration Statement," which shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of
the date of this Agreement. "Prospectus" means (a) the form of prospectus
first filed with the Commission pursuant to Rule 424(b) or (b) the last
preliminary prospectus included in the Registration Statement filed prior
to the time it becomes effective or filed pursuant to Rule 424(a) under the
Act that is delivered by the Company to the Underwriters for delivery to
purchasers of the Shares, together with the term sheet or abbreviated term
sheet filed with the Commission pursuant to Rule 424(b)(7) under the Act.
Each preliminary prospectus included in the Registration Statement prior to
the time it becomes effective is herein referred to as a "Preliminary
Prospectus."
(ii) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, 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 as listed in Exhibit A hereto (collectively,
the "Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement. The Subsidiaries are the only subsidiaries, direct or indirect,
of the Company. The Company and each of the Subsidiaries are duly
qualified to transact business in all jurisdictions in which the conduct of
their business requires such qualification. The outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by the
Company or another Subsidiary free and clear of all liens, encumbrances and
equities and claims, except for the pledge of the issued and outstanding
capital stock of Universal Outdoor, Inc. pursuant to the indenture
governing the Company's Senior Secured Discount Notes due 2004 and the
pledge of the issued and outstanding common stock of each subsidiary of
Universal Outdoor, Inc. pursuant to the Acquisition Credit Facility and the
Revolving 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 obliga-
3
<PAGE>
tions into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.
(iii) The outstanding shares of Common Stock of the Company,
including all shares to be sold by the Selling Shareholders, have been duly
authorized and validly issued and are fully paid and non-assessable; the
portion of the Shares to be issued and sold by the Company have been duly
authorized and when issued and paid for as contemplated herein will be
validly issued, fully paid and non-assessable; and no preemptive rights of
stockholders exist with respect to any of the Shares or the issue and sale
thereof except for the Option Exchange Agreement between Universal Outdoor,
Inc. and William H. Smith and the Capital Appreciation Plan among Lawrence
J. Simon, Daniel L. Simon and Brian T. Clingen, each as described in the
Prospectus. Neither the filing of the Registration Statement nor the
offering or sale of the Shares as contemplated by this Agreement gives rise
to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock.
(iv) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the
jurisdiction of the Company's incorporation.
(v) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares
nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements which are required to be stated therein by, and
will conform, to the requirements of the Act and the Rules and Regulations.
The Registration Statement and any amendment thereto do not contain, and
will not contain, any untrue statement of a material fact and do not omit,
and will not omit, to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Prospectus
and any amendments and supplements thereto do not contain, and will not
contain, any untrue statement of material fact; and do not omit, and will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provid-
4
<PAGE>
ed, however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of any Underwriter through the Representatives, specifically for use
in the preparation thereof.
(vi) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the
results of operations and cash flows of the Company and the consolidated
Subsidiaries, at the indicated dates and for the indicated periods. Such
financial statements and related schedules have been prepared in accordance
with generally accepted principles of accounting, consistently applied
throughout the periods involved, except as disclosed therein, and all
adjustments necessary for a fair presentation of results for such periods
have been made. The summary financial and statistical data included in the
Registration Statement presents fairly the information shown therein and
such data has been compiled on a basis consistent with the financial
statements presented therein and the books and records of the Company. The
pro forma financial statements and other pro forma financial information
included in the Registration Statement and the Prospectus present fairly
the information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(vii) Price Waterhouse LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and
the Rules and Regulations.
(viii) Except as set forth in the Registration Statement, there is
neither (i) any action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise which,
if determined adversely to the Company or any of its Subsidiaries, might
5
<PAGE>
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,
(ix) The Company and the Subsidiaries have good and marketable title
to all of the properties and assets reflected in the financial statements
(or as described in the Registration Statement) hereinabove described,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except those reflected in such financial statements (or as described in the
Registration Statement) or which are not material in amount. The Company
and the Subsidiaries occupy their leased properties or properties subject
to easement under valid and binding leases or easements, respectively.
(x) 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.
(xi) Since the respective dates as of which information is given in
the Registration Statement, as it may be amended or supplemented, there has
not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise), or prospects of the Company and its Subsidiaries taken as a
whole, whether or not occurring in the ordinary course of business, and
there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or the
Subsidiaries, other than transactions in the ordinary course of business
and changes and transactions described in the Registration Statement, as it
may be amended or supplemented. The Company and the Subsidiaries have no
material contingent obligations which are not disclosed in the Company's
financial statements which are included in the Registration Statement.
6
<PAGE>
(xii) 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 Certificate of Incorporation or By-Laws as presently in
effect or as amended as contemplated by the Agreement and Plan of
Recapitalization (the "Recapitalization Agreement"), dated as of July [ ],
1996, between the Company, KIA V, KEP V and certain stockholders of the
Company who are signatories thereto or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a
party or by which it, or any of its properties, is bound and which default
is of material significance in respect of the condition, financial or
otherwise of the Company and its Subsidiaries taken as a whole or the
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the Subsidiaries
taken as a whole. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and the fulfillment of
the terms hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any Subsidiary is a party, or of the Certificate of
Incorporation or By-laws of the Company as presently in effect or as
amended as contemplated by the Recapitalization Agreement 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.
(xiii) 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 consummation of the transactions
herein contemplated (except such additional steps as may be required by the
Commission, the National Association of Securities Dealers, Inc. (the
"NASD") or such additional steps as may be necessary to qualify the Shares
for public offering by the Underwriters under state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(xiv) 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 require-
7
<PAGE>
ments imposed by, all Federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, in each case as required for the conduct of the business in
which it is engaged, and each such License is in full force and effect,
except to the extent that the failure to obtain any such License or to make
any such declaration or filing or satisfy any such requirement would not
have a material adverse effect on the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise)
or prospects of the Company and its Subsidiaries, taken as a whole.
(xv) 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.
(xvi) 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.
(xvii) Neither the Company, nor to the Company's best knowledge, any
of its affiliates, has taken or may take, directly or indirectly, any
action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the
sale or resale of the Shares.
(xviii) 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.
8
<PAGE>
(xix) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xx) 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.
(xxi) 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 (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(ii) 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.
(xxii) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking
9
<PAGE>
and Finance (the "Department"), whichever date is later, or if the
information reported or incorporated by reference in the Prospectus, if
any, concerning the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the Company will
provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.
(b) Each of the Selling Shareholders severally represents and
warrants as follows:
(i) Such Selling Shareholder now has and at the Closing Date and the
Option Closing Date, as the case may be (as such dates are hereinafter
defined), will have good and marketable title to the Firm Shares and the
Option Shares to be sold by such Selling Shareholder, free and clear of any
liens, encumbrances, equities and claims, and full right, power and
authority to effect the sale and delivery of such Firm Shares and Option
Shares, subject as of the date hereof only (i) in the case of the
Management Selling Shareholders, to the Existing Stock Pledges, which will
be released on or prior to the Closing Date, and (ii) to the completion of
the reclassification contemplated by the Recapitalization Agreement and the
filing of the amended Certificate of Incorporation of the Company (the
"Amended Certificate") with the Secretary of State of Delaware as
contemplated by the Recapitalization Agreement, which will be completed on
or prior to the Closing Date; and upon the delivery of, against payment
for, such Firm Shares and Option Shares pursuant to this Agreement, the
Underwriters will acquire good and marketable title thereto, free and clear
of any liens, encumbrances, equities and claims.
(ii) Such Selling Shareholder has full right, power and authority to
execute and deliver this Agreement and, in the case of the Investor Selling
Shareholders, upon consummation of the transactions contemplated by the
Recapitalization Agreement, to perform its obligations under such
Agreement. The execution and delivery of this Agreement and, following
completion of the reclassification contemplated by the Recapitalization
Agreement and the filing of the Amended Certificate with the Secretary of
State of the State of Delaware as contemplated by the Recapitalization
Agreement, the consummation by such Selling Shareholder of the transactions
herein contemplated and the fulfillment by such Selling Shareholder of the
terms hereof will not require any consent, approval, authorization,
10
<PAGE>
or other order of any court, regulatory body, administrative agency or
other governmental body (except as may be required under the Act, state
securities laws or Blue Sky laws) and will not result in a breach of any of
the terms and provisions of, or constitute a default under, organizational
documents of such Selling Shareholder, if not an individual, or any
indenture, mortgage, deed of trust or other agreement or instrument to
which such Selling Shareholder is a party, or of any order, rule or
regulation applicable to such Selling Shareholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
(iii) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted,
or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Common Stock of the
Company and, other than as permitted by the Act, the Selling Shareholder
will not distribute any prospectus or other offering material in connection
with the offering of the Shares.
(iv) The information pertaining to such Selling Shareholder under the
caption "Principal and Selling Stockholders" in the Prospectus does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the
Sellers selling Firm Shares agree to sell to the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase, at a price of
$_____ per share, the number of Firm Shares set forth opposite the name of
each Underwriter in Schedule I hereof, subject to adjustments in accordance
with Section 9 hereof. The number of Firm Shares to be purchased by each
Underwriter from each Seller selling Firm Shares shall be as nearly as
practicable in the same proportion to the total number of Firm Shares being
sold by each such Seller as the number of Firm Shares being purchased by
each Underwriter bears to the total number of Firm Shares
11
<PAGE>
to be sold hereunder. The obligations of the Company and of each of the
Investor Selling Shareholders shall be several and not joint.
(b) Payment for the Firm Shares to be sold hereunder is to be made in
same day funds by wire transfers to accounts to be designated by Company
for the shares to be sold by it and by each of the Investor Selling
Shareholders for the shares to be sold by the Investor Selling
Shareholders, in each case against delivery of certificates therefor to the
Representatives for the several accounts of the Underwriters. The Company
and the Investor Selling Shareholders shall promptly reimburse the
Underwriters for the cost of same day funds. Such payment and delivery are
to be made at the offices of Alex. Brown & Sons Incorporated, 135 East
Baltimore Street, Baltimore, Maryland, at 10:00 a.m., Baltimore time, on
the third business day after the date of this Agreement or at such other
time and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to as
the "Closing Date." (As used herein, "business day" means a day on which
the New York Stock Exchange is open for trading and on which banks in New
York are open for business and not permitted by law or executive order to
be closed.) The certificates for the Firm Shares will be delivered in such
denominations and in such registrations as the Representatives request in
writing not later than the second full business day prior to the Closing
Date, and will be made available for inspection by the Representatives at
least one business day prior to the Closing Date.
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company and the Management Selling Shareholders listed on Schedule III
hereto hereby grant an option to the several Underwriters to purchase the
Option Shares at the price per share as set forth in paragraph (a) of this
Section 2. The maximum number of Option Shares to be sold by the Company
and the Management Selling Shareholders is set forth opposite their
respective names on Schedule III hereto. The option granted hereby may be
exercised in whole or in part by giving written notice (i) at any time
before the Closing Date and (ii) only once thereafter within 30 days after
the date of this Agreement, by you, as Representatives of the several
Underwriters, to the Company and the Management Selling Shareholders,
setting forth the number of Option Shares as to which the several
Underwriters are exercising the option, the names and denominations in
which the Option Shares are to be registered and the time and date at which
such
12
<PAGE>
certificates are to be delivered. If the option granted hereby is
exercised in part, the respective number of Option Shares to be sold by the
Company and each of the Management Selling Shareholders listed in Schedule
III hereto shall be determined on a pro rata basis in accordance with the
percentages set forth opposite their names on Schedule III hereto, adjusted
by you in such manner as to avoid fractional shares. The time and date at
which certificates for Option Shares are to be delivered shall be
determined by the Representatives but shall not be earlier than three nor
later than 10 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein
referred to as the "Option Closing Date"). If the date of exercise of the
option is three or more days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date. The number
of Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to the
total number of Firm Shares, adjusted by you in such manner as to avoid
fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the
Firm Shares by the Underwriters. You, as Representatives of the several
Underwriters, may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company and the
Management Selling Shareholders. To the extent, if any, that the option is
exercised, payment for the Option Shares shall be made on the Option
Closing Date in same day funds by wire transfers to accounts to be
designated by the Company for the Option Shares sold by it and by each of
the Management Selling Shareholders for the Option Shares sold by them
against delivery of certificates therefor at the offices of Alex. Brown &
Sons Incorporated, 135 East Baltimore Street, Baltimore, Maryland. The
Company and the Management Selling Shareholders shall promptly reimburse
the Underwriters for the cost of same day funds.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the
public at the initial public offering price set forth in the Prospectus.
The Representatives may from time to time thereafter change the public
offering price and other selling terms. To the extent, if at all, that any
Option Shares
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are purchased pursuant to Section 2 hereof, the Underwriters will offer them to
the public on the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with
a Master Agreement Among Underwriters entered into by you and the several
other Underwriters.
4. COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule
430A of the Rules and Regulations is followed, to prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations a
Prospectus in a form approved by the Representatives containing information
previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations and (B) not
file any amendment to the Registration Statement or supplement to the
Prospectus of which the Representatives shall not previously have been
advised and furnished with a copy or to which the Representatives shall
have reasonably objected in writing or which is not in compliance with the
Rules and Regulations.
(ii) The Company will advise the Representatives promptly (A) when
the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission,
(C) of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, and (D) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of
the Prospectus or of the institution of any proceedings for that purpose.
The Company will use its best efforts to prevent the issuance of any such
stop order preventing or suspending the use of the Prospectus and to obtain
as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of
such
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jurisdictions as the Representatives 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 Representatives may reasonably
request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period
when delivery of a Prospectus is required under the Act, as many copies of
the Prospectus in final form, or as thereafter amended or supplemented, as
the Representatives may reasonably request. The Company will deliver to
the Representatives at or before the Closing Date, four signed copies of
the Registration Statement and all amendments thereto including all
exhibits filed therewith, and will deliver to the Representatives such
number of copies of the Registration Statement (including such number of
copies of the exhibits filed therewith that may reasonably be requested),
and of all amendments thereto, as the Representatives may reasonably
request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934 (the "Exchange Act"),
and the rules and regulations of the Commission thereunder, so as to permit
the completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus. If during the period in which a prospectus
is required by law to be delivered by an Underwriter or dealer, any event
shall occur as a result of which, in the judgment of the Company or in the
reasonable opinion of the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances existing at the time the Prospectus is delivered
to a purchaser, not misleading, or, if it is necessary at any time to amend
or supplement the Prospectus to comply with any law, the Company promptly
will prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the
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<PAGE>
Prospectus so that the Prospectus as so amended or supplemented will not,
in the light of the circumstances when it is so delivered, be misleading,
or so that the Prospectus will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later
than 15 months after the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail,
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earning statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations and will advise you in writing when such statement
has been so made available.
(vii) The Company will, for a period of five years from the Closing
Date, deliver to the Representatives 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 Representatives 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.
(viii) Except in connection with the issuance of shares of Common
Stock (i) to Lawrence J. Simon and William H. Smith upon the exercise of
certain rights as described in the Registration Statement, (ii) to holders
of the Noteholder Warrants (as defined in the Registration Statement) upon
the exercise of such Noteholder Warrants and (iii) to Daniel L. Simon,
Brian T. Clingen and Paul G. Simon pursuant to the Company's 1996 Warrant
Plan, no offering, sale, short sale or other disposition of any shares of
Common Stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of
Common Stock (or agreement for such) will be made for a period of 180 days
after the date of this Agreement, directly or indirectly, by the Company
otherwise than hereunder or with the prior written consent of Alex. Brown
& Sons Incorporated.
(ix) The Company will use its best efforts to list, subject to notice
of issuance, the Shares on The Nasdaq Stock Market.
(x) The Company has caused each officer and director and [identify
shareholders and warrantholders] of the Company to furnish to you, on or
prior to the date of this agreement, a letter or letters, in form and sub-
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<PAGE>
stance satisfactory to the Underwriters (the "Lockup Agreements"), pursuant
to which each such person shall agree not to offer, sell, sell short or
otherwise dispose of any shares of Common Stock of the Company or other
capital stock of the Company, or any other securities convertible,
exchangeable or exercisable for Common Shares or derivative of Common
Shares owned by such person or request the registration for the offer or
sale of any of the foregoing (or as to which such person has the right to
direct the disposition of) for a period of 180 days after the date of this
Agreement, directly or indirectly, except (i) with the prior written
consent of Alex. Brown & Sons Incorporated or (ii) with regard to the
Institutional Selling Shareholders, the foregoing restrictions shall not
apply to a distribution of the shares of Common Stock to its partners or to
the transfer to any affiliate of the Institutional Selling Shareholders or
to any other transferee in a private transaction not requiring registration
under the Securities Act of 1933, as amended, or to any bona fide pledge of
such shares of Common Stock, provided that such partner, affiliate or other
transferee and/or lender or creditor acknowledges in writing that it is
bound by the provisions of this Section 4(a)(x).
(xi) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Shares and the application of
the proceeds therefrom as may be required in accordance with Rule 463 under
the Act.
(xii) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares 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.
(xiii) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
(xiv) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of the price
of any securities of the Company.
17
<PAGE>
(xv) The Company will use its best efforts to consummate the
transactions contemplated by the Recapitalization Agreement including
without limitation the filing of the Amended Certificate with the Secretary
of State of the State of Delaware.
(b) Each of the Selling Shareholders covenants and agrees with the
several Underwriters that:
(i) No offering, sale, short sale or other disposition of any shares
of Common Stock of the Company or other capital stock of the Company or
other securities convertible, exchangeable or exercisable for Common Stock
or derivative of Common Stock owned by such Selling Shareholder or request
the registration for the offer or sale of any of the foregoing (or as to
which the Selling Shareholder has the right to direct the disposition of)
will be made for a period of 180 days after the date of this Agreement,
directly or indirectly, by such Selling Shareholder otherwise than
(i) hereunder, (ii) with the prior written consent of Alex. Brown & Sons
Incorporated or (iii) with regard to the Institutional Selling
Shareholders, in a distribution of shares of Common Stock to its partners
or by transfer to any affiliate of the Institutional Selling Shareholders
or to any other transferee in a private transaction not requiring
registration under the Securities Act of 1933, as amended, or by any bona
fide pledge of such shares of Common Stock, provided that such partner,
affiliate or other transferee and/or lender or creditor acknowledges in
writing that it is bound by the provisions of this Section 4(b)(i).
(ii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act
of 1983 with respect to the transactions herein contemplated, each of the
Selling Shareholders agrees to deliver to you prior to or at the Closing
Date a properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(iii) Such Selling Shareholder will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any securities of the Company.
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<PAGE>
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Sellers under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for
the Company and the Management Selling Shareholders; the cost of printing
and delivering to, or as requested by, the Underwriters copies of the
Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Selling Memorandum, the Underwriters'
Invitation Letter, the Listing Application, the Blue Sky Survey and any
supplements or amendments thereto; the filing fees of the Commission; the
filing fees and expenses (including legal fees and disbursements) incident
to securing any required review by the National Association of Securities
Dealers, Inc. (the "NASD") of the terms of the sale of the Shares; the
Listing Fee of the Nasdaq Stock Market; and the expenses, including the
fees and disbursements of counsel for the Underwriters, incurred in
connection with the qualification of the Shares under state securities or
Blue Sky laws. The Company shall not, however, be required to pay for any
of the Underwriters expenses (other than those related to qualification
under NASD regulation and state securities or Blue Sky laws) except that,
if this Agreement shall not be consummated because the conditions in
Section 6 hereof are not satisfied, or because this Agreement is terminated
by the Representatives pursuant to Section 11 hereof, or by reason of any
failure, refusal or inability on the part of the Company or the Selling
Shareholders to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on their part to be
performed, unless such failure to satisfy said condition or to comply with
said terms be due to the default or omission of any Underwriter, then the
Company shall reimburse the several Underwriters for reasonable out-of-
pocket expenses, including fees and disbursements of counsel, reasonably
incurred in connection with investigating, marketing and proposing to
market the Shares or in contemplation of performing their obligations
hereunder; but the Company and the Selling Shareholders shall not in any
event be liable to any of the several Underwriters for damages on account
of loss of anticipated profits from the sale by them of the Shares.
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<PAGE>
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the
Option Closing Date, as the case may be, of the representations and
warranties of the Company and the Selling Shareholders contained herein,
and to the performance by the Company and the Selling Shareholders of their
covenants and obligations hereunder and to the following additional
conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by
Rule 424 and Rule 430A of the Rules and Regulations shall have been made,
and any request of the Commission for additional information (to be
included in the Registration Statement or otherwise) shall have been
disclosed to the Representatives and complied with to their reasonable
satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceedings for that purpose shall have been taken or, to the
knowledge of the Company or the Selling Shareholders, shall be contemplated
by the Commission and no injunction, restraining order, or order of any
nature by a Federal or state court of competent jurisdiction shall have
been issued as of the Closing Date which would prevent the issuance of the
Shares.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Winston &
Strawn, counsel for the Company and the Management Selling Shareholders,
dated the Closing Date or the Option Closing Date, as the case may be,
addressed to the Underwriters to the effect that:
(i) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware, 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 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
20
<PAGE>
its business as described in the Registration Statement; the Company
and each of the Subsidiaries are duly qualified to transact business
in all jurisdictions in which the conduct of their business requires
such qualification, or in which the failure to qualify would have a
materially adverse effect upon the business of the Company and the
Subsidiaries taken as a whole; and the outstanding shares of capital
stock of each of the Subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable and are owned by
the Company or a Subsidiary; and, to the best of such counsel's
knowledge, the outstanding shares of capital stock of each of the
Subsidiaries is owned free and clear of all liens, encumbrances and
equities and claims except for the Existing Stock Pledges, and no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
any shares of capital stock or of ownership interests in the
Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Common Stock have been duly
authorized; the outstanding shares of the Company's Common Stock,
including the Shares to be sold by the Selling Shareholders, have been
duly authorized and validly issued and are fully paid and non-
assessable; all of the Shares conform to the description thereof
contained in the Prospectus; the certificates for the Shares, assuming
they are in the form filed with the Commission, are in due and proper
form; the shares of Common Stock, including the Option Shares, if any,
to be sold by the Company pursuant to this Agreement have been duly
authorized and will be validly issued, fully paid and non-assessable
when issued and paid for as contemplated by this Agreement; and no
preemptive rights of stockholders exist with respect to any of the
Shares or the issue or sale thereof.
(iii) Except as described in or contemplated by the Prospectus,
to the knowledge of such counsel, there are no outstanding securities
of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the
Company and there are no outstanding or authorized options, warrants
or rights of any character obligating
21
<PAGE>
the Company to issue any shares of its capital stock or any securities
convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in
the Prospectus, to the knowledge of such counsel, no holder of any
securities of the Company or any other person has the right,
contractual or otherwise, which has not been satisfied or effectively
waived, to cause the Company to sell or otherwise issue to them, or
to permit them to underwrite the sale of, any of the Shares or the
right to have any shares of Common Stock or other securities of the
Company included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require
registration under the Act of any shares of Common Stock or other
securities of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending
or threatened under the Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material
respects with the requirements of the Act and the applicable rules and
regulations thereunder (except that such counsel need express no
opinion as to the financial statements and related schedules therein).
(vi) The statements 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," "Management -- The 1996
Warrant Plan," "Description of Capital Stock," and "Shares Eligible
for Future Sale" in the Prospectus, insofar as such statements
constitute a summary of documents referred to therein or matters of
law, fairly summarize in all material respects the information called
for with respect to such documents and matters.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus
22
<PAGE>
which are not so filed or described as required, and such contracts
and documents as are summarized in the Registration Statement or the
Prospectus are fairly summarized in all material respects.
(viii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will
not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, the Certificate 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 may be bound.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution
and delivery of this Agreement and the consummation of the
transactions herein contemplated (other than as may be required by the
NASD or as required by state securities and Blue Sky laws as to which
such counsel need express no opinion) except such as have been
obtained or made, specifying the same.
(xii) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the
Prospectus, required to register as an investment company under the
1940 Act.
(xiii) To the knowledge of such counsel, the execution and
delivery of this Agreement and the consummation of the sale of Shares
by each Management Selling Shareholder as herein contemplated do not
conflict with or result in a breach of any terms or provisions of, or
constitute a default under, any agreement or
23
<PAGE>
instrument to which such Selling Shareholder is a party or by which
such Selling Shareholder may be bound.
(xiv) No approval, consent, order or permit by or with any
regulatory, administrative or other governmental body is necessary in
connection with the execution and delivery of this Agreement and the
consummation of the sale of Shares by any Management Selling
Shareholder as herein contemplated (other than as may be required by
Federal or state securities and Blue Sky laws or for clearance of the
offering with the NASD, as to which counsel need express no opinion).
(xv) Each Management Selling Shareholder has the full legal
right, power and authority to sell, assign, transfer and deliver the
Shares to be sold by such Management Selling Shareholder.
(xvi) This Agreement has been duly executed and delivered by
each Management Selling Shareholder.
(xvii) Upon delivery and payment for the Shares to be sold by
the Management Selling Shareholders at the Option Closing Date as
provided for herein, the Underwriters will have acquired good and
valid title to the Shares so transferred, free and clear of all liens,
encumbrances, equities and claims (assuming that the Underwriters are
without notice of adverse claims, as defined in the Uniform Commercial
Code, and are otherwise bona fide purchasers for purposes of the
Uniform Commercial Code).
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that no facts have come to the attention
of such counsel which led them to believe that (i) the Registration
Statement, at the time it became effective under the Act (but after giving
effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and (ii) the Prospectus, or
any supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a mate-
24
<PAGE>
rial fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Winston
& Strawn may state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
The Representatives shall also have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of local counsel
for the Company experienced in such matters in Jacksonville, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to
the Underwriters to the effect that the statements under the caption
"Business-Government Regulation," insofar as such statements constitute a
summary of regulatory matters in such jurisdiction relating to the outdoor
advertising industry, fairly describe the regulatory matters relating to
such industry.
(c) The Representatives shall have received on the Closing Date the
opinion of James J. Connors, II, counsel for the Investor Selling
Shareholders, dated the Closing Date, addressed to the Underwriters to the
effect that:
(i) Each Investor Selling Shareholder has been duly formed and
is validly existing as a limited partnership under the laws of the
State of Delaware.
(ii) The execution and delivery of this Agreement and the
consummation of the sale of Shares by each Investor Selling
Shareholder as herein contemplated do not conflict with or result in a
breach of any terms or provisions of, or constitute a default under,
the partnership agreement of such Selling Shareholder, or any
agreement or instrument to which such Selling Shareholder is a party
or by which such Selling Shareholder may be bound.
(iii) No approval, consent, order or permit by or with any
regulatory, administrative or other governmental body is necessary in
connection with the execution and delivery of this Agreement and the
consummation of the sale of Shares by any Investor Selling Shareholder
as herein contemplated (other than as may be required by Federal or
state securities and Blue Sky laws or for clearance of
25
<PAGE>
the offering with the NASD, as to which counsel need express no
opinion).
(iv) Each Investor Selling Shareholder has the power under the
Delaware Revised Uniform Limited Partnership Act and its partnership
agreement to sell, assign, transfer and deliver the Shares to be sold
by such Selling Shareholder and such sale, assignment, transfer and
delivery has been duly authorized by all necessary actions under the
Delaware Revised Uniform Limited Partnership Act and its partnership
agreement.
(v) This Agreement has been duly executed and delivered by each
Investor Selling Shareholder.
(vi) Upon delivery and payment for the Shares to be sold by the
Investor Selling Shareholders at the Closing Date as provided for
herein, the Underwriters will have acquired good and valid title to
the Shares so transferred, free and clear of all liens, encumbrances,
equities and claims (assuming that the Underwriters are without notice
of adverse claims, as defined in the Uniform Commercial Code, and are
otherwise bona fide purchasers for purposes of the Uniform Commercial
Code).
(d) The Representatives shall have received from Skadden, Arps,
Slate, Meagher & Flom, counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, as to such
matters as the Representatives may reasonably require. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads
them to believe that (i) the Registration Statement, or any amendment
thereto, as of the time it became effective under the Act (but after giving
effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) the Prospectus, or any
supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact, necessary in order to make the statements, in the
26
<PAGE>
light of the circumstances under which they are made, not misleading
(except that such counsel need express no view as to financial statements,
schedules and statistical information therein). With respect to such
statement, Skadden, Arps, Slate, Meagher & Flom may state that their belief
is based upon the procedures set forth therein, but is without independent
check and verification.
(e) The Representatives shall have received at or prior to the
Closing Date from Skadden, Arps, Slate, Meagher & Flom a memorandum or
summary, in form and substance satisfactory to the Representatives, with
respect to the qualification for offering and sale by the Underwriters of
the Shares under the state securities or Blue Sky laws of such
jurisdictions as the Representatives may reasonably have designated to the
Company.
(f) The Representatives shall have received, on each of the dates
hereof, the Closing Date and the Option Closing Date, as the case may be,
letters dated the date hereof, the Closing Date or the Option Closing Date,
as the case may be, in form and substance satisfactory to you, of Price
Waterhouse LLP and Ernst & Young LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating that in their
opinion the financial statements and schedules examined by them and
included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations; and containing such other
statements and information as is ordinarily included in accountants'
"comfort letters" to Underwriters with respect to the financial statements
and certain financial and statistical information contained in the
Registration Statement and Prospectus.
(g) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, 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 or the
Option Closing Date, as the case may be, each of them severally represents
as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the
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<PAGE>
Registration Statement has been issued, and no proceedings for such
purpose have been taken or are, to his knowledge, contemplated by the
Commission;
(ii) The representations and warranties of the Company contained
in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
(iv) He has carefully examined the Registration Statement and
the Prospectus and, in his opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and
Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, and since the effective date of the Registration
Statement, no event has occurred which should have been set forth in a
supplement to or an amendment of the Prospectus which has not been so
set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given
in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective
material adverse change in or affecting the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole or the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole, whether or not arising
in the ordinary course of business.
(h) The Company and the Selling Shareholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein
and related matters as the Representatives may reasonably have requested.
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<PAGE>
(i) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq Stock Market.
(j) The Lockup Agreements are in full force and effect.
(k) The transactions contemplated by the Recapitalization Agreement
shall have been consummated, including without limitation the filing of the
Amended Certificate with the Secretary of State of the State of Delaware,
and the Amended Certificate shall have become effective.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in
all material respects satisfactory to the Representatives and to Skadden,
Arps, Slate, Meagher & Flom, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representatives by notifying the Company and the Selling
Shareholders of such termination in writing or by telegram at or prior to
the Closing Date or the Option Closing Date, as the case may be.
In such event, the Selling Shareholders, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
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the meaning of the Act, against any losses, claims, damages or liabilities
to which such Underwriter or any such controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii)
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; and will reimburse each Underwriter and each such controlling
person upon demand for any legal or other expenses reasonably incurred by
such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Shares, whether or not such Underwriter or
controlling person is a party to any action or proceeding; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or such amendment or supplement, in reliance
upon and in conformity with written information furnished to the Company by
or through the Representatives specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Selling Shareholder severally agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act against any losses, claims,
damages or liabilities to which such Underwriter or such controlling person
may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) 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, and will reimburse each Underwriter
and each such controlling person upon demand for any legal or other
expenses reasonably incurred by such Underwriter or such controlling
30
<PAGE>
person in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding or in response to a subpoena or
governmental inquiry relating to the offering of the Shares, whether or not
such Underwriter or controlling person is a party to any action or
proceeding; provided, however, that the Selling Shareholder (i) will be
liable in each such case to the extent, but only to the extent, any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission made
in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company or the Representatives by or
on behalf of such Selling Shareholder specifically for use in the
preparation thereof and (ii) will not be liable for any amount in excess of
the proceeds received by such Selling Shareholder from the Underwriters in
the offering net of underwriting discounts and commissions. This indemnity
agreement will be in addition to any liability which such Selling
Shareholder may otherwise have.
(c) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement, the Selling Shareholders, and each
person, if any, who controls the Company or the Selling Shareholders within
the meaning of the Act, against any losses, claims, damages or liabilities
to which the Company or any such director, officer, Selling Shareholder or
controlling person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, or (ii) the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any legal or
other expenses reasonably incurred by the Company or any such director,
officer, Selling Shareholder or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action
or proceeding; provided, however, that each Underwriter will be liable in
each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission has been made
in the Registration Statement, any Preliminary Pro-
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<PAGE>
spectus, the Prospectus or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by or
through the Representatives specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any liability
which such Underwriter may otherwise have.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to this Section 8, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought
(the "indemnifying party") in writing. No indemnification provided for in
Section 8(a), (b) or (c) shall be available to any party who shall fail to
give notice as provided in this Section 8(d) if the party to whom notice
was not given was unaware of the proceeding to which such notice would have
related and was materially prejudiced by the failure to give such notice,
but the failure to give such notice shall not relieve the indemnifying
party or parties from any liability which it or they may have to the
indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a), (b) or (c). In case any such proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified
party and shall pay as incurred the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred
(or within 30 days of presentation) the fees and expenses of the counsel
retained by the indemnified party in the event (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them
or (iii) the indemnifying party shall have failed to assume the defense and
employ counsel acceptable to the indemnified party within a reasonable
period of time after notice of commencement of the action. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for
the
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<PAGE>
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in
the case of parties indemnified pursuant to Section 8(a) or (b) and by the
Company and the Selling Shareholders in the case of parties indemnified
pursuant to Section 8(c). The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. In addition, the indemnifying party will not, without the prior
written consent of the indemnified party, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action or
proceeding of which indemnification may be sought hereunder (whether or not
any indemnified party is an actual or potential party to such claim, action
or proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action or proceeding.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) in
such proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however,
the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute
to such amount paid or payable by such indemnified party in such proportion
as is appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Shareholders on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities,
(or actions or proceedings in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Selling Shareholders on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Company
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<PAGE>
and the Selling Shareholders bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Selling Shareholders on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. Notwithstanding the foregoing, no Selling Shareholder shall be
obligated to make contributions hereunder which in the aggregate exceed the
amount for which it would have been liable pursuant to Section 8(b) had
indemnification been available thereunder.
The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this
Section 8(e) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section 8(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) referred to
above in this Section 8(e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, (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, and (iii) no
Selling Shareholder shall be required to contribute any amount in excess of
the proceeds received by such Selling Shareholder from the Underwriters in
the offering. The Underwriters' obligations in this Section 8(e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this
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<PAGE>
Section 8 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process issuing
from such court may be served upon him or it by any other contributing
party and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any
such proceeding in which such other contributing party is a party.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, to the Selling Shareholders or to the
Company, its directors or officers, or any person controlling the Company,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such
date (otherwise than by reason of any default on the part of the Company or
a Selling Shareholder), you, as Representatives of the Underwriters, shall
use your reasonable efforts to procure within 36 hours thereafter one or
more of the other Underwriters, or any others, to purchase from the Company
and the Selling Shareholders such amounts as may be agreed upon and upon
the terms set forth herein, the Firm Shares or Option Shares, as the case
may be, which the defaulting Underwriter or Underwriters failed to
purchase. If during such 36 hours you, as such Representatives, shall not
have procured such other Underwriters, or any others, to purchase the Firm
Shares or Option Shares, as the case may be, agreed to be purchased by the
defaulting Underwriter or Underwriters, then (a) if the aggregate number of
shares with respect to which such
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<PAGE>
default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm
Shares or Option Shares, as the case may be, which they are obligated to
purchase hereunder, to purchase the Firm Shares or Option Shares, as the
case may be, which such defaulting Underwriter or Underwriters failed to
purchase, or (b) if the aggregate number of shares of Firm Shares or Option
Shares, as the case may be, with respect to which such default shall occur
exceeds 10% of the Firm Shares or Option Shares, as the case may be,
covered hereby, the Company and the Selling Shareholders or you as the
Representatives of the Underwriters will have the right, by written notice
given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-
defaulting Underwriters or of the Company or of the Selling Shareholders
except to the extent provided in Section 8 hereof. In the event of a
default by any Underwriter or Underwriters, as set forth in this Section 9,
the Closing Date or Option Closing Date, as the case may be, may be
postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this
Section 9 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to Alex.
Brown & Sons Incorporated, 135 East Baltimore Street, Baltimore, Maryland
21202, Attention: ____________; with a copy to Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202.
Attention: General Counsel; if to the Company or the Management Selling
Shareholders, to Universal Outdoor Holdings, Inc., 321 Clark Street, Suite
1010, Chicago, Illinois 60610, Attention: General Counsel; and if to the
Investor Selling Shareholders, c/o Kelso & Company, 350 Park Avenue, 21st
Floor, New York, New York 10022, Attention: General Counsel.
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<PAGE>
11. TERMINATION.
This Agreement may be terminated by you by notice to the Sellers as
follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m.
on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change
in or affecting the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries taken as a whole, whether or not arising in
the ordinary course of business, (ii) any outbreak or escalation of
hostilities or declaration of war or national emergency or other national
or international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the
United States would, in your reasonable judgment, make it impracticable to
market the Shares or to enforce contracts for the sale of the Shares, or
(iii) suspension of trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on
either such Exchange, (iv) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in your opinion materially and adversely
affects or may materially and adversely affect the business or operations
of the Company, (v) declaration of a banking moratorium by United States or
New York State authorities, (vi) any downgrading in the rating of the
Company's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Exchange
Act); (vii) the suspension of trading of the Company's Common Stock by the
Commission on the Nasdaq National Market or (viii) the taking of any action
by any governmental body or agency in respect of its monetary or fiscal
affairs which in your reasonable opinion has a material adverse effect on
the securities markets in the United States; or
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<PAGE>
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Shareholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person
will have any right or obligation hereunder. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign merely
because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS AND SELLING SHAREHOLDERS.
The Company, the Selling Shareholders and the Underwriters acknowledge
and agree that the only information furnished or to be furnished by any
Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to
the Underwriters), legends required by Item 502(d) of Regulation S-K under
the Act and the information under the caption "Underwriting" in the
Prospectus and that the only information furnished or to be furnished by
any Selling Shareholder to the Company for inclusion in any Prospectus or
Registration Statement consists of the information set forth with respect
to such Selling Shareholder under the caption "Principal and Selling
Stockholders" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation
made by or on behalf of any Underwriter or controlling person thereof, or
by or on behalf of the Company or its directors or officers and (c)
delivery of and payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
39
<PAGE>
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Shareholders, the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
UNIVERSAL OUTDOOR
HOLDINGS, INC.
By: ______________________________________________
President and Chief Executive Officer
KELSO INVESTMENT
ASSOCIATES V, L.P.
By: ______________________________________________
General Partner
KELSO EQUITY PARTNERS V, L.P.
By: ______________________________________________
General Partner
__________________________________________________
Daniel L. Simon
__________________________________________________
Brian T. Clingen
40
<PAGE>
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
ALEX. BROWN & SONS INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
As Representatives of the several
Underwriters listed on Schedule I
By: ALEX. BROWN & SONS INCORPORATED
By: ______________________________________
Authorized Officer
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<PAGE>
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
------------ ---------------------
Alex. Brown & Sons Incorporated
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette
Securities Corporation
-----------
Total 6,200,000
---------
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<PAGE>
SCHEDULE II
SCHEDULE OF INVESTOR SELLING SHAREHOLDERS
Number of Firm Shares
Selling Shareholder to be Sold
------------------- ---------------------
Kelso Investment Associates V, L.P.
Kelso Equity Partners V, L.P.
-----------
Total 2,500,000
----------
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<PAGE>
SCHEDULE III
SCHEDULE OF OPTION SHARES
Maximum Number of Percentage Of Total Number
Selling Shareholder Option Shares to be Sold of Option Shares
The Company 730,000 78.5%
Daniel Simon
Brian T. Clingen
------- ---------
Total 930,000 100%
------- -----
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AGREEMENT AND PLAN OF RECAPITALIZATION
This Agreement and Plan of Recapitalization (the "Agreement") is made
and entered into as of July [ ], 1996 between Universal Outdoor Holdings, Inc.,
a Delaware corporation (the "Company"), Kelso Investment Associates V, L.P., a
Delaware limited partnership ("KIA V"), Kelso Equity Partners V, L.P., a
Delaware limited partnership ("KEP V") and certain stockholders of the Company
listed on the signature pages hereto (each, an "Individual Stockholder," and
collectively, the "Stockholders").
WHEREAS, pursuant to a Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of April 5, 1996, among the Company, KIA V, and KEP V, the
Company, among other things, issued and sold certain shares of Class B Common
Stock, par value $.01 per share, of the Company (the "Class B Common Stock") and
Class C Common Stock, par value $.01 per share, of the Company (the "Class C
Common Stock") to KIA V and KEP V in the amounts set forth in Schedule 1, in
each case having the terms set forth in the Second Amended and Restated
Certificate of Incorporation of the Company (the "Certificate"); and
WHEREAS, pursuant to certain Stock Subscription Agreements executed by
the Company and each Individual Stockholder, each dated as of April 5, 1996, the
Company issued and sold shares of Class C Common Stock to such Individual
Stockholder in the amounts set forth in Schedule 1; and
WHEREAS, the Company is presently contemplating an initial public
offering of certain of its equity securities (the "Offering") and, in connection
therewith, intends to amend the Certificate to provide for, among other things,
the recapitalization of the capital structure of the Company such that the total
number of shares of capital stock which the Company shall have authority to
issue shall be 75,000,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), and 10,000,000 shares of Preferred Stock, par value $.01 per
share as reflected in the Third Amended and Restated Certificate of
Incorporation of the Company (the "Amended Certificate"), a copy of which is
attached hereto as Exhibit A; and
<PAGE>
WHEREAS, in connection with the Offering, the Company, KIA V, KEP V
and each Individual Stockholder hereby agree that the Company shall reclassify
each share of Class B Common Stock and Class C Common Stock into one share of
Common Stock (all such shares of Common Stock to be so reclassified being
collectively referred to herein as the "Shares") and shall immediately
thereafter authorize a 16 for 1 split of each share of Common Stock, and the
Company, KIA V, KEP V and certain other parties who are signatories thereto
further agree to enter into a Registration Rights Agreement (the "Registration
Rights Agreement") providing for certain registration rights in connection with
the Shares.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties herein contained, the Company, KIA V, KEP V and
each Individual Stockholder hereby agree as follows:
1. THE RECAPITALIZATION.
(a) AMENDED CERTIFICATE. Pursuant to Section 242 of the General
Corporation Law of the State of Delaware (the "DGCL"), on the Closing Date (as
defined herein), the Company will file the Amended Certificate with the
Secretary of State of the State of Delaware. Except as otherwise provided
herein, the transactions contemplated by this Agreement shall become effective
at such time as the Amended Certificate is duly filed with the Secretary of
State of the State of Delaware or at such later time as may be mutually agreed
upon by the Company and KIA V (the "Effective Time").
(b) RECLASSIFICATION OF SHARES. At the Effective Time, each
share of Class B Common Stock and each share of Class C Common Stock outstanding
immediately prior to the Effective Time shall, without any further action on the
part of the holder thereof, be reclassified as one share of Common Stock having
the powers and privileges described in the Amended Certificate.
(c) BYLAWS. As of the Effective Time, the bylaws of the Company
in effect immediately prior to the Effective Time shall be amended and restated
in accordance with applicable law and the Amended Certificate, in form and
substance as set forth in Exhibit B attached hereto.
2
<PAGE>
(d) OTHER ACTIONS. Prior to the Effective Time, the Board of
Directors of the Company (the "Board") shall take any action necessary to
effectuate the transactions contemplated by this Agreement including without
limitation authorizing the amendment and restatement of the Certificate and the
existing bylaws of the Company and the reclassification of Class B Common Stock
and Class C Common Stock into Common Stock as set forth in Section 1(b) hereof.
2. CLOSING.
(a) TIME AND PLACE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall, subject to the satisfaction or, if
permissible, waiver of all of the conditions set forth in Section 5 hereof, be
on the same date (the "Closing Date") and at the same place of the closing of
and the consummation of the transactions contemplated by the Offering, occurring
substantially concurrent with such closing. The Closing shall be deemed to have
occurred immediately prior to the closing of the Offering.
(b) DELIVERY BY THE COMPANY. At the Closing, the Company will
deliver stock certificates representing the Shares to be reclassified pursuant
to Section 1 hereof registered in the name of the appropriate entity set forth
on Schedule 1.
(c) DELIVERIES BY KIA V, KEP V AND THE STOCKHOLDERS. At the Closing,
each of KIA V, KEP V and each Individual Stockholder will deliver stock
certificates representing the shares of Class B Common Stock and Class C Common
Stock held by such parties as set forth on Schedule 1.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of KIA V, KEP V and each Individual Stockholder
as of the date hereof, and as of the Closing Date, as follows:
(a) CORPORATE FORM. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own or lease and operate
its properties and to carry on its business as now conducted.
3
<PAGE>
(b) CORPORATE AUTHORITY. The Company has all requisite power and
authority to enter into and perform all of its obligations under this Agreement
and to carry out the transactions contemplated hereby.
(c) ACTIONS AUTHORIZED. The Company has taken all corporate actions
necessary to authorize it to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Company and constitutes
a legal, valid and binding obligation of the Company enforceable in accordance
with its terms. The Board has unanimously approved this Agreement and the
transactions contemplated hereby including without limitation the amendment and
restatement of the Certificate as contemplated by the Amended Certificate and
the amendment and restatement of the bylaws of the Company as contemplated by
Section 1(c) hereof.
(d) REQUIRED FILINGS AND APPROVALS. The execution and delivery of
this Agreement by the Company and the consummation of the transactions
contemplated hereby by the Company do not require a consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority on the part of the Company other than the filing of the
Amended Certificate with the Secretary of State of the State of Delaware. The
only approvals of shareholders of the Company required in connection with the
transactions contemplated hereby are the approvals set forth in Section 6(b)
hereof and the approval of (i) holders of a majority of the outstanding shares
of the existing common stock, par value $.01 per share, of the Company (the
"Existing Common Stock"), voting separately as a class, to the amendment and
restatement of the Certificate as contemplated by the Amended Certificate, (ii)
holders more than 80% of the outstanding shares of Existing Common Stock and
Class B Common Stock, voting together as a single class, to the amendment and
restatement of the Certificate as contemplated by the Amended Certificate and to
the amendment and restatement of the bylaws of the Company as contemplated by
Section 1(c) hereof, and (iii) holders of a majority of the outstanding shares
of Existing Common Stock and Class B Common Stock, voting togeth-
4
<PAGE>
er as a single class, to the amendments to the Company's 1996 Warrant Plan,
adopted by the Board on April 5, 1996, described in the Form S-1 Registration
Statement filed by the Company with the Securities and Exchange Commission on
June [ ], 1996 in connection therewith (the "Form S-1").
(e) NO CONFLICTS. None of the execution, delivery or performance of
this Agreement by the Company will conflict with the Certificate, the Amended
Certificate or the bylaws of the Company as in effect on the date hereof and as
in effect (following amendment thereto) as of the Closing, or result in any
material breach of, or constitute a material default under any material
contract, agreement or instrument to which the Company is a party or by which it
or any of its assets is bound.
4. REPRESENTATIONS AND WARRANTIES OF KIA V, KEP V AND THE
STOCKHOLDERS. Each of KIA V, KEP V and each Individual Stockholder (solely as
to itself, himself or herself) represents and warrants to the Company as of the
date hereof, and as of the Closing Date, as follows:
(a) FORM. KIA V is a limited partnership duly organized under the
laws of the State of Delaware and KEP V is a limited partnership duly organized
under the laws of the State of Delaware. Each of KIA V and KEP V has full
authority to conduct its business as it is now being conducted.
(b) AUTHORITY. Each of KIA V and KEP V has full authority to enter
into and perform all of its respective obligations under this Agreement and to
carry out the transactions contemplated hereby.
(c) ACTIONS AUTHORIZED. Each of KIA V and KEP V has taken all
actions necessary to authorize it to enter into and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of KIA
V, KEP V and each Individual Stockholder and constitutes a legal, valid and
binding obligation of such party enforceable in accordance with its terms.
(d) OWNERSHIP OF SHARES. Each of KIA V and KEP V is the lawful owner
of and has full authority to
5
<PAGE>
own the shares of Class B Common Stock and Class C Common Stock owned by it as
set forth on Schedule 1 and, as of the Closing Date, has good title thereto,
free and clear of all liens, claims, restrictions, limitations, security
interests and encumbrances of any kind. Each Individual Shareholder is the
lawful owner of and has full authority to own the shares of Class C Common Stock
owned by him or her as set forth on Schedule 1 and, as of the Closing Date, has
good title thereto, free and clear of all liens, claims, restrictions,
limitations, security interests and encumbrances of any kind.
5. CONDITIONS TO THE OBLIGATIONS OF KIA V, KEP V AND THE
STOCKHOLDERS. The obligations of KIA V, KEP V and the Stockholders to
consummate the transactions contemplated hereby shall be subject to the
fulfillment or written waiver by KIA V at or prior to the Closing of each of the
following conditions:
(a) REGISTRATION RIGHTS AGREEMENT. The Company shall have executed
and delivered to KIA V and KEP V the Registration Rights Agreement.
(b) OFFERING. The Offering shall, substantially concurrently with
the transactions contemplated hereby, have been consummated in accordance with
the terms and provisions set forth in the Form S-1.
(c) SHAREHOLDER APPROVAL. The Company shall have obtained the
approval of shareholders of the Company as set forth in Section 4(d) hereof.
6. ADDITIONAL AGREEMENTS.
(a) NOMINATING RIGHTS. From and after the date hereof, (i) for as
long as KIA V, KEP V and the Individual Stockholders shall beneficially own, in
the aggregate, more than 10% of the outstanding shares of Common Stock, in
connection with each meeting of shareholders of the Company at which the Company
is to elect Class I Directors to its Board or with any action taken by written
consent of shareholders of the Company pursuant to which the Company is to elect
Class I Directors to its Board, the Company hereby grants, and shall take any
corporate and other action as is necessary to grant, KIA V the right to nominate
one person for a seat as a Class I Director on the Board to be voted upon by the
share-
6
<PAGE>
holders of the Company (the "Class I Nominee"), and (ii) for as long as KIA V,
KEP V and the Individual Stockholders shall beneficially own, in the aggregate,
more than 5% of the outstanding shares of Common Stock, in connection with each
meeting of shareholders of the Company at which the Company is to elect Class
III Directors to its Board or with any action taken by written consent of
shareholders of the Company pursuant to which the Company is to elect Class III
Directors to its Board, the Company hereby grants, and shall take any corporate
and other action as is necessary to grant, KIA V the right to nominate one
person for a seat as a Class III Director on the Board to be voted upon by the
shareholders of the Company (collectively with the Class I Nominee, the
"Nominees"). In order to effect the foregoing, prior to any meeting of
shareholders of the Company at which directors shall be elected and prior to any
solicitation of shareholder consent to the election of directors to the Board
(and prior to the mailing of any proxy materials in connection therewith), the
Company shall notify KIA V of such meeting or such solicitation and the intended
date of approval of nominees by the Board and the mailing of proxy materials in
connection therewith. The notice to KIA V shall be adequate such that KIA V may
properly nominate such Nominees in accordance with the applicable terms of the
Certificate (and after the Closing, the Amended Certificate) and bylaws of the
Company as in effect at the particular time. The Company shall include such
Nominees in any such proxy materials and shall recommend that the shareholders
of the Company vote in favor of such Nominees as directors. The Company shall
not change, alter, modify or withdraw any such recommendation without the prior
written consent of KIA V. The Company further agrees and shall take any
corporate and other action as is necessary so that one of such Nominees, if
elected as a director of the Company, shall be appointed to be a member of the
Compensation Committee of the Board.
(b) CLASS B COMMON STOCK AND CLASS C COMMON STOCK SHAREHOLDER
APPROVAL. In accordance with the provisions of paragraph FOURTH, sub-paragraph
F of the Certificate with respect to obtaining the approval of holders of a
majority of outstanding shares of each class of capital stock of the Company to
certain amendments to the Certificate (including the approval of any class of
shareholders affected by any such amendment) and, in lieu
7
<PAGE>
of a meeting of holders of such shares as authorized pursuant to Section 228 of
the DGCL, (i) KIA V and KEP V, as holders of all of the outstanding shares of
Class B Common Stock, hereby consent as the class of Class B Common Stock
holders to the amendment and restatement of the Certificate as contemplated by
the Amended Certificate, and (ii) KIA V, KEP V and each Individual Stockholder,
as holders of all of the outstanding shares of Class C Common Stock, hereby
consent as the class of Class C Common Stock holders to the amendment and
restatement of the Certificate as contemplated by the Amended Certificate.
(c) SHAREHOLDER APPROVAL. Prior to the Closing Date, the Company
hereby agrees to seek, and each of the parties hereto hereby agree to use their
best efforts to obtain, the approval of shareholders of the Company set forth in
Section 4(d).
(d) UNIVERSAL CERTIFICATE OF INCORPORATION AND BYLAWS. The Company
shall take such action as is necessary to amend and restate the Second Amended
Certificate of Incorporation and bylaws of Universal to reflect the transactions
contemplated by this Agreement including without limitation (i) the increase in
authorized shares of Common Stock and Preferred Stock as set forth in the
Amended Certificate, (ii) the reclassification of Class B Common Stock and Class
C Common Stock into Common Stock, and (iii) the amendment and restatement of the
Certificate. The Company shall also take such action as is necessary to amend
and restate the Second Amended Certificate of Incorporation and bylaws of
Universal and any further action as is necessary as the sole shareholder of
Universal such that the directors on the board of directors of Universal shall
at all times be identical to the directors on the Board, and such provisions
shall remain in effect for as long as KIA V, KEP V and the Individual
Stockholders shall beneficially own, in the aggregate more than 10% of the
outstanding shares of Common Stock,.
(e) STOCK SPLIT. Substantially concurrently with the Effective Time,
the Company shall take such action as is necessary to effectuate a 16 for 1
split of each share of the Common Stock as set forth in the Form S-1, such
action to be deemed to have occurred immediately following the Effective Time.
8
<PAGE>
(f) FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
If at any time after the Closing any further action is necessary or desirable to
carry out the purposes of this Agreement, the parties hereto shall, take or
cause to be taken all such necessary action, including, without limitation, the
execution and delivery of such further instruments and documents as may be
reasonably requested by any party for such purposes or otherwise to consummate
and make effective the transactions contemplated hereby.
7. MISCELLANEOUS.
(a) BINDING EFFECT; BENEFITS. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to this
Agreement and their respective successors or permitted assigns any legal or
equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
(b) WAIVER. Any party hereto may by written notice to each other
party (i) extend the time for the performance of any of the obligations or other
actions of the other parties under this Agreement; (ii) waive compliance with
any of the conditions or covenants of the other parties contained in this
Agreement; and (iii) waive or modify performance of any of the obligations of
the other parties under this Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privi-
9
<PAGE>
lege hereunder shall be deemed a waiver of such party's rights or privileges
hereunder or shall be deemed a waiver of such party's rights to exercise the
same at any subsequent time or times hereunder.
(c) AMENDMENTS. Neither this Agreement nor any term or provision
hereof may be amended, modified, waived or supplemented orally, but only by a
written instrument executed by the parties hereto.
(d) ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by any party to this Agreement without the prior written consent of
the other parties to this Agreement.
(e) APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, regardless of the
law that might be applied under principles of conflicts of law.
(f) SEVERABILITY. If any provision of this Agreement, or the
application of such provisions to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
(g) TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(i) by mutual consent in writing of the Company and KIA V; or
(ii) by either the Company or KIA V if the Offering has not been
consummated by September 30, 1996.
In the event that this Agreement shall be terminated pursuant to this Section
7(g), all further obligations of the parties under this Agreement shall
terminate without further liability of any party hereunder to any other party
hereunder.
(h) NOTICE. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if
10
<PAGE>
delivered personally, telecopied (which is confirmed) or sent by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses:
If to the Company to:
Universal Outdoor Holdings, Inc.
321 North Clark Street
Suite 1010
Chicago, Illinois 60610
Attention: Paul G. Simon, Esq.
Telecopy: (312) 664-8371
If to KIA V, KEP V or any Stockholder:
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Attention: James J. Connnors II, Esq.
Telecopy: (212) 223-2379
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
(i) FEES AND EXPENSES. The Company shall pay all fees and expenses in
connection with the transactions contemplated hereby including without
limitation any stamp or transfer taxes and any similar duties or charges.
(j) COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Company, KIA V, KEP V and the Stockholders
have executed this Agreement as of the date first above written.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By:
------------------------------
Name:
Title:
KELSO INVESTMENT ASSOCIATES V, L.P.
By:
------------------------------
Name:
Title:
Date:
KELSO EQUITY PARTNERS V, L.P.
By:
------------------------------
Name:
Title:
Date:
STOCKHOLDERS
---------------------------------
William A. Marquard
Date:
---------------------------------
David M. Roderick
Date:
---------------------------------
Michel Rapoport
Date:
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<PAGE>
---------------------------------
George L. Shinn
Date:
---------------------------------
Patricia Hetter Kelso
Date:
---------------------------------
John F. McGillicuddy
Date:
---------------------------------
John Rutledge
Date:
13
<PAGE>
Schedule 1
Common Stock
Class B Class C (following 16 for
Entity Common Stock Common Stock Common Stock 1 Stock Split)
- ------ ------------ ------------ ------------ --------------
KIA V 176,253 172,487 348,740 5,579,840
KEP V 10,247 10,138 20,385 326,160
William A. Marquard 0 625 625 10,000
David M. Roderick 0 1,250 1,250 20,000
Michel Rapoport 0 1,875 1,875 30,000
George L. Shinn 0 250 250 4,000
Patricia Hetter Kelso 0 937.5 937.5 15,000
John F. McGillicuddy 0 625 625 10,000
John Rutledge 0 312.5 312.5 5,000
Total 186,500 188,500 375,000 6,000,000
14
<PAGE>
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
UNIVERSAL OUTDOOR HOLDINGS, INC.
ARTICLE 1
The name of the Corporation is:
UNIVERSAL OUTDOOR HOLDINGS, INC.
ARTICLE 2
The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at that address is Corporation
Service Company.
ARTICLE 3
The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law (the "DELAWARE LAW").
ARTICLE 4
4.1 The total number of shares of stock which the Corporation shall
have authority to issue is 75,000,000 shares of Common Stock, having a par
value of $.01 per share (the "COMMON STOCK"), and 10,000,000 shares of
Preferred Stock, having a par value of $.01 per share (the "PREFERRED
STOCK"). Upon effectiveness of this Third Amended and Restated Certificate
of Incorporation, (i) each share of Class B Common Stock and Class C Common
Stock heretofore authorized, issued and outstanding shall be reclassified
into one share of Common Stock and all authorized shares of Class B Common
Stock and Class C Common Stock shall cease to be authorized and (ii) each
share of Common Stock of the Corporation then issued and outstanding shall be
split into sixteen (16) shares of Common Stock; provided, that no fractional
shares shall be issued as a result of such split, and in lieu thereof all
fractional share interests shall be rounded up to the nearest whole share.
4.2 Each holder of record of shares of the Common Stock shall be
entitled to vote at all meetings of the stockholders and shall have one (1) vote
for each share held by him of record.
4.3 Subject to all of the rights of the holders of all classes or
series of stock at the time outstanding having prior rights as to dividends, the
holders of the Common Stock shall be entitled to receive dividends at such times
and in such amounts as may be determined by the Board of Directors of the
Corporation.
<PAGE>
4.4 The Board of Directors is expressly authorized to provide for the
issuance of all or any shares of the Preferred Stock in one or more classes or
series, and to fix for each such class or series such voting powers, full or
limited, or no voting powers, and such distinctive designations, preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the Delaware Law.
4.5 In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Common Stock
shall be entitled, after payment or provision for payment of the debts and other
liabilities of the Corporation and the amount to which the holders of any class
or series of the Preferred Stock shall be entitled, to share ratably in the
remaining net assets of the Corporation.
ARTICLE 5
The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(a) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(b) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(c) The number of directors of the Corporation shall be not less than
three (3) nor more than nine (9) and shall be fixed in accordance with the
By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
(d) The directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Each class shall consist,
as nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. At each annual meeting of the
stockholders, successors to the class of directors whose term expires at
the annual meeting shall be elected for a three-year term. The initial
term of the Class I directors shall expire at the 1997 annual meeting of
the stockholders; the initial term of the Class II directors shall expire
at the 1998 annual meeting of the stockholders; and the initial term of the
Class III directors shall expire at the 1999 annual meeting of the
stockholders. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the
number of directors in each class as nearly as equal as possible, but in no
case shall a decrease in the number of directors shorten the term of any
incumbent director. A director shall hold office until the annual meeting
for the year in which
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<PAGE>
his term expires and until his successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement or
removal from office.
(e) Subject to the rights, if any, of holders of any series of the
Preferred Stock then outstanding, any vacancy on the Board of Directors
that results from an increase in the number of directors may be filled by a
majority of the Board of Directors then in office, provided that a quorum
is present, and any other vacancy occurring in the Board of Directors may
be filled by a majority of the directors then in office, even if less than
a quorum. Any director elected to fill a vacancy resulting from an
increase in the size of a class of directors shall hold office for a term
that shall coincide with the remaining term of that class. Any director
elected to fill a vacancy not resulting from an increase in the number of
directors shall have the same remaining term as that of his predecessor.
(f) No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware Law or (iv)
for any transaction from which the director derived an improper personal
benefit.
(g) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the Delaware Law, this Third Amended and Restated Certificate
of Incorporation, and any By-Laws adopted by the stockholders; provided,
however, that no By-Laws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid if
such By-Laws had not been adopted.
ARTICLE 6
The Corporation shall indemnify, in accordance with and to the full
extent now or hereafter permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the
Corporation), by reason of his acting as a director of the Corporation (and the
Corporation, in the discretion of the Board of Directors, may so indemnify a
person by reason of the fact that he is or was an officer or employee of the
Corporation or is or was serving at the request of the Corporation in any other
capacity for or on behalf of the Corporation) against any liability or expense
actually or reasonably incurred by such person in respect thereof; PROVIDED,
HOWEVER, that the Corporation shall not be obligated to indemnify any such
person: (1) with respect to proceedings, claims or actions initiated or brought
voluntarily without the authorization or consent of the Corporation by such
person and not by way of defense; or (ii) for any amounts paid in settlement of
an action effected
-3-
<PAGE>
without the prior written consent of the Corporation to such settlement. Such
indemnification is not exclusive of any other right of indemnification provided
by law, agreement or otherwise.
ARTICLE 7
No amendment to or repeal of Articles 5(f) or 6 of this Third and
Amended and Restated Certificate of Incorporation shall apply to or have any
effect on the rights of any individual referred to in Articles 5(f) or 6 for or
with respect to acts or omissions of such individual occurring prior to such
amendment or repeal.
ARTICLE 8
Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the Delaware Law) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation. Election of directors
need not be by written ballot unless the By-laws of the Corporation shall so
provide. The authority contemplated by Section 228 of the Delaware Law which
permits stockholders to action by written consent is expressly denied to the
stockholders of the Corporation. Accordingly, the stockholders have no ability
to take any action unless such action is taken at an annual or special meeting
of the stockholders.
ARTICLE 9
No stockholder of the Corporation shall by reason of holding shares of
any class of stock have any pre-emptive or preferential right to purchase or
subscribe to any shares of any class of stock of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any class
of such stock, now or hereafter to be authorized, whether or not the issuance of
any such shares, or such notes, debentures, bonds or other securities would
adversely affect the dividend or voting rights of such stockholder, other than
such rights, if any, as the Board of Directors, in its discretion from time to
time, may grant and at such price as the Board of Directors in its discretion
may fix; and the Board of Directors may issue shares of any class of stock of
the Corporation, or any notes, debentures, bonds or other securities convertible
into or carrying options or warrants to purchase shares of any class of such
stock, without offering any such shares of any class, either in whole or in
part, to the existing stockholders of any class of such stock.
ARTICLE 10
The By-laws may be altered, amended or repealed or new By-laws may be
adopted by (i) the holders of at least 66-2/3% of the total voting power of all
shares of stock of the Corporation entitled to vote in the election of
directors, or (ii) the Board of Directors, at any regular meeting of the
stockholders or the Board of Directors, or at any special meeting of the
stockholders or the Board
-4-
<PAGE>
of Directors if notice of such alteration, amendment, repeal or adoption of new
By-laws be contained in the notice of such special meeting.
ARTICLE 11
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Third Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
-5-
<PAGE>
SECOND AMENDED AND RESTATED BY-LAWS
OF
UNIVERSAL OUTDOOR HOLDINGS, INC.
(A Delaware Corporation)
ARTICLE I.
OFFICES
The registered office of the Corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The Corporation may also
have offices at such other places both within and without the State of Delaware
as the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II.
STOCKHOLDERS
Section 1. TIME AND PLACE OF MEETINGS. All meetings of the
stockholders for the election of directors or for any other purpose shall be
held at such time and place, within or without the State of Delaware, as shall
be designated by the Board of Directors. In the absence of a designation of a
place for any such meeting by the Board of Directors, each such meeting shall be
held at the principal office of the Corporation.
Section 2. ANNUAL MEETINGS. An annual meeting of stockholders shall be
held for the purpose of electing directors and transacting such other business
as may properly be brought before the meeting. The date of the annual meeting
shall be determined by the Board of Directors.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by the Third Amended and
Restated Certificate of Incorporation, as amended from time to time (the
"CERTIFICATE OF INCORPORATION"), or by law, may be called by the Chairman of the
Board or the President and shall be called by the Secretary at the direction of
a majority of the Board of Directors.
Section 4. NOTICE OF MEETINGS. Written notice of each meeting of the
stockholders stating the place, date and time of the meeting shall be given not
less than ten (10) nor more than sixty (60) days before the date of the meeting,
to each stockholder entitled to vote at such meeting. The notice of any special
meeting of stockholders shall state the purpose or purposes for which the
meeting is called. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice. Neither the business to
be transacted at, nor the purpose of, an annual or special meeting of
stockholders need be specified in any written waiver of notice.
Section 5. QUORUM; ADJOURNMENTS. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise
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required by these By-laws, the Certificate of Incorporation, or the Delaware
General Corporation Law as from time to time in effect (the "DELAWARE LAW"). If
a quorum is not represented, the holders of the stock present in person or
represented by proxy at the meeting and entitled to vote thereat shall have
power, by the affirmative vote of the holders of a majority of such stock, to
adjourn the meeting to another time and/or place, without notice other than
announcement at the meeting, except as hereinafter provided, until a quorum
shall be present or represented. At such adjourned meeting, at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the original meeting. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. Withdrawal of
stockholders from any meeting shall not cause the failure of a duly constituted
quorum at such meeting.
Section 6. VOTING. (a) At all meetings of the stockholders, each
stockholder shall be entitled to vote, in person, or by proxy appointed in an
instrument in writing subscribed by the stockholder or otherwise appointed in
accordance with Section 212 of the Delaware Law, each share of voting stock
owned by such stockholder of record on the record date for the meeting. Each
stockholder shall be entitled to one vote for each share of voting stock held by
such stockholder, unless otherwise provided in the Delaware Law or the
Certificate of Incorporation.
(b) When a quorum is present at any meeting, the affirmative vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy and voting shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of law or
of the Certificate of Incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Any stockholder who is in attendance at a meeting of stockholders either in
person or by proxy, but who abstains from the vote on any matter, shall not be
deemed present or represented at such meeting for purposes of the preceding
sentence with respected to such vote, but shall be deemed present or represented
at such meeting for all other purposes.
Section 7. ORGANIZATION. At every meeting of the stockholders, the
Chairman of the Board, if there be one, or in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following persons
present in the order stated: the Vice Chairman, if one has been appointed, the
President, the Vice Presidents in their order or rank, a chairman designated by
the Board of Directors or a chairman chosen by the stockholders entitled to cast
a majority of the votes which all stockholders present in person or by proxy are
entitled to cast, shall act as chairman, and the Secretary, or, in his absence,
an Assistant Secretary, or in the absence of the Secretary and the Assistant
Secretaries, a person appointed by the chairman, shall act as secretary of the
meeting.
Section 8. PRE-MEETING NOTIFICATION REQUIREMENT. At an annual meeting
of stockholders, only such business or proposals ("business") shall be conducted
as shall have been properly brought before an annual meeting. To be properly
brought before an annual meeting, the business must be: (a) specified in the
notice of annual meeting (or any supplement thereto) given by or at the
direction
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of the Board of Directors; (b) otherwise properly brought before an annual
meeting by or at the direction of the Board of Directors; or (c) otherwise
properly brought before an annual meeting by a stockholder of the Corporation.
For business to be properly brought before an annual meeting by a
stockholder of the Corporation, the stockholder must give timely written notice
of the business to be brought before an annual meeting to the Secretary of the
Corporation. To be timely, a stockholder's written notice (the "NOTICE") must
be delivered or mailed to and actually received at the Corporation's principal
headquarters at least forty-five (45) days prior to the date of the annual
meeting; provided, however, that if less than sixty (60) days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
the Notice shall be delivered to the Secretary of the Corporation not later than
the close of business on the 10th day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made. A
stockholder's written notice to the Secretary of the Corporation of the business
to be brought before the annual meeting shall set forth as to each matter: (1)
a brief description of the business desired to be brought before the annual
meeting; (2) the name and address of the stockholder proposing the business to
be brought before the annual meeting; (3) the class and number of shares of the
Corporation held by the stockholder proposing to bring business before the
annual meeting; and (4) any material interest of the stockholder making the
written submission in the business to be brought before the annual meeting.
Notwithstanding anything in these By-laws in the contrary, no business
shall be conducted at an annual meeting except in accordance with the
provisions and procedures set forth in this section of the By-laws.
The presiding officer of an annual meeting shall, if the facts warrant,
determine and declare to the annual meeting that the business was not properly
brought before the meeting and, in accordance with the provisions hereof,
declare to the annual meeting that any such business not properly brought before
the meeting shall not be transacted.
ARTICLE III.
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed and controlled by or under the direction of its Board of
Directors, which may exercise all such powers of, and do all such acts and
things as may be done by, the Corporation and do all such lawful acts and things
as are not by law or by the Certificate of Incorporation or by these By-laws
directed or required to be exercised or done by the stockholders.
Section 2. NUMBER, QUALIFICATION AND TENURE. The number of directors
shall be determined from time to time by resolution of the Board of Directors
adopted by a majority of the total number of authorized directors (whether or
not there exist any vacancies in the previously authorized directorships at the
time any such resolution is presented to the Board of Directors for
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adoption), subject to the provisions of the Certificate of Incorporation. The
directors shall be elected at the annual meeting of the stockholders, except as
provided in the Certificate of Incorporation or SECTION 3 of this Article, and
each director elected shall hold office until his or her successor is elected
and qualified or until his or her earlier death, termination, resignation or
removal from office. Directors need not be stockholders.
Section 3. VACANCIES AND NEWLY-CREATED DIRECTORSHIPS. Vacancies and
newly-created directorships resulting from any increase in the number of
directors may be filled by a majority of the directors then in office, although
less than a quorum, or by a sole remaining director, and each director so chosen
shall hold office until his or her successor is elected and qualified or until
his or her earlier death, termination, resignation, retirement, disqualification
or removal from office. If there are no directors in office, then an election
of directors may be held in the manner provided by law.
Section 4. PLACE OF MEETINGS. The Board of Directors may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. MEETINGS. The Board of Directors shall hold a regular
meeting, to be known as the annual meeting, immediately following each annual
meeting of the stockholders. Other regular meetings of the Board of Directors
shall be held at such time and place as shall from time to time be determined by
the Board. No notice of regular meetings need be given, other than by
announcement at the immediately preceding regular meeting. Special meetings of
the Board may be called by the President or by the Secretary on the written
request of a majority of the Board of Directors. Notice of any special meeting
of the Board shall be given at least two (2) days prior thereto, either in
writing, or telephonically if confirmed promptly in writing, to each director at
the address shown for such director on the records of the Corporation.
Section 6. WAIVER OF NOTICE; BUSINESS AND PURPOSE. Notice of any
meeting of the Board of Directors may be waived in a writing signed by the
person or persons entitled to such notice either before or after the time of the
meeting. The attendance of a director at any meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened and at the beginning of the meeting
records such objection with the person acting as secretary of the meeting and
does not thereafter vote on any action taken at the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board need be specified in the notice or waiver of notice of such
meeting, unless specifically required by the Delaware Law.
Section 7. QUORUM AND MANNER OF ACTING. At all meetings of the Board
of Directors a majority of the total number of directors shall constitute a
quorum for the transaction of business. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present. The act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise
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specifically provided by the Delaware Law or by the Certificate of
Incorporation. Withdrawal of directors from any meeting shall not cause the
failure of a duly constituted quorum at such meeting.
Section 8. ORGANIZATION. The Chairman of the Board, if elected, shall
act as chairman at all meetings of the Board of Directors. If the Chairman of
the Board is not elected or, if elected, is not present, a director chosen by a
majority of the directors present, shall act as chairman at such meeting of the
Board of Directors.
Section 9. COMMITTEES. The Board of Directors, by resolution adopted
by a majority of the whole Board, may designate one or more directors to
constitute an Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may create one or more other
committees and appoint one or more directors to serve on such committee or
committees. Each director appointed to serve on any such committee shall serve,
unless the resolution designating the respective committee is sooner amended or
rescinded by the Board of Directors, until the next annual meeting of the Board
or until their respective successors are designated. The Board of Directors, by
resolution adopted by a majority of the whole Board, may also designate
additional directors as alternate members of any committee to serve as members
of such committee in the place and stead of any regular member or members
thereof who may be unable to attend a meeting or otherwise unavailable to act as
a member of such committee. In the absence or disqualification of a member and
all alternate members designated to serve in the place and stead of such member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another director to act at the meeting in the place and
stead of such absent or disqualified member.
The Executive Committee shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation between the meetings of the Board of Directors, and
any other committee may exercise the power and authority of the Board of
Directors to the extent specified by the resolution establishing such committee,
or the Certificate of Incorporation or these By-laws; PROVIDED, HOWEVER, that no
committee may take any action that is expressly required by the Delaware Law or
the Certificate of Incorporation or these By-laws to be taken by the Board of
Directors and not by a committee thereof. Each committee shall keep a record of
its acts and proceedings, which shall form a part of the records of the
Corporation in the custody of the Secretary, and all actions of each committee
shall be reported to the Board of Directors at the next meeting of the Board.
Meetings of committees may be called at any time by the Chairman of the
Board, if any, the President or the chairman of the respective committee. A
majority of the members of the committee shall constitute a quorum for the
transaction of business and, except as expressly limited by this section, the
act of a majority of the members present at any meeting at which there is a
quorum shall be the act of such committee. Except as expressly provided in this
section or in the resolution designating the committee, a majority of the
members of any such committee may select its chairman, fix its rules of
procedure, fix the time and place of its meetings and specify what notice of
meetings, if any, shall be given.
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Section 10. ACTION WITHOUT MEETING. Unless otherwise specifically
prohibited by the Certificate of Incorporation or these By-laws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board of Directors or such committee, as the case may be, execute a consent
thereto in writing setting forth the action so taken, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
such committee.
Section 11. ATTENDANCE BY TELEPHONE. Members of the Board of Directors,
or any committee thereof, may participate in and act at any meeting of the Board
of Directors, or such committee, as the case may be, through the use of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in such
meeting shall constitute attendance and presence in person at the meeting of the
person or persons so participating.
Section 12. COMPENSATION. By resolution of the Board of Directors,
irrespective of any personal interest of any of the members, the directors may
be paid their reasonable expenses, if any, of attendance at each meeting of the
Board of Directors and may be paid a fixed sum of attendance at meetings or a
stated salary as directors. These payments shall not preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
Section 13. NOMINATIONS.
(a) Nominations for election of directors may be made at a meeting of
stockholders only (i) by or at the direction of the Board of Directors of the
Corporation or (ii) by any stockholder entitled to vote for the election of
directors, provided that written notice (the "DIRECTORS NOTICE") of such
stockholder's intent to nominate a director at the meeting is given by the
stockholder and received by the Secretary of the Corporation in the manner and
within the time specified in this subsection. The Directors Notice shall be
delivered to the Secretary of the Corporation at least forty-five (45) days
prior to any meeting of the stockholders called for the election of directors;
provided, however, that if less than sixty (60) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, the
Directors Notice shall be delivered to the Secretary of the Corporation not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Any adjournment(s) or postponement(s) of the original meeting whereby the
meeting will reconvene within thirty (30) days from the original date shall be
deemed for purposes of notice to be a continuation of the original meeting and
no nominations by a stockholder or persons to be elected directors of the
Corporation may be made at any such reconvened meeting other than pursuant to a
notice that was timely for the meeting and date originally scheduled. In lieu
of delivery to the Secretary of the Corporation, the Directors Notice may be
mailed to the Secretary of the Corporation by certified mail, return receipt
requested, but shall be deemed to have been given only upon actual receipt by
the Secretary of the Corporation.
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(b) The Directors Notice shall be in writing and shall contain or be
accompanied by:
(1) the name and residence of such stockholder;
(2) a representation that the stockholder is a holder of record of
the Corporation's voting stock and intends to appear in person or by proxy
at the meeting to nominate the person or persons specified in the Directors
Notice;
(3) such information regarding each nominee as would have been
required to be included in a proxy statement filed pursuant to Regulation
14A of the rules and regulations established by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (or
pursuant to any successor act or regulation), had proxies been solicited
with respect to such nominee by the management or Board of Directors of the
Corporation;
(4) a description of all arrangements or understandings among the
stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which such nomination or nominations are to
be made by the stockholder; and
(5) the written consent of each nominee to serve as a director of the
Corporation if so elected.
(c) The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that any nomination made at the meeting was not made in
accordance with the foregoing procedures and, in such event, the nomination
shall be disregarded. Any decision by the chairman of the meeting shall be
conclusive and binding upon all stockholders of the Corporation for any purpose.
(d) The above procedures shall not apply to nominations with respect to
which proxies shall have been solicited pursuant to a proxy statement filed
pursuant to Regulation 14A of the rules and regulations adopted by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended or pursuant to any successor act or regulation.
ARTICLE IV.
OFFICERS
Section 1. ENUMERATION. The officers of the Corporation shall be
chosen by the Board of Directors and shall include a President, one or more Vice
Presidents, a Secretary, and a Chief Financial Officer. The Board of Directors
may also elect a Chairman of the Board (who shall be considered an officer of
the Corporation), Chief Executive Officer, one or more Assistant Secretaries and
Assistant Treasurers, and such other officers and agents as it may deem
appropriate. Any number of offices may be held by the same person.
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Section 2. TERM OF OFFICE. The officers of the Corporation shall be
elected at the annual meeting of the Board of Directors and shall hold office
until their successors are elected and qualified, or until their earlier death,
termination, resignation or removal from office. Any officer or agent of the
Corporation may be removed at any time by the Board of Directors, with or
without cause. Any vacancy in any office because of death, resignation,
termination, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 3. CHAIRMAN OF THE BOARD. The Chairman of the Board, when and
if elected, shall preside at meetings of the Board of Directors and of
stockholders and shall have such other functions, authority and duties as
customarily appertain to the office of the Chairman of a business corporation or
as may be prescribed by the Board of Directors. The Chairman of the Board shall
have the authority to execute and deliver on behalf of the Company all
instruments, documents, certificates or contracts to the same extent as the
Chief Executive Officer, or if one is not elected, the President. The Chairman
of the Board, if any, shall be a member of the Board of Directors of the
Corporation.
Section 4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, when
and if elected, shall have general supervision, direction and control of the
business and affairs of the Corporation, subject to the control of the Board of
Directors, and shall have such other functions, authority and duties as
customarily appertain to the office of Chief Executive Officer of a business
corporation or as may be prescribed by the Board of Directors.
Section 5. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have general supervision, direction and control over the treasury and the
finances of the Company, including but not limited to the authority over
finance, treasury and accounting personnel and functions of the Company, to act
as agent for the Company in respect of its dealings with creditors and
stockholders on financial matters, and the authority to negotiate all financial
matters of the Company on its behalf, subject to the control of the Board of
Directors. The Chief Financial Officer shall have such other functions,
authority and duties as customarily appertain to the office of the Chief
Financial Officer of a business corporation or as may be prescribed by the Board
of Directors.
Section 6. PRESIDENT. During any period when there shall be an office
of Chairman of the Board, the President shall be the chief operating officer of
the Corporation and shall have such functions, authority and duties as may be
prescribed by the Board of Directors.
Section 7. VICE PRESIDENT. Each Vice President, if any, shall perform
such duties and have such other powers as may from time to time be prescribed by
the Board of Directors, the Chairman of the Board, or the President.
Section 8. SECRETARY. The Secretary shall: (a) keep a record of all
proceedings of the stockholders, the Board of Directors and any committees
thereof in one of more books provided for that purpose; (b) give, or cause to be
given, all notices that are required by law or these By-laws to be given by the
Secretary; (c) be custodian of the corporate records and, if the Corporation has
a corporate seal, of the seal of the Corporation; (d) have authority to affix
the seal of the Corporation
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to all instruments the execution of which requires such seal and to attest such
affixing of the seal; (e) keep a register of the post office address of each
stockholder which shall be furnished to the Secretary by such stockholder; (f)
sign, with the Chairman, President or any Vice President, or any other officer
thereunto authorized by the Board of Directors, any certificates for shares of
the Corporation, or any deeds, mortgages, bonds, contracts or other instruments
which the Board of Directors has authorized to be executed by the signature of
more than one officer; (g) have general charge of the stock transfer books of
the Corporation; (h) have authority to certify as true and correct, copies of
the By-laws, or resolutions of the stockholders, the Board of Directors and
committees thereof, and of other documents of the Corporation; and (i) in
general, perform the duties incident to the office of secretary and such other
duties as from time to time may be prescribed by the Board of Directors, the
Chairman of the Board or the President. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest such affixing of the seal.
Section 9. OTHER OFFICERS AND AGENTS. Any officer or agent who is
elected or appointed from time to time by the Board of Directors and whose
duties are not specified in these By-laws shall perform such duties and have
such powers as may from time to time be prescribed by the Board of Directors,
the Chairman of the Board or the President.
ARTICLE V.
CERTIFICATES OF STOCK AND THEIR TRANSFER
Section 1. FORM. The shares of the Corporation shall be represented by
certificates. Each certificate for shares shall be consecutively numbered or
otherwise identified. Certificates of stock in the Corporation shall be signed
by or in the name of the Corporation by the Chairman of the Board or the
President and by the Secretary of the Corporation. Where a certificate is
countersigned by a transfer agent, other than the Corporation or an employee of
the Corporation, or by a registrar, the signatures of one or more officer of the
Corporation may be facsimiles. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, the certificate may be issued by the Corporation with the
same effect as if such officer, transfer agent or registrar were such officer,
transfer agent or registrar at the date of its issue.
Section 2. TRANSFER. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate of
stock or uncertificated shares in place of any certificate theretofore issued by
the Corporation to the person entitled thereto, cancel the old certificate and
record the transaction in its stock transfer books.
Section 3. REPLACEMENT. In case of the loss, destruction, mutilation
or theft of a certificate for any stock of the Corporation, a new certificate of
stock or uncertificated shares in place of any certificate theretofore issued by
the Corporation may be issued upon the surrender of the
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mutilated certificate or, in the case of loss, destruction or theft of a
certificate, upon satisfactory proof of such loss, destruction or theft and upon
such terms as the Board of Directors may prescribe. The Board of Directors may
in its discretion require the owner of the lost, destroyed or stolen
certificate, or his legal representative, to give the Corporation a bond, in
such sum and in such form and with such surety or sureties as it may direct, to
indemnify the Corporation against any claim that may be made against it with
respect to the certificate alleged to have been lost, destroyed or stolen.
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. THIRD PARTY ACTIONS. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative, including all appeals (other than an
action, suit or proceeding by or in the right of the Corporation) by reason of
the fact that he is or was a director or officer of the Corporation (and the
Corporation, in the discretion of the Board of Directors, may so indemnify a
person by reason of the fact that he is or was an employee or agent of the
Corporation or is or was serving at the request of the Corporation in any other
capacity for or on behalf of the Corporation), against expenses (including
attorneys' fees), judgments, decrees, fines, penalties, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; PROVIDED, HOWEVER, the
Corporation shall be required to indemnify an officer or director in connection
with an action, suit or proceeding initiated by such person only if such action,
suit or proceeding was authorized by the Board of Directors. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith or in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action of suit,
including all appeals, by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the Corporation (and the Corporation, in the discretion of the Board
of Directors, may so indemnify a person by reason of the fact that he is or was
an employee or agent of the Corporation or is or was serving at the request of
the Corporation in any other capacity for or on behalf of the Corporation),
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been finally adjudged to be liable for negligence
or misconduct in the performance of his duty) to the Corporation unless and only
to the extent that the court in which such action or suit was
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brought, or any other court of competent jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper. Notwithstanding
the foregoing, the Corporation shall be required to indemnify an officer or
director in connection with an action, suit or proceeding initiated by such
person only if such action, suit or proceeding was authorized by the Board of
Directors.
Section 3. INDEMNITY IF SUCCESSFUL. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in SECTION
1 or 2 of this Article, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Section 4. STANDARD OF CONDUCT. Any indemnification under SECTION 1
and 2 of this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
SECTION 1 or 2, as applicable, of this Article. Such determination shall be
made (i) by a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (ii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iii) by the stockholders.
Section 5. EXPENSES. Expenses (including attorneys' fees) incurred by
an officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding or threat thereof shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in this Article.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon the receipt of the aforesaid undertaking and such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 6. NONEXCLUSIVITY. The indemnification and advancement of
expenses provided by, or granted pursuant to, other Sections of this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may now or hereafter be entitled
under any law, by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
Section 7. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another Corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the
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Corporation would have the power to indemnify him against such liability under
the provisions of the Delaware Law.
Section 8. DEFINITIONS. For purposes of this Article, references to
"the Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify any or all of its directors,
officers, employees and agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was serving
at the request of such constituent corporation in any other capacity, shall
stand in the same position under the provisions of this Article with respect to
the resulting or surviving corporation as such person would have had with
respect to such constituent corporation if its separate existence had continued.
For purposes of this Article, references to "other capacities" shall
include serving as a trustee or agent for any employee benefit plan; references
to "fines" shall include any excise taxes assessed on a person with respect to
an employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by such
director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this Article.
Section 9. SEVERABILITY. If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction, and the remaining provisions hereof
shall be liberally construed to effectuate the provisions hereof, and the
invalidity of any provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other jurisdiction.
Section 10. AMENDMENT. The right to indemnification conferred by this
Article shall be deemed to be a contract between the Corporation and each person
referred to therein until amended or repealed, but no amendment to or repeal of
these provisions shall apply to or have any effect on the right to
indemnification of any person with respect to any liability or alleged liability
of such person for or with respect to any act or omission of such person
occurring prior to such amendment or repeal.
ARTICLE VII.
GENERAL PROVISIONS
Section 1. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed from time to time by resolution of the Board of Directors.
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Section 2. CORPORATION SEAL. The corporate seal, if any, of the
Corporation shall be in such form as may be approved from time to time by the
Board of Directors. The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any other manner reproduced.
Section 3. NOTICES AND MAILING. Except as otherwise provided in the
Act, the Articles of Incorporation or these By-laws, all notices required to be
given by any provision of these By-laws shall be deemed to have been given (i)
when received, if given in person, (ii) on the date of acknowledgment of
receipt, if sent by telex, facsimile or other wire transmission, (iii) one day
after delivery, properly addressed, to a reputable courier for same day or
overnight delivery or (iv) three (3) days after being deposited, properly
addressed, in the U.S. Mail, certified or registered mail, postage prepaid.
Section 4. WAIVER OF NOTICE. Wherever any notice is required to be
given under the Delaware Law or the provisions of the Certificate of
Incorporation or these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
Section 5. INTERPRETATION. In these By-laws, unless a clear contrary
intention appears, the singular number includes the plural number and VICE
VERSA, and reference to either gender includes the other gender.
ARTICLE VIII.
AMENDMENTS
These By-laws may be altered, amended or repealed or new By-laws may be
adopted by (i) the holders of at least 66-2/3% of the total voting power of all
shares of stock of the Corporation entitled to vote in the election of
directors, considered for the purposed of this Article VIII as one class, or
(ii) the Board of Directors, at any regular meeting of the stockholders or the
Board of Directors or at any special meeting of the stockholders or of the Board
of Directors if notice of such alteration, amendment, repeal or adoption of new
By-laws be contained in the notice of such special meeting.
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Ex. 4.1 Specimen Common Stock Certificate of the Company
The specimen certificate contains the logo of the Company above the name
of the Company and the Company's Cusip number (91377M 10 5), as well as the
seal of the Company. The specimen certificate is signed by Paul G. Simon,
Secretary, and Daniel L. Simon, President, of the Company. The specimen
certificate contains the following language:
This certifies that _______________ is the owner of ________________
fully paid and nonassessable shares of the Common Stock, par value $.01
per share, of Universal Outdoor Holdings, Inc. transferable on the books
of the Corporation by the holder hereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This
certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar. Witness the facsimile seal of the
Corporation and the facsimile signature of its duly authorized officers.
In the lower right-hand corner of the specimen certificate, there is a
place for the signature of LaSalle National Trust, N.A., transfer agent and
registrar.
<PAGE>
Exhibit 5.1
July 19, 1996
Universal Outdoor Holdings, Inc.
321 North Clark Street
Chicago, Illinois 60610
Re: 7,130,000 Shares of Common Stock, $0.01 par
value, of Universal Outdoor Holdings, Inc.
Dear Sir or Madam:
We refer to the Registration Statement on Form S-1, Registration
No. 333-5351 (the "Registration Statement"), filed by Universal Outdoor
Holdings, Inc. (The "Company") with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"), relating
to the registration of 7,130,000 shares of Common Stock $0.01 par value (the
"Shares"), of the Company. Up to 4,430,000 of the Shares are being offered
by the Company (the "Company Shares") and up to 2,700,000 of the Shares are
being offered by the Selling Stockholders (the "Seller Shares").
As set forth in the Registration Statement, the Company intends to
take the following actions (the "Corporate Actions") immediately prior to the
consummation of the offering of the Shares: (i) file amended and restated
articles of incorporation in Delaware; (ii) complete a 16 for one stock split
in the form of a stock dividend with respect to each of its issued and
outstanding shares; (iii) reclassify its Class B Common Stock and Class C
Common Stock into Common Stock; (iv) make appropriate adjustments in
outstanding warrants and options as a result of the stock split; and (v)
cause all required actions of directors and Stockholders to accomplish the
foregoing to be taken.
<PAGE>
Universal Outdoor Holdings, Inc.
July 19, 1996
Page 2
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing in
Delaware.
2. Assuming that all of the Corporate Actions have been
completed, (i) the Company Shares will be legally issued, fully paid, and
non-assessable when the Company Shares shall have been delivered to the
purchasers thereof against payment of the agreed consideration therefore, and
(ii) the Seller Shares are legally issued, fully paid, and non-assessable.
We do not find it necessary for the purposes of this opinion to
cover, and accordingly we express no opinion as to, the application of the
securities or blue sky laws of the various states to the sale of the Shares.
We hereby consent to the filing of this opinion as an Exhibit to
the Registration Statement and to all references to our firm included in or
made a part of the Registration Statement.
Very truly yours,
<PAGE>
EXHIBIT 9.1
UNIVERSAL OUTDOOR HOLDINGS, INC.
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT is made ___________, 1995, among UNIVERSAL
OUTDOOR HOLDINGS, INC., a Delaware corporation, hereinafter called the
"Company", BRIAN CLINGEN, who has executed this agreement as a stockholder of
the Company, hereinafter called the "Stockholder", and DANIEL SIMON, and his
successors in trust, hereinafter called the "Trustee";
WITNESSETH:
WHEREAS, the parties hereto deem it necessary and advisable, and for their
best interests, in order to secure their investment and to effect continuity and
stability of policy and management of the Company, that the Stockholder deposit
his shares of the common capital stock of the Company with the Trustee; and
WHEREAS, the Stockholder has agreed upon the person to be designated as the
Trustee, and upon the form of this agreement; and
WHEREAS, the Trustee has consented to act under this agreement for the
purposes herein provided in consideration of the irrevocable deposit of the
shares hereunder;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereto agree as follows:
1. AGREEMENT.
Copies of this agreement, and of every agreement supplemental hereto
or amendatory hereof, shall be filed in the principal office of the Company, and
shall be open to the inspection of
<PAGE>
any stockholder of the Company, or any beneficiary of the trust under this
agreement, daily during business hours. All voting trust certificates issued
hereunder shall be issued, received, and held subject to all the terms of this
agreement.
2. TRANSFER OF STOCK TO TRUSTEE.
2.1 DEPOSIT OF CAPITAL STOCK. The Stockholder shall deposit with
the Trustee certificates for all capital stock of the Company as set forth after
his signature to this agreement or in the future owned by the Stockholder. Only
stock of the Company having general voting powers or convertible into stock
having general voting powers, as provided in the Certificate of Incorporation,
shall be deposited hereunder. In addition to the stock of the Company deposited
hereunder, the Stockholder shall also deposit any shares of voting capital stock
of the Company paid as a stock dividend or stock split on any shares deposited
hereunder, and any shares of voting capital stock of any other corporation paid
as a dividend or distribution, including a distribution in complete or partial
liquidation, on shares of stock of the Company deposited hereunder. All such
stock certificates shall be made out in the name of the Trustee, or so endorsed,
or accompanied by such instruments of transfer as to enable the Trustee to cause
such certificates to be transferred into the name of the Trustee. On receipt by
the Trustee of the certificates for any such shares of capital stock and the
transfer of the same into the names of the Trustee, the Trustee shall hold the
same subject to the terms of this agreement, and shall thereupon issue and
deliver to the Stockholder voting trust certificates for the capital stock
respectively deposited by them.
2.2 ISSUE OF STOCK CERTIFICATES TO TRUSTEE. All certificates for
capital stock of the Company transferred and delivered to the Trustee pursuant
to this agreement shall be surrendered by the Trustee to the Company and
canceled, and new certificates therefor shall be issued to and held
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by the Trustee in the name of "Daniel Simon as Voting Trustee under Voting Trust
Agreement dated __________, 1995."
3. VOTING TRUST CERTIFICATES.
3.1 FORM. The voting trust certificates to be issued and delivered
by the Trustee in respect of the capital stock of the Company deposited
hereunder shall be in substantially the form of Exhibit A attached hereto and
made a part hereof.
3.2 TRANSFER OF CERTIFICATES. The voting trust certificates shall
be transferable at the principal office of the Company, on the books of the
Trustee, by the registered owner thereof, either in person or by attorney
thereto duly authorized, upon surrender thereof; and the Trustee may treat the
registered holder as owner thereof for all purposes whatsoever, but he shall not
be required to deliver stock certificates hereunder without the surrender of
such voting trust certificates. However, no voting trust certificate may be
transferred except on the same terms and conditions and subject to the same
limitations and restrictions as Stock may be transferred under the provisions of
the Company's Stockholders' Agreement dated __________ between the Company,
Stockholder and Trustee.
3.3 LOST, STOLEN OR DESTROYED CERTIFICATES. If a voting trust
certificate is lost, stolen, mutilated, or destroyed, the Trustee, in his
discretion, may issue a duplicate of such certificate upon receipt of: (a)
evidence of such fact satisfactory to him; (b) indemnity satisfactory to him;
(c) the existing certificate, if mutilated; and (d) his reasonable fees and
expenses in connection with the issuance of a new trust certificate. The
Trustee shall not be required to recognize any transfer of a voting trust
certificate not made in accordance with the provisions hereof, unless the person
claiming
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such ownership shall have produced indicia of title satisfactory to the Trustee,
and shall in addition deposited with the Trustee indemnity satisfactory to him.
4. TERMINATION PROCEDURE.
4.1 NOTICE. Upon the termination of this agreement at any time, as
herein provided, the Trustee, at such time as he may choose during the period
commencing ten (10) days before and ending ten (10) days after such termination,
shall mail written notice of such termination to the registered owners of the
voting trust certificates, at the addresses appearing on the transfer books of
the Trustee. From the date specified in any such notice (which date shall be
fixed by the Trustee), the voting trust certificates shall cease to have any
effect, and the holders of such voting trust certificates shall have no further
rights under this agreement other than to receive certificates for shares of
stock of the Company or other property distributable under the terms hereof and
upon the surrender of such voting trust certificates.
4.2 DELIVERY OF STOCK CERTIFICATES. Within ten (10) days after the
termination of this agreement, the Trustee shall deliver, to the registered
holders of all voting trust certificates, certificates for the number of shares
of the capital stock of the Company represented thereby upon the surrender to
the Trustee of the voting trust certificates, such delivery to be made in each
case at the office of the Company.
4.3 DEPOSIT WITH COMPANY. At any time subsequent to ten (10) days
after the termination of this agreement, the Trustee may deposit with the
Company stock certificates representing the number of shares of capital stock
represented by the voting trust certificates then outstanding, with authority in
writing to the Company to deliver such stock certificates in exchange for voting
trust certificates representing a like number of shares of the capital stock of
the Company;
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<PAGE>
and upon such deposit all further liability of the Trustee for the delivery of
such stock certificates and the delivery or payment of dividends upon surrender
of the voting trust certificates shall cease, and the Trustee shall not be
required to take any further action hereunder.
5. DIVIDENDS.
5.1 CASH DIVIDENDS. Prior to the termination of this agreement,
the holder of each voting trust certificate shall be entitled to receive
payments equal to the cash dividends, if any, received by the Trustee upon a
like number and class of shares of capital stock of the Company as is called for
by such voting trust certificate.
5.2 STOCK DIVIDENDS. If any dividend in respect of the stock
deposited with the Trustee is paid, in whole or in part, in stock of the Company
having general voting powers or convertible into stock having general voting
powers, the Trustee shall receive such stock on behalf of the holder of the
voting trust certificate pertaining thereto and shall likewise hold, subject to
the terms of this agreement, the certificates for stock which are received by
him on account of such dividend on behalf of such holder, and the holder of each
voting trust certificate representing stock on which such stock dividend has
been paid shall be entitled to receive a voting trust certificate issued under
this agreement for the number of shares and class of stock received as such
dividend with respect to the shares represented by such voting trust
certificate.
5.3 PERSONS ENTITLED TO DIVIDENDS. Holders entitled to receive the
dividends discussed above shall be those registered as such on the transfer
books of the Trustee at the close of business on the day fixed by the Company
for the taking of a record to determine those holders of its stock entitled to
receive such dividends.
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<PAGE>
5.4 DIVIDENDS IN STOCK OF OTHER CORPORATIONS. If any shares of
voting capital stock or convertible into stock having general voting powers of
any corporation other than the Company are distributed, as a dividend or in
partial or complete liquidation, upon any shares of capital stock of the Company
deposited hereunder, then such shares shall be deposited hereunder, registered
and held in the name of the Trustee on behalf of the Stockholder. The term
"Company" as used herein shall include, in addition to the Company, the issuer
of such other capital stock, and the holders of voting trust certificates shall
be entitled to receive new voting trust certificates representing such shares,
in substantially the form of Exhibit A attached hereto but with such changes,
additions and deletions as the Trustee may, in his discretion, deem necessary or
advisable in order to reflect the different issuer of such capital stock. In
the event of the receipt and deposit of any such shares, the Trustee shall
request the issuer to enter into this agreement as the "Company" hereunder. If
the issuer refuses, declines or is unable to enter into this agreement, the
validity hereof shall not be affected and this agreement shall continue in full
force and effect with respect to the shares of capital stock of such issuer,
unless otherwise provided by law, but the obligations and liabilities of such
issuer as the "Company" hereunder shall be of no force or effect except for
those obligations and liabilities as it may be required to undertake by law. In
the event there is more than one class of security held hereunder, then any
provision of this agreement which requires the vote, consent or approval of a
percentage of the voting trust certificate holders shall require the same
percentage of voting trust certificate holders representing each class of
securities deposited hereunder.
5.5 DIVIDENDS OTHER THAN CASH AND CAPITAL STOCK. If any dividend
in respect of the stock deposited with the Trustee is paid other than in cash,
in capital stock having general voting
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powers or convertible into stock having general voting powers, then the Trustee
shall distribute the same among the holders of the voting trust certificates
registered as such at the close of the business on the day fixed by the Company
for taking a record to determine the holders of its stock entitled to receive
such distribution. Such distribution shall be made to such holders of voting
trust certificates ratably, in accordance with the number of shares represented
by their respective voting trust certificates.
5.6 CLOSING TRANSFER BOOKS. The transfer books of the Trustee may
be closed temporarily by the Trustee for a period not exceeding 20 days
preceding the date fixed for the payment or distribution of dividends or the
distribution of assets or rights, or at any other time in the discretion of the
Trustee. In lieu of providing for the closing of the books against the transfer
of voting trust certificates, the Trustee may fix a date not exceeding 20 days
preceding any date fixed by the Company for the payment or distribution of
dividends, or for the distribution of assets or rights, as a record date for the
determination of the holders of voting trust certificates entitled to receive
such payment or distribution, and the holders of voting trust certificates of
record at the close of business on such date shall exclusively be entitled to
participate in such payments or distribution.
5.7 DIVIDENDS MAY BE PAID DIRECTLY TO HOLDERS OF VOTING TRUST
CERTIFICATES. In lieu of receiving cash dividends upon the capital stock of the
Company and paying the same to the holders of voting trust certificates pursuant
to the provisions of this agreement, the Trustee shall instruct the Company in
writing to pay such dividends to the holders of the voting trust certificates.
Upon receipt of such written instructions, the Company shall pay such dividends
directly to the holders of the voting trust certificates. Upon such
instructions being given by the Trustee to the Company, all liability of the
Trustee with respect to such dividends shall cease.
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6. SUBSCRIPTION RIGHTS.
In case any stock or other securities of the Company are offered for
subscription to the holders of capital stock of the Company deposited hereunder,
the Trustee, promptly upon receipt of notice of such offer, shall mail a copy
thereof to each of the holders of the voting trust certificates. Upon receipt
by the Trustee at least five days prior to the last day fixed by the Company for
subscription and payment, of a request from any such registered holder of voting
trust certificates to subscribe in his or her behalf, accompanied with the sum
of money required to pay for such stock or securities (not in excess of the
amount subject to subscription in respect of the shares represented by the
voting trust certificate held by such certificate holder), the Trustee shall
make such subscription and payment, and upon receiving from the Company the
certificates for shares or securities so subscribed for, shall issue to such
holder a voting trust certificate in respect thereof if the same be stock having
general voting powers or convertible into stock having general voting powers,
but if the same be securities other than stock having general voting powers or
convertible into stock having general voting powers, the Trustee shall mail or
deliver such securities to the certificate holder in whose behalf the
subscription was made, or may instruct the Company to make delivery directly to
the certificate holder entitled thereto.
7. DISSOLUTION OF COMPANY.
In the event of the dissolution or total or partial liquidation of the
Company, whether voluntary or involuntary, the Trustee shall receive the moneys,
securities, rights, or property to which the holders of the capital stock of the
Company deposited hereunder are entitled and shall, subject to the provisions of
paragraph 2.1, distribute the same among the registered holders of voting trust
certificates in proportion to their interests, as shown by the books of the
Trustee.
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8. REORGANIZATION OF COMPANY.
In case the Company is merged into or consolidated with another
corporation, or all or substantially all of the assets of the Company are
transferred to another corporation, then in connection with such transfer the
term "Company" for all purposes of this agreement shall be taken to include such
successor corporation, and the Trustee shall receive and hold under this
agreement any stock of such successor corporation received on account of the
ownership, as Trustee hereunder, of the stock held hereunder prior to such
merger, consolidation, and transfer. Voting trust certificates issued and
outstanding under this agreement at the time of such merger, consolidation, or
transfer may remain outstanding, or the Trustee may, in his discretion,
substitute for such voting trust certificates new voting trust certificates in
appropriate form, and the terms "stock" and "capital stock" as used herein shall
be taken to include any stock which may be received by the Trustee in lieu of
all or any part of the capital stock of the Company.
9. THE TRUSTEE.
9.1 POWER TO VOTE. Until the actual delivery to the holders of
voting trust certificates issued hereunder of stock certificates in exchange
therefor, and until the surrender of the voting trust certificates for
cancellation, the Trustee shall have the right to exercise, in person or by
nominees or proxies, all stockholder rights and powers in respect of all stock
deposited hereunder, including the right to vote thereon and to take part in or
consent to any corporate or stockholder action of any kind whatsoever, subject
to the limitations set forth below in this Section 9.3. The right to vote shall
include the right to vote for the election of directors, and in favor of or
against any resolution or proposed action of any character whatsoever, which may
be presented at any meeting or require the consent of Stockholder of the
Company.
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Notwithstanding anything to the contrary, the Trustee shall, with
respect to the stock that he holds for the benefit of each holder of a voting
trust certificate hereunder:
a. Not vote in favor of any action or transaction pursuant to
which any additional stock in the Company may be issued, unless none of the
other persons who own stock in the Company as of the date of this Voting Trust
Agreement are given any greater rights than the holder of the voting trust
certificate to acquire additional stock in the Company;
b. Not vote in favor of removing the holder of the voting trust
certificate as a director of the Company, if the holder is a director of the
Company;
c. Vote all of such stock, to the fullest extent necessary, to
elect such holder as a director of the Company, if the holder desires to be such
a director; and
d. Not vote in favor of any action or transaction pursuant to
which any compensation or benefits will be paid or given to any of the directors
of the Company in their capacity as directors and not in any other capacity,
unless all of the directors are treated similarly and unless such compensation
and benefits are reasonable and customary for corporations of the size and
financial conditions of the Company.
9.2 DUTY OF TRUSTEE. In voting the stock held hereunder either in
person or by nominee or proxy, the Trustee shall exercise his best judgment to
select suitable directors of the Company, and in voting upon any matters that
may come before any stockholders' meeting or be acted upon by the unanimous
consent of the stockholders, but shall not be personally responsible with
respect to any action taken pursuant to his vote so cast in any matter or act
committed or omitted to be done under this agreement, provided such commission
or omission does not amount
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to willful misconduct or gross negligence on his part. Stockholder acknowledges
that Trustee is controlling stockholder, president and a director of the
Company. Stockholder agrees that Trustee shall be permitted to vote the stock,
subject to Section 9.1, as he deems appropriate even though Trustee is an
interested director, officer or stockholder.
9.3 RESIGNATION, DEATH AND SUCCESSOR TRUSTEES.
a. RESIGNATION. Daniel Simon shall be the original Trustee
hereunder ("Original Trustee"). The Original Trustee and any successor Trustee
may at any time resign by mailing to the registered holders of voting trust
certificates a written resignation, to take effect ten days thereafter or upon
the prior acceptance thereof.
b. SUCCESSOR TRUSTEES. Upon the death, resignation, failure,
refusal or inability to act of the Original Trustee, then a Trustee or Trustees
to serve hereunder shall be such as may have been designated by Daniel Simon, or
as designated by his legal representative, unless he is deceased or mentally
incompetent to do so, in which event the successor or successors shall be
designated by the registered holders of voting trust certificates issued and
outstanding under this agreement representing a majority of the number of shares
of stock standing in the name of the Trustee hereunder and shall be approved by
the Board of Directors of the Company.
9.4 POWERS OF SUCCESSOR TRUSTEES. Subject to the provisions of
paragraph 9.4, the rights, powers, and privileges of the Trustee named hereunder
shall be possessed by the successor Trustees, with the same effect as though
such successors had originally been parties to this agreement. The word
"Trustee," as used in this agreement, means the Original Trustee or any
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successor Trustee or Trustees acting hereunder, and shall include both the
single and the plural number.
10. TERM.
10.1 IRREVOCABLE TRUST. This agreement and the trust created hereby
is irrevocable, except as otherwise expressly provided herein. The holders of
voting trust certificates issued hereunder shall have no power or right to
terminate this agreement, or the trust created hereby, notwithstanding a
unanimous desire to do so. The holders acknowledge that the agreement of the
Trustee hereunder to act in such capacity is in consideration of the
irrevocability of this agreement.
10.2 TERMINATION BY TRUSTEE. This agreement shall continue in
effect until ____________, 2016 (subject to extension as hereinafter set forth),
but shall terminate at any time upon the execution and acknowledgment (as deeds
for conveyance of real estate are required to be acknowledged under the laws of
Delaware then in effect) by the Trustee hereunder of an instrument of
termination, duly filed in the principal office of the Company.
10.3 OPTIONAL TERMINATION BY VOTING TRUST CERTIFICATE HOLDERS. This
agreement, and the trust created hereby, may be terminated, at the option of the
holders of a majority of the voting trust certificates issued and outstanding,
by written notice to the Trustee at any time on or after the Company becomes a
publicly-held company. For purposes of this paragraph 10.3, the Company shall
be considered a publicly-held company at any time when its Common Stock is
subject to any reporting requirements (by statute, rule, or undertaking) of the
Securities Exchange Act of 1934, or any comparable statutes then in effect.
10.4 EXTENSION. At any time within two years prior to ___________,
2016, or at any time within two years prior to the time of expiration hereof as
extended, one or more holders of
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voting trust certificates hereunder may, by agreement in writing and with the
written consent of the Trustee, extend the duration of this agreement for an
additional period not exceeding ten years. In the event of such extension, the
Trustee shall, prior to the time of expiration of the original term, or as
extended, as the case may be, file in the then principal office of the Company,
a copy of such extension agreement, and of the consent thereto, and thereupon
the duration of this voting trust agreement shall be extended for the period
fixed by such extension agreement; provided, however, that no such extension
agreement shall affect rights or obligations of persons not parties thereto.
11. COMPENSATION AND REIMBURSEMENT OF TRUSTEE. The Trustee shall not be
entitled to compensation for his services in administering and distributing the
trust property, but he shall be entitled to, and the Stockholder agrees to pay
the Trustee, reimbursement for his reasonable expenses. The Trustee shall have
the right to incur and pay such reasonable expenses as he may deem necessary and
proper for carrying this agreement into effect. Any such expenses incurred by
and due to the Trustee may be deducted from the dividends or other moneys or
property received by the Trustee on the stock deposited hereunder. Nothing
herein contained shall disqualify the Trustee or successor Trustees, or
incapacitate them from serving the Company or any of its subsidiaries, as
officers or directors, or in any other capacities, and in any such capacities
receiving compensation.
12. INDEMNIFICATION. The Stockholder agrees to save harmless and
indemnify the Trustee against and from any claim, demand, liability, loss, cost
or expense, including reasonable attorneys' fees, sustained or incurred by the
Trustee as a result of or arising from services performed or actions taken
pursuant to this Voting Trust Agreement or arising in the course of the business
activities of the Company, provided such claim, demand, liability, loss, cost or
expense does not arise as a result of the willful misconduct or gross negligence
of the Trustee.
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<PAGE>
13. NOTICE.
13.1 METHOD OF GIVING NOTICE. Unless otherwise in this agreement
specifically provided, any notice to or communication with the holders of the
voting trust certificates hereunder shall be in writing and shall be deemed to
have been given when delivered by personal delivery, by telegraph or telex, or
by Federal Express or similar courier services or when deposited in the United
States mail, registered or certified, return receipt requested, with postage
prepaid, addressed to such holders at their respective addresses appearing on
the transfer books of the Trustee. The addresses of the holders of voting trust
certificates, as shown on the transfer books of the Trustee, shall in all cases
be deemed to be the addresses of voting trust certificate holders for all
purposes under this agreement, without regard to what other or different
addresses the Trustee may have for any voting trust certificate holder on any
other books or records of the Trustee. Every notice so given shall be
effective, whether or not received, and the date of such delivery or mailing
shall be the date such notice is deemed given for all purposes.
13.2 NOTICE TO COMPANY. Any notice to the Company hereunder shall
be in writing and shall be deemed to have been given when delivered in person to
an officer of the Company or when deposited in the United States mail,
registered or certified, return receipt requested, with postage prepaid,
addressed as follows: Universal Outdoor Holdings, Inc., 321 North Clark Street,
Suite 1010, Chicago, IL 60610, or to such other address as the Company may
designate by notice in writing to the Trustee.
13.3 NOTICE TO TRUSTEE. Any notice to the Trustee hereunder shall
be in writing and shall be deemed to have been given when sent in any manner
permitted under Section 13.1 above,
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<PAGE>
addressed to the Trustee at the Company's principal office, or at such other
addresses as may from time to time be furnished in writing to the Company by the
Trustee.
13.4 DISTRIBUTIONS. All distributions of cash, securities, or other
property hereunder by the Trustee to the holders of voting trust certificates
may be made, in the discretion of the Trustee, as the Trustee may deem
advisable, in the same manner herein provided for the giving of notices to the
holders of voting trust certificates.
14. COUNTERPARTS. This Voting Trust Agreement may be executed in any
number of counterparts, each of which so executed will be deemed to be an
original, but all of which together will constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have signed and sealed this
agreement, and the Stockholder has signed and sealed this agreement and has
stated the number of shares of capital stock of the Company deposited by him.
UNIVERSAL OUTDOOR HOLDINGS, INC.,
Attest: a Delaware corporation
By:
- ------------------------- -----------------------------------------------
-----------------------------------------------
Daniel Simon, Trustee
NUMBER OF SHARES STOCKHOLDER:
-----------------------------------------------
Brian Clingen
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<PAGE>
NO. 1 ______ Shares
Voting Trust Certificate for Capital Stock of
UNIVERSAL OUTDOOR HOLDINGS, INC.
A Delaware Corporation
This certifies that ______________ or registered permitted assigns as
provided in the Voting Trust Agreement dated _________ which is on file with the
Company (as defined below) is entitled to all the benefits arising from the
deposit with the Trustee under the Voting Trust Agreement hereinafter mentioned,
of certificates for ___________ (______) shares of the capital stock of
UNIVERSAL OUTDOOR HOLDINGS, INC., a Delaware corporation, hereinafter called the
Company, as provided in such Trust Agreement and subject to the terms thereof.
The registered holder hereof, or assigns, is entitled to receive payment equal
to the amount of cash dividends, if any, declared and distributed upon the
number of shares of capital stock of the Company in respect of which this
certificate is issued. Dividends received by the Trustee in common or other
stock of the Company and of other corporations having general voting powers or
convertible into stock having general voting powers shall be payable in voting
trust certificates, in form similar hereto. Until the Trustee shall have
delivered the Stock held under such Trust Agreement to the holders of the trust
certificates, or to the Company, as specified in such Trust Agreement, the
Trustee shall possess and shall be entitled to exercise substantially all rights
and powers of an absolute owner of such stock, including the right to vote
thereon, and to execute consents in respect thereof, it being expressly
stimulated that no voting right passes to the owner hereof, or his or her
assigns, under this certificate or any agreement, except as specifically
provided in such Trust Agreement.
This certificate is issued, received, and held under, and the rights of the
owner hereof are subject to, the terms of a Voting Trust Agreement dated
__________, 1995, among the Company
<PAGE>
and Daniel Simon, as Trustee, and his successors in trust, and Brian Clingen
(copies of which Voting Trust Agreement, and of every agreement amending or
supplementing the same, are on file in the principal office of the Company, and
shall be open to the inspection of any stockholder of the Company, or any
beneficiary of the trust under such agreement, daily during business hours), to
all the provisions of which Voting Trust Agreement the holder of this
certificate, by acceptance hereof assents, and by which he or she is bound with
like effect as if such Voting Trust Agreement had been signed by him or her in
person.
In the event of the dissolution or total or partial liquidation of the
Company, the moneys, securities, or property (except for any capital stock
having general voting powers or convertible into stock having general voting
powers) received by the Trustee in respect of the stock deposited under such
Trust Agreement shall be distributed among the registered holders of trust
certificates in proportion to their interests as shown by the books of the
Trustee.
In the event that any dividends or distribution other than in cash or stock
having general voting powers or convertible into stock having general voting
powers is received by the Trustee, the Trustee shall distribute the same to the
registered holders of voting trust certificates, pursuant to the provisions of
paragraph 5.5 of the Trust Agreement. Such distribution shall be made to the
certificate holders ratably in accordance with the number of shares represented
by their respective voting trust certificates.
Stock certificates for the number of shares of capital stock then
represented by this certificate, or the net proceeds in cash or property of such
shares, shall be due and deliverable hereunder upon the termination of such
Trust Agreement as provided therein.
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<PAGE>
The Voting Trust Agreement shall continue in full force and effect until
______________, 2015 (subject to extension as hereinafter set forth), unless
terminated prior thereto, as provided in the agreement. The agreement may be
extended for successive ten-year periods, as provided therein.
This certificate is transferable on the books of the Trustee at the
principal offices of the Company by the holder hereof, either in person or by
attorney duly authorized, in accordance with the provisions of the Trust
Agreement (and subject to the conditions, limitations and restrictions therein
set forth) and on surrender of this certificate properly endorsed. Title to
this certificate when duly endorsed shall be transferred, to the extent
permitted by law and the provisions of the Trust Agreement, be transferable with
the same effect as in the case of a negotiable instrument. Subject to the
foregoing, each holder hereof agrees that delivery of this certificate, duly
endorsed by any holder hereof, shall vest title hereto and all rights hereunder
in the transferee but the Trustee may treat the registered holder hereof, or
when presented duly endorsed in blank the bearer hereof, as the absolute owner
hereof, and of all rights and interests represented hereby, for all purposes
whatsoever, and the Trustee shall not be bound or affected by any notice to the
contrary, or by any notice of any trust, whether express or implied, or
constructive, or of any charge or equity respecting the title or ownership of
this certificate, or the shares of stock represented hereby. No delivery of
stock certificates hereunder, or the proceeds thereof, shall be made without
surrender of this certificate properly endorsed.
This certificate shall not be valid for any purpose until duly signed by
the Trustee.
The word "Trustee" as used in this certificate means the Original Trustee
or any successor Trustee or Trustees at any time acting under such Voting Trust
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Trustee has signed this certificate on
______________, 1995.
-------------------------------------------------------
Daniel Simon, Trustee
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<PAGE>
FORM OF ASSIGNMENT:
For value received, hereby assigns the within
certificate, and all rights and interests represented thereby, to
and appoints
attorney to transfer this certificate on the books of the Trustee mentioned
therein, with full power of substitution.
Dated:
-----------------------
(SEAL)
--------------------
In presence of:
- ------------------------------
- ------------------------------
NOTE: This signature of this assignment must correspond with the name as
written upon the face of this certificate in every particular, without
alteration, enlargement, or any change whatever. All endorsements, in the
discretion of the Trustee, shall be guaranteed by a bank or trust company
satisfactory to the Trustee.
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT is made ___________, 1996, among UNIVERSAL
OUTDOOR HOLDINGS, INC., a Delaware corporation, hereinafter called the
"Company", PAUL G. SIMON, who has executed this agreement as a stockholder of
the Company, hereinafter called the "Stockholder", and DANIEL L. SIMON, and his
successors in trust, hereinafter called the "Trustee";
WITNESSETH:
WHEREAS, the parties hereto deem it necessary and advisable, and for their
best interests, in order to secure their investment and to effect continuity and
stability of policy and management of the Company, that the Stockholder deposit
his shares of the common capital stock of the Company with the Trustee; and
WHEREAS, the Stockholder has agreed upon the person to be designated as the
Trustee, and upon the form of this agreement; and
WHEREAS, the Trustee has consented to act under this agreement for the
purposes herein provided in consideration of the irrevocable deposit of the
shares hereunder;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereto agree as follows:
1. AGREEMENT.
Copies of this agreement, and of every agreement supplemental hereto
or amendatory hereof, shall be filed in the principal office of the Company, and
shall be open to the inspection of any stockholder of the Company, or any
beneficiary of the trust under this agreement, daily during
<PAGE>
business hours. All voting trust certificates issued hereunder shall be issued,
received, and held subject to all the terms of this agreement.
2. TRANSFER OF STOCK TO TRUSTEE.
2.1 DEPOSIT OF CAPITAL STOCk. The Stockholder shall deposit with
the Trustee certificates for all capital stock of the Company as set forth after
his signature to this agreement or in the future owned by the Stockholder. Only
stock of the Company having general voting powers or convertible into stock
having general voting powers, as provided in the Certificate of Incorporation,
shall be deposited hereunder. In addition to the stock of the Company deposited
hereunder, the Stockholder shall also deposit any shares of voting capital stock
of the Company paid as a stock dividend or stock split on any shares deposited
hereunder, and any shares of voting capital stock of any other corporation paid
as a dividend or distribution, including a distribution in complete or partial
liquidation, on shares of stock of the Company deposited hereunder. All such
stock certificates shall be made out in the name of the Trustee, or so endorsed,
or accompanied by such instruments of transfer as to enable the Trustee to cause
such certificates to be transferred into the name of the Trustee. On receipt by
the Trustee of the certificates for any such shares of capital stock and the
transfer of the same into the name of the Trustee, the Trustee shall hold the
same subject to the terms of this agreement, and shall thereupon issue and
deliver to the Stockholder voting trust certificates for the capital stock
respectively deposited by them.
2.2 ISSUE OF STOCK CERTIFICATES TO TRUSTEE. All certificates for
capital stock of the Company transferred and delivered to the Trustee pursuant
to this agreement shall be surrendered by the Trustee to the Company and
canceled, and new certificates therefor shall be issued to and held
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<PAGE>
by the Trustee in the name of "Daniel L. Simon as Voting Trustee under Voting
Trust Agreement dated __________, 1996."
3. VOTING TRUST CERTIFICATES.
3.1 FORM. The voting trust certificates to be issued and delivered
by the Trustee in respect of the capital stock of the Company deposited
hereunder shall be in substantially the form of Exhibit A attached hereto and
made a part hereof.
3.2 TRANSFER OF CERTIFICATES. The voting trust certificates shall
be transferable at the principal office of the Company, on the books of the
Trustee, by the registered owner thereof, either in person or by attorney
thereto duly authorized, upon surrender thereof; and the Trustee may treat the
registered holder as owner thereof for all purposes whatsoever, but he shall not
be required to deliver stock certificates hereunder without the surrender of
such voting trust certificates.
3.3 LOST, STOLEN OR DESTROYED CERTIFICATES. If a voting trust
certificate is lost, stolen, mutilated, or destroyed, the Trustee, in his
discretion, may issue a duplicate of such certificate upon receipt of: (a)
evidence of such fact satisfactory to him; (b) indemnity satisfactory to him;
(c) the existing certificate, if mutilated; and (d) his reasonable fees and
expenses in connection with the issuance of a new trust certificate. The
Trustee shall not be required to recognize any transfer of a voting trust
certificate not made in accordance with the provisions hereof, unless the person
claiming such ownership shall have produced indicia of title satisfactory to the
Trustee, and shall in addition have deposited with the Trustee indemnity
satisfactory to him.
4. TERMINATION PROCEDURE.
4.1 NOTICE. Upon the termination of this agreement at any time, as
herein provided, the Trustee, at such time as he may choose during the period
commencing ten (10) days
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<PAGE>
before and ending ten (10) days after such termination, shall mail written
notice of such termination to the registered owners of the voting trust
certificates, at the addresses appearing on the transfer books of the Trustee.
From the date specified in any such notice (which date shall be fixed by the
Trustee), the voting trust certificates shall cease to have any effect, and the
holders of such voting trust certificates shall have no further rights under
this agreement other than to receive certificates for shares of stock of the
Company or other property distributable under the terms hereof and upon the
surrender of such voting trust certificates.
4.2 DELIVERY OF STOCK CERTIFICATES. Within ten (10) days after the
termination of this agreement, the Trustee shall deliver, to the registered
holders of all voting trust certificates, certificates for the number of shares
of the capital stock of the Company represented thereby upon the surrender to
the Trustee of the voting trust certificates, such delivery to be made in each
case at the office of the Company.
4.3 DEPOSIT WITH COMPANY. At any time subsequent to ten (10) days
after the termination of this agreement, the Trustee may deposit with the
Company stock certificates representing the number of shares of capital stock
represented by the voting trust certificates then outstanding, with authority in
writing to the Company to deliver such stock certificates in exchange for voting
trust certificates representing a like number of shares of the capital stock of
the Company; and upon such deposit all further liability of the Trustee for the
delivery of such stock certificates and the delivery or payment of dividends
upon surrender of the voting trust certificates shall cease, and the Trustee
shall not be required to take any further action hereunder.
5. DIVIDENDS.
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<PAGE>
5.1 CASH DIVIDENDS. Prior to the termination of this agreement, the
holder of each voting trust certificate shall be entitled to receive payments
equal to the cash dividends, if any, received by the Trustee upon a like number
and class of shares of capital stock of the Company as is called for by such
voting trust certificate.
5.2 STOCK DIVIDENDS. If any dividend in respect of the stock
deposited with the Trustee is paid, in whole or in part, in stock of the Company
having general voting powers or convertible into stock having general voting
powers, the Trustee shall receive such stock on behalf of the holder of the
voting trust certificate pertaining thereto and shall likewise hold, subject to
the terms of this agreement, the certificates for stock which are received by
him on account of such dividend on behalf of such holder, and the holder of each
voting trust certificate representing stock on which such stock dividend has
been paid shall be entitled to receive a voting trust certificate issued under
this agreement for the number of shares and class of stock received as such
dividend with respect to the shares represented by such voting trust
certificate.
5.3 PERSONS ENTITLED TO DIVIDENDS. Holders entitled to receive the
dividends discussed above shall be those registered as such on the transfer
books of the Trustee at the close of business on the day fixed by the Company
for the taking of a record to determine those holders of its stock entitled to
receive such dividends.
5.4 DIVIDENDS IN STOCK OF OTHER CORPORATIONS. If any shares of
voting capital stock or convertible into stock having general voting powers of
any corporation other than the Company are distributed, as a dividend or in
partial or complete liquidation, upon any shares of capital stock of the Company
deposited hereunder, then such shares shall be deposited hereunder, registered
and held in the name of the Trustee on behalf of the Stockholder. The term
"Company"
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<PAGE>
as used herein shall include, in addition to the Company, the issuer of such
other capital stock, and the holders of voting trust certificates shall be
entitled to receive new voting trust certificates representing such shares, in
substantially the form of Exhibit A attached hereto but with such changes,
additions and deletions as the Trustee may, in his discretion, deem necessary or
advisable in order to reflect the different issuer of such capital stock. In
the event of the receipt and deposit of any such shares, the Trustee shall
request the issuer to enter into this agreement as the "Company" hereunder. If
the issuer refuses, declines or is unable to enter into this agreement, the
validity hereof shall not be affected and this agreement shall continue in full
force and effect with respect to the shares of capital stock of such issuer,
unless otherwise provided by law, but the obligations and liabilities of such
issuer as the "Company" hereunder shall be of no force or effect except for
those obligations and liabilities as it may be required to undertake by law. In
the event there is more than one class of security held hereunder, then any
provision of this agreement which requires the vote, consent or approval of a
percentage of the voting trust certificate holders shall require the same
percentage of voting trust certificate holders representing each class of
securities deposited hereunder.
5.5 DIVIDENDS OTHER THAN CASH AND CAPITAL STOCK. If any dividend in
respect of the stock deposited with the Trustee is paid other than in cash, in
capital stock having general voting powers or convertible into stock having
general voting powers, then the Trustee shall distribute the same among the
holders of the voting trust certificates registered as such at the close of the
business on the day fixed by the Company for taking a record to determine the
holders of its stock entitled to receive such distribution. Such distribution
shall be made to such holders of voting trust certificates ratably, in
accordance with the number of shares represented by their respective voting
trust certificates.
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<PAGE>
5.6 CLOSING TRANSFER BOOKS. The transfer books of the Trustee may
be closed temporarily by the Trustee for a period not exceeding 20 days
preceding the date fixed for the payment or distribution of dividends or the
distribution of assets or rights, or at any other time in the discretion of the
Trustee. In lieu of providing for the closing of the books against the transfer
of voting trust certificates, the Trustee may fix a date not exceeding 20 days
preceding any date fixed by the Company for the payment or distribution of
dividends, or for the distribution of assets or rights, as a record date for the
determination of the holders of voting trust certificates entitled to receive
such payment or distribution, and the holders of voting trust certificates of
record at the close of business on such date shall exclusively be entitled to
participate in such payments or distribution.
5.7 DIVIDENDS MAY BE PAID DIRECTLY TO HOLDERS OF VOTING TRUST
CERTIFICATES. In lieu of receiving cash dividends upon the capital stock of the
Company and paying the same to the holders of voting trust certificates pursuant
to the provisions of this agreement, the Trustee shall instruct the Company in
writing to pay such dividends to the holders of the voting trust certificates.
Upon receipt of such written instructions, the Company shall pay such dividends
directly to the holders of the voting trust certificates. Upon such
instructions being given by the Trustee to the Company, all liability of the
Trustee with respect to such dividends shall cease.
6. SUBSCRIPTION RIGHTS.
In case any stock or other securities of the Company are offered for
subscription to the holders of capital stock of the Company deposited hereunder,
the Trustee, promptly upon receipt of notice of such offer, shall mail a copy
thereof to each of the holders of the voting trust certificates. Upon receipt
by the Trustee at least five days prior to the last day fixed by the Company for
subscription and payment, of a request from any such registered holder of voting
trust certificates to
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<PAGE>
subscribe in his or her behalf, accompanied with the sum of money required to
pay for such stock or securities (not in excess of the amount subject to
subscription in respect of the shares represented by the voting trust
certificate held by such certificate holder), the Trustee shall make such
subscription and payment, and upon receiving from the Company the certificates
for shares or securities so subscribed for, shall issue to such holder a voting
trust certificate in respect thereof if the same be stock having general voting
powers or convertible into stock having general voting powers, but if the same
be securities other than stock having general voting powers or convertible into
stock having general voting powers, the Trustee shall mail or deliver such
securities to the certificate holder in whose behalf the subscription was made,
or may instruct the Company to make delivery directly to the certificate holder
entitled thereto.
7. DISSOLUTION OF COMPANY.
In the event of the dissolution or total or partial liquidation of the
Company, whether voluntary or involuntary, the Trustee shall receive the moneys,
securities, rights, or property to which the holders of the capital stock of the
Company deposited hereunder are entitled and shall, subject to the provisions of
paragraph 2.1, distribute the same among the registered holders of voting trust
certificates in proportion to their interests, as shown by the books of the
Trustee.
8. REORGANIZATION OF COMPANY.
In case the Company is merged into or consolidated with another
corporation, or all or substantially all of the assets of the Company are
transferred to another corporation, then in connection with such transfer the
term "Company" for all purposes of this agreement shall be taken to include such
successor corporation, and the Trustee shall receive and hold under this
agreement any stock of such successor corporation received on account of the
ownership, as Trustee hereunder,
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<PAGE>
of the stock held hereunder prior to such merger, consolidation, and transfer.
Voting trust certificates issued and outstanding under this agreement at the
time of such merger, consolidation, or transfer may remain outstanding, or the
Trustee may, in his discretion, substitute for such voting trust certificates
new voting trust certificates in appropriate form, and the terms "stock" and
"capital stock" as used herein shall be taken to include any stock which may be
received by the Trustee in lieu of all or any part of the capital stock of the
Company.
9. THE TRUSTEE.
9.1 POWER TO VOTE. Until the actual delivery to the holders of
voting trust certificates issued hereunder of stock certificates in exchange
therefor, and until the surrender of the voting trust certificates for
cancellation, the Trustee shall have the right to exercise, in person or by
nominees or proxies, all stockholder rights and powers in respect of all stock
deposited hereunder, including the right to vote thereon and to take part in or
consent to any corporate or stockholder action of any kind whatsoever, subject
to the limitations set forth below in this Section 9.3. The right to vote shall
include the right to vote for the election of directors, and in favor of or
against any resolution or proposed action of any character whatsoever, which may
be presented at any meeting or require the consent of Stockholder of the
Company.
9.2 DUTY OF TRUSTEE. In voting the stock held hereunder either in
person or by nominee or proxy, the Trustee shall exercise his best judgment to
select suitable directors of the Company, and in voting upon any matters that
may come before any stockholders' meeting or be acted upon by the unanimous
consent of the stockholders, but shall not be personally responsible with
respect to any action taken pursuant to his vote so cast in any matter or act
committed or omitted to
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<PAGE>
be done under this agreement, provided such commission or omission does not
amount to willful misconduct or gross negligence on his part. Stockholder
acknowledges that Trustee is controlling stockholder, president and a
director of the Company. Stockholder agrees that Trustee shall be permitted
to vote the stock, subject to Section 9.1, as he deems appropriate even
though Trustee is an interested director, officer or stockholder.
9.3 RESIGNATION, DEATH AND SUCCESSOR TRUSTEES.
a. RESIGNATION. Daniel L. Simon shall be the original Trustee
hereunder ("Original Trustee"). The Original Trustee and any successor Trustee
may at any time resign by mailing to the registered holders of voting trust
certificates a written resignation, to take effect ten days thereafter or upon
the prior acceptance thereof.
b. SUCCESSOR TRUSTEES. Upon the death, resignation, failure,
refusal or inability to act of the Original Trustee, then a Trustee or Trustees
to serve hereunder shall be such as may have been designated by Daniel L. Simon,
or as designated by his legal representative, unless he is deceased or mentally
incompetent to do so, in which event the successor or successors shall be
designated by the registered holders of voting trust certificates issued and
outstanding representing a majority of the number of shares of stock outstanding
in the name of the Trustee and shall be approved by the Board of Directors of
the Company.
9.4 POWERS OF SUCCESSOR TRUSTEES. Subject to the provisions of
paragraph 9.4, the rights, powers, and privileges of the Trustee named hereunder
shall be possessed by the successor Trustees, with the same effect as though
such successors had originally been parties to this agreement. The word
"Trustee," as used in this agreement, means the Original Trustee or any
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<PAGE>
successor Trustee or Trustees acting hereunder, and shall include both the
single and the plural number.
10. TERM.
10.1 IRREVOCABLE TRUST. This agreement and the trust created hereby
is irrevocable, except as otherwise expressly provided herein. The holders of
voting trust certificates issued hereunder shall have no power or right to
terminate this agreement, or the trust created hereby, notwithstanding a
unanimous desire to do so. The holders acknowledge that the agreement of the
Trustee hereunder to act in such capacity is in consideration of the
irrevocability of this agreement.
10.2 TERMINATION BY TRUSTEE. This agreement shall continue in effect
until ____________, 2006 (subject to extension as hereinafter set forth), but
shall terminate at any time upon the execution and acknowledgment (as deeds for
conveyance of real estate are required to be acknowledged under the laws of
Delaware then in effect) by the Trustee hereunder of an instrument of
termination, duly filed in the principal office of the Company.
10.3 OPTIONAL TERMINATION BY VOTING TRUST CERTIFICATE HOLDERS. This
agreement, and the trust created hereby, may be terminated, at the option of the
holders of a majority of the voting trust certificates issued and outstanding,
by written notice to the Trustee at any time on or after the Company becomes a
publicly-held company. For purposes of this paragraph 10.3, the Company shall
be considered a publicly-held company at any time when its Common Stock is
subject to any reporting requirements (by statute, rule, or undertaking) of the
Securities Exchange Act of 1934, or any comparable statutes then in effect.
10.4 EXTENSION. At any time within two years prior to ___________,
2006, or at any time within two years prior to the time of expiration hereof as
extended, one or more holders of
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<PAGE>
voting trust certificates hereunder may, by agreement in writing and with the
written consent of the Trustee, extend the duration of this agreement for an
additional period not exceeding ten years. In the event of such extension,
the Trustee shall, prior to the time of expiration of the original term, or
as extended, as the case may be, file in the then principal office of the
Company, a copy of such extension agreement, and of the consent thereto, and
thereupon the duration of this voting trust agreement shall be extended for
the period fixed by such extension agreement; provided, however, that no such
extension agreement shall affect rights or obligations of persons not parties
thereto.
11. COMPENSATION AND REIMBURSEMENT OF TRUSTEE. The Trustee shall not be
entitled to compensation for his services in administering and distributing the
trust property, but he shall be entitled to, and the Stockholder agrees to pay
the Trustee, reimbursement for his reasonable expenses. The Trustee shall have
the right to incur and pay such reasonable expenses as he may deem necessary and
proper for carrying this agreement into effect. Any such expenses incurred by
and due to the Trustee may be deducted from the dividends or other moneys or
property received by the Trustee on the stock deposited hereunder. Nothing
herein contained shall disqualify the Trustee or successor Trustees, or
incapacitate them from serving the Company or any of its subsidiaries, as
officers or directors, or in any other capacities, and in any such capacities
receiving compensation.
12. INDEMNIFICATION. The Stockholder agrees to save harmless and
indemnify the Trustee against and from any claim, demand, liability, loss, cost
or expense, including reasonable attorneys' fees, sustained or incurred by the
Trustee as a result of or arising from services performed or actions taken
pursuant to this Voting Trust Agreement or arising in the course of the business
activities of the Company, provided such claim, demand, liability, loss, cost or
expense does not arise as a result of the willful misconduct or gross negligence
of the Trustee.
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<PAGE>
13. NOTICE.
13.1 METHOD OF GIVING NOTICE. Unless otherwise in this agreement
specifically provided, any notice to or communication with the holders of the
voting trust certificates hereunder shall be in writing and shall be deemed to
have been given when delivered by personal delivery, by telegraph or telex, or
by Federal Express or similar courier services or when deposited in the United
States mail, registered or certified, return receipt requested, with postage
prepaid, addressed to such holders at their respective addresses appearing on
the transfer books of the Trustee. The addresses of the holders of voting trust
certificates, as shown on the transfer books of the Trustee, shall in all cases
be deemed to be the addresses of voting trust certificate holders for all
purposes under this agreement, without regard to what other or different
addresses the Trustee may have for any voting trust certificate holder on any
other books or records of the Trustee. Every notice so given shall be
effective, whether or not received, and the date of such delivery or mailing
shall be the date such notice is deemed given for all purposes.
13.2 NOTICE TO COMPANY. Any notice to the Company hereunder shall be
in writing and shall be deemed to have been given when delivered in person to an
officer of the Company or when deposited in the United States mail, registered
or certified, return receipt requested, with postage prepaid, addressed as
follows: Universal Outdoor Holdings, Inc., 321 North Clark Street, Suite 1010,
Chicago, IL 60610, or to such other address as the Company may designate by
notice in writing to the Trustee.
13.3 NOTICE TO TRUSTEE. Any notice to the Trustee hereunder shall be
in writing and shall be deemed to have been given when sent in any manner
permitted under Section 13.1 above,
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<PAGE>
addressed to the Trustee at the Company's principal office, or at such other
addresses as may from time to time be furnished in writing to the Company by
the Trustee.
13.4 DISTRIBUTIONS. All distributions of cash, securities, or other
property hereunder by the Trustee to the holders of voting trust certificates
may be made, in the discretion of the Trustee, as the Trustee may deem
advisable, in the same manner herein provided for the giving of notices to the
holders of voting trust certificates.
14. COUNTERPARTS. This Voting Trust Agreement may be executed in any
number of counterparts, each of which so executed will be deemed to be an
original, but all of which together will constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have signed and sealed this
agreement, and the Stockholder has signed and sealed this agreement and has
stated the number of shares of capital stock of the Company deposited by him.
UNIVERSAL OUTDOOR HOLDINGS, INC.,
Attest: a Delaware corporation
By:
- ------------------------- -----------------------------------------
-----------------------------------------
Daniel L. Simon, Trustee
NUMBER OF SHARES STOCKHOLDER:
-----------------------------------------
Paul G. Simon
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<PAGE>
NO. 1 ______ Shares
Voting Trust Certificate for Capital Stock of
UNIVERSAL OUTDOOR HOLDINGS, INC.
A Delaware Corporation
This certifies that Paul G. Simon or registered permitted assigns as
provided in the Voting Trust Agreement dated _________, 1996 which is on file
with the Company (as defined below) is entitled to all the benefits arising from
the deposit with the Trustee under the Voting Trust Agreement hereinafter
mentioned, of certificates for ___________ (______) shares of the capital stock
of UNIVERSAL OUTDOOR HOLDINGS, INC., a Delaware corporation, hereinafter called
the Company, as provided in such Trust Agreement and subject to the terms
thereof. The registered holder hereof, or assigns, is entitled to receive
payment equal to the amount of cash dividends, if any, declared and distributed
upon the number of shares of capital stock of the Company in respect of which
this certificate is issued. Dividends received by the Trustee in common or
other stock of the Company and of other corporations having general voting
powers or convertible into stock having general voting powers shall be payable
in voting trust certificates, in form similar hereto. Until the Trustee shall
have delivered the Stock held under such Trust Agreement to the holders of the
trust certificates, or to the Company, as specified in such Trust Agreement, the
Trustee shall possess and shall be entitled to exercise substantially all rights
and powers of an absolute owner of such stock, including the right to vote
thereon, and to execute consents in respect thereof, it being expressly
stimulated that no voting right passes to the owner hereof, or his or her
assigns, under this certificate or any agreement, except as specifically
provided in such Trust Agreement.
This certificate is issued, received, and held under, and the rights of the
owner hereof are subject to, the terms of a Voting Trust Agreement dated
__________, 1996, among the Company
<PAGE>
and Daniel L. Simon, as Trustee, and his successors in trust, and Paul G. Simon
(copies of which Voting Trust Agreement, and of every agreement amending or
supplementing the same, are on file in the principal office of the Company, and
shall be open to the inspection of any stockholder of the Company, or any
beneficiary of the trust under such agreement, daily during business hours), to
all the provisions of which Voting Trust Agreement the holder of this
certificate, by acceptance hereof assents, and by which he or she is bound with
like effect as if such Voting Trust Agreement had been signed by him or her in
person.
In the event of the dissolution or total or partial liquidation of the
Company, the moneys, securities, or property (except for any capital stock
having general voting powers or convertible into stock having general voting
powers) received by the Trustee in respect of the stock deposited under such
Trust Agreement shall be distributed among the registered holders of trust
certificates in proportion to their interests as shown by the books of the
Trustee.
In the event that any dividends or distribution other than in cash or stock
having general voting powers or convertible into stock having general voting
powers is received by the Trustee, the Trustee shall distribute the same to the
registered holders of voting trust certificates, pursuant to the provisions of
paragraph 5.5 of the Trust Agreement. Such distribution shall be made to the
certificate holders ratably in accordance with the number of shares represented
by their respective voting trust certificates.
Stock certificates for the number of shares of capital stock then
represented by this certificate, or the net proceeds in cash or property of such
shares, shall be due and deliverable hereunder upon the termination of such
Trust Agreement as provided therein.
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<PAGE>
The Voting Trust Agreement shall continue in full force and effect until
______________, 2006 (subject to extension as hereinafter set forth), unless
terminated prior thereto, as provided in the agreement. The agreement may be
extended for successive ten-year periods, as provided therein.
This certificate is transferable on the books of the Trustee at the
principal offices of the Company by the holder hereof, either in person or by
attorney duly authorized, in accordance with the provisions of the Trust
Agreement (and subject to the conditions, limitations and restrictions therein
set forth) and on surrender of this certificate properly endorsed. Title to
this certificate when duly endorsed shall be transferred, to the extent
permitted by law and the provisions of the Trust Agreement, be transferable with
the same effect as in the case of a negotiable instrument. Subject to the
foregoing, each holder hereof agrees that delivery of this certificate, duly
endorsed by any holder hereof, shall vest title hereto and all rights hereunder
in the transferee but the Trustee may treat the registered holder hereof, or
when presented duly endorsed in blank the bearer hereof, as the absolute owner
hereof, and of all rights and interests represented hereby, for all purposes
whatsoever, and the Trustee shall not be bound or affected by any notice to the
contrary, or by any notice of any trust, whether express or implied, or
constructive, or of any charge or equity respecting the title or ownership of
this certificate, or the shares of stock represented hereby. No delivery of
stock certificates hereunder, or the proceeds thereof, shall be made without
surrender of this certificate properly endorsed.
This certificate shall not be valid for any purpose until duly signed by
the Trustee.
The word "Trustee" as used in this certificate means the Original Trustee
or any successor Trustee or Trustees at any time acting under such Voting Trust
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Trustee has signed this certificate on
______________, 1995.
-----------------------------------------
Daniel L. Simon, Trustee
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<PAGE>
FORM OF ASSIGNMENT:
For value received, hereby assigns the within
--------------------
certificate, and all rights and interests represented thereby, to
---------
and appoints
- ------------------------------ -------------------------------
attorney to transfer this certificate on the books of the Trustee mentioned
therein, with full power of substitution.
Dated:
-----------------------
(SEAL)
--------------------
In presence of:
- ------------------------------
- ------------------------------
NOTE: This signature of this assignment must correspond with the name as
written upon the face of this certificate in every particular, without
alteration, enlargement, or any change whatever. All endorsements, in the
discretion of the Trustee, shall be guaranteed by a bank or trust company
satisfactory to the Trustee.
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT is made ___________, 1996, among UNIVERSAL
OUTDOOR HOLDINGS, INC., a Delaware corporation, hereinafter called the
"Company", LAWRENCE SIMON, who has executed this agreement as a stockholder of
the Company, hereinafter called the "Stockholder", and DANIEL L. SIMON, and his
successors in trust, hereinafter called the "Trustee";
WITNESSETH:
WHEREAS, the parties hereto deem it necessary and advisable, and for their
best interests, in order to secure their investment and to effect continuity and
stability of policy and management of the Company, that the Stockholder deposit
his shares of the common capital stock of the Company with the Trustee; and
WHEREAS, the Stockholder has agreed upon the person to be designated as the
Trustee, and upon the form of this agreement; and
WHEREAS, the Trustee has consented to act under this agreement for the
purposes herein provided in consideration of the irrevocable deposit of the
shares hereunder;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereto agree as follows:
1. AGREEMENT.
Copies of this agreement, and of every agreement supplemental hereto
or amendatory hereof, shall be filed in the principal office of the Company, and
shall be open to the inspection of any stockholder of the Company, or any
beneficiary of the trust under this agreement, daily during
<PAGE>
business hours. All voting trust certificates issued hereunder shall be issued,
received, and held subject to all the terms of this agreement.
2. TRANSFER OF STOCK TO TRUSTEE.
2.1 DEPOSIT OF CAPITAL STOCK. The Stockholder shall deposit with
the Trustee certificates for all capital stock of the Company as set forth after
his signature to this agreement or in the future owned by the Stockholder. Only
stock of the Company having general voting powers or convertible into stock
having general voting powers, as provided in the Certificate of Incorporation,
shall be deposited hereunder. In addition to the stock of the Company deposited
hereunder, the Stockholder shall also deposit any shares of voting capital stock
of the Company paid as a stock dividend or stock split on any shares deposited
hereunder, and any shares of voting capital stock of any other corporation paid
as a dividend or distribution, including a distribution in complete or partial
liquidation, on shares of stock of the Company deposited hereunder. All such
stock certificates shall be made out in the name of the Trustee, or so endorsed,
or accompanied by such instruments of transfer as to enable the Trustee to cause
such certificates to be transferred into the name of the Trustee. On receipt by
the Trustee of the certificates for any such shares of capital stock and the
transfer of the same into the name of the Trustee, the Trustee shall hold the
same subject to the terms of this agreement, and shall thereupon issue and
deliver to the Stockholder voting trust certificates for the capital stock
respectively deposited by them.
2.2 ISSUE OF STOCK CERTIFICATES TO TRUSTEE. All certificates for
capital stock of the Company transferred and delivered to the Trustee pursuant
to this agreement shall be surrendered by the Trustee to the Company and
canceled, and new certificates therefor shall be issued to and held
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<PAGE>
by the Trustee in the name of "Daniel L. Simon as Voting Trustee under Voting
Trust Agreement dated __________, 1996."
3. VOTING TRUST CERTIFICATES.
3.1 FORM. The voting trust certificates to be issued and delivered
by the Trustee in respect of the capital stock of the Company deposited
hereunder shall be in substantially the form of Exhibit A attached hereto and
made a part hereof.
3.2 TRANSFER OF CERTIFICATES. The voting trust certificates shall
be transferable at the principal office of the Company, on the books of the
Trustee, by the registered owner thereof, either in person or by attorney
thereto duly authorized, upon surrender thereof; and the Trustee may treat the
registered holder as owner thereof for all purposes whatsoever, but he shall not
be required to deliver stock certificates hereunder without the surrender of
such voting trust certificates.
3.3 LOST, STOLEN OR DESTROYED CERTIFICATES. If a voting trust
certificate is lost, stolen, mutilated, or destroyed, the Trustee, in his
discretion, may issue a duplicate of such certificate upon receipt of: (a)
evidence of such fact satisfactory to him; (b) indemnity satisfactory to him;
(c) the existing certificate, if mutilated; and (d) his reasonable fees and
expenses in connection with the issuance of a new trust certificate. The
Trustee shall not be required to recognize any transfer of a voting trust
certificate not made in accordance with the provisions hereof, unless the person
claiming such ownership shall have produced indicia of title satisfactory to the
Trustee, and shall in addition have deposited with the Trustee indemnity
satisfactory to him.
4. TERMINATION PROCEDURE.
4.1 NOTICE. Upon the termination of this agreement at any time, as
herein provided, the Trustee, at such time as he may choose during the period
commencing ten (10) days
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<PAGE>
before and ending ten (10) days after such termination, shall mail written
notice of such termination to the registered owners of the voting trust
certificates, at the addresses appearing on the transfer books of the Trustee.
From the date specified in any such notice (which date shall be fixed by the
Trustee), the voting trust certificates shall cease to have any effect, and the
holders of such voting trust certificates shall have no further rights under
this agreement other than to receive certificates for shares of stock of the
Company or other property distributable under the terms hereof and upon the
surrender of such voting trust certificates.
4.2 DELIVERY OF STOCK CERTIFICATES. Within ten (10) days after the
termination of this agreement, the Trustee shall deliver, to the registered
holders of all voting trust certificates, certificates for the number of shares
of the capital stock of the Company represented thereby upon the surrender to
the Trustee of the voting trust certificates, such delivery to be made in each
case at the office of the Company.
4.3 DEPOSIT WITH COMPANY. At any time subsequent to ten (10) days
after the termination of this agreement, the Trustee may deposit with the
Company stock certificates representing the number of shares of capital stock
represented by the voting trust certificates then outstanding, with authority in
writing to the Company to deliver such stock certificates in exchange for voting
trust certificates representing a like number of shares of the capital stock of
the Company; and upon such deposit all further liability of the Trustee for the
delivery of such stock certificates and the delivery or payment of dividends
upon surrender of the voting trust certificates shall cease, and the Trustee
shall not be required to take any further action hereunder.
5. DIVIDENDS.
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<PAGE>
5.1 CASH DIVIDENDS. Prior to the termination of this agreement, the
holder of each voting trust certificate shall be entitled to receive payments
equal to the cash dividends, if any, received by the Trustee upon a like number
and class of shares of capital stock of the Company as is called for by such
voting trust certificate.
5.2 STOCK DIVIDENDS. If any dividend in respect of the stock
deposited with the Trustee is paid, in whole or in part, in stock of the Company
having general voting powers or convertible into stock having general voting
powers, the Trustee shall receive such stock on behalf of the holder of the
voting trust certificate pertaining thereto and shall likewise hold, subject to
the terms of this agreement, the certificates for stock which are received by
him on account of such dividend on behalf of such holder, and the holder of each
voting trust certificate representing stock on which such stock dividend has
been paid shall be entitled to receive a voting trust certificate issued under
this agreement for the number of shares and class of stock received as such
dividend with respect to the shares represented by such voting trust
certificate.
5.3 PERSONS ENTITLED TO DIVIDENDS. Holders entitled to receive the
dividends discussed above shall be those registered as such on the transfer
books of the Trustee at the close of business on the day fixed by the Company
for the taking of a record to determine those holders of its stock entitled to
receive such dividends.
5.4 DIVIDENDS IN STOCK OF OTHER CORPORATIONS. If any shares of
voting capital stock or convertible into stock having general voting powers of
any corporation other than the Company are distributed, as a dividend or in
partial or complete liquidation, upon any shares of capital stock of the Company
deposited hereunder, then such shares shall be deposited hereunder, registered
and held in the name of the Trustee on behalf of the Stockholder. The term
"Company"
-5-
<PAGE>
as used herein shall include, in addition to the Company, the issuer of such
other capital stock, and the holders of voting trust certificates shall be
entitled to receive new voting trust certificates representing such shares, in
substantially the form of Exhibit A attached hereto but with such changes,
additions and deletions as the Trustee may, in his discretion, deem necessary or
advisable in order to reflect the different issuer of such capital stock. In
the event of the receipt and deposit of any such shares, the Trustee shall
request the issuer to enter into this agreement as the "Company" hereunder. If
the issuer refuses, declines or is unable to enter into this agreement, the
validity hereof shall not be affected and this agreement shall continue in full
force and effect with respect to the shares of capital stock of such issuer,
unless otherwise provided by law, but the obligations and liabilities of such
issuer as the "Company" hereunder shall be of no force or effect except for
those obligations and liabilities as it may be required to undertake by law. In
the event there is more than one class of security held hereunder, then any
provision of this agreement which requires the vote, consent or approval of a
percentage of the voting trust certificate holders shall require the same
percentage of voting trust certificate holders representing each class of
securities deposited hereunder.
5.5 DIVIDENDS OTHER THAN CASH AND CAPITAL STOCK. If any dividend in
respect of the stock deposited with the Trustee is paid other than in cash, in
capital stock having general voting powers or convertible into stock having
general voting powers, then the Trustee shall distribute the same among the
holders of the voting trust certificates registered as such at the close of the
business on the day fixed by the Company for taking a record to determine the
holders of its stock entitled to receive such distribution. Such distribution
shall be made to such holders of voting trust certificates ratably, in
accordance with the number of shares represented by their respective voting
trust certificates.
-6-
<PAGE>
5.6 CLOSING TRANSFER BOOKS. The transfer books of the Trustee may
be closed temporarily by the Trustee for a period not exceeding 20 days
preceding the date fixed for the payment or distribution of dividends or the
distribution of assets or rights, or at any other time in the discretion of the
Trustee. In lieu of providing for the closing of the books against the transfer
of voting trust certificates, the Trustee may fix a date not exceeding 20 days
preceding any date fixed by the Company for the payment or distribution of
dividends, or for the distribution of assets or rights, as a record date for the
determination of the holders of voting trust certificates entitled to receive
such payment or distribution, and the holders of voting trust certificates of
record at the close of business on such date shall exclusively be entitled to
participate in such payments or distribution.
5.7 DIVIDENDS MAY BE PAID DIRECTLY TO HOLDERS OF VOTING TRUST
CERTIFICATES. In lieu of receiving cash dividends upon the capital stock of the
Company and paying the same to the holders of voting trust certificates pursuant
to the provisions of this agreement, the Trustee shall instruct the Company in
writing to pay such dividends to the holders of the voting trust certificates.
Upon receipt of such written instructions, the Company shall pay such dividends
directly to the holders of the voting trust certificates. Upon such
instructions being given by the Trustee to the Company, all liability of the
Trustee with respect to such dividends shall cease.
6. SUBSCRIPTION RIGHTS.
In case any stock or other securities of the Company are offered for
subscription to the holders of capital stock of the Company deposited hereunder,
the Trustee, promptly upon receipt of notice of such offer, shall mail a copy
thereof to each of the holders of the voting trust certificates. Upon receipt
by the Trustee at least five days prior to the last day fixed by the Company for
subscription and payment, of a request from any such registered holder of voting
trust certificates to
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<PAGE>
subscribe in his or her behalf, accompanied with the sum of money required to
pay for such stock or securities (not in excess of the amount subject to
subscription in respect of the shares represented by the voting trust
certificate held by such certificate holder), the Trustee shall make such
subscription and payment, and upon receiving from the Company the certificates
for shares or securities so subscribed for, shall issue to such holder a voting
trust certificate in respect thereof if the same be stock having general voting
powers or convertible into stock having general voting powers, but if the same
be securities other than stock having general voting powers or convertible into
stock having general voting powers, the Trustee shall mail or deliver such
securities to the certificate holder in whose behalf the subscription was made,
or may instruct the Company to make delivery directly to the certificate holder
entitled thereto.
7. DISSOLUTION OF COMPANY.
In the event of the dissolution or total or partial liquidation of the
Company, whether voluntary or involuntary, the Trustee shall receive the moneys,
securities, rights, or property to which the holders of the capital stock of the
Company deposited hereunder are entitled and shall, subject to the provisions of
paragraph 2.1, distribute the same among the registered holders of voting trust
certificates in proportion to their interests, as shown by the books of the
Trustee.
8. REORGANIZATION OF COMPANY.
In case the Company is merged into or consolidated with another
corporation, or all or substantially all of the assets of the Company are
transferred to another corporation, then in connection with such transfer the
term "Company" for all purposes of this agreement shall be taken to include such
successor corporation, and the Trustee shall receive and hold under this
agreement any stock of such successor corporation received on account of the
ownership, as Trustee hereunder,
-8-
<PAGE>
of the stock held hereunder prior to such merger, consolidation, and transfer.
Voting trust certificates issued and outstanding under this agreement at the
time of such merger, consolidation, or transfer may remain outstanding, or the
Trustee may, in his discretion, substitute for such voting trust certificates
new voting trust certificates in appropriate form, and the terms "stock" and
"capital stock" as used herein shall be taken to include any stock which may be
received by the Trustee in lieu of all or any part of the capital stock of the
Company.
9. THE TRUSTEE.
9.1 POWER TO VOTE. Until the actual delivery to the holders of
voting trust certificates issued hereunder of stock certificates in exchange
therefor, and until the surrender of the voting trust certificates for
cancellation, the Trustee shall have the right to exercise, in person or by
nominees or proxies, all stockholder rights and powers in respect of all stock
deposited hereunder, including the right to vote thereon and to take part in or
consent to any corporate or stockholder action of any kind whatsoever, subject
to the limitations set forth below in this Section 9.3. The right to vote shall
include the right to vote for the election of directors, and in favor of or
against any resolution or proposed action of any character whatsoever, which may
be presented at any meeting or require the consent of Stockholder of the
Company.
9.2 DUTY OF TRUSTEE. In voting the stock held hereunder either in
person or by nominee or proxy, the Trustee shall exercise his best judgment to
select suitable directors of the Company, and in voting upon any matters that
may come before any stockholders' meeting or be acted upon by the unanimous
consent of the stockholders, but shall not be personally responsible with
respect to any action taken pursuant to his vote so cast in any matter or act
committed or omitted to be done under this agreement, provided such commission
or omission does not amount to willful
-9-
<PAGE>
misconduct or gross negligence on his part. Stockholder acknowledges that
Trustee is controlling stockholder, president and a director of the Company.
Stockholder agrees that Trustee shall be permitted to vote the stock, subject to
Section 9.1, as he deems appropriate even though Trustee is an interested
director, officer or stockholder.
9.3 RESIGNATION, DEATH AND SUCCESSOR TRUSTEES.
a. RESIGNATION. Daniel L. Simon shall be the original Trustee
hereunder ("Original Trustee"). The Original Trustee and any successor Trustee
may at any time resign by mailing to the registered holders of voting trust
certificates a written resignation, to take effect ten days thereafter or upon
the prior acceptance thereof.
b. SUCCESSOR TRUSTEES. Upon the death, resignation, failure,
refusal or inability to act of the Original Trustee, then a Trustee or Trustees
to serve hereunder shall be such as may have been designated by Daniel L. Simon,
or as designated by his legal representative, unless he is deceased or mentally
incompetent to do so, in which event the successor or successors shall be
designated by the registered holders of voting trust certificates issued and
outstanding representing a majority of the number of shares of stock outstanding
in the name of the Trustee and shall be approved by the Board of Directors of
the Company.
9.4 POWERS OF SUCCESSOR TRUSTEES. Subject to the provisions of
paragraph 9.4, the rights, powers, and privileges of the Trustee named hereunder
shall be possessed by the successor Trustees, with the same effect as though
such successors had originally been parties to this agreement. The word
"Trustee," as used in this agreement, means the Original Trustee or any
successor Trustee or Trustees acting hereunder, and shall include both the
single and the plural number.
-10-
<PAGE>
10. TERM.
10.1 IRREVOCABLE TRUST. This agreement and the trust created hereby
is irrevocable, except as otherwise expressly provided herein. The holders of
voting trust certificates issued hereunder shall have no power or right to
terminate this agreement, or the trust created hereby, notwithstanding a
unanimous desire to do so. The holders acknowledge that the agreement of the
Trustee hereunder to act in such capacity is in consideration of the
irrevocability of this agreement.
10.2 TERMINATION BY TRUSTEE. This agreement shall continue in effect
until ____________, 2006 (subject to extension as hereinafter set forth), but
shall terminate at any time upon the execution and acknowledgment (as deeds for
conveyance of real estate are required to be acknowledged under the laws of
Delaware then in effect) by the Trustee hereunder of an instrument of
termination, duly filed in the principal office of the Company.
10.3 OPTIONAL TERMINATION BY VOTING TRUST CERTIFICATE HOLDERS. This
agreement, and the trust created hereby, may be terminated, at the option of the
holders of a majority of the voting trust certificates issued and outstanding,
by written notice to the Trustee at any time on or after the Company becomes a
publicly-held company. For purposes of this paragraph 10.3, the Company shall
be considered a publicly-held company at any time when its Common Stock is
subject to any reporting requirements (by statute, rule, or undertaking) of the
Securities Exchange Act of 1934, or any comparable statutes then in effect.
10.4 EXTENSION. At any time within two years prior to ___________,
2006, or at any time within two years prior to the time of expiration hereof as
extended, one or more holders of voting trust certificates hereunder may, by
agreement in writing and with the written consent of the Trustee, extend the
duration of this agreement for an additional period not exceeding ten years. In
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<PAGE>
the event of such extension, the Trustee shall, prior to the time of expiration
of the original term, or as extended, as the case may be, file in the then
principal office of the Company, a copy of such extension agreement, and of the
consent thereto, and thereupon the duration of this voting trust agreement shall
be extended for the period fixed by such extension agreement; provided, however,
that no such extension agreement shall affect rights or obligations of persons
not parties thereto.
11. COMPENSATION AND REIMBURSEMENT OF TRUSTEE. The Trustee shall not be
entitled to compensation for his services in administering and distributing the
trust property, but he shall be entitled to, and the Stockholder agrees to pay
the Trustee, reimbursement for his reasonable expenses. The Trustee shall have
the right to incur and pay such reasonable expenses as he may deem necessary and
proper for carrying this agreement into effect. Any such expenses incurred by
and due to the Trustee may be deducted from the dividends or other moneys or
property received by the Trustee on the stock deposited hereunder. Nothing
herein contained shall disqualify the Trustee or successor Trustees, or
incapacitate them from serving the Company or any of its subsidiaries, as
officers or directors, or in any other capacities, and in any such capacities
receiving compensation.
12. INDEMNIFICATION. The Stockholder agrees to save harmless and
indemnify the Trustee against and from any claim, demand, liability, loss, cost
or expense, including reasonable attorneys' fees, sustained or incurred by the
Trustee as a result of or arising from services performed or actions taken
pursuant to this Voting Trust Agreement or arising in the course of the business
activities of the Company, provided such claim, demand, liability, loss, cost or
expense does not arise as a result of the willful misconduct or gross negligence
of the Trustee.
13. NOTICE.
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<PAGE>
13.1 METHOD OF GIVING NOTICE. Unless otherwise in this agreement
specifically provided, any notice to or communication with the holders of the
voting trust certificates hereunder shall be in writing and shall be deemed to
have been given when delivered by personal delivery, by telegraph or telex, or
by Federal Express or similar courier services or when deposited in the United
States mail, registered or certified, return receipt requested, with postage
prepaid, addressed to such holders at their respective addresses appearing on
the transfer books of the Trustee. The addresses of the holders of voting trust
certificates, as shown on the transfer books of the Trustee, shall in all cases
be deemed to be the addresses of voting trust certificate holders for all
purposes under this agreement, without regard to what other or different
addresses the Trustee may have for any voting trust certificate holder on any
other books or records of the Trustee. Every notice so given shall be
effective, whether or not received, and the date of such delivery or mailing
shall be the date such notice is deemed given for all purposes.
13.2 NOTICE TO COMPANY. Any notice to the Company hereunder shall be
in writing and shall be deemed to have been given when delivered in person to an
officer of the Company or when deposited in the United States mail, registered
or certified, return receipt requested, with postage prepaid, addressed as
follows: Universal Outdoor Holdings, Inc., 321 North Clark Street, Suite 1010,
Chicago, IL 60610, or to such other address as the Company may designate by
notice in writing to the Trustee.
13.3 NOTICE TO TRUSTEE. Any notice to the Trustee hereunder shall be
in writing and shall be deemed to have been given when sent in any manner
permitted under Section 13.1 above, addressed to the Trustee at the Company's
principal office, or at such other addresses as may from time to time be
furnished in writing to the Company by the Trustee.
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<PAGE>
13.4 DISTRIBUTIONS. All distributions of cash, securities, or other
property hereunder by the Trustee to the holders of voting trust certificates
may be made, in the discretion of the Trustee, as the Trustee may deem
advisable, in the same manner herein provided for the giving of notices to the
holders of voting trust certificates.
14. COUNTERPARTS. This Voting Trust Agreement may be executed in any
number of counterparts, each of which so executed will be deemed to be an
original, but all of which together will constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have signed and sealed this
agreement, and the Stockholder has signed and sealed this agreement and has
stated the number of shares of capital stock of the Company deposited by him.
UNIVERSAL OUTDOOR HOLDINGS, INC.,
Attest: a Delaware corporation
By:
- ------------------------- -----------------------------------------
-----------------------------------------
Daniel L. Simon, Trustee
NUMBER OF SHARES STOCKHOLDER:
-----------------------------------------
Lawrence Simon
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<PAGE>
NO. 1 ______ Shares
Voting Trust Certificate for Capital Stock of
UNIVERSAL OUTDOOR HOLDINGS, INC.
A Delaware Corporation
This certifies that Lawrence Simon or registered permitted assigns as
provided in the Voting Trust Agreement dated _________, 1996 which is on file
with the Company (as defined below) is entitled to all the benefits arising from
the deposit with the Trustee under the Voting Trust Agreement hereinafter
mentioned, of certificates for ___________ (______) shares of the capital stock
of UNIVERSAL OUTDOOR HOLDINGS, INC., a Delaware corporation, hereinafter called
the Company, as provided in such Trust Agreement and subject to the terms
thereof. The registered holder hereof, or assigns, is entitled to receive
payment equal to the amount of cash dividends, if any, declared and distributed
upon the number of shares of capital stock of the Company in respect of which
this certificate is issued. Dividends received by the Trustee in common or
other stock of the Company and of other corporations having general voting
powers or convertible into stock having general voting powers shall be payable
in voting trust certificates, in form similar hereto. Until the Trustee shall
have delivered the Stock held under such Trust Agreement to the holders of the
trust certificates, or to the Company, as specified in such Trust Agreement, the
Trustee shall possess and shall be entitled to exercise substantially all rights
and powers of an absolute owner of such stock, including the right to vote
thereon, and to execute consents in respect thereof, it being expressly
stimulated that no voting right passes to the owner hereof, or his or her
assigns, under this certificate or any agreement, except as specifically
provided in such Trust Agreement.
This certificate is issued, received, and held under, and the rights of the
owner hereof are subject to, the terms of a Voting Trust Agreement dated
__________, 1996, among the Company
<PAGE>
and Daniel L. Simon, as Trustee, and his successors in trust, and Lawrence Simon
(copies of which Voting Trust Agreement, and of every agreement amending or
supplementing the same, are on file in the principal office of the Company, and
shall be open to the inspection of any stockholder of the Company, or any
beneficiary of the trust under such agreement, daily during business hours), to
all the provisions of which Voting Trust Agreement the holder of this
certificate, by acceptance hereof assents, and by which he or she is bound with
like effect as if such Voting Trust Agreement had been signed by him or her in
person.
In the event of the dissolution or total or partial liquidation of the
Company, the moneys, securities, or property (except for any capital stock
having general voting powers or convertible into stock having general voting
powers) received by the Trustee in respect of the stock deposited under such
Trust Agreement shall be distributed among the registered holders of trust
certificates in proportion to their interests as shown by the books of the
Trustee.
In the event that any dividends or distribution other than in cash or stock
having general voting powers or convertible into stock having general voting
powers is received by the Trustee, the Trustee shall distribute the same to the
registered holders of voting trust certificates, pursuant to the provisions of
paragraph 5.5 of the Trust Agreement. Such distribution shall be made to the
certificate holders ratably in accordance with the number of shares represented
by their respective voting trust certificates.
Stock certificates for the number of shares of capital stock then
represented by this certificate, or the net proceeds in cash or property of such
shares, shall be due and deliverable hereunder upon the termination of such
Trust Agreement as provided therein.
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<PAGE>
The Voting Trust Agreement shall continue in full force and effect until
______________, 2006 (subject to extension as hereinafter set forth), unless
terminated prior thereto, as provided in the agreement. The agreement may be
extended for successive ten-year periods, as provided therein.
This certificate is transferable on the books of the Trustee at the
principal offices of the Company by the holder hereof, either in person or by
attorney duly authorized, in accordance with the provisions of the Trust
Agreement (and subject to the conditions, limitations and restrictions therein
set forth) and on surrender of this certificate properly endorsed. Title to
this certificate when duly endorsed shall be transferred, to the extent
permitted by law and the provisions of the Trust Agreement, be transferable with
the same effect as in the case of a negotiable instrument. Subject to the
foregoing, each holder hereof agrees that delivery of this certificate, duly
endorsed by any holder hereof, shall vest title hereto and all rights hereunder
in the transferee but the Trustee may treat the registered holder hereof, or
when presented duly endorsed in blank the bearer hereof, as the absolute owner
hereof, and of all rights and interests represented hereby, for all purposes
whatsoever, and the Trustee shall not be bound or affected by any notice to the
contrary, or by any notice of any trust, whether express or implied, or
constructive, or of any charge or equity respecting the title or ownership of
this certificate, or the shares of stock represented hereby. No delivery of
stock certificates hereunder, or the proceeds thereof, shall be made without
surrender of this certificate properly endorsed.
This certificate shall not be valid for any purpose until duly signed by
the Trustee.
The word "Trustee" as used in this certificate means the Original Trustee
or any successor Trustee or Trustees at any time acting under such Voting Trust
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Trustee has signed this certificate on
______________, 1995.
-----------------------------------------
Daniel L. Simon, Trustee
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<PAGE>
FORM OF ASSIGNMENT:
For value received, hereby assigns the within
--------------------
certificate, and all rights and interests represented thereby, to
---------
and appoints
- ------------------------------ -------------------------------
attorney to transfer this certificate on the books of the Trustee mentioned
therein, with full power of substitution.
Dated:
-----------------------
(SEAL)
--------------------
In presence of:
- ------------------------------
- ------------------------------
NOTE: This signature of this assignment must correspond with the name as
written upon the face of this certificate in every particular, without
alteration, enlargement, or any change whatever. All endorsements, in the
discretion of the Trustee, shall be guaranteed by a bank or trust company
satisfactory to the Trustee.
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT is made ___________, 1996, among UNIVERSAL
OUTDOOR HOLDINGS, INC., a Delaware corporation, hereinafter called the
"Company", WILLIAM H. SMITH, who has executed this agreement as a stockholder of
the Company, hereinafter called the "Stockholder", and DANIEL L. SIMON, and his
successors in trust, hereinafter called the "Trustee";
WITNESSETH:
WHEREAS, the parties hereto deem it necessary and advisable, and for their
best interests, in order to secure their investment and to effect continuity and
stability of policy and management of the Company, that the Stockholder deposit
his shares of the common capital stock of the Company with the Trustee; and
WHEREAS, the Stockholder has agreed upon the person to be designated as the
Trustee, and upon the form of this agreement; and
WHEREAS, the Trustee has consented to act under this agreement for the
purposes herein provided in consideration of the irrevocable deposit of the
shares hereunder;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereto agree as follows:
1. AGREEMENT.
Copies of this agreement, and of every agreement supplemental hereto
or amendatory hereof, shall be filed in the principal office of the Company, and
shall be open to the inspection of any stockholder of the Company, or any
beneficiary of the trust under this agreement, daily during
<PAGE>
business hours. All voting trust certificates issued hereunder shall be issued,
received, and held subject to all the terms of this agreement.
2. TRANSFER OF STOCK TO TRUSTEE.
2.1 DEPOSIT OF CAPITAL STOCK. The Stockholder shall deposit with
the Trustee certificates for all capital stock of the Company as set forth after
his signature to this agreement or in the future owned by the Stockholder. Only
stock of the Company having general voting powers or convertible into stock
having general voting powers, as provided in the Certificate of Incorporation,
shall be deposited hereunder. In addition to the stock of the Company deposited
hereunder, the Stockholder shall also deposit any shares of voting capital stock
of the Company paid as a stock dividend or stock split on any shares deposited
hereunder, and any shares of voting capital stock of any other corporation paid
as a dividend or distribution, including a distribution in complete or partial
liquidation, on shares of stock of the Company deposited hereunder. All such
stock certificates shall be made out in the name of the Trustee, or so endorsed,
or accompanied by such instruments of transfer as to enable the Trustee to cause
such certificates to be transferred into the name of the Trustee. On receipt by
the Trustee of the certificates for any such shares of capital stock and the
transfer of the same into the name of the Trustee, the Trustee shall hold the
same subject to the terms of this agreement, and shall thereupon issue and
deliver to the Stockholder voting trust certificates for the capital stock
respectively deposited by them.
2.2 ISSUE OF STOCK CERTIFICATES TO TRUSTEE. All certificates for
capital stock of the Company transferred and delivered to the Trustee pursuant
to this agreement shall be surrendered by the Trustee to the Company and
canceled, and new certificates therefor shall be issued to and held
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<PAGE>
by the Trustee in the name of "Daniel L. Simon as Voting Trustee under Voting
Trust Agreement dated __________, 1996."
3. VOTING TRUST CERTIFICATES.
3.1 FORM. The voting trust certificates to be issued and delivered
by the Trustee in respect of the capital stock of the Company deposited
hereunder shall be in substantially the form of Exhibit A attached hereto and
made a part hereof.
3.2 TRANSFER OF CERTIFICATES. The voting trust certificates shall
be transferable at the principal office of the Company, on the books of the
Trustee, by the registered owner thereof, either in person or by attorney
thereto duly authorized, upon surrender thereof; and the Trustee may treat the
registered holder as owner thereof for all purposes whatsoever, but he shall not
be required to deliver stock certificates hereunder without the surrender of
such voting trust certificates.
3.3 LOST, STOLEN OR DESTROYED CERTIFICATES. If a voting trust
certificate is lost, stolen, mutilated, or destroyed, the Trustee, in his
discretion, may issue a duplicate of such certificate upon receipt of: (a)
evidence of such fact satisfactory to him; (b) indemnity satisfactory to him;
(c) the existing certificate, if mutilated; and (d) his reasonable fees and
expenses in connection with the issuance of a new trust certificate. The
Trustee shall not be required to recognize any transfer of a voting trust
certificate not made in accordance with the provisions hereof, unless the person
claiming such ownership shall have produced indicia of title satisfactory to the
Trustee, and shall in addition have deposited with the Trustee indemnity
satisfactory to him.
4. TERMINATION PROCEDURE.
4.1 NOTICE. Upon the termination of this agreement at any time, as
herein provided, the Trustee, at such time as he may choose during the period
commencing ten (10) days
-3-
<PAGE>
before and ending ten (10) days after such termination, shall mail written
notice of such termination to the registered owners of the voting trust
certificates, at the addresses appearing on the transfer books of the Trustee.
From the date specified in any such notice (which date shall be fixed by the
Trustee), the voting trust certificates shall cease to have any effect, and the
holders of such voting trust certificates shall have no further rights under
this agreement other than to receive certificates for shares of stock of the
Company or other property distributable under the terms hereof and upon the
surrender of such voting trust certificates.
4.2 DELIVERY OF STOCK CERTIFICATES. Within ten (10) days after the
termination of this agreement, the Trustee shall deliver, to the registered
holders of all voting trust certificates, certificates for the number of shares
of the capital stock of the Company represented thereby upon the surrender to
the Trustee of the voting trust certificates, such delivery to be made in each
case at the office of the Company.
4.3 DEPOSIT WITH COMPANY. At any time subsequent to ten (10) days
after the termination of this agreement, the Trustee may deposit with the
Company stock certificates representing the number of shares of capital stock
represented by the voting trust certificates then outstanding, with authority in
writing to the Company to deliver such stock certificates in exchange for voting
trust certificates representing a like number of shares of the capital stock of
the Company; and upon such deposit all further liability of the Trustee for the
delivery of such stock certificates and the delivery or payment of dividends
upon surrender of the voting trust certificates shall cease, and the Trustee
shall not be required to take any further action hereunder.
5. DIVIDENDS.
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<PAGE>
5.1 CASH DIVIDENDS. Prior to the termination of this agreement, the
holder of each voting trust certificate shall be entitled to receive payments
equal to the cash dividends, if any, received by the Trustee upon a like number
and class of shares of capital stock of the Company as is called for by such
voting trust certificate.
5.2 STOCK DIVIDENDS. If any dividend in respect of the stock
deposited with the Trustee is paid, in whole or in part, in stock of the Company
having general voting powers or convertible into stock having general voting
powers, the Trustee shall receive such stock on behalf of the holder of the
voting trust certificate pertaining thereto and shall likewise hold, subject to
the terms of this agreement, the certificates for stock which are received by
him on account of such dividend on behalf of such holder, and the holder of each
voting trust certificate representing stock on which such stock dividend has
been paid shall be entitled to receive a voting trust certificate issued under
this agreement for the number of shares and class of stock received as such
dividend with respect to the shares represented by such voting trust
certificate.
5.3 PERSONS ENTITLED TO DIVIDENDS. Holders entitled to receive the
dividends discussed above shall be those registered as such on the transfer
books of the Trustee at the close of business on the day fixed by the Company
for the taking of a record to determine those holders of its stock entitled to
receive such dividends.
5.4 DIVIDENDS IN STOCK OF OTHER CORPORATIONS. If any shares of
voting capital stock or convertible into stock having general voting powers of
any corporation other than the Company are distributed, as a dividend or in
partial or complete liquidation, upon any shares of capital stock of the Company
deposited hereunder, then such shares shall be deposited hereunder, registered
and held in the name of the Trustee on behalf of the Stockholder. The term
"Company"
-5-
<PAGE>
as used herein shall include, in addition to the Company, the issuer of such
other capital stock, and the holders of voting trust certificates shall be
entitled to receive new voting trust certificates representing such shares, in
substantially the form of Exhibit A attached hereto but with such changes,
additions and deletions as the Trustee may, in his discretion, deem necessary or
advisable in order to reflect the different issuer of such capital stock. In
the event of the receipt and deposit of any such shares, the Trustee shall
request the issuer to enter into this agreement as the "Company" hereunder. If
the issuer refuses, declines or is unable to enter into this agreement, the
validity hereof shall not be affected and this agreement shall continue in full
force and effect with respect to the shares of capital stock of such issuer,
unless otherwise provided by law, but the obligations and liabilities of such
issuer as the "Company" hereunder shall be of no force or effect except for
those obligations and liabilities as it may be required to undertake by law. In
the event there is more than one class of security held hereunder, then any
provision of this agreement which requires the vote, consent or approval of a
percentage of the voting trust certificate holders shall require the same
percentage of voting trust certificate holders representing each class of
securities deposited hereunder.
5.5 DIVIDENDS OTHER THAN CASH AND CAPITAL STOCK. If any dividend in
respect of the stock deposited with the Trustee is paid other than in cash, in
capital stock having general voting powers or convertible into stock having
general voting powers, then the Trustee shall distribute the same among the
holders of the voting trust certificates registered as such at the close of the
business on the day fixed by the Company for taking a record to determine the
holders of its stock entitled to receive such distribution. Such distribution
shall be made to such holders of voting trust certificates ratably, in
accordance with the number of shares represented by their respective voting
trust certificates.
-6-
<PAGE>
5.6 CLOSING TRANSFER BOOKS. The transfer books of the Trustee may
be closed temporarily by the Trustee for a period not exceeding 20 days
preceding the date fixed for the payment or distribution of dividends or the
distribution of assets or rights, or at any other time in the discretion of the
Trustee. In lieu of providing for the closing of the books against the transfer
of voting trust certificates, the Trustee may fix a date not exceeding 20 days
preceding any date fixed by the Company for the payment or distribution of
dividends, or for the distribution of assets or rights, as a record date for the
determination of the holders of voting trust certificates entitled to receive
such payment or distribution, and the holders of voting trust certificates of
record at the close of business on such date shall exclusively be entitled to
participate in such payments or distribution.
5.7 DIVIDENDS MAY BE PAID DIRECTLY TO HOLDERS OF VOTING TRUST
CERTIFICATES. In lieu of receiving cash dividends upon the capital stock of the
Company and paying the same to the holders of voting trust certificates pursuant
to the provisions of this agreement, the Trustee shall instruct the Company in
writing to pay such dividends to the holders of the voting trust certificates.
Upon receipt of such written instructions, the Company shall pay such dividends
directly to the holders of the voting trust certificates. Upon such
instructions being given by the Trustee to the Company, all liability of the
Trustee with respect to such dividends shall cease.
6. SUBSCRIPTION RIGHTS.
In case any stock or other securities of the Company are offered for
subscription to the holders of capital stock of the Company deposited hereunder,
the Trustee, promptly upon receipt of notice of such offer, shall mail a copy
thereof to each of the holders of the voting trust certificates. Upon receipt
by the Trustee at least five days prior to the last day fixed by the Company for
subscription and payment, of a request from any such registered holder of voting
trust certificates to
-7-
<PAGE>
subscribe in his or her behalf, accompanied with the sum of money required to
pay for such stock or securities (not in excess of the amount subject to
subscription in respect of the shares represented by the voting trust
certificate held by such certificate holder), the Trustee shall make such
subscription and payment, and upon receiving from the Company the certificates
for shares or securities so subscribed for, shall issue to such holder a voting
trust certificate in respect thereof if the same be stock having general voting
powers or convertible into stock having general voting powers, but if the same
be securities other than stock having general voting powers or convertible into
stock having general voting powers, the Trustee shall mail or deliver such
securities to the certificate holder in whose behalf the subscription was made,
or may instruct the Company to make delivery directly to the certificate holder
entitled thereto.
7. DISSOLUTION OF COMPANY.
In the event of the dissolution or total or partial liquidation of the
Company, whether voluntary or involuntary, the Trustee shall receive the moneys,
securities, rights, or property to which the holders of the capital stock of the
Company deposited hereunder are entitled and shall, subject to the provisions of
paragraph 2.1, distribute the same among the registered holders of voting trust
certificates in proportion to their interests, as shown by the books of the
Trustee.
8. REORGANIZATION OF COMPANY.
In case the Company is merged into or consolidated with another
corporation, or all or substantially all of the assets of the Company are
transferred to another corporation, then in connection with such transfer the
term "Company" for all purposes of this agreement shall be taken to include such
successor corporation, and the Trustee shall receive and hold under this
agreement any stock of such successor corporation received on account of the
ownership, as Trustee hereunder,
-8-
<PAGE>
of the stock held hereunder prior to such merger, consolidation, and transfer.
Voting trust certificates issued and outstanding under this agreement at the
time of such merger, consolidation, or transfer may remain outstanding, or the
Trustee may, in his discretion, substitute for such voting trust certificates
new voting trust certificates in appropriate form, and the terms "stock" and
"capital stock" as used herein shall be taken to include any stock which may be
received by the Trustee in lieu of all or any part of the capital stock of the
Company.
9. THE TRUSTEE.
9.1 POWER TO VOTE. Until the actual delivery to the holders of
voting trust certificates issued hereunder of stock certificates in exchange
therefor, and until the surrender of the voting trust certificates for
cancellation, the Trustee shall have the right to exercise, in person or by
nominees or proxies, all stockholder rights and powers in respect of all stock
deposited hereunder, including the right to vote thereon and to take part in or
consent to any corporate or stockholder action of any kind whatsoever, subject
to the limitations set forth below in this Section 9.3. The right to vote shall
include the right to vote for the election of directors, and in favor of or
against any resolution or proposed action of any character whatsoever, which may
be presented at any meeting or require the consent of Stockholder of the
Company.
9.2 DUTY OF TRUSTEE. In voting the stock held hereunder either in
person or by nominee or proxy, the Trustee shall exercise his best judgment to
select suitable directors of the Company, and in voting upon any matters that
may come before any stockholders' meeting or be acted upon by the unanimous
consent of the stockholders, but shall not be personally responsible with
respect to any action taken pursuant to his vote so cast in any matter or act
committed or omitted to be done under this agreement, provided such commission
or omission does not amount to willful
-9-
<PAGE>
misconduct or gross negligence on his part. Stockholder acknowledges that
Trustee is controlling stockholder, president and a director of the Company.
Stockholder agrees that Trustee shall be permitted to vote the stock, subject
to Section 9.1, as he deems appropriate even though Trustee is an interested
director, officer or stockholder.
9.3 RESIGNATION, DEATH AND SUCCESSOR TRUSTEES.
a. RESIGNATION. Daniel L. Simon shall be the original Trustee
hereunder ("Original Trustee"). The Original Trustee and any successor Trustee
may at any time resign by mailing to the registered holders of voting trust
certificates a written resignation, to take effect ten days thereafter or upon
the prior acceptance thereof.
b. SUCCESSOR TRUSTEES. Upon the death, resignation, failure,
refusal or inability to act of the Original Trustee, then a Trustee or Trustees
to serve hereunder shall be such as may have been designated by Daniel L. Simon,
or as designated by his legal representative, unless he is deceased or mentally
incompetent to do so, in which event the successor or successors shall be
designated by the registered holders of voting trust certificates issued and
outstanding representing a majority of the number of shares of stock outstanding
in the name of the Trustee and shall be approved by the Board of Directors of
the Company.
9.4 POWERS OF SUCCESSOR TRUSTEES. Subject to the provisions of
paragraph 9.4, the rights, powers, and privileges of the Trustee named hereunder
shall be possessed by the successor Trustees, with the same effect as though
such successors had originally been parties to this agreement. The word
"Trustee," as used in this agreement, means the Original Trustee or any
successor Trustee or Trustees acting hereunder, and shall include both the
single and the plural number.
-10-
<PAGE>
10. TERM
10.1 IRREVOCABLE TRUST. This agreement and the trust created hereby
is irrevocable, except as otherwise expressly provided herein. The holders of
voting trust certificates issued hereunder shall have no power or right to
terminate this agreement, or the trust created hereby, notwithstanding a
unanimous desire to do so. The holders acknowledge that the agreement of the
Trustee hereunder to act in such capacity is in consideration of the
irrevocability of this agreement.
10.2 TERMINATION BY TRUSTEE. This agreement shall continue in effect
until ____________, 2006 (subject to extension as hereinafter set forth), but
shall terminate at any time upon the execution and acknowledgment (as deeds for
conveyance of real estate are required to be acknowledged under the laws of
Delaware then in effect) by the Trustee hereunder of an instrument of
termination, duly filed in the principal office of the Company.
10.3 OPTIONAL TERMINATION BY VOTING TRUST CERTIFICATE HOLDERS. This
agreement, and the trust created hereby, may be terminated, at the option of the
holders of a majority of the voting trust certificates issued and outstanding,
by written notice to the Trustee at any time on or after the Company becomes a
publicly-held company. For purposes of this paragraph 10.3, the Company shall
be considered a publicly-held company at any time when its Common Stock is
subject to any reporting requirements (by statute, rule, or undertaking) of the
Securities Exchange Act of 1934, or any comparable statutes then in effect.
10.4 EXTENSION. At any time within two years prior to ___________,
2006, or at any time within two years prior to the time of expiration hereof as
extended, one or more holders of
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<PAGE>
voting trust certificates hereunder may, by agreement in writing and with the
written consent of the Trustee, extend the duration of this agreement for an
additional period not exceeding ten years. In the event of such extension, the
Trustee shall, prior to the time of expiration of the original term, or as
extended, as the case may be, file in the then principal office of the Company,
a copy of such extension agreement, and of the consent thereto, and thereupon
the duration of this voting trust agreement shall be extended for the period
fixed by such extension agreement; provided, however, that no such extension
agreement shall affect rights or obligations of persons not parties thereto.
11. COMPENSATION AND REIMBURSEMENT OF TRUSTEE. The Trustee shall not be
entitled to compensation for his services in administering and distributing the
trust property, but he shall be entitled to, and the Stockholder agrees to pay
the Trustee, reimbursement for his reasonable expenses. The Trustee shall have
the right to incur and pay such reasonable expenses as he may deem necessary and
proper for carrying this agreement into effect. Any such expenses incurred by
and due to the Trustee may be deducted from the dividends or other moneys or
property received by the Trustee on the stock deposited hereunder. Nothing
herein contained shall disqualify the Trustee or successor Trustees, or
incapacitate them from serving the Company or any of its subsidiaries, as
officers or directors, or in any other capacities, and in any such capacities
receiving compensation.
12. INDEMNIFICATION. The Stockholder agrees to save harmless and
indemnify the Trustee against and from any claim, demand, liability, loss, cost
or expense, including reasonable attorneys' fees, sustained or incurred by the
Trustee as a result of or arising from services performed or actions taken
pursuant to this Voting Trust Agreement or arising in the course of the business
activities of the Company, provided such claim, demand, liability, loss, cost or
expense does not arise as a result of the willful misconduct or gross negligence
of the Trustee.
13. NOTICE.
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<PAGE>
13.1 METHOD OF GIVING NOTICE. Unless otherwise in this agreement
specifically provided, any notice to or communication with the holders of the
voting trust certificates hereunder shall be in writing and shall be deemed to
have been given when delivered by personal delivery, by telegraph or telex, or
by Federal Express or similar courier services or when deposited in the United
States mail, registered or certified, return receipt requested, with postage
prepaid, addressed to such holders at their respective addresses appearing on
the transfer books of the Trustee. The addresses of the holders of voting trust
certificates, as shown on the transfer books of the Trustee, shall in all cases
be deemed to be the addresses of voting trust certificate holders for all
purposes under this agreement, without regard to what other or different
addresses the Trustee may have for any voting trust certificate holder on any
other books or records of the Trustee. Every notice so given shall be
effective, whether or not received, and the date of such delivery or mailing
shall be the date such notice is deemed given for all purposes.
13.2 NOTICE TO COMPANY. Any notice to the Company hereunder shall be
in writing and shall be deemed to have been given when delivered in person to an
officer of the Company or when deposited in the United States mail, registered
or certified, return receipt requested, with postage prepaid, addressed as
follows: Universal Outdoor Holdings, Inc., 321 North Clark Street, Suite 1010,
Chicago, IL 60610, or to such other address as the Company may designate by
notice in writing to the Trustee.
13.3 NOTICE TO TRUSTEE. Any notice to the Trustee hereunder shall
be in writing and shall be deemed to have been given when sent in any manner
permitted under Section 13.1 above, addressed to the Trustee at the Company's
principal office, or at such other addresses as may from time to time be
furnished in writing to the Company by the Trustee.
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<PAGE>
13.4 DISTRIBUTIONS. All distributions of cash, securities, or other
property hereunder by the Trustee to the holders of voting trust certificates
may be made, in the discretion of the Trustee, as the Trustee may deem
advisable, in the same manner herein provided for the giving of notices to the
holders of voting trust certificates.
14. COUNTERPARTS. This Voting Trust Agreement may be executed in any
number of counterparts, each of which so executed will be deemed to be an
original, but all of which together will constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have signed and sealed this
agreement, and the Stockholder has signed and sealed this agreement and has
stated the number of shares of capital stock of the Company deposited by him.
UNIVERSAL OUTDOOR HOLDINGS, INC.,
Attest: a Delaware corporation
By:
- ------------------------- -----------------------------------------
-----------------------------------------
Daniel L. Simon, Trustee
NUMBER OF SHARES STOCKHOLDER:
-----------------------------------------
William H. Smith
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<PAGE>
NO. 1 ______ Shares
Voting Trust Certificate for Capital Stock of
UNIVERSAL OUTDOOR HOLDINGS, INC.
A Delaware Corporation
This certifies that William H. Smith or registered permitted assigns as
provided in the Voting Trust Agreement dated _________, 1996 which is on file
with the Company (as defined below) is entitled to all the benefits arising from
the deposit with the Trustee under the Voting Trust Agreement hereinafter
mentioned, of certificates for ___________ (______) shares of the capital stock
of UNIVERSAL OUTDOOR HOLDINGS, INC., a Delaware corporation, hereinafter called
the Company, as provided in such Trust Agreement and subject to the terms
thereof. The registered holder hereof, or assigns, is entitled to receive
payment equal to the amount of cash dividends, if any, declared and distributed
upon the number of shares of capital stock of the Company in respect of which
this certificate is issued. Dividends received by the Trustee in common or
other stock of the Company and of other corporations having general voting
powers or convertible into stock having general voting powers shall be payable
in voting trust certificates, in form similar hereto. Until the Trustee shall
have delivered the Stock held under such Trust Agreement to the holders of the
trust certificates, or to the Company, as specified in such Trust Agreement, the
Trustee shall possess and shall be entitled to exercise substantially all rights
and powers of an absolute owner of such stock, including the right to vote
thereon, and to execute consents in respect thereof, it being expressly
stimulated that no voting right passes to the owner hereof, or his or her
assigns, under this certificate or any agreement, except as specifically
provided in such Trust Agreement.
This certificate is issued, received, and held under, and the rights of the
owner hereof are subject to, the terms of a Voting Trust Agreement dated
__________, 1996, among the Company
<PAGE>
and Daniel L. Simon, as Trustee, and his successors in trust, and William H.
Smith (copies of which Voting Trust Agreement, and of every agreement amending
or supplementing the same, are on file in the principal office of the Company,
and shall be open to the inspection of any stockholder of the Company, or any
beneficiary of the trust under such agreement, daily during business hours), to
all the provisions of which Voting Trust Agreement the holder of this
certificate, by acceptance hereof assents, and by which he or she is bound with
like effect as if such Voting Trust Agreement had been signed by him or her in
person.
In the event of the dissolution or total or partial liquidation of the
Company, the moneys, securities, or property (except for any capital stock
having general voting powers or convertible into stock having general voting
powers) received by the Trustee in respect of the stock deposited under such
Trust Agreement shall be distributed among the registered holders of trust
certificates in proportion to their interests as shown by the books of the
Trustee.
In the event that any dividends or distribution other than in cash or stock
having general voting powers or convertible into stock having general voting
powers is received by the Trustee, the Trustee shall distribute the same to the
registered holders of voting trust certificates, pursuant to the provisions of
paragraph 5.5 of the Trust Agreement. Such distribution shall be made to the
certificate holders ratably in accordance with the number of shares represented
by their respective voting trust certificates.
Stock certificates for the number of shares of capital stock then
represented by this certificate, or the net proceeds in cash or property of such
shares, shall be due and deliverable hereunder upon the termination of such
Trust Agreement as provided therein.
-2-
<PAGE>
The Voting Trust Agreement shall continue in full force and effect until
______________, 2006 (subject to extension as hereinafter set forth), unless
terminated prior thereto, as provided in the agreement. The agreement may be
extended for successive ten-year periods, as provided therein.
This certificate is transferable on the books of the Trustee at the
principal offices of the Company by the holder hereof, either in person or by
attorney duly authorized, in accordance with the provisions of the Trust
Agreement (and subject to the conditions, limitations and restrictions therein
set forth) and on surrender of this certificate properly endorsed. Title to
this certificate when duly endorsed shall be transferred, to the extent
permitted by law and the provisions of the Trust Agreement, be transferable with
the same effect as in the case of a negotiable instrument. Subject to the
foregoing, each holder hereof agrees that delivery of this certificate, duly
endorsed by any holder hereof, shall vest title hereto and all rights hereunder
in the transferee but the Trustee may treat the registered holder hereof, or
when presented duly endorsed in blank the bearer hereof, as the absolute owner
hereof, and of all rights and interests represented hereby, for all purposes
whatsoever, and the Trustee shall not be bound or affected by any notice to the
contrary, or by any notice of any trust, whether express or implied, or
constructive, or of any charge or equity respecting the title or ownership of
this certificate, or the shares of stock represented hereby. No delivery of
stock certificates hereunder, or the proceeds thereof, shall be made without
surrender of this certificate properly endorsed.
This certificate shall not be valid for any purpose until duly signed by
the Trustee.
The word "Trustee" as used in this certificate means the Original Trustee
or any successor Trustee or Trustees at any time acting under such Voting Trust
Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, the Trustee has signed this certificate on
______________, 1995.
-----------------------------------------
Daniel L. Simon, Trustee
-4-
<PAGE>
FORM OF ASSIGNMENT:
For value received, hereby assigns the within
--------------------
certificate, and all rights and interests represented thereby, to
---------
and appoints
- ------------------------------ -------------------------------
attorney to transfer this certificate on the books of the Trustee mentioned
therein, with full power of substitution.
Dated:
-----------------------
(SEAL)
--------------------
In presence of:
- ------------------------------
- ------------------------------
NOTE: This signature of this assignment must correspond with the name as
written upon the face of this certificate in every particular, without
alteration, enlargement, or any change whatever. All endorsements, in the
discretion of the Trustee, shall be guaranteed by a bank or trust company
satisfactory to the Trustee.
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
AMENDED AND RESTATED 1996 WARRANT PLAN
JULY [ ], 1996
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
AMENDED AND RESTATED 1996 WARRANT PLAN
1. PURPOSE. The purpose of this Amended and Restated 1996 Warrant
Plan (the "Plan") is to advance the interests of Universal Outdoor Holdings,
Inc., a Delaware corporation (the "Corporation"), by affording certain key
executives and employees of the Corporation an opportunity to acquire a
proprietary interest in the Corporation and thus to stimulate in such persons
increased personal interest in the success and future growth of the Corporation.
2. DEFINITIONS.
"BOARD" shall mean the Board of Directors of the Corporation.
"BUSINESS DAY" Any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in the City of New York are authorized by
law to be closed. Any reference to "days" (unless Business Days are specified)
shall mean calendar days.
"ELIGIBLE PERSON" has the meaning set forth in paragraph 4.
"EXPIRATION DATE" shall mean such date as is specified in the Warrant.
"HOLDER" shall mean a person to whom a Warrant is granted pursuant to
the Plan.
"PLAN" has the meaning set forth in paragraph 1.
"RESERVED SHARES" has the meaning set forth in paragraph 3(d).
"SERIES I RESERVED SHARES" has the meaning set forth in paragraph
3(a).
"SERIES I WARRANT" shall mean a warrant to purchase shares of Common
Stock substantially in the form of Annex A.
<PAGE>
"SERIES II RESERVED SHARES" has the meaning set forth in paragraph
3(b).
"SERIES II WARRANT" shall mean a warrant to purchase shares of Common
Stock substantially in the form of Annex B.
"SERIES III RESERVED SHARES" has the meaning set forth in paragraph
3(c).
"SERIES III WARRANT" shall mean a warrant to purchase shares of Common
Stock substantially in the form of Annex C.
"WARRANT COMMON STOCK" shall mean the Common Stock, par value $0.01
per share, of the Corporation.
"WARRANT PRICE" shall mean, with respect to any Warrant, the price per
share for which shares of Common Stock may be purchased pursuant to such
Warrant.
"WARRANTS" shall mean, collectively, the Series I Warrants, the Series
II Warrants and the Series III Warrants.
3. SHARES SUBJECT TO THE PLAN. Subject to adjustments authorized
by paragraph 9, the number of shares of Warrant Common Stock which may be issued
in the aggregate pursuant to the Plan shall be subject to the following
limitations:
(a) No more than 823,536 shares of Warrant Common Stock may be
issued in the aggregate upon exercise of the Series I Warrants (the "Series I
Reserved Shares");
(b) No more than 823,536 shares of Warrant Common Stock may be
issued in the aggregate upon exercise of the Series II Warrants (the "Series II
Reserved Shares");
(c) No more than 823,536 shares of Warrant Common Stock may be
issued in the aggregate upon exercise of the Series III Warrants (the "Series
III Reserved Shares"); and
2
<PAGE>
(d) No more than 2,470,608 Reserved Shares (the total amount of the
Reserved Shares) may be issued in the aggregate upon the exercise of all
Warrants.
4. ELIGIBILITY. Daniel Simon, Brian Clingen and Paul Simon (each,
an "Eligible Person") shall be eligible to receive Warrants.
5. NO RIGHT TO EMPLOYMENT OR CONTINUED SERVICE. Nothing in the
Plan or in any Warrant shall confer any right on any Eligible Person to continue
in the employ or service of the Corporation or shall interfere in any way with
the right of the stockholders of the Corporation, to terminate such Eligible
Person's employment or service at any time.
6. ADMINISTRATION OF THE PLAN. (a) The Plan shall be administered
by the Board. From such time that Warrant Common Stock becomes registered under
the Securities Exchange Act of 1934, as amended, ("Exchange Act") the
composition of the Board shall at all times satisfy the provisions of Rule 16b-3
of the Exchange Act ("Rule 16b-3").
(b) The Board, acting by unanimous action, shall have full power to
construe and interpret the Plan, to establish rules for its administration and
to grant Warrants to Eligible Persons, in each case in accordance with the
provisions of the Plan and the Warrants. In addition, the Board may delegate
such of its duties under the Plan as may be deemed by the Board to be clerical
or ministerial to such delegates as the full Board, acting by unanimous action,
deems appropriate. All actions taken and decisions made by the Board, acting by
unanimous action, pursuant to the Plan shall be binding and conclusive on all
persons interested in the Plan.
7. WARRANTS. (a) Series I Warrants, Series II Warrants and Series
III Warrants shall be granted to the Eligible Persons listed on Schedule 1,
entitling such Eligible Persons to purchase the total number of shares of
Warrant Common Stock specified for each such Warrant on Schedule 1.
(b) Each Warrant shall further state the terms and conditions of
the Warrant (including the conditions to exercisability thereof) and the Warrant
Price. A
3
<PAGE>
Warrant may be exercised, subject to clause (f) below, for any or all full or
fractional shares which have become purchasable under such Warrant.
(c) Subject to the terms and conditions set forth in the Warrant
(including the conditions to exercisability thereof), a Warrant may be exercised
by the Holder during normal business hours on any Business Day, by surrender of
the Warrant to the Corporation at its principal office, accompanied by a
subscription in substantially the form attached to the Warrant as Exhibit A duly
executed by such Holder and accompanied by payment, in cash or by certified or
official bank check payable to the order of the Corporation, in the amount
obtained by multiplying (x) the number of shares of Warrant Common Stock
designated in such subscription (up to the amount of shares to which such Holder
is entitled to receive at such time upon exercise of the Warrant) by (y) the
Warrant Price.
(d) The Corporation at its expense shall deliver to the relevant
Holder (or as such Holder may direct pursuant to the Warrant) a certificate or
certificates representing shares of the Warrant Common Stock so purchased as
soon as reasonably practicable, but in any event within five Business Days,
after receipt of such notice.
(e) The right to exercise any Warrant shall expire immediately,
without any requirement of the Corporation to take action or provided notice to
the Holder, upon the resignation or termination, with or without cause, of the
Holder of the Warrant as an officer of the Corporation.
(f) Notwithstanding anything to the contrary in the Plan or any
Warrant, in no event may any Warrant be exercised prior to the time at which the
Warrant becomes exercisable (as set forth in the Warrant) or after the
Expiration Date of such Warrant, and each Warrant shall terminate upon the
Expiration Date.
(g) If, at any time, the Board shall determine, in its sole
discretion, that the listing, registration or qualification of the shares of
Warrant Common Stock upon any securities exchange or under any applicable
securities laws, or the consent or approval of
4
<PAGE>
any governmental or self-regulatory agency or body, is necessary or reasonably
desirable as a condition of, or in connection with, the issue or purchase of the
shares of Warrant Common Stock under any Warrant, such Warrant may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
unacceptable to the Board.
(h) The Corporation will provide notice to Holders prior to the
occurrence of certain events (including notice with respect to the
exercisability of the Warrant) as set forth in the Warrant.
8. NON-TRANSFERABILITY OF WARRANTS; COMPELLED SALE. (a) Each
Holder, by acceptance of a Warrant, acknowledges and agrees that the Warrant may
not be sold, assigned, transferred, exchanged, mortgaged, pledged or granted a
security interest in, or otherwise disposed of or encumbered by or to any party
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or the Employment Retirement Income Security Act of 1934, as
amended, or as otherwise set forth in the Warrant.
(b) The Corporation shall have the right to compel the Holder of a
Warrant to sell the Warrant in the event of a sale of all or substantially all
of the Corporation to a third party, whether pursuant to a sale of capital stock
of the Corporation, merger, consolidation, sale of assets or similar transaction
(any such sale, a "Compelled Sale"). In the event that the Corporation
determines to exercise its right to a Compelled Sale, it shall mail to Holders
written notice of such event, and Holders shall be entitled to receive from the
Corporation certain consideration as set forth in the Warrant.
9. ADJUSTMENTS. The number and kind of shares purchasable upon
the exercise of the Warrants shall be subject to adjustment from time to time as
set forth in the Warrants.
10. RIGHTS AS HOLDERS OF SHARES. The Holder of a Warrant shall not
have any
5
<PAGE>
rights as a stockholder of the Corporation (including, without limitation, any
right to vote or to receive dividends or to consent or to receive notice as a
stockholder in respect of any meeting of stockholders for the election of
directors of the Corporation or any other matter, or any right whatsoever as a
stockholder of the Corporation (except for those notices and other matters
expressly set forth under the Plan or in the Warrant)). A Warrant does not
impose any obligation on a Holder to purchase any securities or impose any
liabilities on a Holder as a stockholder of the Corporation, whether such
obligation or liabilities are asserted by the Corporation or by creditors of the
Corporation.
11. WITHHOLDING. The Corporation shall have the right to require a
Holder or other person entitled to receive shares of Warrant Common Stock under
the Plan to pay to the Corporation the amount which the Corporation is or will
be required to withhold with respect to the issuance of such shares in order for
the Corporation to pay taxes or to claim an income tax deduction with respect to
the issuance of such shares. In lieu of such payment, the Corporation will be
entitled, at the discretion of the Board, to retain a sufficient number of such
shares (valued at the fair market value thereof, as determined by the Board in
its sole discretion on the date of exercise) to cover the amount required to be
withheld.
12. LIABILITY. The Corporation, and not the Board, or any member
thereof, shall be liable for any and all claims made against the Corporation or
the Board in connection with the Plan or any Warrant.
13. LEGAL REQUIREMENTS. (a) The Corporation shall be responsible
and shall pay for any transfer, revenue or documentary stamps with respect to
shares of Warrant Common Stock issued upon the exercise of Warrants granted
under the Plan.
(b) The Corporation shall not be required to issue a certificate or
certificates for shares upon the exercise of any Warrant if such issuance would
result in a violation of any federal or state securities or other laws. The
Corporation agrees to use its best efforts to clear the legal impediment as soon
as possible.
6
<PAGE>
14. AMENDMENT AND TERMINATION OF THE PLAN. The Board, acting by
unanimous action, may at any time and from time to time alter, amend, suspend,
or terminate the Plan in whole or in part; PROVIDED THAT, no amendment which
requires stockholder approval in order for the Plan to continue to comply with
Rule 16b-3, shall be effective unless the same shall be approved by the
requisite vote of the stockholders of the Corporation entitled to vote thereon.
Notwithstanding the foregoing, no amendment, suspension or termination shall
affect adversely any of the rights of any Holder, without such Holder's consent,
under any Warrant theretofore granted under the Plan.
15. EFFECTIVE DATE; PLAN TERMINATION. The Plan shall take effect
upon its adoption by the Board.
16. INTERPRETATIONS. Except as otherwise expressly provided in the
Plan, the following rules of interpretation apply to the Plan and each Warrant:
(i) the singular includes the plural and the plural includes the singular; (ii)
"include" and "including" are not limiting and "or" is not exclusive; (iii) a
reference to any agreement or other contract includes permitted supplements and
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; and (v) a reference to
any person, corporation or other entity includes its permitted successors and
assigns.
17. GOVERNING LAW. THE PLAN AND ANY AND ALL WARRANTS SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAW OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS.
7
<PAGE>
Schedule 1
SERIES I WARRANTS
Number of Shares of
ELIGIBLE PERSON WARRANT COMMON STOCK
- --------------- --------------------
Daniel Simon 595,000
Brian Clingen 105,006
Paul Simon 123,530
SERIES II WARRANTS
Number of Shares of
ELIGIBLE PERSON WARRANT COMMON STOCK
- --------------- --------------------
Daniel Simon 700,000
Brian Clingen 123,536
SERIES III WARRANTS
Number of Shares of
ELIGIBLE PERSON WARRANT COMMON STOCK
- --------------- --------------------
Daniel Simon 700,000
Brian Clingen 123,536
<PAGE>
ANNEX A
- --------------------------------------------------------------------------------
UNIVERSAL OUTDOOR HOLDINGS, INC.
Series I Common Stock Purchase Warrant
Dated as of [ ], [ ]
- --------------------------------------------------------------------------------
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
REGISTRATION UNDER SUCH ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION
THEREFROM UNDER SUCH ACT AND IN ALL CASES IN COMPLIANCE WITH ALL APPLICABLE
STATE SECURITIES LAWS AND IN ALL CASES IN COMPLIANCE WITH ALL APPLICABLE
STATE SECURITIES LAWS, AND IN ANY EVENT THIS WARRANT MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, EXCHANGED, MORTGAGED, PLEDGED OR GRANTED A SECURITY
INTEREST IN, OR OTHERWISE DISPOSED OF OR ENCUMBERED BY OR TO ANY PARTY
OTHER THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION OR PURSUANT TO A
QUALIFIED DOMESTIC RELATIONS ORDER AS DEFINED BY THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF
1934, AS AMENDED, OR AS OTHERWISE SET FORTH IN THIS WARRANT.
<PAGE>
1. Exercise of Warrant..................................................... 1
1.1. Time and Manner of Exercise....................................... 1
1.2. When Exercise Effective........................................... 2
1.3. Delivery of Stock Certificates, etc............................... 2
1.4. Withholding....................................................... 3
2. Adjustment of Number of Shares of Common Stock Issuable Upon Exercise... 3
2.1. Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications....................................................... 3
2.2. No Adjustment for Dividends; No Adjustment of Warrant Price;
Adjustments of All Other Transaction Warrants..................... 4
2.3. Other Adjustments................................................. 4
2.4. Notice of Adjustment.............................................. 4
2.5. Excluded Transactions............................................. 4
3. Purchase Rights Upon Merger, Consolidation, etc.......................... 5
4. Rounding of Shares...................................................... 6
5. Other Dilutive Events................................................... 6
6. No Dilution or Impairment............................................... 7
7. Notices of Corporate Actions............................................ 7
8. Reservation of Stock, Appraisal, etc.................................... 8
9. Expiration.............................................................. 9
9.1. Expiration Time.................................................... 9
9.2. Expiration Event................................................... 9
9.3. Expiration Date.................................................... 9
10. Restrictions on Transfer............................................... 9
10.1. Restrictive Legend................................................ 9
10.2. Restrictions on Transfer.......................................... 10
11. Registration and Transfer of Warrants, etc............................. 10
11.1. Warrant Register; Ownership of Warrants........................... 10
11.2. Transfer and Exchange of Warrants................................ 10
11.3. Replacement of Warrants.......................................... 11
12. Definitions............................................................ 11
13. Remedies............................................................... 13
i
<PAGE>
14. No Rights or Liabilities as Stockholder. .............................. 13
15. Notices................................................................ 14
16. Amendments............................................................. 14
17. Descriptive Headings................................................... 14
18. Severability........................................................... 14
19. GOVERNING LAW.......................................................... 15
20. Consent to Jurisdiction, Etc........................................... 15
Exhibit A: Form Of Subscription........................................ 17
Exhibit B: Form Of Assignment.......................................... 18
ii
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
SERIES I COMMON STOCK PURCHASE WARRANT
[ ] Shares (Subject to the Adjustment
Provisions Specified Herein)
No. I-__ [ ], [ ]
Universal Outdoor Holdings, Inc., a Delaware corporation (the
"Company"), hereby grants to [ ] (the "Holder"), this Series I Common
Stock Purchase Warrant (the "Warrant", and together with all other Series I
Common Stock Purchase Warrants issued in substitution therefor, the "Warrants")
and certifies that the Holder is entitled to purchase from the Company up to [
] duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock, par value $0.01 per share, of the Company (the "Common Stock") at
the purchase price per share of $5.00 (the "Warrant Price"), subject to the
terms, conditions and adjustments set forth below. This Warrant is being issued
pursuant to the Warrant Plan (as defined in Section 12 hereof). Certain
capitalized terms used in this Warrant are defined in Section 12; references to
an "Exhibit" are, unless otherwise specified, to one of the Exhibits attached to
this Warrant and references to a "Section" are, unless otherwise specified, to
one of the Sections of this Warrant.
1. EXERCISE OF WARRANT.
1.1. TIME AND MANNER OF EXERCISE. (a) This Warrant shall be
exercisable at any time prior to the Expiration Date.
(b) Subject to paragraph (a) above and the other terms and
conditions set forth herein, this Warrant may be exercised by the Holder, in
whole or in part, during normal business hours on any Business Day, by surrender
of this Warrant to the Company at its principal office, accompanied by a
subscription in substantially the form attached to this Warrant as Exhibit A
duly executed by such Holder and accompanied by payment, in cash
<PAGE>
or by certified or official bank check payable to the order of the Company, in
the amount obtained by multiplying (x) the number of shares of Common Stock
designated in such subscription (up to the amount of shares to which such Holder
is entitled to receive at such time upon exercise of this Warrant) by (y) the
Warrant Price, and such Holder shall thereupon be entitled to receive the full
number of duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock (or Other Securities) so purchased upon such exercise.
1.2. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall
be deemed to have been effected immediately prior to the close of business on
the Business Day on which this Warrant shall have been surrendered to the
Company as provided in Section 1.1, and at such time the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
Section 1.3 shall be deemed to have become the Holder or Holders of record
thereof.
1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable
after each exercise of this Warrant, in whole or in part, subject to Section 1.4
hereof, and in any event within five Business Days thereafter, the Company at
its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Holder or, subject to
Section 10, as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such Holder shall be entitled upon
such exercise, and
(b) in case such exercise is in part only, a new Warrant of like
tenor, calling in the aggregate on the face thereof for the number of
shares of Common Stock equal to the number of such shares which such Holder
would be entitled to receive at such time upon exercise of this Warrant,
after giving effect to such recent exercise.
2
<PAGE>
1.4. WITHHOLDING. The Company shall have the right to require a
Holder or other person entitled to receive shares of Common Stock upon exercise
of the Warrant to pay to the Company the amount which the Company is or will be
required to withhold with respect to the issuance of such shares in order for
the Company to pay taxes or to claim an income tax deduction with respect to the
issuance of such shares. In lieu of such payment, the Company will be entitled,
at the discretion of the Board of Directors of the Company, to retain a
sufficient number of such shares (valued at the fair market value thereof, as
determined by the Board of Directors in its sole discretion on the date of
exercise) to cover the amount required to be withheld.
2. ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE. The number and kind of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time as follows:
2.1. STOCK DIVIDENDS; STOCK SPLITS; REVERSE STOCK SPLITS;
RECLASSIFICATIONS. In case the Company shall (i) pay a dividend or make any
other distribution with respect to its Common Stock in shares of its capital
stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a merger, consolidation or other
business combination in which the Company is the continuing corporation) the
number of shares of Common Stock issuable upon exercise of the Warrant
immediately prior to the record date for such dividend or distribution or the
effective date of such subdivision or combination shall be adjusted so that the
holder of the Warrant shall thereafter be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company that such
holder would have owned or have been entitled to receive after the happening of
any of the events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect thereto.
An adjustment made pursuant to this Section 2.1 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
3
<PAGE>
2.2. NO ADJUSTMENT FOR DIVIDENDS; NO ADJUSTMENT OF WARRANT PRICE;
ADJUSTMENTS OF ALL OTHER TRANSACTION WARRANTS. Except as otherwise provided in
this Section 2, no adjustment in respect of any dividends declared and paid on
Common Stock, or on any other capital stock of the Company, shall be made during
the term of a Warrant or upon the exercise of a Warrant. Notwithstanding
anything to the contrary contained in this Warrant, (A) in the event of any
adjustments to this Warrant pursuant to this Section 2, adjustments shall be
made solely to the number and kind of securities purchasable upon the exercise
of this Warrant and no adjustments shall be made to the Warrant Price, and (B)
no adjustments to this Warrant pursuant to this Section 2 shall be made or given
any effect unless similar adjustments are made to all other Transaction Warrants
(it being the intent of the Company and the Holder that all Transaction Warrants
shall contain adjustment provisions which are similar in nature to this Section
2 and that upon any event or circumstance giving rise to any adjustment pursuant
to this Section 2, all Transaction Warrants shall be similarly adjusted).
2.3. OTHER ADJUSTMENTS. In the event that at any time, as a result
of an adjustment made pursuant to this Section 2, the registered holders shall
become entitled to receive any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares of Common Stock contained in this Section 2.
2.4. NOTICE OF ADJUSTMENT. Whenever the number of shares of Common
Stock purchasable upon the exercise of the Warrant is adjusted, as herein
provided, the Company shall give Notice (pursuant to Section 15) to each Holder
of such adjustment or adjustments.
2.5. EXCLUDED TRANSACTIONS. Notwithstanding any provision in this
Section 2 to the contrary, no adjustment shall be made pursuant to this Section
2 in respect of (i) the exercise of any warrants, options or other rights to
purchase Common Stock, or the conversion of any convertible securities of the
Company, in each case issued or granted prior to the date hereof or issued
4
<PAGE>
or granted pursuant to or in connection with the Existing Warrant Agreement or
the Warrant Plan, (ii) the issuance of Common Stock pursuant to any dividend
reinvestment plan, if any, (iii) the issuance of shares of Common Stock to the
directors, officers or employees of, or any consultants or advisors to, the
Company, or the granting of options, stock appreciation rights or similar rights
to such persons with respect thereto, pursuant to any BONA FIDE management
compensation plan or arrangement of the Company or any of its subsidiaries, (iv)
equity securities issued, either directly or indirectly, in connection with the
acquisition by the Company of an interest in an unaffiliated third party
(whether by merger, consolidation, sale of assets or securities, or otherwise),
(v) the issuance of securities (including any convertible securities or options
and the conversion or exercise thereof) to any third party which is at such time
a creditor of the Company, in connection with the refinancing or restructuring
of the indebtedness owed to such party, (vi) the issuance of additional equity
securities to the existing shareholders of the Company, the proceeds of which
are specifically utilized for purposes of acquiring an interest in an
unaffiliated third party, and (vii) the sale or transfer of Common Stock in
connection with a Compelled Sale.
3. PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC. (a) In the
event of any consolidation of the Company with or merger of the Company with or
into another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all the property of the Company, the
Acquiring Person shall execute an agreement that each Holder shall have the
right thereafter (whether or not the Warrant is then exercisable by its terms)
upon payment of the Warrant Price in effect immediately prior to such action to
purchase upon exercise of the Warrant the kind and amount of securities, cash or
other assets which he would have owned or have been entitled to receive after
the happening of such consolidation, merger, sale, transfer or lease had such
Warrant been exercised immediately prior to such action; PROVIDED that no
adjustment in respect of dividends, interest or other income on or from such
shares or other securities and property shall be made during the term of a
Warrant or upon the exercise of a Warrant. The Company shall mail by first
class mail, postage prepaid, to each Holder, notice of the execution
5
<PAGE>
of any such agreement (including a copy thereof). Such agreement shall provide
for adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 3. The provisions of this Section
3 shall similarly apply to successive consolidations, mergers, sales, transfers
or leases. The Acquiring Person shall mail to Holders a notice describing any
supplemental Warrant Agreement. In the event that this Section 3 shall be
applicable, the provisions of Section 2.1 shall not be applicable.
(b) The Company shall have the right to compel the Holder of this
Warrant to sell this Warrant in the event of a sale of all or substantially all
of the Company to a third party, whether pursuant to a sale of capital stock of
the Company, merger, consolidation, sale of assets or similar transaction (any
such sale, a "Compelled Sale"). In the event that the Company determines to
exercise its right to a Compelled Sale, it shall mail to Holders written notice
of such event, and Holders shall be entitled to receive from the Company an
amount equal to (i) the Current Value per share of Common Stock minus the
Warrant Price, multiplied by the number of shares of Common Stock issuable upon
the exercise of the Warrant, plus (ii) the fair value (as determined by the
Board of Directors of the Company acting in good faith) of any Other Securities
issuable upon the exercise of the Warrant, if any.
4. ROUNDING OF SHARES. To the extent necessary upon the exercise
of a Warrant, the Company shall round each fractional share issuable upon such
exercise up to the next whole number.
5. OTHER DILUTIVE EVENTS. In case any event shall occur as to
which the provisions of Section 2 or Section 3 are not strictly applicable but
the failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such Sections, then, in each such case, the Company by unanimous
action by the Board of Directors of the Company shall appoint a firm of
independent certified public accountants of recognized national standing (which
may be the regular auditors of the Company), which shall give their opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in Sections 2 and
6
<PAGE>
3, necessary to preserve, without dilution, the purchase rights represented by
this Warrant. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the holder of this Warrant and shall make the adjustments
described therein.
6. NO DILUTION OR IMPAIRMENT. Following the date of issuance of
this Warrant, the Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be reasonably necessary
or appropriate in order to protect the rights of the holder of this Warrant
against dilution or other impairment. Without limiting the generality of the
foregoing, the Company (a) will not permit the par value of any shares of stock
receivable upon the exercise of this Warrant to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock on the exercise of the Warrants from time
to time outstanding, and (c) will not take any action which results in any
adjustment pursuant to Section 2 if the total number of shares of Common Stock
(or Other Securities) issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock (or Other
Securities) then authorized by the Company's certificate of incorporation and
available for the purpose of issue upon such exercise.
7. NOTICES OF CORPORATE ACTIONS. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a regular periodic
dividend payable in cash out of earned surplus in an amount not exceeding
the amount of the immediately preceding cash dividend for such period) or
other distribution, or any right to subscribe for, purchase or otherwise
acquire any
7
<PAGE>
shares of stock of any class or any other securities or property, or to
receive any other right, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the assets of the Company to any other
Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-
up of the Company,
the Company will mail or deliver to each holder of a Warrant a notice specifying
(i) the date or expected date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right, and (ii) the date or expected date on
which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place and the time, if any such time is to be fixed, as of which the
holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for the securities
or other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed or delivered at least three (3) days
prior to the date therein specified. Failure to mail or receive such notice or
any defect therein or in the mailing thereof shall not affect the validity of
any action taken in connection with any of the foregoing transactions.
8. RESERVATION OF STOCK, APPRAISAL, ETC. The Company will at all
times reserve and keep available, solely for issuance and delivery upon exercise
of the Warrants, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of all Warrants at the time outstanding.
All shares of Common Stock (or Other Securities) issuable upon exercise of any
Warrants shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the Holders thereof. The Company shall cause the
Appraisal to be conducted on the later
8
<PAGE>
of (i) 60 days following the last day of a fiscal year or (ii) 20 days following
the date on which annual audited financial statements are available and
complete.
9. EXPIRATION.
9.1. EXPIRATION TIME. Subject to Section 9.2, the right to exercise
this Warrant shall expire upon the tenth anniversary of the date of the issuance
of this Warrant.
9.2. EXPIRATION EVENT. The right to exercise this Warrant shall
expire immediately, without any requirement of the Company to take action or
provide notice to the Holder, upon the resignation or termination, with or
without cause, of the Holder of the Warrant as an officer of the Company.
9.3. EXPIRATION DATE. For purposes of this Warrant, "Expiration
Date" shall mean the date upon which the right to exercise this Warrant shall
expire pursuant to Section 9.1 or 9.2 hereof.
10. RESTRICTIONS ON TRANSFER.
10.1. RESTRICTIVE LEGEND. Except as otherwise permitted by this
Section 10, each Warrant (including each Warrant issued upon the transfer of any
Warrant) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933, as
amended, and may not be transferred, sold or otherwise disposed of
except while a registration under such Act is in effect or pursuant to
an exemption therefrom under such Act and in all cases in compliance
with all applicable state securities laws, and in any event, this
Warrant may not be sold, assigned, transferred, exchanged, mortgaged,
pledged or granted a security interest in, or otherwise disposed of or
encumbered by or to any party other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code
9
<PAGE>
of 1986, as amended, or the Employment Retirement Income Security Act of
1934, as amended, or as otherwise set forth in this Warrant."
10.2. RESTRICTIONS ON TRANSFER. Each Holder, by acceptance of this
Warrant, acknowledges and agrees that this Warrant may not be sold, assigned,
transferred, exchanged, mortgaged, pledged or granted a security interest in, or
otherwise disposed of or encumbered by or to any party other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or the
Employment Retirement Income Security Act of 1934, as amended, or as otherwise
set forth in this Warrant.
11. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
11.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. The Company will keep
at its principal office a register in which the Company will provide for the
registration of Warrants and the registration of transfers of Warrants. The
Company may treat the Person in whose name any Warrant is registered on such
register as the owner thereof for all other purposes, and the Company shall not
be affected by any notice to the contrary, except that, if and when any Warrant
is accompanied by an instrument of assignment in substantially the form attached
hereto as Exhibit B, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. Subject to
Section 10, a Warrant, if properly assigned, may be exercised by a new holder
without a new Warrant first having been issued.
11.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon surrender of any
Warrant for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will (subject to compliance with
Section 10, if applicable) execute and deliver in exchange therefor a new
Warrant or Warrants of like tenor, in the name of such holder or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant or Warrants so
surrendered.
10
<PAGE>
11.3. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
upon delivery of an indemnity bond in such reasonable amount as the Company may
determine (or, at the sole option of the Company, of an indemnity agreement
reasonably satisfactory to the Company), or, in the case of any such mutilation,
upon the surrender of such Warrant for cancellation to the Company at its
principal office, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
12. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
ACQUIRING PERSON: With reference to the transactions referred to in
Section 3, (i) the continuing or surviving corporation of a consolidation or
merger with the Company (if other than the Company), (ii) the transferee of
substantially all of the properties of the Company, (iii) the parent entity of
any corporation consolidating with or merging into the Company in a
consolidation or merger in connection with which the Common Stock is changed
into or exchanged for stock or other securities of any other Person (including
such parent entity) or cash or any other property if the Company becomes a
subsidiary of such entity, or (iv) in the case of a capital reorganization or
reclassification or in any case in which the Company is a surviving corporation
in a merger not described in clause (iii) above, the Company.
AFFILIATE: Affiliate shall have the meaning set forth in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
APPRAISAL: The report prepared and delivered to the Board of
Directors of the Company by an independent valuation consultant or appraiser of
recognized national standing appointed by a majority of the Board of Directors
of the Company appraising the Current Value per share of Common Stock as of the
last day of the fiscal year then most recently ended.
BUSINESS DAY: Any day other than a Saturday or a Sunday or a day on
which commercial banking institu-
11
<PAGE>
tions in the City of New York are authorized by law to be closed. Any reference
to "days" (unless Business Days are specified) shall mean calendar days.
COMMON STOCK: As defined in the introduction to this Warrant, such
term to include any stock into which such Common Stock shall have been changed
or any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference.
COMPANY: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of the
Company hereunder in compliance with Section 3.
COMPELLED SALE: As defined in Section 3(b) of this Warrant.
CURRENT VALUE: On any date specified herein, the Current Value per
share of Common Stock shall be equal to the average closing price per share of
the Common Stock as reported on the NASDAQ National Market over the thirty
consecutive trading days immediately preceding such date; PROVIDED, that if the
Common Stock is not then reported on such market, then the Current Value per
share of Common Stock shall be equal to the aggregate fair market value of the
Common Stock divided by the number of such outstanding shares, all calculated on
a fully diluted basis, without additional premiums for control or discounts for
minority interests or restrictions on transfer, as determined in the most recent
existing Appraisal.
EXERCISE DATE: As defined in Section 7.2 of this Warrant.
EXISTING WARRANT AGREEMENT: The Warrant Agreement, dated as of June
30, 1994, between Seller and United States Trust Company of New York, as Warrant
Agent.
12
<PAGE>
EXPIRATION DATE: As defined in Section 9.3 of this Warrant.
OTHER SECURITIES: Any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
Holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 3 or otherwise.
PERSON: A corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
TRANSACTION WARRANTS: The Warrants and all other common stock
purchase warrants issued pursuant to the Warrant Plan.
WARRANT PLAN: The Company's Amended and Restated 1996 Warrant Plan
adopted by the Board of Directors of the Company on April 5, 1996 and amended
and restated on July [ ], 1996.
WARRANT PRICE: As defined in the introduction to this Warrant.
WARRANTS: As defined in the introduction to this Warrant.
13. REMEDIES. The Company stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in
this Warrant shall be construed as (x) conferring upon the Holder hereof any
rights as a
13
<PAGE>
stockholder of the Company (including, without limitation, any right to vote or
to receive dividends or to consent or to receive notice as a stockholder in
respect of any meeting of stockholders for the election of directors of the
Company or any other matter, or any right whatsoever as a stockholder of the
Company (except for those notices and other matters expressly set forth herein))
or (y) imposing any obligation on such Holder to purchase any securities or as
imposing any liabilities on such Holder as a stockholder of the Company, whether
such obligation or liabilities are asserted by the Company or by creditors of
the Company.
15. NOTICES. All notices and other communications by the Company
or by any Holder to the Company under this Warrant shall be in writing and shall
be delivered in person or by facsimile transmission, or mailed by registered or
certified mail, return receipt requested, or by a nationally recognized
overnight courier, postage prepaid, addressed in each case (A) if to any Holder
of any Warrant, at the registered address of such Holder as set forth in the
register kept at the principal office of the Company, or (B) if to the Company,
to the attention of its Corporate Secretary at its principal office with a copy
to James J. Connors II, Esq., at Kelso & Company, 320 Park Avenue, 24th floor,
New York, New York 10022, PROVIDED that the exercise of any Warrant shall be
effective in the manner provided in Section 1. Each party hereto may from time
to time change the address to which notices to it are to be delivered or mailed
hereunder by notice to the other party.
16. AMENDMENTS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
17. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
18. SEVERABILITY. The invalidity or unenforceability of any
provision of this Warrant in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Warrant in such jurisdiction
or the validity, legality or enforceability
14
<PAGE>
of this Warrant, including any such provision, in any other jurisdiction, it
being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
19. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
20. CONSENT TO JURISDICTION, ETC. The Company and each Holder (by
its acceptance of this Warrant) irrevocably and unconditionally (a) agrees that
all suits, actions or other legal proceedings arising out of this Agreement or
any of the transactions contemplated hereby (a "SUIT") shall be brought and
adjudicated solely in the United States District Court for the District of
Delaware or Delaware Chancery Court, or, if such courts will not accept
jurisdiction, in any court of competent civil jurisdiction sitting in New Castle
County, Delaware, (b) submits to the exclusive jurisdiction of any such court
for the purpose of any such Suit and (c) waives and agrees not to assert by way
of motion, as a defense or otherwise in any such Suit, any claims that it is not
subject to the jurisdiction of the above courts, that such Suit is brought in an
inconvenient forum or that the venue of such Suit is improper. Each of the
parties hereto also irrevocably and unconditionally consents to the service of
any process, summons, pleadings, notices or other papers in a manner permitted
by the notice provisions of Section 15 hereof and agrees that any such form of
service shall be effective in connection with any such Suit; PROVIDED that
nothing contained herein shall affect the right of any party to serve process,
pleadings, notices or other papers in any other manner permitted by applicable
Law. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in any Suit shall be conclusive and binding on
such party and that such judgment may be enforced in any other jurisdiction,
either within or outside of the United States, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of such judgment.
15
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
By:
--------------------------
Name:
Title:
16
<PAGE>
Exhibit A
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
TO: UNIVERSAL OUTDOOR HOLDINGS, INC.
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, __________
shares of Common Stock, par value $0.01 per share, of UNIVERSAL OUTDOOR
HOLDINGS, INC., and herewith makes payment of $_____________ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to ___________, whose address is _____________.
Dated:
----------- ------------------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
-------------------------------------------------------
(Street Address)
-------------------------------------------------------
(City)(State)(Zip Code)
17
<PAGE>
Exhibit B
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, subject to the terms, condition and restrictions
contained in the within Warrant (including certain restrictions on
transferability thereof) the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _______________ the right represented
by such Warrant to purchase __________ shares of Common Stock, par value $0.01
per share, of UNIVERSAL OUTDOOR HOLDINGS, INC. to which such Warrant relates,
and appoints _________________ as attorney to make such transfer on the books of
UNIVERSAL OUTDOOR HOLDINGS, INC. maintained for such purpose, with full power of
substitution in the premises.
Dated:
------------ -------------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
-------------------------------------------------------
(Street Address)
-------------------------------------------------------
(City)(State)(Zip Code)
Signed in the presence of:
- --------------------------
18
<PAGE>
ANNEX B
- --------------------------------------------------------------------------------
UNIVERSAL OUTDOOR HOLDINGS, INC.
Series II Common Stock Purchase Warrant
Dated as of [ ], [ ]
- --------------------------------------------------------------------------------
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
UNDER SUCH ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION THEREFROM UNDER SUCH
ACT AND IN ALL CASES IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS
AND IN ALL CASES IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AND
IN ANY EVENT THIS WARRANT MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, EXCHANGED,
MORTGAGED, PLEDGED OR GRANTED A SECURITY INTEREST IN, OR OTHERWISE DISPOSED OF
OR ENCUMBERED BY OR TO ANY PARTY OTHER THAN BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION OR PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER AS DEFINED BY
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR THE EMPLOYMENT RETIREMENT
INCOME SECURITY ACT OF 1934, AS AMENDED, OR AS OTHERWISE SET FORTH IN THIS
WARRANT.
<PAGE>
1. Exercise of Warrant..................................................... 2
1.1. Time and Manner of Exercise.......................................... 2
1.2. When Exercise Effective.............................................. 2
1.3. Delivery of Stock Certificates, etc.................................. 2
1.4. Withholding.......................................................... 3
2. Adjustment of Number of Shares of Common Stock Issuable Upon Exercise... 3
2.1. Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications.......................................................... 3
2.2. No Adjustment for Dividends; No Adjustment of Warrant Price;
Adjustments of All Other Transaction Warrants..................... 4
2.3. Other Adjustments.................................................... 4
2.4. Notice of Adjustment................................................. 5
2.5. Excluded Transactions................................................ 5
3. Purchase Rights Upon Merger, Consolidation, etc.......................... 5
4. Rounding of Shares...................................................... 6
5. Other Dilutive Events................................................... 7
6. No Dilution or Impairment............................................... 7
7. Notices of Corporate Actions............................................ 8
8. Reservation of Stock, Appraisal, etc.................................... 9
9. Expiration.............................................................. 9
9.1. Expiration Time....................................................... 9
9.2. Expiration Event...................................................... 9
9.3. Expiration Date....................................................... 9
10. Restrictions on Transfer............................................... 9
10.1. Restrictive Legend................................................... 9
10.2. Restrictions on Transfer............................................. 10
11. Registration and Transfer of Warrants, etc............................. 10
11.1. Warrant Register; Ownership of Warrants.............................. 10
11.2. Transfer and Exchange of Warrants................................... 11
11.3. Replacement of Warrants............................................. 11
12. Definitions............................................................ 11
13. Remedies............................................................... 14
i
<PAGE>
14. No Rights or Liabilities as Stockholder. .............................. 14
15. Notices................................................................ 14
16. Amendments............................................................. 15
17. Descriptive Headings................................................... 15
18. Severability........................................................... 15
19. GOVERNING LAW.......................................................... 15
20. Consent to Jurisdiction, Etc........................................... 15
Exhibit A: Form Of Subscription........................................ 17
Exhibit B: Form Of Assignment.......................................... 18
ii
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
SERIES II COMMON STOCK PURCHASE WARRANT
[ ] Shares (Subject to the Adjustment
Provisions Specified Herein)
No. II-__ [ ], [ ]
Universal Outdoor Holdings, Inc., a Delaware corporation (the "Company"),
hereby grants to [ ] (the "Holder"), this Series II Common Stock Purchase
Warrant (the "Warrant", and together with all other Series II Common Stock
Purchase Warrants issued in substitution therefor, the "Warrants") and certifies
that the Holder is entitled to purchase from the Company up to [ ] duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
par value $0.01 per share, of the Company (the "Common Stock") at the purchase
price per share equal to the closing price per share of the Common Stock as
reported on the NASDAQ National Market (the "Closing Price") for the day
immediately preceding the date of exercise minus $0.01 (the "Warrant Price");
PROVIDED, however, that if at any time prior to the expiration of such Warrant
the average Closing Price for any thirty (30) consecutive trading days is equal
to or greater than$16.25 and the Closing Price for the last day of such thirty
day trading period is equal to or greater than$16.25, then the Warrant Price
shall thereafter equal $5.00, in either case subject to the terms, conditions
and adjustments set forth below. This Warrant is being issued pursuant to the
Warrant Plan (as defined in Section 12 hereof). Certain capitalized terms used
in this Warrant are defined in Section 12; references to an "Exhibit" are,
unless otherwise specified, to one of the Exhibits attached to this Warrant and
references to a "Section" are, unless otherwise specified, to one of the
Sections of this Warrant.
<PAGE>
1. EXERCISE OF WARRANT.
1.1. TIME AND MANNER OF EXERCISE. (a) This Warrant shall be
exercisable at any time prior to the Expiration Date.
(b) Subject to paragraph (a) above and the other terms and conditions set
forth herein, this Warrant may be exercised by the Holder, in whole or in part,
during normal business hours on any Business Day, by surrender of this Warrant
to the Company at its principal office, accompanied by a subscription in
substantially the form attached to this Warrant as Exhibit A duly executed by
such Holder and accompanied by payment, in cash or by certified or official bank
check payable to the order of the Company, in the amount obtained by multiplying
(x) the number of shares of Common Stock designated in such subscription (up to
the amount of shares to which such Holder is entitled to receive at such time
upon exercise of this Warrant) by (y) the Warrant Price, and such Holder shall
thereupon be entitled to receive the full number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) so purchased upon such exercise.
1.2. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall
be deemed to have been effected immediately prior to the close of business on
the Business Day on which this Warrant shall have been surrendered to the
Company as provided in Section 1.1, and at such time the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
Section 1.3 shall be deemed to have become the Holder or Holders of record
thereof.
1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable
after each exercise of this Warrant, in whole or in part, subject to Section 1.4
hereof, and in any event within five Business Days thereafter, the Company at
its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Holder or, subject to
Section 10, as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct,
2
<PAGE>
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled upon such exercise, and
(b) in case such exercise is in part only, a new Warrant of like tenor,
calling in the aggregate on the face thereof for the number of shares of
Common Stock equal to the number of such shares which such Holder would be
entitled to receive at such time upon exercise of this Warrant, after giving
effect to such recent exercise.
1.4. WITHHOLDING. The Company shall have the right to require a
Holder or other person entitled to receive shares of Common Stock upon exercise
of the Warrant to pay to the Company the amount which the Company is or will be
required to withhold with respect to the issuance of such shares in order for
the Company to pay taxes or to claim an income tax deduction with respect to the
issuance of such shares. In lieu of such payment, the Company will be entitled,
at the discretion of the Board of Directors of the Company, to retain a
sufficient number of such shares (valued at the fair market value thereof, as
determined by the Board of Directors in its sole discretion on the date of
exercise) to cover the amount required to be withheld.
2. ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE.
The number and kind of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time as follows:
2.1. STOCK DIVIDENDS; STOCK SPLITS; REVERSE STOCK SPLITS;
RECLASSIFICATIONS. In case the Company shall (i) pay a dividend or make any
other distribution with respect to its Common Stock in shares of its capital
stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a merger, consolidation or other
business combination in which the Company is the continuing corporation) the
number of shares of Common Stock issuable upon exercise of the War-
3
<PAGE>
rant immediately prior to the record date for such dividend or distribution or
the effective date of such subdivision or combination shall be adjusted so that
the holder of the Warrant shall thereafter be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company that such
holder would have owned or have been entitled to receive after the happening of
any of the events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect thereto.
An adjustment made pursuant to this Section 2.1 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
2.2. NO ADJUSTMENT FOR DIVIDENDS; NO ADJUSTMENT OF WARRANT PRICE;
ADJUSTMENTS OF ALL OTHER TRANSACTION WARRANTS. Except as otherwise provided in
this Section 2, no adjustment in respect of any dividends declared and paid on
Common Stock, or on any other capital stock of the Company, shall be made during
the term of a Warrant or upon the exercise of a Warrant. Notwithstanding
anything to the contrary contained in this Warrant, (A) in the event of any
adjustments to this Warrant pursuant to this Section 2, adjustments shall be
made solely to the number and kind of securities purchasable upon the exercise
of this Warrant and no adjustments shall be made to the Warrant Price, and (B)
no adjustments to this Warrant pursuant to this Section 2 shall be made or given
any effect unless similar adjustments are made to all other Transaction Warrants
(it being the intent of the Company and the Holder that all Transaction Warrants
shall contain adjustment provisions which are similar in nature to this Section
2 and that upon any event or circumstance giving rise to any adjustment pursuant
to this Section 2, all Transaction Warrants shall be similarly adjusted).
2.3. OTHER ADJUSTMENTS. In the event that at any time, as a result
of an adjustment made pursuant to this Section 2, the registered holders shall
become entitled to receive any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practi-
4
<PAGE>
cable to the provisions with respect to the shares of Common Stock contained in
this Section 2.
2.4. NOTICE OF ADJUSTMENT. Whenever the number of shares of Common
Stock purchasable upon the exercise of the Warrant is adjusted, as herein
provided, the Company shall give Notice (pursuant to Section 15) to each Holder
of such adjustment or adjustments.
2.5. EXCLUDED TRANSACTIONS. Notwithstanding any provision in this
Section 2 to the contrary, no adjustment shall be made pursuant to this Section
2 in respect of (i) the exercise of any warrants, options or other rights to
purchase Common Stock, or the conversion of any convertible securities of the
Company, in each case issued or granted prior to the date hereof or issued or
granted pursuant to or in connection with the Existing Warrant Agreement or the
Warrant Plan, (ii) the issuance of Common Stock pursuant to any dividend
reinvestment plan, if any, (iii) the issuance of shares of Common Stock to the
directors, officers or employees of, or any consultants or advisors to, the
Company, or the granting of options, stock appreciation rights or similar rights
to such persons with respect thereto, pursuant to any BONA FIDE management
compensation plan or arrangement of the Company or any of its subsidiaries, (iv)
equity securities issued, either directly or indirectly, in connection with the
acquisition by the Company of an interest in an unaffiliated third party
(whether by merger, consolidation, sale of assets or securities, or otherwise),
(v) the issuance of securities (including any convertible securities or options
and the conversion or exercise thereof) to any third party which is at such time
a creditor of the Company, in connection with the refinancing or restructuring
of the indebtedness owed to such party, (vi) the issuance of additional equity
securities to the existing shareholders of the Company, the proceeds of which
are specifically utilized for purposes of acquiring an interest in an
unaffiliated third party, and (vii) the sale or transfer of Common Stock in
connection with a Compelled Sale.
3. PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC. (a) In the event of
any consolidation of the Company with or merger of the Company with or into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all the
5
<PAGE>
property of the Company, the Acquiring Person shall execute an agreement that
each Holder shall have the right thereafter (whether or not the Warrant is then
exercisable by its terms) upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of the Warrant the
kind and amount of securities, cash or other assets which he would have owned or
have been entitled to receive after the happening of such consolidation, merger,
sale, transfer or lease had such Warrant been exercised immediately prior to
such action; PROVIDED that no adjustment in respect of dividends, interest or
other income on or from such shares or other securities and property shall be
made during the term of a Warrant or upon the exercise of a Warrant. The
Company shall mail by first class mail, postage prepaid, to each Holder, notice
of the execution of any such agreement (including a copy thereof). Such
agreement shall provide for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 3. The
provisions of this Section 3 shall similarly apply to successive consolidations,
mergers, sales, transfers or leases. The Acquiring Person shall mail to Holders
a notice describing any supplemental Warrant Agreement. In the event that this
Section 3 shall be applicable, the provisions of Section 2.1 shall not be
applicable.
(b) The Company shall have the right to compel the Holder of this Warrant
to sell this Warrant in the event of a sale of all or substantially all of the
Company to a third party, whether pursuant to a sale of capital stock of the
Company, merger, consolidation, sale of assets or similar transaction (any such
sale, a "Compelled Sale"). In the event that the Company determines to exercise
its right to a Compelled Sale, it shall mail to Holders written notice of such
event, and Holders shall be entitled to receive from the Company an amount equal
to (i) the Current Value per share of Common Stock minus the Warrant Price,
multiplied by the number of shares of Common Stock issuable upon the exercise of
the Warrant, plus (ii) the fair value (as determined by the Board of Directors
of the Company acting in good faith) of any Other Securities issuable upon the
exercise of the Warrant, if any.
4. ROUNDING OF SHARES. To the extent necessary upon the exercise of a
Warrant, the Company shall
6
<PAGE>
round each fractional share issuable upon such exercise up to the next whole
number.
5. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the
provisions of Section 2 or Section 3 are not strictly applicable but the failure
to make any adjustment would not fairly protect the purchase rights represented
by this Warrant in accordance with the essential intent and principles of such
Sections, then, in each such case, the Company by unanimous action by the Board
of Directors of the Company shall appoint a firm of independent certified public
accountants of recognized national standing (which may be the regular auditors
of the Company), which shall give their opinion upon the adjustment, if any, on
a basis consistent with the essential intent and principles established in
Sections 2 and 3, necessary to preserve, without dilution, the purchase rights
represented by this Warrant. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the holder of this Warrant and shall make the
adjustments described therein.
6. NO DILUTION OR IMPAIRMENT. Following the date of issuance of this
Warrant, the Company will not, by amendment of its certificate of incorporation
or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be reasonably necessary or
appropriate in order to protect the rights of the holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (a) will not permit the par value of any shares of stock receivable
upon the exercise of this Warrant to exceed the amount payable therefor upon
such exercise, (b) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of the Warrants from time to time
outstanding, and (c) will not take any action which results in any adjustment
pursuant to Section 2 if the total number of shares of Common Stock (or Other
Securities) issuable after the action upon the exercise of all of the Warrants
would exceed the total number of shares
7
<PAGE>
of Common Stock (or Other Securities) then authorized by the Company's
certificate of incorporation and available for the purpose of issue upon such
exercise.
7. NOTICES OF CORPORATE ACTIONS. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a regular periodic
dividend payable in cash out of earned surplus in an amount not exceeding
the amount of the immediately preceding cash dividend for such period) or
other distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger involving the Company and any other Person or any transfer of all or
substantially all the assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
the Company will mail or deliver to each holder of a Warrant a notice specifying
(i) the date or expected date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right, and (ii) the date or expected date on
which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place and the time, if any such time is to be fixed, as of which the
holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for the securities
or other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed or delivered at least three (3) days
prior to the date therein specified. Failure to mail or receive such
8
<PAGE>
notice or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with any of the foregoing
transactions.
8. RESERVATION OF STOCK, APPRAISAL, ETC. The Company will at all times
reserve and keep available, solely for issuance and delivery upon exercise of
the Warrants, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of all Warrants at the time outstanding.
All shares of Common Stock (or Other Securities) issuable upon exercise of any
Warrants shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the Holders thereof. The Company shall cause the
Appraisal to be conducted on the later of (i) 60 days following the last day of
a fiscal year or (ii) 20 days following the date on which annual audited
financial statements are available and complete.
9. EXPIRATION.
9.1. EXPIRATION TIME. Subject to Section 9.2, the right to exercise
this Warrant shall expire upon the tenth anniversary of the date of the issuance
of this Warrant.
9.2. EXPIRATION EVENT. The right to exercise this Warrant shall
expire immediately, without any requirement of the Company to take action or
provide notice to the Holder, upon the resignation or termination, with or
without cause, of the Holder of the Warrant as an officer of the Company.
9.3. EXPIRATION DATE. For purposes of this Warrant, "Expiration
Date" shall mean the date upon which the right to exercise this Warrant shall
expire pursuant to Section 9.1 or 9.2 hereof.
10. RESTRICTIONS ON TRANSFER.
10.1. RESTRICTIVE LEGEND. Except as otherwise permitted by this
Section 10, each Warrant (including each Warrant issued upon the transfer of any
Warrant) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
9
<PAGE>
"This Warrant and any shares acquired upon the exercise of this Warrant
have not been registered under the Securities Act of 1933, as amended, and
may not be transferred, sold or otherwise disposed of except while a
registration under such Act is in effect or pursuant to an exemption
therefrom under such Act and in all cases in compliance with all applicable
state securities laws, and in any event this Warrant may not be sold,
assigned, transferred, exchanged, mortgaged, pledged or granted a security
interest in, or otherwise disposed of or encumbered by or to any party other
than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code
of 1986, as amended, or the Employment Retirement Income Security Act of
1934, as amended, or as otherwise set forth in this Warrant."
10.2. RESTRICTIONS ON TRANSFER. Each Holder, by acceptance of this
Warrant, acknowledges and agrees that this Warrant may not be sold, assigned,
transferred, exchanged, mortgaged, pledged or granted a security interest in, or
otherwise disposed of or encumbered by or to any party other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or the
Employment Retirement Income Security Act of 1934, as amended, or as otherwise
set forth in this Warrant.
11. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
11.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. The Company will keep
at its principal office a register in which the Company will provide for the
registration of Warrants and the registration of transfers of Warrants. The
Company may treat the Person in whose name any Warrant is registered on such
register as the owner thereof for all other purposes, and the Company shall not
be affected by any notice to the contrary, except that, if and when any Warrant
is accompanied by an instrument of assignment in substantially the form attached
hereto as Exhibit B, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. Subject to
Section 10, a Warrant, if
10
<PAGE>
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
11.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon surrender of any
Warrant for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will (subject to compliance with
Section 10, if applicable) execute and deliver in exchange therefor a new
Warrant or Warrants of like tenor, in the name of such holder or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant or Warrants so
surrendered.
11.3. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
upon delivery of an indemnity bond in such reasonable amount as the Company may
determine (or, at the sole option of the Company, of an indemnity agreement
reasonably satisfactory to the Company), or, in the case of any such mutilation,
upon the surrender of such Warrant for cancellation to the Company at its
principal office, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
12. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
ACQUIRING PERSON: With reference to the transactions referred to in
Section 3, (i) the continuing or surviving corporation of a consolidation or
merger with the Company (if other than the Company), (ii) the transferee of
substantially all of the properties of the Company, (iii) the parent entity of
any corporation consolidating with or merging into the Company in a
consolidation or merger in connection with which the Common Stock is changed
into or exchanged for stock or other securities of any other Person (including
such parent entity) or cash or any other property if the Company becomes a
subsidiary of such entity, or (iv) in the case of a capital reorganization or
reclassification or in any
11
<PAGE>
case in which the Company is a surviving corporation in a merger not described
in clause (iii) above, the Company.
AFFILIATE: Affiliate shall have the meaning set forth in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
APPRAISAL: The report prepared and delivered to the Board of Directors of
the Company by an independent valuation consultant or appraiser of recognized
national standing appointed by a majority of the Board of Directors of the
Company appraising the Current Value per share of Common Stock as of the last
day of the fiscal year then most recently ended.
BUSINESS DAY: Any day other than a Saturday or a Sunday or a day on which
commercial banking institutions in the City of New York are authorized by law to
be closed. Any reference to "days" (unless Business Days are specified) shall
mean calendar days.
COMMON STOCK: As defined in the introduction to this Warrant, such term to
include any stock into which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common Stock, and all other
stock of any class or classes (however designated) of the Company the holders of
which have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
COMPANY: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of the
Company hereunder in compliance with Section 3.
COMPELLED SALE: As defined in Section 3(b) of this Warrant.
CURRENT VALUE: On any date specified herein, the Current Value per share
of Common Stock shall be equal to the Closing Price over the thirty consecutive
trading days immediately preceding such date; PROVIDED, that if the Common Stock
is not then reported on such market, then the Current Value per share of Common
Stock shall be equal to the aggregate fair market value of the
12
<PAGE>
Common Stock divided by the number of such outstanding shares, all calculated on
a fully diluted basis, without additional premiums for control or discounts for
minority interests or restrictions on transfer, as determined in the most recent
existing Appraisal.
EXERCISE DATE: As defined in Section 7.2 of this Warrant.
EXISTING WARRANT AGREEMENT: The Warrant Agreement, dated as of June 30,
1994, between Seller and United States Trust Company of New York, as Warrant
Agent.
EXPIRATION DATE: As defined in Section 9.3 of this Warrant.
OTHER SECURITIES: Any stock (other than Common Stock) and other securities
of the Company or any other Person (corporate or otherwise) which the Holders of
the Warrants at any time shall be entitled to receive, or shall have received,
upon the exercise of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to Section 3 or
otherwise.
PERSON: A corporation, an association, a partnership, an organization, a
business, an individual, a government or political subdivision thereof or a
governmental agency.
TRANSACTION WARRANTS: The Warrants and all other common stock purchase
warrants issued pursuant to the Warrant Plan.
WARRANT PLAN: The Company's Amended and Restated 1996 Warrant Plan
adopted by the Board of Directors of the Company on April 5, 1996 and amended
and restated on July [ ], 1996.
WARRANT PRICE: As defined in the introduction to this Warrant.
WARRANTS: As defined in the introduction to this Warrant.
13
<PAGE>
13. REMEDIES. The Company stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in
this Warrant shall be construed as (x) conferring upon the Holder hereof any
rights as a stockholder of the Company (including, without limitation, any right
to vote or to receive dividends or to consent or to receive notice as a
stockholder in respect of any meeting of stockholders for the election of
directors of the Company or any other matter, or any right whatsoever as a
stockholder of the Company (except for those notices and other matters expressly
set forth herein)) or (y) imposing any obligation on such Holder to purchase any
securities or as imposing any liabilities on such Holder as a stockholder of the
Company, whether such obligation or liabilities are asserted by the Company or
by creditors of the Company.
15. NOTICES. All notices and other communications by the Company
or by any Holder to the Company under this Warrant shall be in writing and shall
be delivered in person or by facsimile transmission, or mailed by registered or
certified mail, return receipt requested, or by a nationally recognized
overnight courier, postage prepaid, addressed in each case (A) if to any Holder
of any Warrant, at the registered address of such Holder as set forth in the
register kept at the principal office of the Company, or (B) if to the Company,
to the attention of its Corporate Secretary at its principal office with a copy
to James J. Connors II, Esq., at Kelso & Company, 320 Park Avenue, 24th floor,
New York, New York 10022, PROVIDED that the exercise of any Warrant shall be
effective in the manner provided in Section 1. Each party hereto may from time
to time change the address to which notices to it are to be delivered or mailed
hereunder by notice to the other party.
14
<PAGE>
16. AMENDMENTS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
17. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
18. SEVERABILITY. The invalidity or unenforceability of any
provision of this Warrant in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Warrant in such jurisdiction
or the validity, legality or enforceability of this Warrant, including any such
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
19. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
20. CONSENT TO JURISDICTION, ETC. The Company and each Holder (by
its acceptance of this Warrant) irrevocably and unconditionally (a) agrees that
all suits, actions or other legal proceedings arising out of this Agreement or
any of the transactions contemplated hereby (a "SUIT") shall be brought and
adjudicated solely in the United States District Court for the District of
Delaware or Delaware Chancery Court, or, if such courts will not accept
jurisdiction, in any court of competent civil jurisdiction sitting in New Castle
County, Delaware, (b) submits to the exclusive jurisdiction of any such court
for the purpose of any such Suit and (c) waives and agrees not to assert by way
of motion, as a defense or otherwise in any such Suit, any claims that it is not
subject to the jurisdiction of the above courts, that such Suit is brought in an
inconvenient forum or that the venue of such Suit is improper. Each of the
parties hereto also irrevocably and unconditionally consents to the service of
any process, summons, pleadings, notices or other papers in a manner permitted
15
<PAGE>
by the notice provisions of Section 15 hereof and agrees that any such form of
service shall be effective in connection with any such Suit; PROVIDED that
nothing contained herein shall affect the right of any party to serve process,
pleadings, notices or other papers in any other manner permitted by applicable
Law. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in any Suit shall be conclusive and binding on
such party and that such judgment may be enforced in any other jurisdiction,
either within or outside of the United States, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of such judgment.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By:
--------------------------
Name:
Title:
16
<PAGE>
Exhibit A
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
TO: UNIVERSAL OUTDOOR HOLDINGS, INC.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, __________ shares of
Common Stock, par value $0.01 per share, of UNIVERSAL OUTDOOR HOLDINGS, INC.,
and herewith makes payment of $_____________ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered to
___________, whose address is _____________.
Dated:
----------- ------------------------------------------------------------
(Signature must conform in all respects to name of holder as
specified on the face of Warrant)
------------------------------------------------------------
(Street Address)
------------------------------------------------------------
(City)(State)(Zip Code)
<PAGE>
Exhibit B
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, subject to the terms, condition and restrictions
contained in the within Warrant (including certain restrictions on
transferability thereof) the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _______________ the right represented
by such Warrant to purchase __________ shares of Common Stock, par value $0.01
per share, of UNIVERSAL OUTDOOR HOLDINGS, INC. to which such Warrant relates,
and appoints _________________ as attorney to make such transfer on the books of
UNIVERSAL OUTDOOR HOLDINGS, INC. maintained for such purpose, with full power of
substitution in the premises.
Dated:
----------- ------------------------------------------------------------
(Signature must conform in all respects to name of holder as
specified on the face of Warrant)
------------------------------------------------------------
(Street Address)
------------------------------------------------------------
(City)(State)(Zip Code)
Signed in the presence of:
- --------------------------
<PAGE>
ANNEX C
- --------------------------------------------------------------------------------
UNIVERSAL OUTDOOR HOLDINGS, INC.
Series III Common Stock Purchase Warrant
Dated as of [ ], [ ]
- --------------------------------------------------------------------------------
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
REGISTRATION UNDER SUCH ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION
THEREFROM UNDER SUCH ACT AND IN ALL CASES IN COMPLIANCE WITH ALL APPLICABLE
STATE SECURITIES LAWS AND IN ALL CASES IN COMPLIANCE WITH ALL APPLICABLE
STATE SECURITIES LAWS, AND IN ANY EVENT THIS WARRANT MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, EXCHANGED, MORTGAGED, PLEDGED OR GRANTED A SECURITY
INTEREST IN, OR OTHERWISE DISPOSED OF OR ENCUMBERED BY OR TO ANY PARTY
OTHER THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION OR PURSUANT TO A
QUALIFIED DOMESTIC RELATIONS ORDER AS DEFINED BY THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF
1934, AS AMENDED, OR AS OTHERWISE SET FORTH IN THIS WARRANT.
<PAGE>
1. Exercise of Warrant..................................................... 2
1.1. Time and Manner of Exercise....................................... 2
1.2. When Exercise Effective........................................... 2
1.3. Delivery of Stock Certificates, etc............................... 2
1.4. Withholding....................................................... 3
2. Adjustment of Number of Shares of Common Stock Issuable Upon Exercise... 3
2.1. Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications....................................................... 3
2.2. No Adjustment for Dividends; No Adjustment of Warrant Price;
Adjustments of All Other Transaction Warrants...................... 4
2.3. Other Adjustments................................................. 4
2.4. Notice of Adjustment.............................................. 5
2.5. Excluded Transactions............................................. 5
3. Purchase Rights Upon Merger, Consolidation, etc.......................... 5
4. Rounding of Shares...................................................... 6
5. Other Dilutive Events................................................... 7
6. No Dilution or Impairment............................................... 7
7. Notices of Corporate Actions............................................ 8
8. Reservation of Stock, Appraisal, etc.................................... 9
9. Expiration.............................................................. 9
9.1. Expiration Time.................................................... 9
9.2. Expiration Event................................................... 9
9.3. Expiration Date.................................................... 9
10. Restrictions on Transfer............................................... 9
10.1. Restrictive Legend................................................ 9
10.2. Restrictions on Transfer.......................................... 10
11. Registration and Transfer of Warrants, etc............................. 10
11.1. Warrant Register; Ownership of Warrants........................... 10
11.2. Transfer and Exchange of Warrants................................ 11
11.3. Replacement of Warrants.......................................... 11
12. Definitions............................................................ 11
13. Remedies............................................................... 14
i
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14. No Rights or Liabilities as Stockholder. .............................. 14
15. Notices................................................................ 14
16. Amendments............................................................. 15
17. Descriptive Headings................................................... 15
18. Severability........................................................... 15
19. GOVERNING LAW.......................................................... 15
20. Consent to Jurisdiction, Etc........................................... 15
Exhibit A: Form Of Subscription........................................ 17
Exhibit B: Form Of Assignment.......................................... 18
ii
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
SERIES III COMMON STOCK PURCHASE WARRANT
[ ] Shares (Subject to the Adjustment
Provisions Specified Herein)
No. III-__ [ ], [ ]
Universal Outdoor Holdings, Inc., a Delaware corporation (the
"Company"), hereby grants to [ ] (the "Holder"), this Series III Common
Stock Purchase Warrant (the "Warrant", and together with all other Series III
Common Stock Purchase Warrants issued in substitution therefor, the "Warrants")
and certifies that the Holder is entitled to purchase from the Company up to [
] duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock, par value $0.01 per share, of the Company (the "Common Stock") at
the purchase price per share equal to the closing price per share of the Common
Stock as reported on the NASDAQ National Market (the "Closing Price") for the
day immediately preceding the date of exercise minus $0.01 (the "Warrant
Price"); PROVIDED, however, that if at any time prior to the expiration of such
Warrant the average Closing Price for any thirty (30) consecutive trading days
is equal to or greater than $20.00 and the Closing Price for the last day of
such thirty day trading period is equal to or greater than $20.00, then the
Warrant Price shall thereafter equal $5.00, in either case subject to the terms,
conditions and adjustments set forth below. This Warrant is being issued
pursuant to the Warrant Plan (as defined in Section 12 hereof). Certain
capitalized terms used in this Warrant are defined in Section 12; references to
an "Exhibit" are, unless otherwise specified, to one of the Exhibits attached to
this Warrant and references to a "Section" are, unless otherwise specified, to
one of the Sections of this Warrant.
<PAGE>
1. EXERCISE OF WARRANT.
1.1. TIME AND MANNER OF EXERCISE. (a) This Warrant shall be
exercisable at any time prior to the Expiration Date.
(b) Subject to paragraph (a) above and the other terms and
conditions set forth herein, this Warrant may be exercised by the Holder, in
whole or in part, during normal business hours on any Business Day, by surrender
of this Warrant to the Company at its principal office, accompanied by a
subscription in substantially the form attached to this Warrant as Exhibit A
duly executed by such Holder and accompanied by payment, in cash or by certified
or official bank check payable to the order of the Company, in the amount
obtained by multiplying (x) the number of shares of Common Stock designated in
such subscription (up to the amount of shares to which such Holder is entitled
to receive at such time upon exercise of this Warrant) by (y) the Warrant Price,
and such Holder shall thereupon be entitled to receive the full number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
(or Other Securities) so purchased upon such exercise.
1.2. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall
be deemed to have been effected immediately prior to the close of business on
the Business Day on which this Warrant shall have been surrendered to the
Company as provided in Section 1.1, and at such time the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
Section 1.3 shall be deemed to have become the Holder or Holders of record
thereof.
1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable
after each exercise of this Warrant, in whole or in part, subject to Section 1.4
hereof, and in any event within five Business Days thereafter, the Company at
its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Holder or, subject to
Section 10, as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct,
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(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such Holder shall be entitled upon
such exercise, and
(b) in case such exercise is in part only, a new Warrant of like
tenor, calling in the aggregate on the face thereof for the number of
shares of Common Stock equal to the number of such shares which such Holder
would be entitled to receive at such time upon exercise of this Warrant,
after giving effect to such recent exercise.
1.4. WITHHOLDING. The Company shall have the right to require a
Holder or other person entitled to receive shares of Common Stock upon exercise
of the Warrant to pay to the Company the amount which the Company is or will be
required to withhold with respect to the issuance of such shares in order for
the Company to pay taxes or to claim an income tax deduction with respect to the
issuance of such shares. In lieu of such payment, the Company will be entitled,
at the discretion of the Board of Directors of the Company, to retain a
sufficient number of such shares (valued at the fair market value thereof, as
determined by the Board of Directors in its sole discretion on the date of
exercise) to cover the amount required to be withheld.
2. ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE. The number and kind of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time as follows:
2.1. STOCK DIVIDENDS; STOCK SPLITS; REVERSE STOCK SPLITS;
RECLASSIFICATIONS. In case the Company shall (i) pay a dividend or make any
other distribution with respect to its Common Stock in shares of its capital
stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a merger, consolidation or other
business combination in which the Company is the continuing corporation) the
number of shares of Common Stock issuable upon exercise of the War-
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rant immediately prior to the record date for such dividend or distribution or
the effective date of such subdivision or combination shall be adjusted so that
the holder of the Warrant shall thereafter be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company that such
holder would have owned or have been entitled to receive after the happening of
any of the events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect thereto.
An adjustment made pursuant to this Section 2.1 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
2.2. NO ADJUSTMENT FOR DIVIDENDS; NO ADJUSTMENT OF WARRANT PRICE;
ADJUSTMENTS OF ALL OTHER TRANSACTION WARRANTS. Except as otherwise provided in
this Section 2, no adjustment in respect of any dividends declared and paid on
Common Stock, or on any other capital stock of the Company, shall be made during
the term of a Warrant or upon the exercise of a Warrant. Notwithstanding
anything to the contrary contained in this Warrant, (A) in the event of any
adjustments to this Warrant pursuant to this Section 2, adjustments shall be
made solely to the number and kind of securities purchasable upon the exercise
of this Warrant and no adjustments shall be made to the Warrant Price, and (B)
no adjustments to this Warrant pursuant to this Section 2 shall be made or given
any effect unless similar adjustments are made to all other Transaction Warrants
(it being the intent of the Company and the Holder that all Transaction Warrants
shall contain adjustment provisions which are similar in nature to this Section
2 and that upon any event or circumstance giving rise to any adjustment pursuant
to this Section 2, all Transaction Warrants shall be similarly adjusted).
2.3. OTHER ADJUSTMENTS. In the event that at any time, as a result
of an adjustment made pursuant to this Section 2, the registered holders shall
become entitled to receive any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practi-
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cable to the provisions with respect to the shares of Common Stock contained in
this Section 2.
2.4. NOTICE OF ADJUSTMENT. Whenever the number of shares of Common
Stock purchasable upon the exercise of the Warrant is adjusted, as herein
provided, the Company shall give Notice (pursuant to Section 15) to each Holder
of such adjustment or adjustments.
2.5. EXCLUDED TRANSACTIONS. Notwithstanding any provision in this
Section 2 to the contrary, no adjustment shall be made pursuant to this Section
2 in respect of (i) the exercise of any warrants, options or other rights to
purchase Common Stock, or the conversion of any convertible securities of the
Company, in each case issued or granted prior to the date hereof or issued or
granted pursuant to or in connection with the Existing Warrant Agreement or the
Warrant Plan, (ii) the issuance of Common Stock pursuant to any dividend
reinvestment plan, if any, (iii) the issuance of shares of Common Stock to the
directors, officers or employees of, or any consultants or advisors to, the
Company, or the granting of options, stock appreciation rights or similar rights
to such persons with respect thereto, pursuant to any BONA FIDE management
compensation plan or arrangement of the Company or any of its subsidiaries, (iv)
equity securities issued, either directly or indirectly, in connection with the
acquisition by the Company of an interest in an unaffiliated third party
(whether by merger, consolidation, sale of assets or securities, or otherwise),
(v) the issuance of securities (including any convertible securities or options
and the conversion or exercise thereof) to any third party which is at such time
a creditor of the Company, in connection with the refinancing or restructuring
of the indebtedness owed to such party, (vi) the issuance of additional equity
securities to the existing shareholders of the Company, the proceeds of which
are specifically utilized for purposes of acquiring an interest in an
unaffiliated third party, and (vii) the sale or transfer of Common Stock in
connection with a Compelled Sale.
3. PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC. (a) In the
event of any consolidation of the Company with or merger of the Company with or
into another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all the
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property of the Company, the Acquiring Person shall execute an agreement that
each Holder shall have the right thereafter (whether or not the Warrant is then
exercisable by its terms) upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of the Warrant the
kind and amount of securities, cash or other assets which he would have owned or
have been entitled to receive after the happening of such consolidation, merger,
sale, transfer or lease had such Warrant been exercised immediately prior to
such action; PROVIDED that no adjustment in respect of dividends, interest or
other income on or from such shares or other securities and property shall be
made during the term of a Warrant or upon the exercise of a Warrant. The
Company shall mail by first class mail, postage prepaid, to each Holder, notice
of the execution of any such agreement (including a copy thereof). Such
agreement shall provide for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 3. The
provisions of this Section 3 shall similarly apply to successive consolidations,
mergers, sales, transfers or leases. The Acquiring Person shall mail to Holders
a notice describing any supplemental Warrant Agreement. In the event that this
Section 3 shall be applicable, the provisions of Section 2.1 shall not be
applicable.
(b) The Company shall have the right to compel the Holder of
this Warrant to sell this Warrant in the event of a sale of all or substantially
all of the Company to a third party, whether pursuant to a sale of capital stock
of the Company, merger, consolidation, sale of assets or similar transaction
(any such sale, a "Compelled Sale"). In the event that the Company determines
to exercise its right to a Compelled Sale, it shall mail to Holders written
notice of such event, and Holders shall be entitled to receive from the Company
an amount equal to (i) the Current Value per share of Common Stock minus the
Warrant Price, multiplied by the number of shares of Common Stock issuable upon
the exercise of the Warrant, plus (ii) the fair value (as determined by the
Board of Directors of the Company acting in good faith) of any Other Securities
issuable upon the exercise of the Warrant, if any.
4. ROUNDING OF SHARES. To the extent necessary upon the exercise
of a Warrant, the Company shall
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<PAGE>
round each fractional share issuable upon such exercise up to the next whole
number.
5. OTHER DILUTIVE EVENTS. In case any event shall occur as to
which the provisions of Section 2 or Section 3 are not strictly applicable but
the failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such Sections, then, in each such case, the Company by unanimous
action by the Board of Directors of the Company shall appoint a firm of
independent certified public accountants of recognized national standing (which
may be the regular auditors of the Company), which shall give their opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in Sections 2 and 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon receipt of such
opinion, the Company will promptly mail a copy thereof to the holder of this
Warrant and shall make the adjustments described therein.
6. NO DILUTION OR IMPAIRMENT. Following the date of issuance of
this Warrant, the Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be reasonably necessary
or appropriate in order to protect the rights of the holder of this Warrant
against dilution or other impairment. Without limiting the generality of the
foregoing, the Company (a) will not permit the par value of any shares of stock
receivable upon the exercise of this Warrant to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock on the exercise of the Warrants from time
to time outstanding, and (c) will not take any action which results in any
adjustment pursuant to Section 2 if the total number of shares of Common Stock
(or Other Securities) issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares
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<PAGE>
of Common Stock (or Other Securities) then authorized by the Company's
certificate of incorporation and available for the purpose of issue upon such
exercise.
7. NOTICES OF CORPORATE ACTIONS. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a regular periodic
dividend payable in cash out of earned surplus in an amount not exceeding
the amount of the immediately preceding cash dividend for such period) or
other distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the assets of the Company to any other
Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail or deliver to each holder of a Warrant a notice specifying
(i) the date or expected date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right, and (ii) the date or expected date on
which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place and the time, if any such time is to be fixed, as of which the
holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for the securities
or other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed or delivered at least three (3) days
prior to the date therein specified. Failure to mail or receive such
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<PAGE>
notice or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with any of the foregoing
transactions.
8. RESERVATION OF STOCK, APPRAISAL, ETC. The Company will at
all times reserve and keep available, solely for issuance and delivery upon
exercise of the Warrants, the number of shares of Common Stock (or Other
Securities) from time to time issuable upon exercise of all Warrants at the time
outstanding. All shares of Common Stock (or Other Securities) issuable upon
exercise of any Warrants shall be duly authorized and, when issued upon such
exercise, shall be validly issued and, in the case of shares, fully paid and
nonassessable with no liability on the part of the Holders thereof. The Company
shall cause the Appraisal to be conducted on the later of (i) 60 days following
the last day of a fiscal year or (ii) 20 days following the date on which annual
audited financial statements are available and complete.
9. EXPIRATION.
9.1. EXPIRATION TIME. Subject to Section 9.2, the right to exercise
this Warrant shall expire upon the tenth anniversary of the date of the issuance
of this Warrant.
9.2. EXPIRATION EVENT. The right to exercise this Warrant shall
expire immediately, without any requirement of the Company to take action or
provide notice to the Holder, upon the resignation or termination, with or
without cause, of the Holder of the Warrant as an officer of the Company.
9.3. EXPIRATION DATE. For purposes of this Warrant, "Expiration
Date" shall mean the date upon which the right to exercise this Warrant shall
expire pursuant to Section 9.1 or 9.2 hereof.
10. RESTRICTIONS ON TRANSFER.
10.1. RESTRICTIVE LEGEND. Except as otherwise permitted by this
Section 10, each Warrant (including each Warrant issued upon the transfer of any
Warrant) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
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"This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933, as
amended, and may not be transferred, sold or otherwise disposed of
except while a registration under such Act is in effect or pursuant to
an exemption therefrom under such Act and in all cases in compliance
with all applicable state securities laws, and in any event this
Warrant may not be sold, assigned, transferred, exchanged, mortgaged,
pledged or granted a security interest in, or otherwise disposed of or
encumbered by or to any party other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or
the Employment Retirement Income Security Act of 1934, as amended, or
as otherwise set forth in this Warrant."
10.2. RESTRICTIONS ON TRANSFER. Each Holder, by acceptance of this
Warrant, acknowledges and agrees that this Warrant may not be sold, assigned,
transferred, exchanged, mortgaged, pledged or granted a security interest in, or
otherwise disposed of or encumbered by or to any party other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or the
Employment Retirement Income Security Act of 1934, as amended, or as otherwise
set forth in this Warrant.
11. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
11.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. The Company will keep
at its principal office a register in which the Company will provide for the
registration of Warrants and the registration of transfers of Warrants. The
Company may treat the Person in whose name any Warrant is registered on such
register as the owner thereof for all other purposes, and the Company shall not
be affected by any notice to the contrary, except that, if and when any Warrant
is accompanied by an instrument of assignment in substantially the form attached
hereto as Exhibit B, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. Subject to
Section 10, a Warrant, if
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properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
11.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon surrender of any
Warrant for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will (subject to compliance with
Section 10, if applicable) execute and deliver in exchange therefor a new
Warrant or Warrants of like tenor, in the name of such holder or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant or Warrants so
surrendered.
11.3. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
upon delivery of an indemnity bond in such reasonable amount as the Company may
determine (or, at the sole option of the Company, of an indemnity agreement
reasonably satisfactory to the Company), or, in the case of any such mutilation,
upon the surrender of such Warrant for cancellation to the Company at its
principal office, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
12. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
ACQUIRING PERSON: With reference to the transactions referred to in
Section 3, (i) the continuing or surviving corporation of a consolidation or
merger with the Company (if other than the Company), (ii) the transferee of
substantially all of the properties of the Company, (iii) the parent entity of
any corporation consolidating with or merging into the Company in a
consolidation or merger in connection with which the Common Stock is changed
into or exchanged for stock or other securities of any other Person (including
such parent entity) or cash or any other property if the Company becomes a
subsidiary of such entity, or (iv) in the case of a capital reorganization or
reclassification or in any
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case in which the Company is a surviving corporation in a merger not described
in clause (iii) above, the Company.
AFFILIATE: Affiliate shall have the meaning set forth in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
APPRAISAL: The report prepared and delivered to the Board of
Directors of the Company by an independent valuation consultant or appraiser of
recognized national standing appointed by a majority of the Board of Directors
of the Company appraising the Current Value per share of Common Stock as of the
last day of the fiscal year then most recently ended.
BUSINESS DAY: Any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in the City of New York are authorized by
law to be closed. Any reference to "days" (unless Business Days are specified)
shall mean calendar days.
COMMON STOCK: As defined in the introduction to this Warrant, such
term to include any stock into which such Common Stock shall have been changed
or any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference.
COMPANY: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of the
Company hereunder in compliance with Section 3.
COMPELLED SALE: As defined in Section 3(b) of this Warrant.
CURRENT VALUE: On any date specified herein, the Current Value per
share of Common Stock shall be equal to the Closing Price over the thirty
consecutive trading days immediately preceding such date; PROVIDED, that if the
Common Stock is not then reported on such market, then the Current Value per
share of Common Stock shall be equal to the aggregate fair market value of the
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Common Stock divided by the number of such outstanding shares, all calculated on
a fully diluted basis, without additional premiums for control or discounts for
minority interests or restrictions on transfer, as determined in the most recent
existing Appraisal.
EXERCISE DATE: As defined in Section 7.2 of this Warrant.
EXISTING WARRANT AGREEMENT: The Warrant Agreement, dated as of June
30, 1994, between Seller and United States Trust Company of New York, as Warrant
Agent.
EXPIRATION DATE: As defined in Section 9.3 of this Warrant.
OTHER SECURITIES: Any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
Holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 3 or otherwise.
PERSON: A corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
TRANSACTION WARRANTS: The Warrants and all other common stock
purchase warrants issued pursuant to the Warrant Plan.
WARRANT PLAN: The Company's Amended and Restated 1996 Warrant Plan
adopted by the Board of Directors of the Company on April 5, 1996 and amended
and restated on July [ ], 1996.
WARRANT PRICE: As defined in the introduction to this Warrant.
WARRANTS: As defined in the introduction to this Warrant.
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13. REMEDIES. The Company stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in
this Warrant shall be construed as (x) conferring upon the Holder hereof any
rights as a stockholder of the Company (including, without limitation, any right
to vote or to receive dividends or to consent or to receive notice as a
stockholder in respect of any meeting of stockholders for the election of
directors of the Company or any other matter, or any right whatsoever as a
stockholder of the Company (except for those notices and other matters expressly
set forth herein)) or (y) imposing any obligation on such Holder to purchase any
securities or as imposing any liabilities on such Holder as a stockholder of the
Company, whether such obligation or liabilities are asserted by the Company or
by creditors of the Company.
15. NOTICES. All notices and other communications by the Company
or by any Holder to the Company under this Warrant shall be in writing and shall
be delivered in person or by facsimile transmission, or mailed by registered or
certified mail, return receipt requested, or by a nationally recognized
overnight courier, postage prepaid, addressed in each case (A) if to any Holder
of any Warrant, at the registered address of such Holder as set forth in the
register kept at the principal office of the Company, or (B) if to the Company,
to the attention of its Corporate Secretary at its principal office with a copy
to James J. Connors II, Esq., at Kelso & Company, 320 Park Avenue, 24th floor,
New York, New York 10022, PROVIDED that the exercise of any Warrant shall be
effective in the manner provided in Section 1. Each party hereto may from time
to time change the address to which notices to it are to be delivered or mailed
hereunder by notice to the other party.
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16. AMENDMENTS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
17. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
18. SEVERABILITY. The invalidity or unenforceability of any
provision of this Warrant in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Warrant in such jurisdiction
or the validity, legality or enforceability of this Warrant, including any such
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
19. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
20. CONSENT TO JURISDICTION, ETC. The Company and each Holder (by
its acceptance of this Warrant) irrevocably and unconditionally (a) agrees that
all suits, actions or other legal proceedings arising out of this Agreement or
any of the transactions contemplated hereby (a "SUIT") shall be brought and
adjudicated solely in the United States District Court for the District of
Delaware or Delaware Chancery Court, or, if such courts will not accept
jurisdiction, in any court of competent civil jurisdiction sitting in New Castle
County, Delaware, (b) submits to the exclusive jurisdiction of any such court
for the purpose of any such Suit and (c) waives and agrees not to assert by way
of motion, as a defense or otherwise in any such Suit, any claims that it is not
subject to the jurisdiction of the above courts, that such Suit is brought in an
inconvenient forum or that the venue of such Suit is improper. Each of the
parties hereto also irrevocably and unconditionally consents to the service of
any process, summons, pleadings, notices or other papers in a manner permitted
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by the notice provisions of Section 15 hereof and agrees that any such form of
service shall be effective in connection with any such Suit; PROVIDED that
nothing contained herein shall affect the right of any party to serve process,
pleadings, notices or other papers in any other manner permitted by applicable
Law. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in any Suit shall be conclusive and binding on
such party and that such judgment may be enforced in any other jurisdiction,
either within or outside of the United States, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of such judgment.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By:
--------------------------
Name:
Title:
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Exhibit A
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
TO: UNIVERSAL OUTDOOR HOLDINGS, INC.
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, __________
shares of Common Stock, par value $0.01 per share, of UNIVERSAL OUTDOOR
HOLDINGS, INC., and herewith makes payment of $_____________ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to ___________, whose address is _____________.
Dated: _---------- ------------------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
------------------------------------------------------------
(Street Address)
------------------------------------------------------------
(City)(State)(Zip Code)
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Exhibit B
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, subject to the terms, condition and restrictions
contained in the within Warrant (including certain restrictions on
transferability thereof) the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _______________ the right represented
by such Warrant to purchase __________ shares of Common Stock, par value $0.01
per share, of UNIVERSAL OUTDOOR HOLDINGS, INC. to which such Warrant relates,
and appoints _________________ as attorney to make such transfer on the books of
UNIVERSAL OUTDOOR HOLDINGS, INC. maintained for such purpose, with full power of
substitution in the premises.
Dated: _---------- ------------------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
------------------------------------------------------------
(Street Address)
------------------------------------------------------------
(City)(State)(Zip Code)
Signed in the presence of:
- --------------------------
18
<PAGE>
CAPITAL APPRECIATION RIGHT AGREEMENT
THIS CAPITAL APPRECIATION RIGHT AGREEMENT (the "Agreement") is entered
into this 18th day of November, 1993, between the holders set forth on Annex
A hereto (the "Holders"), and Universal Outdoor II Holding Company, a
Delaware corporation (the "Company").
WHEREAS, immediately prior to the execution of this Agreement, the
company is entering into a Contribution Agreement (the "Contribution
Agreement") pursuant to which the Company's affiliate, Universal Outdoor,
Inc., an Illinois corporation ("UOI"), will become a wholly-owned subsidiary
of the Company;
WHEREAS, immediately after the consummation of the transactions
contemplated by the Contribution Agreement and prior to the execution of this
Agreement, UOI and Universal Outdoor II, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company ("UO-II"), are entering into a Plan
and Agreement of Merger whereby UO-II will be merged with and into UOI (the
"Merger");
WHEREAS, the Company and UOI are concurrently with the execution of
this Agreement consummating a refinancing plan (the "Refinancing Plan")
intended to enhance financial and operating flexibility;
WHEREAS, in connection with the Refinancing Plan, UOI intends to prepay
certain indebtedness owned to the Holders, which prepayment shall provide a
substantial benefit to UOI and the Company;
WHEREAS, on account of the prepayment penalty not being paid in full,
the Company and the Holders have agreed on the terms of the limited capital
appreciation right described herein;
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
understandings herein contained, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
respective meanings set forth below:
"Common Equity" shall mean any and all issued and outstanding shares of
common stock of the Company.
"Company" shall mean Universal Outdoor II Holding Company, a Delaware
corporation.
"Consideration" shall mean cash or marketable securities.
"Expiration Date" shall mean June 30, 1998 except that, with respect to
subparagraph (iv) of the definition of
<PAGE>
"Triggering Event," the "Expiration Date" shall mean June 30, 1996.
"Holders" shall mean the holders of the limited capital appreciation
right set forth on Annex A attached hereto.
"Merger" shall have the meaning set forth in the recitals hereto.
"Refinancing Plan" shall have the meaning set forth in the recitals
hereto.
"Triggering Event" shall mean the occurrence of any one of the
following: (i) a plan of complete liquidation or dissolution of the Company
or UOI, (ii) the sale of all or substantially all of the Common Equity or
assets of the Company or substantially all of the common shares or assets of
UOI, (iii) the merger or consolidation of the Company or UOI, unless,
immediately after such merger or consolidation, more than 40% of the then
outstanding shares of common stock of the purchasing corporation or surviving
corporation, as the case may be, are beneficially owned by all or
substantially all of the individuals and entities who were the beneficial
owners of the Common Equity immediately prior to such merger or
consolidation, or (iv) an initial public offering of common stock of the
Company or common shares of UOI, unless substantially all proceeds of such
offering are used to redeem the Company's Series A Senior Preferred Stock.
"UOI" shall mean Universal Outdoor, Inc., an Illinois corporation.
"UO-II" shall mean Universal Outdoor II, Inc., a Delaware corporation,
to be merged with and into UOI.
"Valuation Amount" shall have the meaning set forth in Section 2 hereof.
2. VALUATION. Upon the occurrence of a Triggering Event prior to the
Expiration Date, there shall be a valuation of the Common Equity. The Common
Equity shall be valued as follows:
The Board of Directors of the Company shall make a determination in
good faith of the fair value of the Common Equity, which good faith
determination shall be delivered to the Holders. Within 30 days after
receiving this determination by the Board of Directors, the Holders shall
have an opportunity to meet with the Board of Directors to discuss in a
reasonable manner any objections to the determination by the Board of
Directors. In the event that the Holders continue to object to the
determination by the Board of Directors at the expiration of this 30-day
period, such dispute shall be resolved by an investment banking or appraisal
firm of recognized national standing selected by the Company and reasonably
acceptable to the
-2-
<PAGE>
Holders and whose decision shall be binding on the Holders and the Company.
In the event that the fair value of the Common Equity, as determined by such
investment banking or appraisal firm, exceeds the fair value of the Common
Equity, as determined by the Board of Directors, then the Company shall bear
the entire amount of the costs and expenses of such firm's services for such
determination; otherwise, the Holders shall bear the entire amount of such
costs and expenses. For purposes of this Agreement, the "Valuation Amount"
shall mean the determination of the fair value of the Common Equity by the
Board of Directors or, in the event of a dispute, the determination by an
investment banking or appraisal firm as set forth above. For the purposes
hereof, in the event of an initial public offering of common stock or common
shares as set forth in subparagraph (iv) of the definition of "Triggering
Event," the determination of the Valuation Amount shall take into account the
initial public offering price of such common stock or common shares.
3. APPRECIATION RIGHTS.
3.1 PARTICIPATION BY HOLDERS. The Holders shall be entitled to receive
Consideration as a result of a Triggering Event, computed in accordance with
the following schedule:
Valuation of the Amount Payable
Common Equity to Holders
- ----------------------------------- --------------------------------
Greater than: But less than:
------------ --------------
(a) $0 $10,000,000 None
(b) $10,000,000 $13,333,000 26% of Valuation Amount in excess
of $10,000,000
(c) $13,333,000 $16,666,000 $867,000, plus 38% of Valuation
Amount in excess of $13,333,000
(d) $16,660,000 - $2,113,000, plus 50% of Valuation
Amount in excess of $17,500,000 up
to an aggregate maximum of
$3,800,000
The maximum aggregate amount payable to the Holders hereunder shall be
$3,800,000.
3.2 PAYMENT. (a) Subject to Section 3.2(c) below, the payment of the
Consideration due under this Section 3 to the Holders shall occur on the
closing date (the "Closing Date") of the transaction that caused the
Triggering Event or within one year thereafter. The Company shall use its
best efforts to pay the Holders as soon as commercially practicable after the
Closing Date.
-3-
<PAGE>
(b) The parties hereto agree that the Company shall allocate any
payment due to the Holders hereunder in accordance with the percentages set
forth on Annex B hereto.
(c) The Holders acknowledge and agree that their rights hereunder to
the Consideration are subject to the rights of the holders of the Company's
Series A Senior Preferred Stock. There shall be no payment hereunder while
the Series A Senior Preferred Stock is outstanding. Subject to the
preceding sentence, the Company shall pay the Consideration due hereunder on
or before the earlier of (i) the redemption of the Company's Series A Senior
Preferred stock or (ii) December 31, 2004.
4. MISCELLANEOUS.
4.1 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party shall be in writing and mailed by overnight
courier or certified United States mail, postage prepaid.
4.2 CHOICE OF LAW. This Agreement shall be construed, interpreted,
enforced and the rights of the parties determined in accordance with the laws
of the State of Illinois.
4.3 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement
constitutes the entire agreement among the parties pertaining to the subject
understandings, negotiations and discussions of the parties. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to the subject matter contained herein or therein. This Agreement
may be modified or amended or the provisions hereof waived only with the
written consent of all of the parties hereto.
4.4 SEVERABILITY. If any of the provisions contained in this
Agreement shall be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision of this
Agreement.
4.5 EXECUTION BY COUNTERPARTS. This Agreement may be executed by
counterparts.
4.6 EFFECTIVE DATE. The effective date of this Agreement shall be the
date on which the Holders receive the prepayment from UOI as set forth in the
recitals hereto.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By: CIGNA Investments, Inc.
By: /s/ MARY S. LAW
-------------------------------
Name: Mary S. Law
Title: Vice President
CIGNA PROPERTY AND CASUALTY
INSURANCE COMPANY
By: CIGNA Investments, Inc.
By: /s/ MARY S. LAW
-------------------------------
Name: Mary S. Law
Title: Vice President
LIFE INSURANCE COMPANY OF NORTH
AMERICA
By: CIGNA Investments, Inc.
By: /s/ MARY S. LAW
-------------------------------
Name: Mary S. Law
Title: Vice President
AETNA LIFE INSURANCE COMPANY
By:_______________________________
Name:
Title:
UNIVERSAL OUTDOOR II HOLDING
COMPANY
By:_______________________________
Daniel L. Simon
President
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By: CIGNA Investments, Inc.
By:_______________________________
Name:
Title:
CIGNA PROPERTY AND CASUALTY
INSURANCE COMPANY
By: CIGNA Investments, Inc.
By:_______________________________
Name:
Title:
LIFE INSURANCE COMPANY OF NORTH
AMERICA
By: CIGNA Investments, Inc.
By:_______________________________
Name:
Title:
AETNA LIFE INSURANCE COMPANY
By: /s/
-------------------------------
Name:
Title: Investment Officer
UNIVERSAL OUTDOOR II HOLDING
COMPANY
By: /s/ DANIEL L. SIMON
-------------------------------
Daniel L. Simon
President
-5-
<PAGE>
ANNEX A TO CAPITAL APPRECIATION RIGHT AGREEMENT
Connecticut General Life Insurance Company
Cigna Property and Casualty Insurance Company
Life Insurance Company of North America
Aetna Life Insurance Company
<PAGE>
ANNEX B TO CAPITAL APPRECIATION RIGHT AGREEMENT
PERCENTAGE
OF CAPITAL
HOLDER APPRECIATION RIGHT
------ ------------------
Connecticut General Life Insurance Company 48.93%
CIGNA Property and Casualty Insurance Company 3.70%
Life Insurance Company of North America 19.27%
Aetna Life Insurance Company 28.10%
<PAGE>
EXHIBIT 10.7
OPTION EXCHANGE AGREEMENT
OPTION EXCHANGE AGREEMENT, dated November 18, 1993 (the "Agreement"),
between Universal Outdoor, Inc., an Illinois Corporation ("UOI"), Universal
Outdoor II Holding Company, a Delaware corporation ("UHC"), and William H.
Smith (the "Assignee").
WHEREAS, UOI has heretofore granted to Optionee options (the "UOI Option")
to purchase its Common Shares in an amount representing (1%) of the aggregate
number of the Company's Common Shares issued and outstanding immediately
preceding the exercise of the UOI option under and pursuant to that certain
Non-Qualified Stock Option Agreement dated March 9, 1989 between UOI and
Optionee (the "UOI Option Agreement");
WHEREAS, OUI, UHC and Universal Outdoor II, Inc., a Delaware corporation
and wholly-owned subsidiary of UHC ("UOII" and, collectively, OUI, UHC and
UOII shall be referred to herein as the "Universal Companies"), are
affiliated entities under common control;
WHEREAS, the Universal Companies intend to effect a recapitalization and
refinancing plan (the "Refinancing Plan") that will extend the average life of
the companies' obligations on a combined basis and reduce the companies' debt
service burden, thereby enhancing the companies' financial and operating
liability;
WHEREAS, as part of the Refinancing plan, UHC and all of the
shareholders of UOI (the "UOI Shareholders") are entering into a Contribution
Agreement (the "Contribution Agreement"), whereby (i) the UOI Shareholders
will contribute their respective holdings to UOI to the capital of UHC in
exchange for shares of stock of UHC, (ii) UOI will become a wholly-owned
subsidiary of UHC and (iii) UOII will be merged with and into UOI (the
"Merger");
WHEREAS, pursuant to the terms of the Contribution Agreement, the
holders of voting Common Shares of uOI are contributing each issued and
outstanding Common Share of UOI to the capital of UHC in exchange for one
share of Common Stock of UHC;
WHEREAS, the parties hereto desire, subject to the terms set forth
below, that the UOI Option be surrendered and cancelled in exchange for a
comparable option to purchase shares of Common Stock of UHC;
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
understandings herein contained, it is agreed by and between the parties as
follows:
-1-
<PAGE>
1. GRANT OF UHC OPTION. UHC hereby grants to the Assignee the right,
privilege, and option (hereinafter the "UHC Option") to purchase shares of
its Common Stock in an amount representing 0.52% of the aggregate number of
shares of UHC's Common Stock issued and outstanding immediately preceding the
exercise of this UHC Option at the purchase price of one hundred thirty
thousand U.S. dollars ($130,000.00) payable in cash, in the manner and
subject to the conditions hereinafter provided. UHC will at all times prior
to the expiration of this UHC Option reserve sufficient shares of Common
Stock to comply with this UHC Option.
2. VESTING AND EXERCISE OF UHC OPTION BY OPTIONEE. Optionee may exercise
this UHC Option, subject to the other provisions of this Agreement, at any
time from time to time before the Termination Date as defined in paragraph 5
below, provided that and has entered into a definitive agreement in
accordance with the UHC shall be bound to issue through an underwritten
public offering shares of UHC's Common Stock or to sell to an unrelated third
person all or substantially all of UHC's Common Stock or assets (a
"Triggering Event"), provided further that a distribution of all or
substantially all of UHC's assets pro rata to its then current stockholders
shall constitute a qualifying Triggering Event. In no event may the UHC Option
be exercised prior to the occurrence of a Triggering Event. UHC hereby agrees
to give to Optionee written notice as soon as reasonably practicable of the
occurrence of a Triggering Event. In the event Optionee shall die owning but
without having exercised this UHC Option, his personal representative, estate
or any person who acquired the right to exercise the same by bequest or
inheritance or by reason of the death of Optionee may, subject to the other
provisions of this Agreement, exercise such UHC Option at any time and from
time to time within thirty (30) days after the appointment of a personal
representative for the deceased Optionee's estate (but in no event after the
Termination Date) with respect to the shares as to which Optionee could have
exercised the same at the time of his death. Any such exercise shall be
effected by written notice to UHC and payment for the shares in the manner
described in Paragraph 3 hereof, provided that the person exercising the UHC
Option per the Optionee has provided to UHC evidence satisfactory to UHC of
that person's right to exercise the UHC option and of payment or provision
for the payment of any estate, transfer or inheritance or death taxes payable
with respect to such UHC Option or the shares to which it relates.
3. METHOD OF EXERCISE. The UHC Option shall be exercised by written
notice of the President of UHC, at UHC's principal place of business,
accompanied by cash, certified or cashier's check in the amount of the Option
Price. Upon the exercise of the UHC Option granted herein pursuant to the
terms hereof, UHC shall, as soon as practicable thereafter, cause a
certificate or certificates for such shares to be registered in the name of
such Optionee or his legal successor, and shall deliver the certificate or
certificates to such Optionee or his legal successor. The UHC Option must be
exercised, if at all, in total and not in part.
-2-
<PAGE>
4. RESTRICTION ON DISPOSITION. Except as herein otherwise stated, all
shares acquired by the Optionee pursuant to this Agreement shall be subject
to the restrictions on sale, encumbrance and other disposition contained in
any stockholders or other similar agreement affecting shares of UHC generally
at the time of exercise. The terms and conditions of any such agreement are
incorporated herein by reference, and by executing this Agreement, the
Optionee hereby agrees to be bound by the terms of such agreement. All
certificates issued under any exercise of the Option herein shall be legended
in a manner to reflect the restrictions referred to herein.
5. TERMINATION OF UHC OPTION. Except to the extent not heretofore
exercised, the UHC Option shall terminate (the "Termination Date") upon the
first to occur of the following dates:
(a) The Optionee's death, provided, however, that in such event the
decreased Optionee's personal representative may exercise, within (30)
days following the appointment of the personal representative for the
decreased Optionee's estate, any outstanding UHC Options not theretofore
exercised during lifetime, subject to the other provisions of this
Agreement;
(b) Thirty days prior to the scheduled Closing Date under a
definitive agreement governing a Triggering Event; or
(c) March 9, 1999.
6. NONTRANSFERABILITY. The UHC Option granted pursuant to this Agreement
shall not be transferable or assignable by the Optionee, other than by will
or the laws of intestacy, and is exercisable during the Optionee's lifetime
only by the Optionee.
7. ADJUSTMENT IN CASE OF STOCK SPLITS, STOCK DIVIDENDS, ETC. In the
event of stock dividends upon, or subdivisions, split-ups, combinations or
reclassifications of the Common Stock, the stock which remains subject to the
UHC Options granted hereunder shall be adjusted in the same manner as if the
stock were then currently outstanding, and the UHC Option price shall be
correspondingly adjusted to retain the same proportionate UHC Option price
per share.
8. MERGER OR CONSOLIDATION. In the event of a merger or consolidation of
UHC, the new shares tendered, if any, in exchange for the old shares shall
dictate the terms of substitution (and the ratio thereof) of new shares for
old shares of Common Stock, which new shares shall remain subject to this
Agreement.
-3-
<PAGE>
9. SALE, LIQUIDATION OR DISSOLUTION OF COMPANY. In the event of a sale
of substantially all the assets of UHC, or its liquidation, or dissolution,
any UHC Option for shares remaining unexercised shall be cancelled as of the
closing date of such transaction.
10. CERTAIN OTHER LIMITATIONS. No person shall have any of the rights or
privileges of a stockholder of UHC in respect of any of the shares to be
issued upon the exercise of the UHC Option herein granted unless and until
certificates representing said shares shall have been issued and delivered.
Nothing herein contained shall at any time be deemed to limit or restrict any
right of a corporation by which Optionee is employed to terminate his
employment.
11. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. Optionee hereby
represents and warrants to UHC (a) that the UOI Option being exchanged
pursuant to the terms of this Agreement is not subject to any lien, security
interest or other encumbrance; (b) that the Optionee has entered into this
Agreement and has acquired any stock hereunder as investment for his own
account and not as nominee or for the benefit of any other person or with the
intent to resell the stock to any other person; and (c) that the Optionee
understands that any stock issued hereunder has not been registered under the
federal or state securities laws in reliance and certain exemptions, and that
any shares acquired hereunder may not be transferred unless those shares
have been effectively registered which UHC does not hereby undertake to
accomplish or UHC shall have received the written opinion of its counsel
that registration is not required. Optionee agrees that this Agreement shall
be void if the foregoing representation is untrue at the time of exercise.
12. BINDING EFFECT. This Agreement shall be binding on the respective
legal successors of the parties.
13. EFFECTIVE DATE. This Agreement shall become effective if and only if
the Merger is consummated on or before November 15, 1993; otherwise, this
Agreement shall have no effect. The effective date of this Agreement shall be
the date and time at which the Secretary of State of Illinois issues a
Certificate of Merger.
-4-
<PAGE>
14. UOI OPTION AGREEMENT. The parties hereto acknowledge and agree that,
upon the effectiveness of this Agreement, the UOI Option Agreement shall be
surrendered for cancellation and superseded by this Agreement.
IN WITNESS HEREOF, the parties hereto have executed this agreement as of
the date first set forth above.
UNIVERSAL OUTDOOR, INC.
By: /s/
----------------------------
Name:
Title: President
UNIVERSAL OUTDOOR II HOLDING COMPANY
By: /s/
----------------------------
Name:
Title: President
/s/ William H. Smith
--------------------------------
William H. Smith
-5-
<PAGE>
AMENDMENT TO OPTION EXCHANGE AGREEMENT
AMENDMENT to OPTION EXCHANGE AGREEMENT, dated July __, 1996 (the
"Amendment") between Universal Outdoor, Inc., an Illinois corporation ("UOI"),
Universal Outdoor Holdings, Inc., a Delaware corporation ("Holdings"), William
H. Smith (the "Optionee"), Daniel L. Simon ("Mr. Simon") and Brian T. Clingen
("Mr. Clingen") amending that certain Option Exchange Agreement dated November
18, 1993 (the "Agreement") between UOI, Universal Outdoor II Holding Company, a
predecessor of Holdings, and the Optionee.
WHEREAS, certain options to purchase Common Stock of Holdings were granted
to the Optionee pursuant to the Agreement;
WHEREAS, pursuant to the 1996 Warrant Plan of Holdings, Mr. Simon and Mr.
Clingen received warrants exercisable for Common Stock of Holdings and, as
partial consideration for such warrants, Mr. Simon and Mr. Clingen have agreed
to assume the obligation of Holdings to offer Common Stock to the Optionee
pursuant to the option to purchase Common Stock of Holdings granted to the
Optionee under the Agreement;
WHEREAS, the parties hereto desire to shift the obligation of Holdings to
offer Common Stock for purchase pursuant to the option granted to the Optionee
under the Agreement to Mr. Simon and Mr. Clingen;
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
understandings herein contained, it is agreed by and between the parties as
follows:
1. DEFINITIONS.
Capitalized terms used herein and not defined have the
<PAGE>
meanings ascribed to them in the Agreement.
2. AMENDMENT TO AGREEMENT.
This Amendment will be effective to amend the Agreement as to the parties
obligated to offer shares of Common Stock to the Optionee pursuant to the UHC
Option granted under the Agreement. Mr. Simon and Mr. Clingen, pursuant to the
allocation described below in Section 3 hereof, hereby grant to the Optionee the
right, privilege, and option (the "Holdings Option") to purchase shares of
Common Stock of Holdings in an amount and for the purchase price described in
the Agreement and pursuant to all other terms of the Agreement. Holdings
extinguishes the UHC Option in exchange for the Holdings Option.
3. ALLOCATION OF OPTIONEE'S HOLDINGS OPTION BETWEEN MR. SIMON AND MR. CLINGEN.
Upon the exercise of the Holdings Option by Optionee, the shares of Common
Stock of Holdings required to be offered to the Optionee in order to satisfy the
exercise of the Holdings Option will be contributed by Mr. Simon and Mr. Clingen
on a pro rata basis consistent with their relative current ownership of shares
of Common Stock of Holdings with Mr. Simon contributing 83.12% and Mr. Clingen
contributing 16.88% of the total number of shares of Common Stock needed to
satisfy Optionee's exercise of the Holdings Option. Similarly, the
consideration to be paid upon exercise of the Holdings Option will be
distributed to Mr. Simon and Mr. Clingen with Mr. Simon receiving 83.12% or
$108,056 and Mr. Clingen receiving 16.88% or $21,944.
2
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
Optionee hereby represents and warrants to Mr. Simon and Mr. Clingen (a)
that the UHC Option being exchanged pursuant to the terms of this Amendment is
not subject to any lien, security interest or other encumbrance; (b) that the
Optionee has entered into this Amendment and has acquired any stock hereunder as
investment for his own account and not as nominee or for the benefit of any
other person or with the intent to resell the stock to any other person; and (c)
that the Optionee understands that any stock issued hereunder has not been
registered under the federal or state securities laws in reliance upon certain
exemptions, and that any shares acquired hereunder may not be transferred unless
those shares have been effectively registered which Holdings does not hereby
undertake to accomplish or Holdings shall have received the written opinion of
its counsel that registration is not required. Optionee agrees that this
Amendment shall be void if the foregoing representation is untrue at the time of
exercise.
4. INCORPORATION OF AGREEMENT.
All terms of the Agreement not directly modified by this Amendment are
hereby incorporated by reference herein with all references to the "UHC Option"
now referring to the Holdings Option granted in section 1 above. The parties
hereto acknowledge and agree that, upon the effectiveness of this Amendment, the
Agreement shall be amended by the Amendment and the terms of the Agreement shall
be superseded by the terms of the Amendment to the extent any terms of the
Amendment conflict with terms in the Agreement.
3
<PAGE>
5. BINDING EFFECT.
This Agreement shall be binding on the respective legal successors of the
parties.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first set forth above.
UNIVERSAL OUTDOOR, INC.
By: __________________________
Name:
Title:
UNIVERSAL OUTDOOR HOLDINGS, INC.
By: __________________________
Name:
Title:
WILLIAM H. SMITH
By: __________________________
William H. Smith
DANIEL L. SIMON
By: ___________________________
Daniel L. Simon
BRIAN T. CLINGEN
By: ___________________________
Brian T. Clingen
5
<PAGE>
[Revolving]
AMENDMENT
AMENDMENT (this "Amendment"), dated as of July 16, 1996, among
Universal Outdoor, Inc. (the "Borrower") and the lending institutions party
to the Credit Agreement referred to below (the "Banks"). All capitalized
terms used herein and not otherwise defined shall have the respective
meanings provided such terms in the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks, La Salle National Bank, as
Co-Agent and Bankers Trust Company as Agent are parties to the Revolving
Credit Agreement, dated as of March 29, 1996 (as amended, modified or
supplemented to the date hereof, the "Credit Agreement");
WHEREAS, the Borrower has requested that the Banks agree to amend
certain provisions of the Credit Agreement, and the Banks are willing to
amend such provisions, subject to and on the terms and conditions set forth
herein;
NOW THEREFORE, it is agreed:
1. On and after the Amendment Date, the Credit Agreement shall be
amended as follows:
(I) Section 8.04 shall be amended by deleting clause (f) therein in
its entirety and renumbering clauses (g) and (h) as "(f)" and "(g)",
respectively.
<PAGE>
(II) Section 8.05(a) shall be amended by changing the reference to
"$6,000,000" therein to read "$8,000,000."
(III) Section 8.08(a) shall be amended by (x) inserting "(I)"
immediately after the phrase "provided that" and (y) adding at the end of
said Section 8.08(a) the following:
"and (II) the Borrower may pay dividends to Holdings to permit it to
purchase Discount Notes as provided for in Section 8.09(a)".
(IV) Section 8.13 shall be amended by changing the reference to
"5.25:1.0" therein to read "5.00:1.0".
(V) Section 9.08(A) shall be amended by deleting clause (c) therein
in its entirety and inserting a new clause to read:
"(c) Holdings issuing Capital Stock in any initial or subsequent public
offering to the extent an amount equal to the net proceeds thereof are
applied to reduce AR Commitments (as defined in the AF Credit Agreement) or
repay AR Loans as provided in Section 4.02(A)(d) of the AF Credit Agreement
or, in the case of the IPO, to repay AR Loans as provided in Section
4.02(A)(a)(iii) of the AF Credit Agreement".
(VI) Section 9.08(B) shall be amended by changing the reference to
"6.25:1.0" therein to read "6.00:1.0".
(VII) Section 9.08 shall be further amended by changing the "or" at the
end of clause (C) therein to read "and/or" and by adding new clauses (D)
and (E) to read:
"(D) A UOH Pledge Date shall have occurred and any of the Existing UOH
Stockholders shall have failed to authorize and execute a pledge agreement
(as subsequently modified, amended or supplemented in accordance with the
terms thereof, the "Replacement UOH Pledge Agreement") substantially in the
form of the UOH Pledge Agreement and reasonably satisfactory to the Agent
and/or to deliver same to the Collateral Agent, together with, in pledge
thereunder, the certificates representing all shares of Holdings Capital
Stock then owned by such Stockholders (and no other shares), accompanied by
executed and undated stock powers (it being understood and agreed that the
Replacement UOH
-2-
<PAGE>
Pledge Agreement shall terminate, and the stock pledged
thereunder released, upon the execution and delivery of the Holdings
Pledge Agreement, together with the pledge of the Borrower's capital stock
thereunder); and/or
(E) Holdings shall have failed, for more than 15 days following the
date on which the Discount Notes shall have been Purchased in full, to
authorize and execute a guaranty agreement (the "Holdings Guaranty") in
respect of the Obligations hereunder and a pledge agreement (as
subsequently modified, amended or supplemented in accordance with the
terms thereof, the "Holdings Pledge Agreement") pledging all the capital
stock of the Borrower, all in such form as is acceptable to the Agent
and/or to deliver same to the Agent and Collateral Agent, as the case may
be, together with, in pledge under, the Pledge Agreement, the certificates
representing all the shares of the capital stock of the Borrower,
accompanied by executed and undated stock powers and such opinions of
counsel relating thereto as reasonably requested by the Agent; or".
(VIII) Section 10 shall be amended by:
(A) Deleting the phrase "and the Term Loans as defined in the AF
Credit Agreement" in the definition of Acquisition Loans.
(B) Amending the definition of Change of Control by (a) changing the
phrase "'Holdings' initial public offering of common stock" in clause (ii)
thereof to read "the IPO"; (b) deleting clause (iii) thereof and inserting
in lieu thereof a new clause to read:
"(iii) after the IPO, the Management Investors shall cease to be the
beneficial owner (as defined in clause (ii) above) of 30% or more in the
aggregate of the total voting and economic ownership interests of
Holdings,";
(c) deleting the "or" immediately prior to "(v)" therein; and (d) adding
the following at the end of said definition:
"and (vi) any "Change of Control" as defined in the Discount Note
Indenture and the Senior Note Indenture, respectively, in each case
so long as Discount Notes or Senior Notes, as the case may be, are
outstanding."
-3-
<PAGE>
(C) Changing the definition of Credit Documents by adding after the
phrase "Security Documents" therein the phrase ", the Holdings Guaranty
(once executed)".
(D) Changing the definition of Permitted Acquisition by deleting all
of such definition after the reference to "Section 8.01" and inserting in
lieu thereof:
"provided that, without the consent of the Super-Majority Banks, (I) the
sum of the aggregate amounts expended for each such permitted acquisition
that is consummated at a time when the Holdings Leverage Ratio as of the
Measurement Date immediately prior to such acquisition determined by
giving effect to such acquisition on a pro forma basis satisfactory to the
Agent is greater than 5.00:1.0, shall not exceed $25,000,000, it being
understood that the amounts expended pursuant to the portion, if any, of
any such permitted acquisition that does not result in such pro forma
Ratio exceeding 5.00:1.0 shall not be included in determining the
$25,000,000 aggregate amount and (II) the aggregate amounts expended in
any consecutive 12 month period for each such permitted acquisition
wherein the consolidated EBITDA for the last 12 months of the entity or
assets being acquired was negative shall not exceed $10,000,000."
(E) Changing the definition of Pledge Agreement by deleting the
phrase "and the UOH Pledge Agreement" and inserting in lieu thereof the
phrase ", (once executed and delivered and to the extent not terminated in
accordance with the terms thereof) the Replacement UOH Pledge Agreement
and/or (once executed and delivered) the Holdings Pledge Agreement".
(F) Deleting the definition of Tested Borrowing in its entirety and
inserting in lieu thereof a new definition to read:
"`Tested Borrowing' shall mean any incurrence of Revolving Loans
after the Initial Borrowing Date in which the aggregate amount of
Revolving Loans incurred, when added to the aggregate amount of AR Loans
(other than those incurred on the Amendment Date to refinance Term Loans
under and as defined in the AF Credit Agreement) and Revolving Loans
incurred during the immediately preceding 30 day period (to the extent
(x) incurred after the Initial Borrowing Date, (y) still outstanding and
(z) not included in establishing an earlier Tested Borrowing), equal or
exceed $1,000,000."
(G) Adding the following definitions in appropriate alphabetical
order:
-4-
<PAGE>
`"Amendment Date" shall have the meaning provided in the Amendment
dated as of July 16, 1996 to this Agreement.
"Holdings Guaranty" shall have the meaning provided in Section
9.08(E).
"Holdings Pledge Agreement" shall have the meaning provided in
Section 9.08(E).
"IPO" shall mean the initial public offering (including sales
pursuant to any over allotment rights) of the common stock of Holdings
effected as contemplated by Holdings' Registration Statement No.
333-5351 as amended.
"Replacement UOH Pledge Agreement" shall have the meaning provided in
Section 9.08(D).
"UOH Pledge Date" shall mean a date after the Amendment Date but
prior to the date of the execution and delivery of the Holdings Pledge
Agreement as provided in Section 9.08(E) on which all the following
conditions exist: (A) an Event of Default exists and/or the Holdings
Leverage Ratio on the last preceding Measurement Date exceeded 5.00:1.0;
(B) the Agent has delivered to Holdings a written notice stating that
one of the events specified in clause (A) exists and requesting that the
Replacement UOH Pledge Agreement be executed and delivered as provided
in Section 9.08(D); and (C) 15 days have passed since delivery of such
written notice."
2. On the Amendment Date, all the Pledged Securities delivered
pursuant to the UOH Pledge Agreement shall be released by the Collateral Agent
to the record holders thereof and the UOH Pledge Agreement shall terminate and
be of no further force and effect.
3. In order to induce the Banks to enter into this Amendment, the
Borrower hereby represents and warrants that (x) no Default or Event of
Default exists on the Amendment Date, both before and after giving effect to
this Amendment and (y) all of the representations and warranties contained in
the Credit Documents shall be true and correct in all material respects on
the Amendment Date both before and after giving effect to this Amendment,
with the same effect as though such representations and warranties had been
made on and as of the Amendment Date (it being understood that any
representation or warranty made as of a specific date shall be true and
correct in all material respects as of such specific date).
-5-
<PAGE>
4. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
5. This Amendment 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.
6. This Amendment 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.
7. This Amendment shall become effective as of the date (the
"Amendment Date") when the following conditions have been met to the
satisfaction of the Agent (it being understood that if the Amendment Date
fails to occur on or prior to August 31, 1996 this Amendment shall not become
effective and shall be null and void):
(i) each of the Borrower and the Super-Majority Banks 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; and
(ii) The Amendment dated as of July 16, 1996 to the AF Credit
Agreement shall have become effective in accordance with its terms, the
Banks hereby agreeing to such Amendment.
8. From and after the Amendment Date, all references to the Credit
Agreement in the Credit Agreement and the other Credit Documents shall be
deemed to be references to such Credit Agreement as modified hereby.
-6-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
UNIVERSAL OUTDOOR, INC.
By________________________
Name:
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By________________________
Name:
Title:
LA SALLE NATIONAL BANK,
Individually and as Co-Agent
By________________________
Name:
Title:
BANK OF AMERICA ILLINOIS
By________________________
Name:
Title:
-7-
<PAGE>
FIRST NATIONAL BANK OF BOSTON
By___________________________
Name:
Title:
UNION BANK
By___________________________
Name:
Title
-8-
<PAGE>
[Acquisition]
AMENDMENT
AMENDMENT (this "Amendment"), dated as of July 16, 1996, among
Universal Outdoor, Inc. (the "Borrower") and the lending institutions party
to the Credit Agreement referred to below (the "Banks"). All capitalized
terms used herein and not otherwise defined shall have the respective
meanings provided such terms in the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks, La Salle National Bank, as
Co-Agent and Bankers Trust Company as Agent are parties to the Acquisition
Credit Agreement, dated as of March 29, 1996 (as amended, modified or
supplemented to the date hereof, the "Credit Agreement");
WHEREAS, the Borrower has requested that the Banks agree to amend
certain provisions of the Credit Agreement, and the Banks are willing to
amend such provisions, subject to and on the terms and conditions set forth
herein;
NOW THEREFORE, it is agreed:
1. On the Amendment Date, all Term Loans outstanding on such date
(the "Outstanding Term Loans") shall be repaid in full, together with all
accrued interest thereon, such repayment of the principal of the Outstanding
Term Loans to be effected by the Borrower incurring AR Loans from each Bank
in the then aggregate principal amount of its Outstanding Term Loans, with
such AR Loans to constitute Eurodollar Loans in an aggregate amount equal to
the principal amount of the Outstanding Term Loans that were Eurodollar
Loans, with the remainder, if any, of such AR Loans to
<PAGE>
constitute Base Rate Loans. All such new Eurodollar Loans shall have
Interest Periods ending on the same days as the expiration dates of the
Interest Periods applicable to the Outstanding Term Loan on the Amendment
Date ("OTL Interest Periods"), with the same principal amount of Borrowings
as subject to, and the same Eurodollar Rate as applicable to, such OTL
Interest Periods. Upon such refinancing the Banks holding old Notes will
mark same as cancelled and return same to the Borrower. The provisions of
Section 6.05(b) of the Credit Agreement are hereby waived to the extent
necessary to permit AR Loans to be incurred to refinance the Outstanding Term
Loans.
2. On and after the Amendment Date, the Credit Agreement shall be
amended as follows:
(I) Section 1.03 shall be amended by adding the phrase "if prior
to the Amendment Date," immediately after the reference to "(i)" in the
second sentence thereof.
(II) Section 3.03 shall be amended by deleting clause (d) therein in
its entirety and inserting in lieu thereof a new clause to read:
"(d) The Total AR Commitment shall be reduced at the times and in
the amounts, if any, provided for in Sections 4.02(A)(c), (d), (e)
and/or (f)."
(III) Section 4.01 shall be amended by deleting clause (v) thereof in
its entirety and inserting a new clause to read:
"(v) each prepayment of AR Loans made pursuant to this Section 4.01
after the AR Termination Date shall reduce the remaining Scheduled
Repayments on a PRO RATA basis (based on the then remaining principal
amount of each such Scheduled Repayment)."
(IV) Section 4.02(A) shall be amended by adding at the end of Section
4.02(A)(a) a new clause to read:
"(iii) On the date or dates of the receipt thereof (in same day
funds) by the Borrower, an amount equal to the proceeds (net of
underwriting discounts and commissions and other reasonable costs
associated therewith) of the IPO shall be applied to repay the principal
of AR Loans, with any such repayment not to reduce the Total AR
Commitment."
-2-
<PAGE>
(V) Section 4.02(A) shall be further amended by deleting Section
4.02(A)(b) therein in its entirety and inserting a new clause to read:
"(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"):
Repayment Date Amount
June 30, 1999 $4,375,000
September 30, 1999 $4,375,000
December 31, 1999 $4,375,000
March 31, 2000 $4,375,000
June 30, 2000 $5,250,000
September 30, 2000 $5,250,000
December 31, 2000 $5,250,000
March 31, 2001 $5,250,000
June 30, 2001 $5,250,000
September 30, 2001 $5,250,000
December 312, 2001 $5,250,000
March 31, 2002 $5,250,000
June 30, 2002 $7,000,000
September 30, 2002 $7,000,000
December 31, 2002 $7,000,000
Final Maturity Date $7,000,000"
(VI) Section 4.02(A) shall be further amended by deleting clauses
(c), (d), (e) and (f) therein in their entirety and inserting new
clauses to read:
"(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 (x) if on or prior to the
AR Termination Date, to reduce the Total AR Commitment and (y) if after
the AR Termination Date, 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 reduce AR
Commitments and/or repay AR 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").
- 3-
<PAGE>
The Borrower may exercise its Reinvestment Election (within the parameters
specified in the preceding sentence) with respect to an Asset Sale if (x)
no Default or Event of Default exists and (y) the Borrower delivers a
Reinvestment Notice to the Agent on the Business Day following the date of
the consummation of the respective Asset Sale, with such Reinvestment
Election being effective with respect to the Net Cash Proceeds of such
Asset Sale equal to the Anticipated Reinvestment Amount specified in
such Reinvestment Notice.
(d) On the date of the receipt thereof by Holdings or the Borrower,
as the case may be, an amount equal to 75% of the 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 (i) equity issued to management and
other employees of Holdings, the Borrower or its Subsidiaries, (ii) the
exercise of any warrants outstanding on the Initial Borrowing Date, (iii)
any amount of cash received by Holdings or the Borrower in connection with
any capital contributions made by the Existing UOH Stockholders and (iv)
the proceeds of the IPO) shall be applied (x) if on or prior to the AR
Termination Date, to reduce the Total AR Commitment and (y) if after the
AR Termination Date, as a mandatory repayment of the principal of the then
outstanding AR 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, 1997), 50% of Excess Cash Flow for the fiscal year then last ended
shall be applied (x) if on or prior to the AR Termination Date, to reduce
the Total AR Commitment and (y) if after the AR Termination Date, 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 (x) if on
or prior to the AR Termination Date, to reduce the Total AR Commitment and
(y) if after the AR Termination Date, as a mandatory repayment of the
principal of the then outstanding AR Loans."
(VII) Section 4.02(B) shall be amended by deleting clause (a) therein
in its entirety and inserting in lieu thereof a new clause to read:
-4-
<PAGE>
"(a) Each mandatory repayment of AR Loans required to be made
pursuant to Sections 4.02(A) (other than pursuant to clause (a) or (b)
thereof) shall be applied to reduce the Scheduled Repayments on a PRO RATA
basis (based upon the then remaining outstanding principal amount of each
such Scheduled Repayment)."
(VIII) Section 7.12 shall be deleted in its entirety and Section 7.13
shall be renumbered as Section 7.12.
(IX) Section 8.04 shall be amended by deleting clause (f) therein in
its entirety and renumbering clauses (g) and (h) as "(f)" and "(g)",
respectively.
(X) Section 8.05(a) shall be amended by changing the reference to
"$6,000,000" therein to read "$8,000,000."
(XI) Section 8.08(a) shall be amended by (x) inserting "(I)"
immediately after the phrase "provided that" and (y) adding at the end of
said Section 8.08(a) the following:
"and (II) the Borrower may pay dividends to Holdings to permit it to
purchase Discount Notes as provided for in Section 8.09(a)".
(XII) Section 8.13 shall be amended by changing the reference to
"5.25:1.0" therein to read "5.00:1.0".
(XIII) Section 9.08(A) shall be amended by deleting clause (c) therein
in its entirety and inserting a new clause to read:
"(c) Holdings issuing Capital Stock in any initial or subsequent public
offering to the extent an amount equal to the net proceeds thereof are
applied to reduce AR Commitments or repay AR Loans as provided in Section
4.02(A)(d) hereof or, in the case of the IPO, to repay AR Loans as provided
in Section 4.02(A)(a)(iii)".
(XIV) Section 9.08(B) shall be amended by changing the reference to
"6.25:1.0" therein to read "6.00:1.0".
-5-
<PAGE>
(XV) Section 9.08 shall be further amended by changing the "or" at the
end of clause (C) therein to read "and/or" and by adding new clauses (D)
and (E) to read:
"(D) A UOH Pledge Date shall have occurred and any of the Existing UOH
Stockholders shall have failed to authorize and execute a pledge agreement
(as subsequently modified, amended or supplemented in accordance with the
terms thereof, the "Replacement UOH Pledge Agreement") substantially in the
form of the UOH Pledge Agreement and reasonably satisfactory to the Agent
and/or to deliver same to the Collateral Agent, together with, in pledge
thereunder, the certificates representing all shares of Holdings Capital
Stock then owned by such Stockholders (and no other shares), accompanied by
executed and undated stock powers (it being understood and agreed that the
Replacement UOH Pledge Agreement shall terminate, and the stock pledged
thereunder released, upon the execution and delivery of the Holdings Pledge
Agreement, together with the pledge of the Borrower's capital stock
thereunder); and/or
(E) Holdings shall have failed, for more than 15 days following the
date on which the Discount Notes shall have been Purchased in full, to
authorize and execute a guaranty agreement (the "Holdings Guaranty") in
respect of the Obligations hereunder and a pledge agreement (as
subsequently modified, amended or supplemented in accordance with the terms
thereof, the "Holdings Pledge Agreement") pledging all the capital stock of
the Borrower, all in such form as is acceptable to the Agent and/or to
deliver same to the Agent and Collateral Agent, as the case may be,
together with, in pledge under, the Pledge Agreement, the certificates
representing all the shares of the capital stock of the Borrower,
accompanied by executed and undated stock powers and such opinions of
counsel relating thereto as reasonably requested by the Agent; or".
(XVI) Section 10 shall be amended by:
(A) Changing the reference to "$12,500,000" in the definition of AR
Repayment Percentage to read "$87,500,000".
(B) Deleting the definition of Available Equity Amount in its
entirety and inserting a new definition thereof to read:
"`Available Equity Amount' shall mean at any time (A) an amount equal
to the sum of (x) $5,000,000 plus 25% of the net proceeds of the IPO in
excess
-6-
<PAGE>
of $5,000,000 and (y) the aggregate proceeds at such time from the
sale or issuance of equity by Holdings or the Borrower after the Amendment
Date not required to be utilized to reduce AR Commitments and/or repay AR
Loans under Section 4.02(A)(d) less (B) the sum of (x) the aggregate
amounts theretofore expended after the Initial Borrowing Date to Purchase
Senior Notes and/or Discount Notes pursuant to Section 8.08(a)(y) or
9.08(A)(ix)(d)(y), as the case may be, plus (y) the aggregate of any
amounts theretofore expended pursuant to Section 8.05(c) to the extent in
excess of the Available ECF Amount at such time."
(C) Amending the definition of Change of Control by (a) changing the
phrase "'Holdings' initial public offering of common stock" in clause (ii)
thereof to read "the IPO"; (b) deleting clause (iii) thereof and inserting
in lieu thereof a new clause to read:
"(iii) after the IPO, the Management Investors shall cease to be the
beneficial owner (as defined in clause (ii) above) of 30% or more in the
aggregate of the total voting and economic ownership interests of
Holdings,";
(c) deleting the "or" immediately prior to "(v)" therein; and (d) adding
the following at the end of said definition:
"and (vi) any "Change of Control" as defined in the Discount Note Indenture
and the Senior Note Indenture, respectively, in each case so long as
Discount Notes or Senior Notes, as the case may be, are outstanding."
(D) Changing the definition of Credit Documents by adding after the
phrase "Security Documents" therein the phrase ", the Holdings Guaranty
(once executed)".
(E) Changing the definition of Excess Cash Flow by deleting clause
(iv)(z)(II) therein and inserting in lieu thereof:
"(II) after the AR Termination Date, the AR Loans, except prepayments
thereof pursuant to Sections 4.02(A)(c), (d), (e) or (f)".
(F) Changing the definition of Modified Available Amount by adding at
the end thereof the phrase "to the extent not theretofore contributed as
common equity to the Borrower".
-7-
<PAGE>
(G) Changing the definition of Permitted Acquisition by deleting all
of such definition after the reference to "Section 8.01" and inserting in
lieu thereof:
"provided that, without the consent of the Super-Majority Banks, (I) the
sum of the aggregate amounts expended for each such permitted acquisition
that is consummated at a time when the Holdings Leverage Ratio as of the
Measurement Date immediately prior to such acquisition determined by giving
effect to such acquisition on a pro forma basis satisfactory to the Agent
is greater than 5.00:1.0, shall not exceed $25,000,000, it being understood
that the amounts expended pursuant to the portion, if any, of any such
permitted acquisition that does not result in such pro forma Ratio
exceeding 5.00:1.0 shall not be included in determining the $25,000,000
aggregate amount and (II) the aggregate amounts expended in any consecutive
12 month period for each such permitted acquisition wherein the
consolidated EBITDA for the last 12 months of the entity or assets being
acquired was negative shall not exceed $10,000,000."
(H) Changing the definition of Pledge Agreement by deleting the
phrase "and the UOH Pledge Agreement" and inserting in lieu thereof the
phrase ", (once executed and delivered and to the extent not terminated in
accordance with the terms thereof) the Replacement UOH Pledge Agreement
and/or (once executed and delivered) the Holdings Pledge Agreement".
(I) Deleting the definition of Tested Borrowing in its entirety and
inserting in lieu thereof a new definition to read:
"`Tested Borrowing' shall mean any incurrence of AR Loans after the
Initial Borrowing Date other than on the Amendment Date to refinance Term
Loans (the "Designated AR Loans") in which the aggregate amount of AR Loans
incurred, when added to the aggregate amount of AR Loans (other than
Designated AR Loans) and Revolving Loans incurred during the immediately
preceding 30 day period (to the extent (x) incurred after the Initial
Borrowing Date, (y) still outstanding and (z) not included in establishing
an earlier Tested Borrowing), equal or exceed $1,000,000."
(J) Adding the following definitions in appropriate alphabetical
order:
`"Amendment Date" shall have the meaning provided in the Amendment
dated as of July 16, 1996 to this Agreement.
-8-
<PAGE>
"Holdings Guaranty" shall have the meaning provided in Section
9.08(E).
"Holdings Pledge Agreement" shall have the meaning provided in Section
9.08(E).
"IPO" shall mean the initial public offering (including sales pursuant
to any over allotment rights) of the common stock of Holdings effected as
contemplated by Holdings' Registration Statement No. 333-5351 as amended.
"Replacement UOH Pledge Agreement" shall have the meaning provided in
Section 9.08(D).
"UOH Pledge Date" shall mean a date after the Amendment Date but prior
to the date of the execution and delivery of the Holdings Pledge Agreement
as provided in Section 9.08(E) on which all the following conditions exist:
(A) an Event of Default exists and/or the Holdings Leverage Ratio on the
last preceding Measurement Date exceeded 5.00:1.0; (B) the Agent has
delivered to Holdings a written notice stating that one of the events
specified in clause (A) exists and requesting that the Replacement UOH
Pledge Agreement be executed and delivered as provided in Section 9.08(D);
and (C) 15 days have passed since delivery of such written notice."
(XVII) Annex I shall be deleted in its entirety and a new Annex shall be
inserted in lieu thereof to read as provided in Annex I attached hereto.
3. On the Amendment Date, all the Pledged Securities delivered
pursuant to the UOH Pledge Agreement shall be released by the Collateral Agent
to the record holders thereof and the UOH Pledge Agreement shall terminate and
be of no further force and effect.
4. The Banks hereby consent to the amendments being effected to the
RF Credit Agreement pursuant to the Amendment thereto dated as of July 16, 1996,
which Amendment is to become effective on the Amendment Date.
5. In order to induce the Banks to enter into this Amendment, the
Borrower hereby represents and warrants that (x) no Default or Event of
Default exists on the Amendment Date, both before and after giving effect to
this Amendment and (y) all of the representations and warranties contained in
the Credit Documents shall be true and correct in all material respects on
the Amendment Date both before and after giving
-9-
<PAGE>
effect to this Amendment, with the same effect as though such representations
and warranties had been made on and as of the Amendment Date (it being
understood that any representation or warranty made as of a specific date
shall be true and correct in all material respects as of such specific date).
6. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
7. This Amendment 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.
8. This Amendment 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.
9. This Amendment shall become effective as of the date (the
"Amendment Date") when the following conditions have been met to the
satisfaction of the Agent (it being understood that if the Amendment Date fails
to occur on or prior to August 31, 1996 this Amendment shall not become
effective and shall be null and void):
(i) Holdings shall have consummated the IPO (without regard to any
over allotment sale) in accordance with the definition thereof or as
otherwise satisfactory to the Agent;
(ii) the Borrower shall have duly authorized, executed and delivered
new AR Notes for each Bank to reflect their new AR Commitments as provided
in Annex I hereto and otherwise in the form of Exhibit B-2 to the Credit
Agreement, together with such opinions of counsel relating to this
Amendment and the transactions contemplated hereby as may be reasonably
requested by the Agent;
(iii) each of the Borrower and the Banks 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; and
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<PAGE>
(iv) the conditions specified in Section 5.20 of the Credit Agreement
shall be satisfied on such date as if the borrowing of AR Loans on such
date constituted a Tested Borrowing.
10. From and after the Amendment Date, all references to the Credit
Agreement in the Credit Agreement and the other Credit Documents shall be deemed
to be references to such Credit Agreement as modified hereby.
-11-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
UNIVERSAL OUTDOOR, INC.
By________________________
Name:
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By________________________
Name:
Title:
LA SALLE NATIONAL BANK,
Individually and as Co-Agent
By________________________
Name:
Title:
BANK OF AMERICA ILLINOIS
-12-
<PAGE>
By________________________
Name:
Title:
-13-
<PAGE>
FIRST NATIONAL BANK OF BOSTON
By___________________________
Name:
Title:
UNION BANK
By___________________________
Name:
Title:
-14-
<PAGE>
ANNEX I
COMMITMENTS
AR
Bank
Commitment
----------
Bankers Trust Company $24,062,500
LaSalle National Bank 24,062,500
Bank of America Illinois 13,125,000
First National Bank of Boston 13,125,000
Union Bank 13,125,000
-----------
Total: $87,500,000
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Universal Outdoors Holdings, Inc. Universal Outdoor, Inc.
321 North Clark Street 321 North Clark Street
Suite 1010 Suite 1010
Chicago, Illinois 60610 Chicago, Illinois 60610
as of July [ ], 1996
Kelso & Company, L.P.
320 Park Avenue, 24th Floor
New York, NY 10022
Attn: James Connors II, Esq.
Ladies and Gentlemen:
Reference is made to the Letter Agreement (the "Letter Agreement")
dated as of April 5, 1996 between Universal Outdoors Holdings, Inc., a Delaware
corporation ("Universal"), Universal Outdoor, Inc., a wholly owned subsidiary of
Universal ("Outdoor"), and Kelso & Company, L.P., a Delaware limited partnership
("Kelso"). The parties hereto hereby agree, in consideration of the mutual
agreements herein contained, that effective as of the date hereof, the
agreements for Kelso to provide consulting and advisory services pursuant to the
first paragraph of the Letter Agreement and for Outdoor to pay to Kelso an
annual advisory fee of $150,000 pursuant to the second paragraph of the Letter
Agreement are hereby terminated and of no further force and effect.
Notwithstanding the foregoing sentence, the remaining provisions of the Letter
Agreement, including without limitation, the indemnification provisions
contained therein, shall remain in full force and effect.
Universal and Outdoor hereby further agree to retain Kelso to provide
consulting and advisory services to Universal in connection with an initial
public offering of certain of Universal's equity securities. In consideration
for providing the foregoing services, Outdoor will pay to Kelso a one-time fee
of $650,000 in cash, which amount shall be paid on or prior to July [ ], 1996.
Outdoor will also reimburse Kelso promptly for Kelso's reasonable out-of-pocket
costs and expenses incurred in connection with the performance of Kelso's duties
hereunder.
Universal and Outdoor will jointly and severally indemnify Kelso and
its affiliates, and their respective officers, directors, employees, agents and
control persons (as such term is used in the Securities Act
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Kelso & Company, L.P.
as of July [ ], 1996
Page 2
of 1933, as amended, and the rules and regulations thereunder) (together, the
"Kelso Indemnities") to the full extent lawful against any and all claims,
losses and expenses as incurred (including all reasonable fees and disbursements
of any such indemnitee's counsel and other out-of-pocket expenses incurred in
connection with the investigation of and preparation for any such pending or
threatened claims and any litigation or other proceedings arising therefrom)
arising out of any services rendered by Kelso hereunder, PROVIDED, HOWEVER,
there shall be excluded from such indemnification any such claim, loss or
expense that is based upon any action or failure to act by Kelso that is found
in a final judicial determination to constitute gross negligence or intentional
misconduct on Kelso's part. Outdoor (and Universal, if necessary) will advance
costs and expenses, including attorney's fees, incurred by any such indemnitee
in defending any such claim in advance of the final disposition of such claim
upon receipt of an undertaking by or on behalf of such indemnitee to repay
amounts so advanced if it shall ultimately be determined that such indemnitee is
not entitled to be indemnified by Universal and Outdoor pursuant to this
Agreement. No Kelso Indemnitee shall be liable to Universal, Outdoor or their
respective subsidiaries or affiliates for any error of judgment or mistake of
law or for any loss incurred by the Universal, Outdoor or their subsidiaries or
any of their respective affiliates in connection with the matters to which this
agreement relates, except for any damages that are found by a court of competent
jurisdiction to have resulted primarily from the gross negligence or willful
misconduct of the Kelso Indemnitee.
Universal's and Outdoor's obligations set forth in this Agreement
shall survive the termination of Kelso's services pursuant to paragraph two.
This agreement shall be governed by the laws of the State of New York.
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Kelso & Company, L.P.
as of July [ ], 1996
Page 3
If you are in agreement with the foregoing, kindly so indicate by
signing a counterpart of this letter, whereupon it will become a binding
agreement between us.
Very truly yours,
UNIVERSAL OUTDOOR HOLDINGS, INC.
By:
----------------------------
Name:
Title:
UNIVERSAL OUTDOOR, INC.
By:
----------------------------
Name:
Title:
Accepted and agreed
as of July [ ], 1996
KELSO & COMPANY, L.P.
By: Kelso & Companies, Inc.,
its general partner
By:
---------------------------
Name:
Title:
3
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REGISTRATION RIGHTS AGREEMENT
Dated July _, 1996
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TABLE OF CONTENTS
SECTION PAGE
1. INTRODUCTION............................................................ 1
2. REGISTRATION UNDER SECURITIES ACT, ETC.................................. 1
2.1 REGISTRATION ON REQUEST............................................ 1
(a) REQUEST....................................................... 1
(b) REGISTRATION STATEMENT FORM................................... 2
(c) EXPENSES...................................................... 3
(d) EFFECTIVE REGISTRATION STATEMENT.............................. 3
(e) SELECTION OF UNDERWRITERS..................................... 3
(f) PRIORITY IN REQUESTED REGISTRATIONS........................... 3
2.2 INCIDENTAL REGISTRATION............................................ 4
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES....................... 4
(b) PRIORITY IN INCIDENTAL REGISTRATIONS.......................... 5
2.3 REGISTRATION PROCEDURES............................................ 5
2.4 UNDERWRITTEN OFFERINGS............................................. 10
(a) REQUESTED UNDERWRITTEN OFFERINGS.............................. 10
(b) INCIDENTAL UNDERWRITTEN OFFERINGS............................. 11
(c) HOLDBACK AGREEMENTS........................................... 11
(d) PARTICIPATION IN UNDERWRITTEN OFFERINGS....................... 12
2.5 PREPARATION; REASONABLE INVESTIGATION.............................. 12
2.6 RIGHTS OF REQUESTING HOLDERS....................................... 12
2.7 INDEMNIFICATION.................................................... 13
(a) INDEMNIFICATION BY THE COMPANY................................ 13
(b) INDEMNIFICATION BY THE SELLERS................................ 14
(c) NOTICES OF CLAIMS, ETC........................................ 15
(d) OTHER INDEMNIFICATION......................................... 15
(e) INDEMNIFICATION PAYMENTS...................................... 16
(f) CONTRIBUTION.................................................. 16
2.8 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES....................... 17
3. DEFINITIONS............................................................. 17
4. RULES 144 AND 144A...................................................... 19
5. AMENDMENTS AND WAIVERS.................................................. 20
6. NOMINEES FOR BENEFICIAL OWNERS.......................................... 20
7. NOTICES................................................................. 20
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8. ASSIGNMENT.............................................................. 21
9. DESCRIPTIVE HEADINGS.................................................... 21
10. GOVERNING LAW........................................................... 21
11. COUNTERPARTS............................................................ 21
12. ENTIRE AGREEMENT........................................................ 22
13. SUBMISSION TO JURISDICTION.............................................. 22
14. SEVERABILITY............................................................ 22
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of July _, 1996, among Universal
Outdoor Holdings, Inc., a Delaware corporation (the "Company"), and the other
undersigned parties hereto.
1. INTRODUCTION. The Company is a party to the separate Agreement and
Plan of Recapitalization (the "Recapitalization Agreement"), dated as of July _,
1996, with Kelso Investment Associates V, L.P. ("KIA V"), Kelso Equity Partners
V, L.P. ("KEP V") and the Company Stockholders, pursuant to which the Company
has agreed, among other things, to reclassify shares of Class B Common Stock,
par value $.01 per share, and Class C Common Stock, par value $.01 per share, of
the Company into shares of Common Stock, par value $.01 per share, of the
Company (the "Common Stock"). This Agreement shall become effective upon the
reclassification of such securities pursuant to the Recapitalization Agreement
and the initial public offering of the Common Stock by the Company as described
in the Form S-1 Registration Statement filed by the Company with the Commission
on June 6, 1996. The Company has also issued warrants to purchase Common Stock
to the Management Individuals pursuant to, and subject to the terms and
conditions of, its 1996 Warrant Plan adopted on April 5, 1996, as amended on
July _, 1996. Certain capitalized terms used in this Agreement are defined in
section 3 hereof; references to sections shall be to sections of this agreement.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 REGISTRATION ON REQUEST.
(a) REQUEST. Subject to the last sentence of this section 2.1(a),
upon the written request of one or more Initiating Holders, requesting that the
Company effect the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities and specifying the intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all registered holders of Registrable Securities who
would be entitled to participate in such registration, and thereupon the Company
will, subject to the terms of this Agreement, effect the registration under the
Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such request;
(ii) all other Registrable Securities the holders of which shall
have made a written request to the Company for registration thereof within
30 days after the giving of such written notice by the Company (which
request shall specify the intended method of disposition of such
Registrable Securities);
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(iii) all shares of Common Stock which the Company may elect to
register in connection with the offering of Registrable Securities pursuant
to this section 2.1; PROVIDED however, for so long as any shares of Common
Stock are held by any Kelso Entity or by any Management Individual, shares
of Common Stock which the Company may elect to register shall not be so
registered pursuant to this Section 2.1(a) without the prior written
consent of, (X) in the event that any shares of Common Stock are held by
any Kelso Entity, KIA V, and (Y) in the event that any shares of Common
Stock are held by any Management Individual, each such Management
Individual,
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any so to be registered , PROVIDED that
the Company shall not be required to effect any registration of Registrable
Securities pursuant to this section 2.1 unless (X) a single holder of
Registrable Securities has requested the registration of a number of shares of
Registrable Securities held by such holder which is equal to or greater than 5%
of the shares of Common Stock at the time outstanding and (Y) the aggregate
number of shares of Registrable Securities requested to be registered by all
holders of Registrable Securities is equal to or greater than 10% of the number
of shares of Common Stock at the time outstanding, and PROVIDED, FURTHER, that
the foregoing proviso shall not apply if any Kelso Entity is initiating a
request as an Initiating Holder for the registration of all of such Kelso
Entity's Registrable Securities. Subject to the provisions of Section 2.1(d)
and to the following sentence, each Initiating Holder will have the right to
request registration pursuant to this Section 2.1(a) an aggregate of four (4)
times. In the event that any Management Shareholder requests registration as an
Initiating Holder pursuant to this section 2.1(a), the Company shall notify KIA
V in writing of such request and KIA V may elect, in its sole discretion, within
15 business days of receipt of such written request, to request registration as
an Initiating Holder pursuant to this section 2.1(a) in which case KIA V shall
be treated as an Initiating Holder for purposes of this section 2.1(a) and such
Management Shareholder originally requesting registration shall not to be
treated as an Initiating Holder pursuant to this section 2.1(a) (and such
registration request shall not be counted with respect to such Management
Shareholder for purposes of the preceding sentence).
(b) REGISTRATION STATEMENT FORM. Registrations under this section
2.1 shall be on such appropriate registration form of the Commission (i) as
shall be selected by the Company and,as shall be reasonably acceptable to the
holders of more than 50% (by number of shares) of the Registrable Securities so
to be registered and (ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in their request for such registration. If, in connection with any
registration under section 2.1 which is proposed by the Company to be on Form S-
3 or any similar short form registration statement which is a successor to Form
S-3, the managing underwriters, if any, shall advise the Company in writing that
in their opinion the use of another permitted form is of material importance to
the success of the offering, then such registration shall be on such other
permitted form.
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(c) EXPENSES. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this section 2.1
(including any registration deemed not to be "effected" under Section 2.1) and
any other actions that may be taken in connection with any such registration as
contemplated by this Agreement.
(d) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this section 2.1 shall not be deemed to have been effected (and
therefore not requested for purposes of the second to last sentence of section
2.1(a)) (i) unless a registration statement with respect thereto has become
effective, PROVIDED that a registration which does not become effective after
the Company has filed a registration statement with respect thereto solely by
reason of the refusal to proceed of the Initiating Holders (other than a refusal
to proceed based upon the advice of counsel relating to a matter with respect to
the Company) shall be deemed to have been effected by the Company at the request
of such Initiating Holders unless the Initiating Holders shall have elected to
pay all Registration Expenses in connection with such registration, (ii) if,
after it has become effective, such registration becomes subject to any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason, or (iii) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied, other than by reason of
some act or omission by such Initiating Holders.
(e) SELECTION OF UNDERWRITERS. If a requested registration pursuant
to this section 2.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the holders of at least a majority (by
number of shares) of the Registrable Securities as to which registration has
been requested; PROVIDED, however, that if any Kelso Entity is an Initiating
Holder pursuant to section 2.1(a), then the underwriter or underwriters in such
underwritten offering shall be selected by KIA V.
(f) PRIORITY IN REQUESTED REGISTRATIONS. If a requested registration
pursuant to this section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy to each holder of
Registrable Securities requesting registration) that, in its opinion, the number
of securities requested to be included in such registration (including
securities of the Company which are not Registrable Securities) exceeds the
number which can be sold in such offering within a price range acceptable to the
holders of a majority of the Registrable Securities requested to be included in
such registration, the Company will include in such registration, to the extent
of the number which the Company is so advised can be sold in such offering, (X)
in the event that any Kelso Entity is an Initiating Holder, (i) first,
Registrable Securities requested to be included in such registration by any
Kelso Entity which is a holder of Registrable Securities, PRO RATA among such
holders requesting such registration on the basis of the number of such
securities requested to be included by such holders, (ii) second, Registrable
Securities requested to be included in such registration by any other holder of
Registrable Securities, PRO RATA among such other holders requesting such
registration on the basis of the number of such securities requested to be
included by such holders and (iii) third, subject to section 2.1(a) hereof,
securities the Company proposes to sell and other securities of the Company
included in such registration by the holders thereof, and (Y) in the
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event no Kelso Entity is an Initiating Holder, securities proposed by the
Company to be sold for its own account, Registrable Securities and other
securities of the Company requested to be included in such registration PRO RATA
on the basis of the number of shares of such securities so proposed to be sold
and so requested to be included.
2.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any
time proposes to register any of its securities under the Securities Act (other
than by a registration on Form S-4 or S-8, or any successor or similar forms and
other than pursuant to section 2.1), whether or not for sale for its own
account, it will each such time give prompt written notice to all holders of
Registrable Securities of its intention to do so and of such holders' rights
under this section 2.2. Upon the written request of any such holder made within
30 days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company will, subject to the terms
of this Agreement, effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such Registrable Securities in
the registration statement which covers the securities which the Company
proposes to register; PROVIDED that if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to each holder of Registrable Securities and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any holder
or holders of Registrable Securities entitled to do so to request that such
registration be effected as a registration under section 2.1, and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this section
2.2 shall relieve the Company of its obligation to effect any registration upon
request under section 2.1, nor shall any such registration hereunder be deemed
to have been effected pursuant to section 2.1. The Company will pay all
Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this section 2.2, and each requesting holder
whose Registrable Securities are included in a registration requested pursuant
to this section 2.2 will pay any underwriting discounts and commissions in
connection therewith
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If (i) a registration
pursuant to this section 2.2 involves an underwritten offering of the securities
so being registered, whether or not for sale for the account of the Company, to
be distributed (on a firm commitment basis) by or through one or more
underwriters of recognized standing under underwriting terms appropriate for
such a transaction, (ii) the Registrable Securities so requested to be
registered for sale for the
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account of holders of Registrable Securities are not also to be included in such
underwritten offering (either because the Company has not been requested so to
include such Registrable Securities pursuant to section 2.4(b) or, if requested
to do so, is not obligated to do so under section 2.4(b), and (iii) the managing
underwriter of such underwritten offering shall inform the Company and holders
of the Registrable Securities requesting such registration by letter of its
belief that the number of securities requested to be included in such
registration exceeds the number which can be sold in (or during the time of)
such offering, then the Company will include in such registration, to the extent
of the number which the Company is so advised can be sold in (or during the time
of) such offering, securities proposed by the Company to be sold for its own
account, Registrable Securities and other securities of the Company requested to
be included in such registration PRO RATA on the basis of the number of shares
of such securities so proposed to be sold and so requested to be included.
2.3 REGISTRATION PROCEDURES. If and whenever (a) the Company is required
to effect the registration of any Registrable Securities under the Securities
Act as provided in sections 2.1 and 2.2 or (b) there is a Requesting Holder in
connection with any other proposed registration by the Company under the
Securities Act, the Company shall, as expeditiously as possible:
(i) prepare and (within 60 days after the end of the period within
which requests for registration may be given to the Company or in any event
as soon thereafter as possible) file with the Commission the requisite
registration statement to effect such registration (including such audited
financial statements as may be required by the Securities Act or the rules
and regulations promulgated thereunder) and thereafter cause such
registration statement to become and remain effective, PROVIDED however
that the Company may discontinue any registration of its securities which
are not Registrable Securities (and, under the circumstances specified in
section 2.2(a), its securities which are Registrable Securities) at any
time prior to the effective date of the registration statement relating
thereto;
(ii) prepare and file with the Commission such amendment and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or (i) in the case of a registration pursuant to section 2.1, the
expiration of one hundred eighty days after such registration statement
becomes effective, or (ii) in the case of a registration pursuant to
section 2.2, the expiration of 90 days after such registration statement
becomes effective;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement and each Requesting Holder and each
underwriter, if any, of the securities being sold by such seller such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including
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all exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as such seller and underwriter, if any, may
reasonably request;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities laws or blue sky laws of such jurisdictions as
any seller thereof and any underwriter of the securities being sold by such
seller and any Requesting Holder shall reasonably request, to keep such
registrations or qualifications in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such seller and underwriter to
consummate the disposition in such jurisdictions of the securities owned by
such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to general
service or process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) furnish to each seller of Registrable Securities and each
Requesting Holder a signed counterpart, addressed to such seller, such
Requesting Holder and the underwriters, if any, of:
(X) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(Y) a "comfort" letter (or, in the case of any such Person which
does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon
procedures" letter), dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, a letter of like kind dated the date of the closing under
the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect
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to events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to the underwriters in underwritten public offerings of
securities (with, in the case of an "agreed upon procedure" letter, such
modifications or deletions as may be required under Statement on Auditing
Standards No. 35) and, in the case of the accountants' letter, such other
financial matters, and, in the case of the legal opinion, such other legal
matters, as such seller or such Requesting Holder (or the underwriters, if
any) may reasonably request;
(vii) notify the holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly and confirm such
advice in writing promptly thereafter:
(V) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment thereto, when
the same has become effective;
(W) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;
(X) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings by any Person for that purpose;
(Y) if at any time the representations and warranties of the
Company made as contemplated by section 2.4 below cease to be true and
correct; and
(Z) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(viii) notify each seller of Registrable Securities covered by such
registration statement and each Requesting Holder, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, upon the Company's discovery that, or upon the happening of
any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and at the request
of any such seller or Requesting Holder promptly prepare and furnish to
such seller or Requesting Holder and each underwriter, if any, a
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reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
(ix) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the
earliest possible moment;
(x) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first day of the Company's first full calendar quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder, and will furnish to each such seller and each
Requesting Holder at least five business days prior to the filing thereof a
copy of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such seller or any
Requesting Holder shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder;
(xi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(xii) enter into such agreements and take such other actions as
sellers of such Registrable Securities holding more than 50% of the shares
so to be sold shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(xiii) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on which
any of the securities of the same class as the Registrable Securities are
then listed;
(xiv) use its best efforts to provide a CUSIP number for the
Registrable Securities, not later than the effective date of the
registration statement.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
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The Company will not file any registration statement or amendment thereto
or any prospectus or any supplement thereto (including such documents
incorporated by reference and proposed to be filed after the initial filing of
the registration statement) to which the holders of at least a majority of the
Registrable Securities covered by such registration statement or the underwriter
or underwriters, if any, shall reasonably object, PROVIDED that the Company may
file such document in a form required by law or upon the advice of its counsel.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in subdivision (viii) of this
section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of this
section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph (ii) of
this section 2.3 shall be extended by the length of the period from and
including the date when each seller of any Registrable Securities covered by
such registration statement shall have received such notice to the date on which
each such seller has received the copies of the supplemented or amended
prospectus contemplated by paragraph (viii) of this section 2.3.
If any such registration statement refers to any holder of Registrable
Securities by name or otherwise as the holder of any securities of the Company,
then such holder shall have the right to require (i) the insertion therein of
language, in form and substance satisfactory to such holder, to the effect that
the holding by such holder of such securities is not to be construed as a
recommendation by such holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such holder
will assist in meeting any future financial requirements of the Company, or (ii)
in the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force, the
deletion of the reference to such holder.
2.4 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to the Company,
each such holder and the underwriters, and to contain such representations and
warranties by the Company and such other terms as are generally prevailing in
agreements of this type, including, without limitation, indemnities to the
effect and to the extent provided in section 2.7. The holders of the
Registrable Securities will cooperate with the Company in the negotiation of the
underwriting agreement and will give consideration to the reasonable suggestions
of the Company regarding the form thereof, PROVIDED that nothing herein
contained shall diminish the
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foregoing obligations of the Company. The holders of Registrable Securities to
be distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations and warranties
contained in writing furnished by such holder expressly for use in such
registration statement or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method of distribution and any
other representation required by law or to make any agreements with the Company
or the underwriters with respect to indemnification of any Person or the
contribution obligations of any Person that would impose any obligation beyond
or inconsistent with the provisions of section 2.7.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in section 2.2 and subject to the
provisions of section 2.2(b), use its best efforts to arrange for such
underwriters to include all the Registrable Securities to be offered and sold by
such holder among the securities to be distributed by such underwriters. The
holders of Registrable Securities to be distributed by such underwriters shall
be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law or to make any agreements with the Company or the underwriters with
respect to indemnification of any Person or the contribution obligations of any
Person that would impose any obligation beyond or inconsistent with the
provisions of section 2.7.
(c) HOLDBACK AGREEMENTS.
(i) Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities, if and to the extent so required by the
managing underwriter, not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of or
otherwise dispose of any securities of the Company, during the 7 days prior
to and the 180 days after any underwritten registration pursuant
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to section 2.1 or 2.2 has become effective, except as part of such
underwritten registration, whether or not such holder participates in such
registration, PROVIDED that the foregoing restrictions shall not apply with
regard to any Kelso Entity in a distribution of Registrable Securities to
its partners or to the transfer to any Affiliate of such Persons or to any
other transferee in a private transaction not requiring registration under
the Securities Act, or to any bona fide pledge of such Registrable
Securities, provided that such Affiliate or other transferee and/or lender
or creditor acknowledges in writing that it is bound by the provisions of
this section 2.4(c). Each holder of Registrable Securities agrees that the
Company may instruct its transfer agent to place stop transfer notations in
its records to enforce this section 2.4(c).
(ii) The Company agrees (X) if so required by the managing
underwriter not to sell, make any short sale of, loan, grant any option for
the purchase of, effect any public sale or distribution of or otherwise
dispose of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the seven
days prior to and the 180 days after any -underwritten registration
pursuant to section 2.1 or 2.2 has become effective, except as part of such
underwritten registration and except pursuant to registrations on Form S-4,
S-8, or any successor or similar forms thereto, and (Y) to cause each
holder of its securities purchased from the Company at any time after the
date of this Agreement (other than in a public offering) to agree not to
sell, make any short sale of, loan, gant any option for the purchase of,
effect any public sale or distribution of or otherwise dispose of such
securities during such period.
(d) PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Person may
participate in any underwritten offering hereunder unless such person (i) agrees
to sell such Person's securities on the basis provided in any underwriting
arrangements approved, subject to the terms and conditions hereof, by the
Company and the holders of a majority of Registrable Securities to be included
in such underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and other documents (other
than powers of attorney) required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no underwriting agreement (or
other agreement in connection with such offering) shall require any holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations and
warranties contained in a writing furnished by such holder expressly for use in
the related registration statement or agreements regarding such holder, such
holder's registrable Securities and such holder's intended method of
distribution and any other representation required by law or to make any
agreements with the Company or the underwriters with respect to indemnification
of any Person or the contribution obligations of any Person that would impose
any obligation beyond or inconsistent with the provisions of section 2.7.
2.5 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration
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statement, their underwriters, if any, each Requesting Holder and their
respective counsel and accountants, the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
2.6 RIGHTS OF REQUESTING HOLDERS. The Company will not file any
registration statement under the Securities Act (other than by a registration on
Form S-8), unless it shall first have given to each holder of Registrable
Securities (who would be entitled to participate in such registration) at the
time outstanding (other than any such Person who acquired all such securities
held by such Person in a public offering registered under the Securities Act or
as the direct or indirect transferee of shares initially issued in such an
offering), at least 30 days prior written notice thereof. Any such Person who
shall so request within 30 days after such notice (a "Requesting Holder") shall
have the rights of a Requesting Holder provided in sections 2.3, 2.5 and 2.7.
In addition, if any such registration statement refers to any Requesting Holder
by name or otherwise as the holder of any securities of the Company, then such
holder shall have the right to require (a) the insertion therein of language, in
form and substance satisfactory to such holder, to the effect that the holding
by such holder of such securities does not necessarily make such holder a
"controlling person" of the Company within the meaning of the Securities Act and
is not to be construed as a recommendation by such holder of the investment
quality of the Company's debt or equity securities covered thereby and that such
holding does not imply that such holder will assist in meeting any future
financial requirements of the Company, or (b) in the event that such reference
to such holder by name or otherwise is not required by the Securities Act or any
rules and regulations promulgated thereunder, the deletion of the reference to
such holder.
2.7 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any registration
of any securities of the Company under the Securities Act, the Company will, and
hereby does agree to, indemnify and hold harmless (i) in the case of any
registration statement filed pursuant to section 2.1 or 2.2, the holder of any
Registrable Securities covered by such registration statement and its partners,
if any, its and their respective directors, officers, partners, agents and
Affiliates, each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
holder or any such underwriter within the meaning of the Securities Act, and
(ii) in the case of any registration statement of the Company, any Requesting
Holder and it partners, if any, its and their respective directors, officers,
partners, agents and Affiliates and each other Person, if any, who controls such
Requesting Holder within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder or
Requesting Holder or partner thereof or any such director or officer or partner
or agent or Affiliate or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or
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proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such holder, such
Requesting Holder, their respective partners and each such director, officer,
partner, agent, Affiliate, underwriter and controlling person for any legal or
any other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceeding, PROVIDED
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such holder or
Requesting Holder, as the case may be, specifically stating that it is for use
in the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such holder or
such Requesting Holder or partner thereof or any such director, officer,
partner, agent, Affiliate, underwriter or controlling person and shall survive
the transfer of such securities by such holder. The indemnity agreement
contained in the section 2.7(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, action or proceeding if such settlement
is effected without the consent of the Company (which consent shall not be
unreasonably withheld).
(b) INDEMNIFICATION BY THE SELLERS. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to section 2.3, that the Company shall have received an
undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities, to indemnify severally and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this section
2.7) the Company, each director of the Company, each officer of the Company and
each other person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Any such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by such seller. The indemnity agreement
contained in the section 2.7(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, action or proceeding if such settlement
is effected without the consent of such seller (which consent shall not be
unreasonably withheld). The parties hereto hereby acknowledge and agree that,
unless otherwise expressly agreed to in
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writing by holders of Registrable Securities to the contrary, for all purposes
of this Agreement the only information furnished or to be furnished to the
Company for use in any registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto are statements specifically relating to (i) transactions
between such holder and its Affiliates, on the one hand, and the Company, on the
other hand, (ii) the beneficial ownership of shares of Common Stock by such
holders and its Affiliates and (iii) the name and address of such holder. If
any additional information about such holder or the plan of distribution (other
than for an underwritten offering) is required by law to be disclosed in any
such document, then such holder shall not unreasonably withhold its agreement
referred to in the immediately preceding sentence. The indemnity provided under
this section 2.7(b) shall be limited in amount to the net amount of proceeds
actually received by such seller from the sale of Registrable Securities
pursuant to such registration statement.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this section 2.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action, PROVIDED that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
In case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability, or a covenant not to sue, in respect to such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
(d) OTHER INDEMNIFICATION. Indemnification similar to that specified
in the preceding subdivisions of this section 2.7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority, other than the Securities Act, provided that the indemnifying party
receives an undertaking by or on behalf of such indemnified party to repay
amounts so advanced if it shall ultimately be determined that such indemnified
party is not entitled to be indemnified hereunder.
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(e) INDEMNIFICATION PAYMENTS. The indemnification required by this
section 2.7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(f) CONTRIBUTION. If the indemnification provided for in the
preceding subdivisions of this section 2.7 is unavailable to an indemnified
party in respect of any expense, loss, claim, damage or liability referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such expense, loss, claim, damage or liability in such proportion
as is appropriate to reflect the relative benefits and the relative fault of the
Company on the one hand and the holder or underwriter, as the case may be, on
the other in connection with the distribution of the Registrable Securities and
the statements or omissions which result in any expense, loss, damage or
liability, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the holder or underwriter,
as the case may be, on the other in connection with the distribution of the
Registrable Securities shall be deemed to be in the same proportion as the total
net proceeds received by the Company from the sale of the Common Stock by the
Company to the purchasers (plus the purchase price received by the Company from
any previous sale of the Registrable Securities to the holder in the case of
shares sold by such holder) in a registered offering hereunder, bear to the
gain, if any, realized by the selling holder (minus, in the case of any selling
holder, the price paid by such holder to the Company) or the underwriting
discounts and commissions received by the underwriter, as the case may be. The
relative fault of the Company on the one hand and of the holder or underwriter,
as the case may be, on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission to state a material fact relates to information supplied by the
Company, by the holder of by the underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, PROVIDED that the foregoing contribution agreement shall
not inure to the benefit of any indemnified party if indemnification would be
unavailable to such indemnified party by reason of the provisions contained in
the first sentence of subdivision (a) of this section 2.7, and in no event shall
the obligation of any prospective seller of Registrable Securities to contribute
under this subdivision (f) exceed the amount that such indemnifying party would
have been obligated to pay by way of indemnification if the indemnification
provided for under subdivisions (a) or (b) of this section 2.7 had been
available under the circumstances.
The Company and the holders of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this subdivision (a) were
determined by PRO RATA allocation (even if the holders, Requesting Holders and
any underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth in the preceding sentence and
subdivision (c) of this Section 2.7, any legal
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or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of the subdivision (f), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder the net
proceeds received by such holder form the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or 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.
2.8 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not
effect or permit to occur any combination or subdivision of shares which would
adversely affect the ability of the holders of Registrable Securities to include
such Registrable Securities in any registration of its securities contemplated
by this section 2 or the marketability of such Registrable Securities under any
such registration.
3. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
AFFILIATE: As defined in Rule 12b-2 promulgated under the Exchange Act.
COMMISSION: The Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act.
COMMON STOCK: As defined in section 1.
COMPANY: As defined in the introductory paragraph of this Agreement.
COMPANY STOCKHOLDERS: Collectively, William A. Marquard, David M. Roderick,
Michel Rapoport, George L. Shinn, Patricia Hetter Kelso, John F.
McGillicuddy and John Rutledge.
EXCHANGE ACT: The Securities Exchange Act of 1934, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time. Reference to a particular section
of the Securities Exchange Act of 1934 shall include a reference to the
comparable section, if any, of any such similar federal statute.
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INITIATING HOLDERS: Any holder or holders of Registrable Securities
holding at least 5% of the Registrable Securities (by number of shares at
the time issued and outstanding), and initiating a request pursuant to
section 2.1 for the registration of all or part of such holder's or
holders' Registrable Securities; PROVIDED however, that the definition of
Initiating Holder shall include any Kelso Entity who is a holder of
Registrable Securities, irrespective of such Kelso Entity's percentage of
ownership of Registrable Securities, if such Kelso Entity is initiating a
request for the registration of all of such Kelso Entity's Registrable
Securities.
KELSO ENTITY: Collectively, KIA V, KEP V, the Company Stockholders and any
Transferee and any of their respective Permitted Transferees.
KEP V: As defined in section 1.
KIA V: As defined in section 1.
MANAGEMENT INDIVIDUALS: Collectively, Brian T. Clingen, Daniel L. Simon and
Paul G. Simon.
PERMITTED TRANSFEREE: Any Person who is specifically approved in writing by
KIA V, in its sole discretion, prior to any transfer of Registrable
Securities to such Person by a Company Stockholder or a Transferee and is
designated by KIA V as a Permitted Transferee, and who is therefor entitled
through such designation to the rights and privileges of a Permitted
Transferee set forth herein subject to the terms and conditions hereof.
PERSON: A corporation, an association, a partnership, an organization,
business, an individual, a governmental or political subdivision thereof or
a governmental agency.
RECAPITALIZATION AGREEMENT: As defined in section 1.
REGISTRABLE SECURITIES: The Common Stock and any securities issued or
issuable with respect to any Common Stock by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise, PROVIDED that
shares of Common Stock registered pursuant to the Registration Statement of
Form S-1 filed by the Company with the Commission on June 6, 1996 shall be
excluded from the definition of Registrable Securities and such shares
shall not be included as Registrable Securities for any purpose
contemplated by this Agreement. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale of
such securities shall have become effective under the Securities Act and
such securities have been disposed of in accordance with such registration
statement, (b) they shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act, (c) any
disposition of them shall not require
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registration or qualification of them under the Securities Act, or (d) they
shall have ceased to be outstanding.
REGISTRATION EXPENSES: All expenses incident to the Company's performance
of or compliance with section 2, including, without limitation, all
registration, filing and NASD fees, all stock exchange listing fees, all
fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special
audits or "cold comfort" letters required by or incident to such
performance and compliance, the fees and disbursements of any counsel and
accountants retained by the holder or holders of more than 50% of the
Registrable Securities being registered, premiums and other costs of
policies of insurance against liabilities arising out of the pubic offering
of the Registrable Securities being registered and any fees and
disbursements of underwriters customarily paid by issuers or sellers or
securities, but excluding underwriting discounts and commissions and
transfer taxes, if any.
REQUESTING HOLDER: As defined in section 2.6.
SECURITIES ACT: The Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as
of the same shall be in effect at the time. References to a particular
section of the Securities Act of 1933 shall include a reference to the
comparable section, if any, of any such similar Federal statute.
TRANSFEREE: As defined in section 8.
4. RULES 144 AND 144A. The Company shall timely file the reports
required to be filed by it under the Securities Act and the Exchange Act
(including but not limited to the reports under sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder and will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities, the
Company will (a) deliver to such holder a written statement as to whether it has
complied with the requirements of the Section 4, or (b) take such action as is
necessary to allow transfer of such Registrable Securities in accordance with
the provisions of Rule 144(k) (or any successor provision) under the Securities
Act including without limitation, if necessary, the issuance of new certificates
for such Registrable Securities bearing a legend restricting further transfer.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed
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by it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the holder or holders of more than 50%
of the shares of Registrable Securities and in the case of any such amendment,
action or omission to act in respect of the first sentence of Section 4, the
written consent of each holder affected thereby; PROVIDED however, for so long
as any shares of Common Stock are held by any Kelso Entity, any amendment,
action or omission to act is also subject to the prior written consent of KIA V.
Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
of holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
7. NOTICES. Except as otherwise provided in this Agreement, all notices,
requests and other communications to any Person provided for hereunder shall be
in writing and shall be given to such Person (a) in the case of any Kelso
Entity, addressed to such party care of Kelso & Company, 320 Park Avenue, 24th
floor, New York, New York 10022 to the attentions of James J. Connors III, Esq.
or at such other address as such party shall have furnished to the Company in
writing, (b) in the case of any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing, or,
until any such other holder so furnishes to the Company an address, then to and
at the address of the last holder of such Registrable Securities who has
furnished an address to the Company or (c) in the case of the Company, at
Universal Outdoor Holdings, Inc., 321 North Clark Street, Suite 1010, Chicago,
Illinois 60610 to the attention of its General Counsel, or at such another
address, or to the attention of such other officer, as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding.
Each such notice, request or other communication shall be effective (i) if given
by mail, 72 hours after such communication is deposited in the mail with first
class postage prepaid, addressed as aforesaid or (ii) if given by any other
means (including without limitation, by air courier), when delivered at the
address specified above, PROVIDED that any such notice, request or communication
to any holder of Registrable Securities shall not be effective until received.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of KIA V or KEP V shall also be for the benefit of and enforceable by (i) the
Company Stockholders and their Permitted Transferees (and any such party shall
have the rights under sections 2 and 4 and be subject to the obligations of KIA
V and KEP
19
<PAGE>
V under sections 2 and 4 hereof), and (ii) any subsequent holder of any
Registrable Securities held by KIA V or KEP V as of the date hereof and their
Permitted Transferees (and any such party shall have the rights under sections 2
and 4 and be subject to the obligations of KIA V and KEP V under sections 2 and
4 hereof), in the case of each of clause (i) and clause (ii), as and to the
extent set forth in an instrument executed by KIA V or KEP V, as the case may
be, and the Company Stockholder or the respective transferee (a "Transferee") or
their respective Permitted Transferees, as the case may be, subject to the
provisions respecting the minimum numbers or percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. Prior to the exercise of any rights by
a Company Stockholder or a Transferee or any of their respective Permitted
Transferees pursuant to the provisions of the proceeding sentence, KIA V shall
designate in writing to the Company a representative (which may be KIA V or KEP
V or any of their respective Affiliates, and which, if not, will be subject to
the approval of the Company, which approval shall not be unreasonably withheld)
for the Company Stockholders and all Transferees and their respective Permitted
Transferees with respect to the rights and obligations of such parties
hereunder, and such representative shall act on behalf of such parties at the
direction of such parties in connection with all matters relating to such
parties hereunder.
9. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF DELAWARE WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.
11. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
12. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the Company and each other party hereto relating to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
13. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF DELAWARE
OR OF THE UNITED STATES OF AMERICA FOR THE STATE OF DELAWARE AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS AND APPELLATE COURTS FROM ANY THEREOF. EACH PARTY HERETO
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY ACTION OR PROCEED-
20
<PAGE>
ING BY THE MAILING OF COPIES THEREOF TO SUCH PARTY BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO SUCH PARTY AT ITS ADDRESS
SPECIFIED IN SECTION 7. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY
JURY AND ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
14. SEVERABILITY. If any provision of this Agreement, or the application
of such provisions to any Person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
21
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By
-------------------------
Name:
Title:
KELSO INVESTMENT ASSOCIATES V, L.P.
By Kelso Partners V, L.P.
as general partner
By
-------------------------
Name:
Title:
KELSO EQUITY PARTNERS V, L.P.
By
-------------------------
Name:
Title:
-------------------------------------
Daniel L. Simon
-------------------------------------
Brian T. Clingen
-------------------------------------
Paul G. Simon
22
<PAGE>
EXHIBIT 11.1
UNIVERSAL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF LOSS PER SHARE
<TABLE>
FOR THE THREE
MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31 MARCH 31,
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET LOSS $(9,321,000) $(5,166,000) $(3,703,000) $(1,778,000) $(2,007,000)
WEIGHTED AVERAGE NUMBER OF
ACTUAL SHARES OUTSTANDING 437,500 437,500 437,500 437,500 437,500
----------- ----------- ----------- ----------- -----------
LOSS PER COMMON AND
EQUIVALENT SHARE $(21.31) $(11.81) $(8.46) $(4.06) $(4.59)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE>
EXHIBIT 21.1
1. Universal Outdoor, Inc.; Subsidiary of Universal Outdoor Holdings, Inc.
State of Incorporation: Illinois
Doing business under: Universal Eight, Inc. (IL & TX)
2. Quantum Structures & Design, Inc.; Subsidiary of Universal Outdoor, Inc.
State of Incorporation: Illinois
3. Naegele Outdoor Advertising Company; Subsidiary of Universal Outdoor, Inc.
State of Incorporation: Delaware
Doing business under: Universal Outdoor Advertising (FL)
4. Corporate Name: HCA, Inc.; Subsidiary of Quantum Structures & Design, Inc.
State of Incorporation: Illinois
5. Superior Outdoor Structures, Inc.; Subsidiary of HCA, Inc.
State of Incorporation: Illinois
<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 Holdings, Inc. and our
report dated June 14, 1996 relating to the financial statements of Ad-Sign,
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
July 18, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated July 21, 1995, with respect to the financial statements
of NOA Holding Company included in Amendment No. 2 to the Registration Statement
(Form S-1 No. 333-5351) and related Prospectus of Universal Outdoor Holdings,
Inc.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
July 17, 1996
